Well, I am off to Nepal again. This will be my FIFTH trip. My wife, Stephanie Waisler-Rubin, is the founder of the Unatti Foundation (www.unattifoundation.org). I have the privilege of serving as the General Counsel of the foundation. And a wonderful privilege it is. The Unatti Foundation was formed in 2002. The Unatti Foundation operates a group home for girls in the village of Bhaktapur, Nepal. Approximately 20 girls ages 4 and up live in the home. The remarkable story of the Unatti Foundation is set forth in great detail on the aforementioned website so I will not attempt to re-tell it in this limited space. What I will do is share with you a remarkable moment that took place during my first trip in about 2004.

There are religious conversions. There are political party conversions. There are sports-team-fan ship conversions (though in my experience these are much rarer than religious and political party conversions). There are even conversions to "the Dark Side" made famous by my old friend Darth Vader. But whether you are a Laker fan who would never convert to a Celtic fan (please!), a Democrat who would never convert to a Republican (stay tuned on that one), or Luke Skywalker himself, I bet you would be surprised to learn that a California Nonprofit Public Benefit Corporation can convert to a California Nonprofit Mutual Benefit Corporation! Really. I am not making this up! In fact, I recently had to preside over such a conversion for a client! No ecclesiastical garb was required.

You see, the client is a business networking group. The client organized itself as a California Nonprofit Public Benefit Corporation. (For this article I will refer to this entity as the "PBC"). In the course of filling out an IRS Form 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code (the "Form 1023"), the client realized that since it would be applying for tax exempt status as a 501(c)(6) (business league), the client needed to (i) organize itself as a California Nonprofit Mutual Benefit Corporation (for this article I will refer to this entity as the "MBC"), and (ii) file a Form 1024, Application for Recognition of Exemption Under Section 501(a) (the "Form 1024").

I agree this is fascinating. No doubt you are wondering, how is this conversion from PBC to MBC accomplished? Is a particle collider required? Thankfully not. Will you need to understand the periodic table of elements? Not really. What is required is as follows:

First, the PBC will need to amend its Articles of Incorporation to provide that the corporation will be a MBC. This amendment will need to be duly approved by (a) the members of the PBC, and (b) the board of directors of the PBC. Now, before the California Secretary of State will file the amendment, the Registrar of Charitable Trusts, which is part of the California State Attorney General's office will need to issue a letter approving the amendment. The approval letter must be submitted to the California Secretary of State along with the amendment for filing.

Therefore, the second step after the amendment is duly approved, is to submit the amendment to the Registrar of Charitable Trusts, along with a financial statement for the entity that is seeking to convert. The Registrar of Charitable Trusts (for the remainder of this article I will refer to this entity as the "Registrar") may also request additional information as well. Once the Registrar receives all the requested information, if the Registrar approves of the amendment, the Registrar will issue a letter of approval. The (x) letter of approval and (y) amendment can then be submitted to the California Secretary of State for filing.

So back to my client. Once the California Secretary of State filed the amendment (which official filing included a copy of the letter of approval attached to the amendment), we were able to proceed with the filing of the Form 1024 which is now pending before the IRS ... which is supposed to get back to us any time in the next six months ...

Go Lakers ...

Back to Top

Some of you may be disappointed, but this article has nothing to do with Walker Texas Ranger. This is okay with me however, because I watched David Carradine in Kung Fu so I kind of got my fill of that sort of thing. Rather, this article focuses in a way on money. That's right, money. In fact, this article focuses on a specific amount of money. That's right, a specific amount of money. How much you ask? Well, if you must know, the amount is $25,000. That's right, $25,000. So what is so magical about $25,000 that an entire article should be devoted to this amount. Well, let me tell you.

When you file a lawsuit, you are allowed to choose between what is called "Unlimited jurisdiction" and "Limited jurisdiction." If you file your case as an "Unlimited jurisdiction" case, there is no limit on the amount of damages you may seek. If you file your case as a "Limited jurisdiction" case, you are essentially conceding that the maximum amount of damages you seek is less than or equal to $25,000. So far so good. So what does any of this have to do with a "Walker Hearing," or Walker Texas Ranger for that matter? Excellent question.

You see, where this can get very exciting, is when a Plaintiff (the party filing a lawsuit seeking damages) files her lawsuit as an "Unlimited jurisdiction" case, but either the Defendant (the party defending against the lawsuit), or even the Judge on her own (!), challenges the amount of damages they believe is at stake in the case (believing it to be equal to or less than $25,000), and asks that the case be "reclassified" as a "Limited jurisdiction" case. A hearing is then set for the parties to present their facts and argue whether or not the damages in the case will be equal to or less than $25,000 and therefore, whether a case initially filed as an "Unlimited jurisdiction" case should be "reclassified" as a "Limited jurisdiction" case. Such a hearing is known as a "Walker Hearing" after a well known case that addressed this issue.

The reason such a hearing is very exciting (certainly to the Plaintiff) is that if an "Unlimited jurisdiction" case is "reclassified" as a "Limited jurisdiction" case, the defendant can be assured that no matter what happens at the trial of the case, the most the Plaintiff can recover is $25,000 which can have a huge impact on the resolution of the case. Suddenly, the "Million Dollar" case is reduced to a $25,000 case, and, as you might imagine, the Defendant will have a very different approach to settlement negotiations or any resolution of the case for that matter.

One of the factors than can defeat a Defendant's (or a Judge's) attempt to reclassify a case from "Unlimited jurisdiction" to "Limited jurisdiction," is if the relief sought by the Plaintiff includes a permanent injunction. While a temporary restraining order or preliminary injunction can be issued by a court of "Limited jurisdiction," a permanent injunction can only be issued by a court of "Unlimited jurisdiction." This is what happened to my client in a recent case. The Court, on its own motion, ordered a "Walker Hearing" because the Court felt that my client's damages could only be equal to or less than $25,000. However, when I pointed out in papers I filed with the court that my client sought relief which included a permanent injunction, the court ruled that the matter would remain in "Unlimited jurisdiction" which came as a big relief to me and my client.

Now that you feel you are an expert at "Walker Hearings," I want you to know that a "Walker Hearing" can also work in the other direction - to show that a case filed as a "Limited jurisdiction" case should really be an "Unlimited jurisdiction" case because the amount of damages will be greater than $25,000.

There you go Grasshopper ...

Back to Top