This is an exact copy of the charges filed with the Cuyahoga County Court of Common Pleas by the Grand Lodge of Ohio. The only changes have been the actual names of those accused, which are reduced to initials. If you would like to look up this issue with the Court, all you need is the CV number, which is 08 649002In The Court of Common Pleas, Cuyahoga County, Ohio
CV 08 649002
Filed January 28, 2008
Preliminary Statement
1. The individual Defendants named in this action used their positions as members and officers of a fraternal organization to improperly take property worth hundreds of thousands of dollars from Plaintiffs and place that property under their own control. They then attempted to sever any affiliation they might have with Plaintiffs without returning this property. This Complaint seeks the rightful return of Plaintiff’s property, and damages resulting from its wrongful taking. Parties
2. Halcyon Masonic Lodge #498 (the “Halcyon Lodge” or the “Lodge”) is a Subordinate Masonic Lodge operating in Cleveland, Ohio, pursuant to a charter given to it by the Grand Lodge of Free and Accepted Masons of Ohio (the “Grand Lodge of Ohio” or the “Grand Lodge”).
3. The Grand Lodge of Ohio is a not-for-profit corporation with its principal place of business in Worthington, Ohio.
4. Halcyon Charities, Inc. (“Halcyon Charities”) is a not-for-profit corporation with its principal place of business in Cleveland, Ohio.
5. Defendants M, W, K, C, S, H, and K are all individuals who reside in Cuyahoga County, Ohio (collectively, the “Individual Defendants”).
6. John Does 1 through 5, inclusive, are named in this Complaint under fictitious names. Their true names and addresses are presently unknown to Plaintiffs, but will be supplemented when ascertained. Plaintiffs believe that each John Doe 1 through 5 was a person or entity involved in the wrongdoing that forms the basis of this Complaint.
Jurisdiction and Venue
7. Jurisdiction is appropriate in this Court because the controversy involves Ohio citizens or corporate entities and the amount in the controversy exceeds the Cuyahoga Court of Common Pleas’ jurisdictional minimum.
8. This Court is the appropriate venue for this action because all Defendants reside or have their principal place of business in Cuyahoga County and because the actions giving rise to the claims asserted occurred in Cuyahoga County. Factual AllegationsI. Background
9. Freemasonry is the oldest fraternity in the world. For numerous centuries the fraternal organization has been committed to assisting men in leading lives devoted to faith, morality, self-awareness, and community service.
10. A Grand Lodge is the administrative body in charge of Freemasonry in a particular geographical area. The Grand Lodge of Ohio was established in 1808. It was incorporated by Act of the General Assembly on March 12, 1844.
11. The Grand Lodge of Ohio, in its discretion, provides charters for the operation of Subordinate Masonic Lodges in the State of Ohio. A minimum of eight Master Masons may petition the Grand Lodge of Ohio for recognition as a Subordinate Masonic Lodge. After a period of review, the Grand Lodge of Ohio may grant the petition, and issue the charter. There are approximately 528 Subordinate Masonic Lodges in the State of Ohio, each of which has been chartered by the Grand Lodge.
12. Subordinate Lodge and their members are bound to follow and abide by the rules and regulations promulgated by the Grand Lodge of Ohio. This includes the Constitution of the Grand Lodge of Ohio, the Grand Lodge of Ohio’s by-laws, and the Code for Government of Lodge.
13. A petitioner for membership in a Subordinate Lodge does not become a full, voting member of the Subordinate Lodge, and is not eligible to be an officer in the Subordinate Lodge, until attaining the rank of Master Mason.
14. Officers of Subordinate Lodges know that they are required to follow and abide by the rules and regulations promulgated by the Grand Lodge of Ohio. They are also knowledgeable regarding the content of these rules and regulations.
15. The Halcyon Lodge received its charter from the Grand Lodge of Ohio in 1877. The Halcyon Lodge conducts its activities in the Halcyon Masonic Temple, which is a large, neoclassical building located in Cleveland. The temple was constructed in 1931. An inscription on the side of the building reads “(t)his building is dedicated and consecrated to the spirit of Freemasonry.”
