Special Committee on Legal Liability, June 30, 1998

ICE MILLER DONADIO & RYAN

TRANSMITTAL COVER SHEET DATE: July 6, 1998 3 PAGES INCLUDING THIS PAGE HARD COPY TO FOLLOW __ Yes _X_ No VIA: __ Mail __ Courier

TO: John Carter COMPANY: FAX #: PHONE #:

TO: Greg Hattenbach COMPANY: FAX #: PHONE #:

TO: Suzannah Walker COMPANY: FAX #: PHONE #:

FROM: Kathleen K. Shortridge TELEPHONE NUMBER:

SUBJECT: Herron-Morton Neighborhood Association

COMMENTS: See attached minutes.

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HERRON-MORTON NEIGHBORHOOD ASSOCIATION

Minutes of the Meeting of the Special Committee on Legal Liability June 30, 1998

Members present were Kathy Shortridge, John Carter and Jan Steinhoff. Michael Beason attended to provide technical support, as did Neighborhood Association President, Greg Hattenbach.

The meeting began by discussing its charge with Greg Hattenbach. It was decided that the Committee would focus on the following areas:

The Committee established three general goals:

1. To determine what type of actions can expose a not-for-profit organization to liability;

2. Determine whether recent actions by a Board member or members may have exposed the organization to any potential liability; and

3. Make recommendations that the organization should pursue to limit liability with respect to any foreseeable incident which would create a risk of legal liability.

The Committee then began discussing the general problems of potential legal liability for the Board, individual members of the Board, and the organization as a whole. Michael Beason made a brief presentation touching on a number of fundamental legal points. By statue, there would generally speaking be no personal liability for a Board member or member of a non-for-profit organization. However, the organization is liable for the authorized actions of its members, and the assets of the organization are potentially recoverable in damages if a member speaking on behalf of the organization commits a tort, such as libel or slander, or if there is personal injury attributable to the organization's property.

This raises the question of what a member of the organization, or a Board member, is authorized to do on behalf of the organization, which is the central focus of this Committee. Michael made it clear that, even in a voluntary organization, some types of institutional controls are necessary to protect the well-being of the organization.

The Committee decided to break into two subcommittees to focus on the two types of issues which were raised in the general discussion. Committee SIGMA is concerned with systems and procedures. It will be responsible for reviewing the basic legal documents concerning the conduct