Off Broadway Theatre is a theater arts school in Sierra Vista, Arizona.
History The school came into existence when Cheryl Reynolds, the acting (albeit illegal) president of non-profit organization LimeLight Productions, Inc. allegedly purchased Limelight's assets for $4500 and proposed to dissolve the non-profit school. A board meeting consisting of three (of five which were legally required) directors voted on and approved the proposal; one of these directors was Reynolds, who abstained, yet stayed in the room when the motion was made, seconded, and voted on. The other two directors were Sue Ann Waddell and Joe Morris, neither of whom were validly elected. The assets included the building in which the school is housed (which included a theater with 50 seats, lights, sound equipment and a dance classroom with an oak wood dance floor), a piano, a van, office equipment, furniture, and numerous props and costumes. Although she was never elected, Reynolds served as de facto president of Limelight from January 2006 through the present date, reserved the name of Off Broadway Theatre on May 14, 2007, and filed articles of incorporation for Off Broadway, a for-profit organization offering essentially the same things that LimeLight had been doing as a not-for-profit entity, on July 05, 2007.
History of case
LimeLight Productions, Inc., a 501(c)(3) non profit corporation was founded in 1984 by Kathryn Chaffin-Honda. Limelight's continuing objective is to "encourage and promote individual creative growth within a communal structure among young people ages 3-18 years." Reynolds became a member of the board not by election, but by appointment in January, 2006. According to LimeLight's by-laws, her appointment should not have extended past January 31, 2007. When Reynolds claimed that LimeLight was in "terrible financial shape" in June, 2007, LimeLight held its annual dance recital at the Buena Performing Arts Center without charging any admission, although it was necessary to pay for the use of the center. One of LimeLight's methods of raising money in the past had been charging admission for these recitals. In addition, neither Reynolds nor anyone else serving on the board made any special appeal to the membership or past donors seeking contributions, and no mention was made of LimeLight's financial distress when a general request for donations was sent out in January, 2007.
Superior Court decision The Court found that Reynolds did not act in good faith or in the best interests of LimeLight Productions, Inc. In addition, the Court found that Reynolds acted in violation of her fiduciary obligations to LimeLight Productions, Inc. Reynold's Motion for Indemnification was denied on the basis that she was acting illegally as a director of Limelight while having the ability to rectify the illegality by convening the required annual meetings (to be conducted in January of each year) to elect a lawful board, but failed to do so. No annual meeting was held in 2005, 2006, or 2007.