16. The Halcyon Masonic Temple is owned by the West Side Masonic Temple Company (the “Temple Company”), which was incorporated by members of the Halcyon Lodge in 1915.
17. The Halcyon Lodge had accumulated substantial assets since receiving its charter in 1877 from dues paid by individual members, investments, and gifts. As of December 1, 2006, this included owning 100 percent of the stock in the Temple Company, as well as over $300,000.00 in cash and other equitable securities and/or investments.
18. The Halcyon Lodge presently has approximately 180 members. Until recently, this number was approximately 300. Many members of the Halcyon Lodge transferred their membership to other Subordinate Lodges when the Individual Defendants raised annual membership dues for 2007.
19. The substantial majority of members of the Halcyon Lodge are retired, and no longer living in the area. They remain members of the Lodge, but do not actively participate in the day-to-day management of the Lodge.
II. The Transfer of Assets to Halcyon Charities
20. The Individual Defendants were all officers of the Halcyon Lodge when the allegations detailed within this section of the Complaint transpired. Defendant M was Worshipful Master of the Halcyon Lodge. Defendant C was Senior Warden of the Halcyon Lodge. Defendant S was Junior Warden of the Halcyon Lodge. Defendant W was Treasurer of the Halcyon Lodge. Defendant K was Secretary of the Halcyon Lodge. Defendant H was Senior Deacon of the Halcyon Lodge. Defendant K was Junior Deacon of the Halcyon Lodge.
21. Defendant M became a Master Mason on March 26, 2004. Defendant W became a Master Mason on October 18, 2004. Defendant K became a Master Mason on November 7, 2005. Defendant C became a Master Mason on April 28, 2005. Defendant S became a Master Mason on January 15, 2001. Defendant K became a Master Mason on January 30, 2006. Defendant H became a Master Mason on March 27, 2006.
22. The Code for Government of Lodges (the “Code”) provides that a Subordinate Lodge may hold two types of meetings. “Stated Meetings” occur at times set forth in the Subordinate Lodge’s by-laws. “Special Meetings” are not provided for in the by-laws, and are called in the event of an emergency or other unusual situations.
23. Section 21.04(a) of the Code provides that “notice of any special meeting and its object shall be by mail to the members of the Lodge.” Section 21.04(b) of the Code further provides that “(t)he right of a Mason to be present and vote at the meetings of his lodge is a sacred right and must not be denied any Mason in good standing who conducts himself with propriety.”
24. The officers of the Halcyon Lodge held a stated meeting on November 27, 2006. At this meeting, the officers discussed transferring substantially all of the Halcyon Lodge’s assets, including its Temple Company stock, to a new business entity that certain officers of the Lodge would incorporate. No decision regarding this issue was reached at this meeting.
25. The officers of the Halcyon Lodge held a special meeting to discuss this same issue on December 4, 2006. Notice of this special meeting was not sent to members of Halcyon Lodge by mail. A formal resolution regarding the transfer of assets was not reached at this special meeting.
26. On December 6, 2006, Defendants K, W and M incorporated Halcyon Charities, and Ohio not-for-profit corporation, by filing its Articles of Incorporation with the Ohio Secretary of State.
27. The officers of the Halcyon Lodge held another stated meeting on December 11, 2006. There were only ten members of the Halcyon Lodge present at this stated meeting. Defendant K briefed those present regarding the formation of Halcyon Charities and the alleged benefits of transferring substantially all of the Halcyon Lodge’s assets to this entity. A motion was made to take this action, which motion was approved by those present at the meting.
28. As a result of the foregoing, substantially all of the Halcyon Lodge’s assets were transferred to Halcyon Charities. This includes all of the stock in the Temple Company as well as $300,000.00 in cash and other equities. These assets had been accumulated by the Halcyon Lodge since it received its charter in 1877. This action was approved at a meeting attended by only a small percentage of members of the Halcyon Lodge. The vast majority of Halcyon Lodge members had no notice or knowledge that its officers were taking this action.
