Umrani v. Sindhi Ass'n of North America
201 N.E.3d 40
Ill. App. Ct.2021Background
- Plaintiffs: two individual SANA members (Umrani and Jatoi) and SANA (a New York not-for-profit) sued derivatively alleging SANA officers manipulated elections and breached fiduciary duties at a Chicago convention.
- Defendants: multiple SANA officers and officeholders living across U.S. and Canada; only Memon was a Cook County resident.
- Procedural history: defendants moved under 735 ILCS 5/2-619 asserting lack of standing (under NY Not‑For‑Profit Corp. Law) and lack of personal jurisdiction; the circuit court dismissed the amended complaint for lack of standing and, alternatively, for lack of personal jurisdiction as to all but Memon.
- Plaintiffs argued some defendants waived standing by failing to plead it in “answers”; defendants argued they timely raised standing in their 2-619 motion and that the documents plaintiffs called answers were not proper answers.
- On appeal the court reviewed jurisdiction to hear the waiver argument, concluded the notice of appeal was sufficient, and affirmed dismissal on the independent ground that plaintiffs lacked standing under New York law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appellate jurisdiction to review waiver/standing | Notice of appeal targeted personal jurisdiction only but appealed dismissal order generally | Notice of appeal reasonably referenced the January 3, 2020 dismissal (which cited both standing and jurisdiction) | Court exercised jurisdiction; liberal construction of notice of appeal permitted review |
| Waiver of standing by filing answers | Certain defendants filed answers and therefore waived lack-of-standing defense | The documents were not true answers; defendants timely raised standing in a 2-619 motion | Held no waiver: the documents were letters/appearances not compliant answers, and defendants timely raised standing in their 2-619 motion |
| Procedural adequacy of raising standing | Standing must be pleaded in an answer in some contexts (foreclosure cases) | Section 2-619 allows raising affirmative matters (like lack of standing) within the time for pleading; motion timely filed | 2-619 was appropriate and timely; filing a motion does not forfeit the defense |
| Merits: standing to bring derivative suit under NY law | Plaintiffs (two members) may sue derivatively on behalf of SANA | NY Not‑For‑Profit Law requires either $1,000+ contributor with bylaw/certificate authorization or at least 5% of members to bring a derivative claim | Held plaintiffs lacked standing: bylaws contained no $1,000 contributor provision and two members < 5% membership so dismissal under 2-619(a)(9) was proper |
Key Cases Cited
- Zedella v. Gibson, 165 Ill.2d 181 (1995) (purpose and timing of section 2-619 motions)
- Van Meter v. Darien Park District, 207 Ill.2d 359 (2003) (pleadings and supporting materials construed favorably to nonmovant; evidentiary support for 2-619)
- Glisson v. City of Marion, 188 Ill.2d 211 (1999) (definition of an affirmative matter under 2-619)
- Stone v. Moore, 26 Ill. 165 (1861) (characteristics and role of an answer)
- Segal v. Powers, 687 N.Y.S.2d 589 (Sup. Ct. 1999) (interpreting NY Not-For-Profit Law’s 5% member standing requirement)
- Schaefer v. Chautauqua Escapes Ass’n, 71 N.Y.S.3d 244 (App. Div. 2018) (upholding dismissal of derivative action where plaintiffs did not meet 5% membership threshold)
- Clark v. Trois, 801 N.Y.S.2d 330 (App. Div. 2005) (same: dismissal where statutory membership threshold not met)
- Waste Management, Inc. v. International Surplus Lines Ins. Co., 144 Ill.2d 178 (1991) (notice of appeal dual purposes: vesting jurisdiction and informing opposing party)