P.S. Docket No. MD 16-215


October 11, 2016

In the Matter of a Mail Dispute Between

JAMES FREDERICK SEAMAN and HEIDI BREUNIG           

P.S. Docket No. MD 16-215

APPEARANCE FOR DISPUTANT JAMES FREDERICK SEAMAN
Elizabeth A. Culley, Esq.
Andre Morris & Buttery

APPEARANCE FOR DISPUTANT HEIDI BREUNIG
Jesse L. B. Hill, Esq.
Law Office of Jesse L. B. Hill

INITIAL DECISION

This mail dispute was docketed pursuant to Postal Operations Manual (POM) § 616.21 under the procedures established at 39 C.F.R. Part 965.  The disputants, James Frederick (“Fred”) Seaman and Heidi Breunig (together with Bradley A. Felger and Valerie S. DeMarco) each claim the right to receive mail addressed to Airstrike Bird Control, Inc., 1209 Park Street, Suite 301C, Paso Robles, CA 93446.  The Judicial Officer directed the Paso Robles Postmaster to hold the mail addressed to Airstrike Bird Control, Inc. until this dispute is resolved.

FINDINGS OF FACT

  1. Airstrike Bird Control, Inc. (ABCI) is a California corporation formed on January 7, 2014 (Referral from USPS, Office of General Counsel, Pacific Area Office, Attachment 5, Articles of Incorporation).
  2. Valerie S. DeMarco (formerly Valerie S. Felger), Bradley A. Felger, Fred Seaman, and Katherine E. Seaman were ABCI’s initial incorporators who created the company with 100,000 shares of common stock (Referral, Attachment 5, Articles of Incorporation).
  3. The Statement of Action of Directors of Airstrike Bird Control Inc., dated January 7, 2014, allocated the common stock equally to the four Directors:  Bradley Felger, 25,000 shares; Fred Seaman, 25,000 shares; Valerie DeMarco, 25,000 shares; and Katherine Seaman, 25,000 shares (Seaman Exh. 3). 
  4. The Statement of Action of Directors of Airstrike Bird Control Inc. also identified the initial corporate officers as follows:  Bradley Felger, President; Fred Seaman, CEO; Valerie DeMarco, Vice President; and Katherine Seaman, Secretary and Treasurer (Seaman Exh. 3).
  5. The Directors adopted the Bylaws for the Regulation of Airstrike Bird Control Inc. A California Corporation (“ABCI Bylaws”) on January 7, 2014 (Seaman Exh. 1). 
  6. ABCI’s Bylaws provide that “The number of Directors shall be four (4) until changed by a duly adopted amendment to the Articles or to these Bylaws.”  (Seaman Exh. 1, ABCI Bylaws § 3.02).
  7. ABCI’s Bylaws provide:
    Except as otherwise required by law or the Articles, these Bylaws may be amended or repealed, and new Bylaws may be adopted, by affirmative vote of a majority of the outstanding shares entitled to vote or by approval of the Board.  Notwithstanding the first sentence of this Section 7.01 any amendment, repeal or adoption of a bylaw by the action of the Board which has the effect of changing the authorized number of Directors shall be ineffective without the affirmative vote of a majority of the outstanding shares entitled to vote.
    (Seaman Exh. 1, ABCI Bylaws § 7.01).
  8. ABCI’s Bylaws also provide that Special Meetings of the “Board [of Directors] shall be held upon four (4) days’ written notice by mail or forty-eight (48) hours notice given personally . . . or by Electronic Transmission [i.e., email] . . . .”  (Seaman Exh. 1, ABCI Bylaws § 3.07).  “A majority of the authorized number of Directors shall constitute a quorum of the Board for the transaction of business . . . .”  (Seaman Exh. 1, ABCI Bylaws § 3.09).
  9. ABCI’s Bylaws also identify the roles of the corporate officers.  “The CEO shall, subject to the control of the Board, have general supervision, direction, and control of the business and officers of the Corporation. . . .  If there is no president, the CEO shall also serve as the president of the Corporation.”  (Seaman Exh. 1, ABCI Bylaws § 3.02).
  10. ABCI’s Bylaws also provide that “Subject to such supervisory powers of the CEO, the president shall, subject to the control of the Board, have responsibility for the general day-to-day operations of the Corporation. . . .  If there is no CEO, the president shall also serve as chief executive officer of the Corporation. . . .”  (Seaman Exh. 1, ABCI Bylaws § 4.07).
  11. ABCI hired Northern Arizona Business Group, Inc. (NABG) to provide accounting support on January 11, 2016.  Heidi Breunig is a principle with NABG.  (Breunig Rebuttal Exh. 7, Exh. A).
  12. On June 29, 2016, Katherine Seaman resigned as Secretary and Treasurer.  Katherine Seaman transferred her shares to Fred Seaman on July 29, 2016.  (Seaman Affidavit, ¶ 13).
  13. On June 30, 2016, Bradley Felger, Valerie Felger, and Katherine Seaman signed a document identified as Statement of Action of Shareholders of Airstrike Bird Control, Inc., A California Corporation, in Lieu of Annual Meeting.  It is not signed by Fred Seaman.  This document provides that “the following named persons are elected as directors of the Corporation, to hold such office until the next annual meeting of shareholders or until their successors are elected:  Valerie S. DeMarco, Bradley A. Felger, and [Fred] Seaman.”  The Statement of Action of Shareholders does not say that it is amending ABCI’s Bylaws to change the number of Directors from four to three.  (Breunig Rebuttal, Exh. 7, Exh. H).
  14. On Monday, July 11, 2016, Fred Seaman sent an email to Brad Felger, Valerie DeMarco, and Katherine Seaman.  The “Subject” line of the email provides:  “Conference Call – Thursday 9:00 a.m.”  The email content provides:
    Hi all,
    1. NABG – termination
    2. New accounting company
    3. Banking, master accounts update
    4. Organizational changes
    I’m just throwing this out for discussion.  It fits into the organization charge [sic, chart] I forwarded. . . .
    This is all for discussion.  I feel we need it or I would not have spent the time.  I believe that terminating NABG will provide all or almost all of the funds to pay for these positions.
    This email does not identify the meeting as a Directors meeting or otherwise say that it is a Notice for a Directors meeting.  (Breunig Rebuttal, Exh. 7, Exh. G).
  15. On July 14, 2016 at 8:52 a.m. Brad Felger sent an email to Fred Seaman, Katherine Seaman, and Valerie DeMarco which provides:
    Hi,
    Since Fred has already called a Directors meeting for today I would like to take this as an opportunity to have our regular annual Board of Directors meeting to start our year out and to comply with our Bylaws and California Corporate law.
    The Airstrike Bird Control, Inc. Board of Directors are listed as follows:
    Fred Seaman
    Brad Felger
    Valerie DeMarco . . . .
    Note – this is a Directors meeting to be attended by the current Airstrike Bird Control, Inc. Directors.
    (Breunig Rebuttal, Exh. 7, Exh. G). 
  16. At 9:30 a.m. on July 14, 2016 (less than an hour after Mr. Felger sent his 8:52 a.m. email), Fred Seaman, Brad Felger and Valerie DeMarco began a telephone conference.  The minutes from this meeting provide that it was a meeting of the Board of Directors called “electronically with more than 48 hours’ notice as a Special Meeting of the Board of Directors by Fred Seaman and then electronic notice was made by Brad Felger of converting the meeting into the regular annual meeting, the undersigned hereby waive notice of this regular annual meeting.”  The minutes are signed only by Brad Felger and Valerie DeMarco.  Fred Seaman did not sign the minutes and did not agree to the waiver of notice.  Additionally, these minutes do not reference a continuation meeting to be held on July 20, 2016.  (Breunig Exh. 2).
  17. On July 20, 2016, another meeting was held.  The minutes provide that this meeting was a continuation of the July 14, 2016 Board of Directors meeting.  This meeting was attended by Ms. DeMarco, Mr. Felger, and Ms. Breunig.  The meeting minutes are signed by Ms. DeMarco, Mr. Felger, and Ms. Breunig.  During the meeting Mr. Felger and Ms. DeMarco elected Mr. Felger to the positions of CEO and President, Ms. DeMarco to the position of Vice President, and Ms. Breunig to the positions of Secretary and Treasurer.  (Breunig Exh. 1).  The record does not include a separate email notice provided 48 hours in advance of the meeting to either the Directors or Shareholders. 