29. At the time of the transfer of assets occurred, Section 9.02(a) of the Grand Lodge of Ohio by-laws provided: “No Subordinate Lodge shall purchase lands for Lodge purchases, purchase, erect, or occupy a building, or any part thereof, or be a member of a company, or delegate such authority to any person or organization, or pledge its resources or obligate the Lodge in any manner, for such purposes if the total amount to be expended is $10,000.00 or more, until the method of financing, and the plans for the project shall have been submitted to the Temple Committee of the Grand Lodge and its approval thereto obtained.”
30. The officers of the Halcyon Lodge pledged over $10,000.00 to Halcyon Charities, and delegated authority to Halcyon Charities to manage the Halcyon Masonic Temple, without notifying any member of the Temple Committee, and without obtaining the Committee’s approval to take this action. The transfer of assets to Halcyon Charities violated Section 9.02(a) of the Grand Lodge of Ohio by-laws.
31. At the time of the transfer of assets occurred, Section 9.02(b) of the Grand Lodge of Ohio by-laws provided: “All requests involving the expenditure of $10,000.00 or more for the purchase, repair, remodeling, or the erection of a building must be brought before the membership of the Lodge at a stated meeting. It shall be entered upon the minutes and lie over for 30 days, when it shall require the sanction of a majority of the members present. Upon the approval of the membership for all such expenditures of $25,000.00 or more, the method of financing, the plans for the project, all supporting data, and copies of both stated meeting minutes shall be sent to the Temple Committee of the Grand Lodge for approval. No legal purchase commitments shall be made by the Lodge or Lodge funds expended concerning the project until the approval of the Grand Lodge Temple Committee is given for the expenditure.”
32. The transfer of assets to Halcyon Charities, which was done for the ostensible purpose of repairing and remodeling the Halcyon Temple, was a project falling within the scope of Section 9.02(b). The Individual Defendants therefore violated Section 9.02(b) by transferring the Halcyon Lodge assets without following the procedure set for the in Section 9.02(b) for such an expenditure of assets.
33. Defendant M is the President of Halcyon Charities. Defendant W is the Treasurer of Halcyon Charities. Defendant K is Secretary of Halcyon Charities. These Defendants also serve as Directors for Halcyon Charities.
34. Section 3.7 of Halcyon Charities Articles of Incorporation provides: “Officers may be compensated for services provided to the Corporation in their capacities as officers. Officers may be compensated for the reasonable value of any other services authorized by and provided to the Corporation.”
35. Thus, as a result of their becoming Freemasons, Defendants M, W and K, as officers and directors of Halcyon Charities, are now in possession of, and have control over 100 percent of Temple Company stock and $300,000.00 in cash and other equities. These are substantially all of the assets of the Halcyon Lodge, which the Lodge had accumulated since receiving its charter in 1877. The action of the Individual Defendants has prevented the membership of the Halcyon Lodge as well as the Grand Lodge of Ohio from participating in the management and disbursement of Lodge assets. Members of the Lodge have also been denied access to the Temple. This action was taken without any notification to the membership at large or to the Grand Lodge of Ohio, and without following the rules pursuant to which the Individual Defendants had agreed to be governed. Defendants M, W and K’s control of Lodge assets is not subjected to any meaningful oversight by any individual or entity. They may also receive compensation for their services to Halcyon Charities. In sum, their stint as Freemasons proved a profitable venture.
III. The Discovery and Aftermath
36. In November of 2007, in the course of conducting an annual audit of the Halcyon Lodge, Grand Lodge of Ohio officials confirmed the transfer of the Lodge assets to Halcyon Charities. The Grand Lodge of Ohio had not documentation of the transaction until this time.
37. Representatives of the Grand Lodge of Ohio thereafter attended a stated meeting of the Halcyon Lodge on November 12, 2007. These representatives demanded that the cash and equities, including the Temple Company stock, be returned to the Halcyon Lodge and its members within forty-eight hours.
