Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LEBANESE AMERICAN UNIV. v. NATIONAL EVANGELICAL SYNOD

January 5, 2005.

LEBANESE AMERICAN UNIVERSITY, Plaintiff,
v.
NATIONAL EVANGELICAL SYNOD OF SYRIA AND LEBANON, Defendant.



The opinion of the court was delivered by: RICHARD HOLWELL, District Judge

MEMORANDUM OPINION AND ORDER

This action is part of a battle for control of the Lebanese American University (the "University"), pitting the University's Board of Trustees (the "Trustees"), acting through the University, against defendant National Evangelical Synod of Syria and Lebanon (the "Synod"), a religious organization with ties to the Presbyterian Church of the United States (the "PCUSA"). The Trustees claim that the University is an American institution, pointing out that it was founded by Presbyterian missionaries from the United States, and that it has been chartered by New York State since 1950. The Synod disagrees, contending that the University, which maintains campuses only in Beirut and Byblos, Lebanon, is a Lebanese institution governed only by Lebanese law.

The dispute arose after the Trustees voted to adopt a new constitution and to amend the University's by-laws in June 2003 (the "Restructuring"). As a result of the Restructuring, the Synod lost much of its power within the University. Frustrated with that outcome, on April 24, 2004 the Synod filed a complaint in Lebanese court against the Board of Trustees, arguing that the University is a Lebanese institution and that the Restructuring was invalid under Lebanese law. Those proceedings were stayed by a Lebanese appellate court, and on July 13, 2004 the University instituted this action, seeking a declaration that the University is an American institution and arguing that the Restructuring was valid — and in fact required — under New York law. On July 30, 2004, this Court entered an order preliminarily enjoining the Synod from, among other things, attempting to lift the stay of the Lebanese proceedings before the present matter is resolved.

  Thereafter, by notice of motion dated September 10, 2004, the Synod moved to dismiss this case pursuant to Fed.R.Civ.P. 12(b)(1), arguing that the Court does not have subject matter jurisdiction under 28 U.S.C. § 1332(a) because diversity of citizenship is lacking. It is undisputed that the Synod is a foreign entity, and that the University is a New York not-for-profit corporation. The Synod contends that the University is also a citizen of Lebanon, and argues that diversity is therefore lacking because both parties are aliens. The University disagrees, arguing that it is only a citizen of New York for purposes of 28 U.S.C. § 1332(c)(1), which means that complete diversity exists.

  For the reasons that follow, the Court concludes that the concept of dual citizenship under Section 1332(c) cannot be invoked to destroy diversity where a domestically incorporated entity with a foreign principal place of business brings suit against a foreign entity. Accordingly, the Court finds that jurisdiction is proper and denies the Synod's motion to dismiss. BACKGROUND

  A thorough factual discussion is not necessary to resolve the purely jurisdictional question presently before the Court, and in any case would be premature. However, a brief overview — historical in nature, and focusing on the parties — will be helpful to frame the relevant issues.

  A. The Parties

  The University began life as the American School for Girls, founded in Beirut in 1835 by Presbyterian missionaries from America. Questions & Answers, at http://www.lau.edu.lb/general-info/qanda.html (last visited December 20, 2004). Under the direction and control of the PCUSA, the University evolved into the American Junior College for Women in 1924, the Beirut College for Women in 1948, the coeducational Beirut University College in 1973, and finally, the Lebanese American University in 1994. Id. Since 1950, the University has been chartered by the New York Board of Regents,*fn1 and in that capacity has awarded degrees to "tens of thousands of students," consistent with its goal "to extend to students, without regard to gender, race, nationality, faith or religious sect, an opportunity for higher education . . . in accordance with the heritage of its Presbyterian founders." (Amended Complaint for Declaratory Relief, ¶ 12 ("Amend. Compl.")). In its present form, the University considers itself to be a "bridge of cultural understanding between East and West in the Middle East." (Amend. Compl., ¶ 2). Like any bridge, the University has ties to the lands that it connects, two of which are relevant to the jurisdictional question raised by the Synod's motion to dismiss. First, the University is incorporated in and chartered by New York State, and has kept administrative offices in New York City at all relevant times. (Amend. Compl., ¶¶ 8, 12). Second, the University maintains educational facilities only in Beirut and Byblos, Lebanon. Accordingly, for purposes of the present motion the Court will assume that the University's principal place of business is in Lebanon, which means that the University shall be considered a domestic corporation with a foreign principal place of business.