DECISION

Mr. Seaman asserts that he is entitled to direct who shall receive ABCI’s mail because he is the CEO and 50% shareholder of ABCI.  Ms. Breunig asserts that as the Secretary for ABCI she may receive the mail based on the direction of Mr. Felger (the President and CEO) and Ms. DeMarco (the Vice President).

POM § 614.1 provides that all mail addressed to an organization (including corporations) is delivered to the organization.  “If disagreement arises about where any such mail should be delivered, it must be delivered according to the order of the organization’s president or equivalent official.”  POM § 614.1; see also Domestic Mail Manual (DMM) § 508.1.5.1;Victor Dee and Clifford Mark Tohsonii, MD 16-142 (I.D. August 5, 2016), aff’d, (P.S.D. August 19, 2016); see also Jeffrey T. Henson and John D. Young, MD 16-19 (I.D. March 28, 2016), aff’d, (P.S.D. April 18, 2016). 

The first issue in deciding this case hinges upon interpreting the POM and DMM’s meaning of “president or equivalent official.”  The phrase can mean the senior official within the corporation.  Alternatively, the phrase means to identify the titled “president” and then, if indeterminable the “equivalent official.”  I am guided by the U.S. Court of Appeals for the District of Columbia Circuit when it was called upon to interpret the language of “foreman or equivalent official” as used in the mine safety regulations.  See National Min. Ass’n v. Mine Safety and Health Admin., 116 F.3d 520, 543 (D.C. Cir. 1997).  In National Mining, the D.C. Circuit looked to the intent of the regulation that notice of problems with a mine ventilation fan be given to the proper person within the organization who could act on the notice.  A narrow reading would be inconsistent with the intent of the regulation’s drafters.  Notice could be given to someone with a title other than “foreman” but who had the necessary authority within the organization.  Id.  Similarly, the intent of the POM and DMM is to deliver the mail as directed by the senior officer within the corporation. 