38. The officers of the Halcyon Lodge refused to reverse the transaction. Instead, they attempted to sever any affiliation they might have to Freemasonry and the Grand Lodge, symbolically voting to surrender the Halcyon Lodge charter.
39. For the first time, in a letter dated November 21, 2007, Defendant M informed the membership of the Halcyon Lodge of the transfer of assets to Halcyon Charities. This letter stated that the Defendants intended to form a new lodge, not affiliated with the Grand Lodge of Ohio, and that the members of Halcyon Lodge could feel free to petition this new lodge for membership.
40. As a result of the Individual Defendants’ actions, members of the Halcyon Lodge were uncertain of their standing with the Grand Lodge of Ohio and, more generally, with the fraternal brotherhood itself.
41. The Grand Lodge of Ohio has appointed interim officers to conduct the affairs of the Halcyon Lodge until its Temple and property are returned. It has taken action to ensure that the Halcyon Lodge members who were kept in the dark regarding the transfer of Lodge assets to Halcyon Charities know that their membership in the fraternal brotherhood and with the Grand Lodge of Ohio remains in good standing.
42. The Halcyon Lodge met in the Cleveland Masonic Center, located at 3615 Euclid Avenue in Cleveland, on December 10, 2007, and its members intend to continue its operations. The substantial financial assets of the Lodge, however, remain subject to the Defendants’ possession and control.
43. On January 2, 2008, Mr. C, Acting Worshipful Master for the Halcyon Lodge, sent a letter to Defendant K, as statutory agent for Halcyon Charities, demanding the return of the Halcyon Lodge’s personal and Masonic property. (A copy of the letter is attached as Exhibit A and incorporated herein.) Halcyon Charities has refused to return these materials to the Halcyon Lodge.
Count One
Breach of Fiduciary Duty (Halcyon Masonic Lodge #498)
44. Plaintiffs restate the incorporate all allegations contained in the preceding paragraphs as though fully written herein.
45. As officers of the Halcyon Lodge, the Individual Defendants owed fiduciary duties to their fellow members of the Halcyon Lodge and to the Lodge itself.
46. The Individual Defendants breached their fiduciary duties by not informing the membership of the Halcyon Lodge at large of their intent to transfer substantially all of the Lodge’s assets to Halcyon Charities. This failure to disclose prevented Halcyon Lodge members from interfering with this improper action, and was in contravention of the rules the officers had agreed to follow.
47. The Individual Defendants breached their fiduciary duties by transferring substantially all of the Halcyon Lodge’s assets to Halcyon Charities.
48. The Halcyon Lodge has been damaged as a result of these breaches of fiduciary duty. The Halcyon Lodge no longer has possession of, and can no longer make use of, the substantial assets the Lodge had accumulated since 1877.
49. The conduct of the Individual Defendants in breaching their fiduciary duties to Halcyon Lodge was intentionally injurious, and done with such reckless disregard for the Halcyon Lodge’s rights that it amounts to malicious, deliberate, gross, and wanton conduct, entitling the Halcyon Lodge to a recovery of punitive damages.
Count Two
Breach of Fiduciary Duty (Grand Lodge of Ohio)
50. Plaintiffs restate an incorporate all allegations contained in the preceding paragraphs as though fully written herein.
51. The Individual Defendants, as members and officers of the Halcyon Lodge, owed fiduciary duties to the Grand Lodge of Ohio.
52. As is stated on the Halcyon Lodge charter, the Grand Lodge of Ohio granted the charter because it “repos(ed) especial trust and confidence in the integrity and well-known attachment of the aforesaid petitioners to the sublime principles of Masonry.” The Grand Lodge of Ohio places this same special trust and confidence in all members of the Subordinate Lodges.
