Bishop Macram Max Gassis v. Corkery, C.A. 8868-VCG (May 28, 2014)

In this opinion, the Court of Chancery addressed the power of “de facto” directors to remove a properly elected director of a non-profit Delaware corporation.  After being removed as a director in accordance with the company’s bylaws, the plaintiff brought suit alleging, inter alia, that his removal was void because three of the directors who voted in favor of his removal were “not validly seated on the board” due to procedural defaults in their election.  In addressing this argument, the Court found that even if the three board members were invalidly elected, they were “de facto” directors and thus still capable of taking enforceable actions.  The Court, affirming precedent, explained that a “de facto” director is one “‘in possession of and exercising the powers of that office under claim and color of an election, although . . . not a director [d]e jure and [removable] by proper proceedings.’”  The Court stated that although “de facto” directors were potentially removable, any prior, otherwise valid actions they had taken were enforceable as a matter of law.  Accordingly, the court dismissed the plaintiff’s argument and upheld the director’s removal.