  Defendant Synod has a similarly eclectic past, also tracing its origins to Presbyterian missionaries first active in Syria and Lebanon in the early 19th century. In particular, certain of the ecclesiastical facilities established by those missionaries apparently banded together to form the Synod, although it is unclear when this occurred. (Mot. to Dismiss, p. 2.). Since its formation, the Synod asserts that it has worked with the PCUSA in the Middle East to "promote the fundamental Presbyterian values of tolerance, inclusiveness, peace and reconciliation." (Mot. to Dismiss, p. 2). Thus, the Synod considers itself to be a citizen only of Lebanon for purposes of diversity jurisdiction. (Mot. to Dismiss, p. 5). The University agrees, characterizing the Synod as a "religious organization recognized under Lebanese law", and also noting that it is a "juridical person separate from its members" and that it has the "exclusive right of regulating and administering its own affairs and property." (Amend. Compl., ¶ 13). B. The University's Governance

  By the early 1970's, the Synod contends that the PCUSA had determined to divest itself of several assets in the Middle East, including the University. At the same time, however, the PCUSA was concerned that the University's New York charter be maintained, which was thought to require that a "majority of the trustees . . . be American citizens," and also that those Trustees be "invested with certain fundamental powers." (Mot. to Dismiss, p. 3). In order to achieve both goals, the Synod claims that in 1973 the University implemented a "compromise solution," whereby a "Synod-controlled Board of Overseers" shared power with a "non-Synod-controlled Board of Trustees." (the "1973 Structure") (Id.). For its part, the University acknowledges that the Synod had significant rights under the 1973 Structure, but notes that control was shared between (i) a Board of Trustees, consisting of twenty-five members, a majority of whom were United States citizens, and (ii) a Board of Overseers, composed of the members of the Board of Trustees, plus seven members elected by the Synod, the President of the Alumi Association, and other individuals selected by the Board of Overseers. (Amend. Compl., ¶¶ 18-20).

  However one describes the power sharing arrangement, it appears that the Board of Overseers played a significant role in the University's governance. Thus, when the University began a search for a new president in 2002, the Board of Overseers was apparently able to force a stalemate, preventing the Trustees from electing the president of their choice. (Amend. Compl., ¶¶ 29-30). Once it became clear that the disagreement would not be resolved, the University sought guidance from the Office of Counsel at the New York State Education Department ("NYED"). (Compl., ¶ 30). Specifically, the University asked the NYED to clarify the legality of its governance structure given the requirements of its charter.

  On March 7, 2003, the NYED notified the University that only the Board of Trustees had the authority to manage the University, to choose its President, and to adopt or amend by-laws. (March 7, 2003 letter from Kathy A. Ahearn to Barbara L. Kirschten and Randolph M. Goodmna, attached as Exhibit G to the Compl.). The NYED also advised the University that, under the laws of the State of New York, the Trustees could not delegate this power to the Overseers, at least not without first submitting a petition to the New York State Board of Regents.

  Shortly thereafter, in June 2003, at a meeting in New York that was apparently not attended by the Synod's representatives on the Board of Trustees, the Trustees voted to adopt a new Constitution and by-laws consistent with this advice. (Amend. Compl., ¶¶ 32-36). Under the Restructuring, the Synod was granted a single seat on the Board of Trustees, and the Board of Overseers was eliminated in favor of a Board of International Advisors, whose only role was to advise the Trustees. In this way, the Synod lost much of its power within the University.

  On April 21, 2004 the Synod filed a complaint against the Trustees in a Lebanese "emergency court," arguing that the changes effected by the Restructuring were invalid because the University is a Lebanese institution subject only to Lebanese law. (Amend. Compl., ¶ 38). On July 2, 2004, the Lebanese emergency court issued an interim order, placing the University in receivership and staying all changes effected by the Trustees at the June 2003 meeting. (Amend. Compl., ¶ 41). The University appealed the interim order that same ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.