53. The Individual Defendants breached their fiduciary duties by not informing the Grand Lodge of Ohio of their intention to transfer substantially all of the Halcyon Lodge’s assets to Halcyon Charities. This failure to disclose prevented the Grand Lodge of Ohio from interfering with this improper action, and was in contravention of the rules the officers had agreed to follow.
54. The Individual Defendants breached their fiduciary duties by transferring substantially all of the Halcyon Lodge’s assets to Halcyon Charities.
55. The Grand Lodge of Ohio has been damaged as a result of these breaches of fiduciary duty. A Subordinate Lodge has been deprived of substantially all of its assets, thereby affecting the Grand Lodge’s ability to further the interests of the fraternal brotherhood at large.
56. The conduct of the Individual Defendants in breaching their fiduciary duties to the Grand Lodge of Ohio was intentionally injurious, and done with such reckless disregard for the Grand Lodge of Ohio’s rights that it amounts to malicious, deliberate, gross, and wanton conduct, entitling the Grand Lodge of Ohio to a recovery of punitive damages.
Count Three
Conversion (Halcyon Masonic Lodge #498)
57. Plaintiffs restate and incorporate all allegations contained in the preceding paragraphs as though fully written herein.
58. The Halcyon Lodge is the owner of the cash and equitable securities the Lodge had accumulated since receiving its charter in 1877, as well as all personal and Masonic property in the Halcyon Temple, and used by its members.
59. The Individual Defendants, in transferring these properties to Halcyon Charities in violation of their fiduciary duties, and without informing the membership of the Halcyon Lodge at large, wrongfully exercised dominion and control over them in a manner inconsistent with the Lodge’s rights.
60. The Halcyon Lodge has demanded the return of its monies, securities, and personal property from Halcyon Charities, but the properties have not been returned.
61. The Halcyon Lodge has been damaged by this conversion of its properties and will suffer additional consequential damages if Halcyon Charities should continue to wrongfully possess the Halcyon Lodge’s property.
62. The conduct of the Individual Defendants in wrongfully converting the Halcyon Lodge’s property was intentionally injurious, and was done with such reckless disregard for the Halcyon Lodge’s rights that it amounts to malicious, deliberate, gross, and wanton conduct, entitling the Halcyon Lodge to a recovery of punitive damages.
Count Four
Fraudulent Concealment (Halcyon Masonic Lodge #498)
63. Plaintiffs restate and incorporate all allegations contained in the preceding paragraphs as though fully written herein.
64. The Individual Defendants had a duty to disclose their intent to transfer substantially all of the Halcyon Lodge’s assets to Halcyon Charities to the Lodge membership.
65. The Individual Defendants did not disclose their intent to transfer Halcyon Lodge assets to the Lodge membership at large. Indeed, it was not until nearly a year after the transfer had occurred that the members were notified of its occurrence.
66. The Individual Defendants had knowledge that their intent to transfer substantially all of the Halcyon Lodge’s assets to Halcyon Charities was a material fact that was required to be disclosed to the membership at large, particularly when they held a special meeting to discuss the matter. They nevertheless willfully failed to disclose this fact to the membership at large.
67. The Halcyon Lodge has been damaged as a result of the fraudulent concealment of the transfer of its assets. The Halcyon Lodge no longer has possession of, and can no longer make use of, the substantial assets the Lodge had accumulated since 1877.
68. The conduct of the Individual Defendants in fraudulently concealing the transfer of Halcyon Lodge assets to Halcyon Charities was intentionally injurious, and was done with such reckless disregard for the Halcyon Lodge’s rights that it amounts to malicious, deliberate, gross, and wanton conduct, entitling Halcyon Lodge to a recovery of punitive damages.
Count Five
Fraudulent Concealment (Grand Lodge of Ohio)
69. Plaintiffs restate and incorporate all allegations contained in the preceding paragraphs as though fully written herein.
70. The Individual Defendants had a duty to disclose their intent to transfer substantially all of the Halcyon Lodge’s assets to Halcyon Charities to the Grand Lodge of Ohio.
