Gordon & Rees Denver senior counsel Laurie J. Rust and associate Greg S. Hearing prevailed in an arbitration regarding wrongful termination of membership in a private club and secured dismissal of a related state court action for conspiracy, defamation, and outrageous conduct.
The board of directors of a private membership club met to discuss complaints about a member. The board decided that the member’s behavior was not consistent with the club’s requirements and terminated her membership without notice or an opportunity to be heard, in violation of the club’s constitution. The member then demanded reinstatement.
The member filed suit in Colorado state court against nine defendants, some of whom were board members and some of whom were only members of the club. She alleged that they had conspired to terminate her membership in order to humiliate her and sought damages in excess of $100,000.
Upon their engagement, Rust and Hearing recommended that the member be reinstated and temporarily suspended and that the club give her notice of the charges against her and set a hearing in order to afford her the due process required by the club’s constitution. Following the hearing, the board voted to terminate her membership. She demanded that a panel of three arbitrators review the decision, as permitted by the club constitution.
Rust and Hearing filed a motion to dismiss the state court complaint, arguing that the member failed to state a claim for relief. The court agreed, granted the motion to dismiss, found the matter frivolous, and awarded the club its attorneys’ fees. The member filed a motion for reconsideration. On Feb. 2, the court denied the motion, affirmed its ruling, and awarded the club its attorneys’ fees for all work in connection with the motion.
Arbitration was held Feb. 3. The following day, the panel issued an order finding that there was good cause for the termination of membership.