71. The Individual Defendants did not disclose their intent to transfer Halcyon Lodge assets to the Grand Lodge of Ohio. The Grand Lodge only discovered the transfer almost a year later, in the course of performing the annual audit of the Halcyon Lodge.
72. The Individual Defendants had knowledge that their intent to transfer substantially all of the Halcyon Lodge’s assets to Halcyon Charities was a material fact that was required to be disclosed to the Grand Lodge of Ohio pursuant to Code Section 9.02(a). The Individual Defendants nevertheless willfully failed to disclose this fact to the Grand Lodge of Ohio.
73. The Grand Lodge of Ohio has been damaged as a result of the fraudulent concealment of the transfer of its assets. A Subordinate Lodge has been deprived of substantially all of its assets, thereby affecting the Grand Lodge’s ability to further the interests of the fraternal brotherhood at large.
74. The conduct of the Individual Defendants in fraudulently concealing their transfer of Halcyon Lodge assets to Halcyon Charities from the Grand Lodge of Ohio was intentionally injurious, and done with such reckless disregard for the Grand Lodge of Ohio’s rights that it amounts to malicious, deliberate, gross, and wanton conduct, entitling the Grand Lodge of Ohio to a recovery of punitive damages.
Count Six
Civil Conspiracy (Halcyon Masonic Lodge #498)
75. Plaintiffs restate and incorporate all allegations contained in the preceding paragraphs as though fully written herein.
76. The Individual Defendants maliciously combined to engage in a course of conduct designed to injure the Halcyon Lodge under the schemes described above, in a way not competent for one alone, resulting in actual damages to the Halcyon Lodge.
77. The conduct of the Individual Defendants in conspiring to commit these unlawful acts was intentionally injurious, and done with such reckless disregard for the Halcyon Lodge’s rights that it amounts to malicious, deliberate, gross, and wanton conduct, entitling the Halcyon Lodge to a recovery of punitive damages. Count SevenCivil Conspiracy (Grand Lodge of Ohio)
78. Plaintiffs restate and incorporate all allegations contained in the preceding paragraphs as though fully written herein.
79. The Individual Defendants maliciously combined to engage in a course of conduct designed to injure the Grand Lodge of Ohio under the schemes described above, in a way not competent for one alone, resulting in actual damages to the Grand Lodge of Ohio.
80. The conduct of the Individual Defendants in conspiring to commit these unlawful acts was intentionally injurious, and done with such reckless disregard for the Grand Lodge of Ohio’s rights that it amounts to malicious, deliberate, gross and wanton conduct, entitling the Grand Lodge of Ohio to a recovery of punitive damages.
Count Eight
Unjust Enrichment (Halcyon Masonic Lodge #498)
81. Plaintiffs restate and incorporate all allegations contained in the preceding paragraphs as though fully written herein.
82. The Halcyon conferred a benefit upon Defendants M, W, and K by allowing them to join the Lodge, thereby giving them access to the Lodge’s substantial financial assets.
83. Defendants M, W, and K knew that the Halcyon Lodge had conferred a benefit upon them in accepting their petitions to join the fraternal organization, and in giving them access to these financial assets and properties.
84. Defendants M, W, and K now have control over the substantial financial assets of the Halcyon Lodge, via their positions as officers and directors of Halcyon Charities.
85. It would be unjust to allow these Defendants to retain their control of financial assets which rightfully belong to the Halcyon Lodge without payment.
Prayer For Relief
Wherefore, Plaintiffs seek the following relief:
A. The return of the Plaintiff’s property;
B. Compensatory damages in an amount in excess of $25,000.00;
C. Punitive damages;
D. Plaintiff’s reasonable attorney fees and costs in pursuing this action;E. Any other relief as this Court may deem just and proper.
Dated January 28, 2008
Respectfully submitted,(names and address of attorneys for the Plaintiff)
Jury Demand
Plaintiffs hereby demand trial by jury on all issues pursuant to Civ. R. 38.
Respectfully submitted, (names and address of attorneys for the Plaintiff)