We look to a corporation’s bylaws to determine which officer is the president or equivalent official.  See Darren Rose and Wendy Del Rosa, MD 14-391 (I.D. March 11, 2015), aff’d, (P.S.D. June 1, 2015).  The corporate title may not necessarily reflect which officer is the president or equivalent official for purposes of delivery of the mail.  E.g., Tom Moore and Joseph Bridges, MD 07-244 (December 28, 2009) (two board factions argued that their respective officer – one the chief operating officer and the other the CEO/president – was entitled to direct delivery).  In Tom Moore and Joseph Bridges we relied on a court’s guidance to indicate which party had the better claim.  Id.

While often that person is titled as the president, in the present case the senior corporate officer is the CEO.  ABCI’s Bylaws provide that “[t]he CEO shall, subject to the control of the Board, have general supervision, direction, and control of the business and officers of the Corporation.”  (Finding 9).  Also, its president operates “[s]ubject to such supervisory powers of the CEO.”  (Finding 10).  While the president directs day-to-day operations, the terms of the ABCI’s Bylaws provide that the CEO is more senior to the president and thus the CEO may direct the delivery of the mail, notwithstanding the president’s day-to-day authority.  From ABCI’s incorporation on January 7, 2014, through July 20, 2016, Fred Seaman was ABCI’s CEO (Findings 4 and 17).  As such he would have the authority to direct the delivery of the mail addressed to ABCI.  The next issue in this case is whether Fred Seaman was removed as CEO on July 20, 2016.

Ms. Breunig appears to makes four arguments that Mr. Felger is the new CEO and continuing president and thus may direct the delivery of the mail.  (Findings 16-18).  These arguments are flawed.

First, Ms. Breunig argues that the July 14, 2016 meeting was a duly noticed meeting of the Board of Directors as required by ABCI’s Bylaws and California law.  See Finding 8; see also Cal. Corp. Code § 307(a)(2) (“48 hours’ notice delivered personally or by telephone, including a voice messaging system or by electronic transmission by the corporation”).  Ms. Breunig points to the July 11, 2014 email sent by Mr. Seaman as proper notice (Finding 14).  Ms. Breunig further argues that even though the email does not say it is a notice of a Board of Directors meeting, it was implied by the topics listed for discussion.  However, listing topics for discussion does not make this email a proper notice of a Board of Director’s meeting.  Additionally, Fred Seaman states in his email:  “I’m just throwing this out for discussion.”  The language does not indicate that he intended a Board of Directors meeting, but rather an informal discussion.  Mr. Felger’s email less than an hour before the July 14, 2016 meeting stating that it should be treated as a Board of Directors meeting also does not meet the forty-eight hour notice requirement (Findings 8 and 17).  See Paul C. Thompson and John Graham, MD-68 (October 16, 1989), aff’d, (P.S.D. November 8, 1989)(the Initial Decision holds that a board election held without proper notice will not serve to replace the existing board).

Second, Ms. Breunig argues that Mr. Felger became the CEO on July 20, 2016 and may, therefore, direct delivery of the mail.  This argument fails because the July 20, 2016 meeting’s legitimacy relies on the July 14 meeting being proper when no new notice was given.   She also argues that notice was provided during the July 14, 2016 meeting.  However, this argument is not supported by the meeting minutes of the July 14, 2016 meeting or other document in the record (Finding 17).

Third, Ms. Breunig argues that notice of the Board of Directors meeting was waived.  However, Mr. Seaman did not sign the July 14, 2016 meeting minutes confirming his waiver (Finding 16).  Additionally, Mr. Seaman did not attend the July 20, 2016 meeting or sign the minutes for that meeting (which contained a waiver of notice) (Finding 17).

Fourth, Ms. Breunig’s argument that a majority of the three Board members (Mr. Felger and Ms. DeMarco) could waive notice and approve Mr. Felger’s appointment as both CEO and president on July 20, 2016, assumes proper notice was given to the Board of Directors.  This argument ignores the requirement for notice to the entire Board.  Also, while the shareholders appointed Mr. Seaman, Mr. Felger, and Ms. DeMarco as directors on June 30, 2016, they did not amend the ABCI Bylaws to change the number of directors from four to three.  Mr. Felger and Ms. DeMarco could not compose a majority, or even a quorum without Mr. Seaman’s presence (Findings 6, 7, 8).  Nothing in the record shows that a majority of the stockholders approved a reduction in the number of Directors as required by the Bylaws (Finding 7). 

This initial decision deals only with the delivery of the mail.  It does not determine the ownership of the contents of the mail nor does it attempt to resolve any underlying disputes between the parties.  If a court order subsequently directs delivery of the mail, postal regulations provide that the mail will be delivered according to such an order.  POM § 616.3. 

Recommendation

I recommend that the Judicial Officer issue an order to the Paso Robles Postmaster directing that all mail being held, or hereafter received, addressed to Airstrike Bird Control, Inc., 1209 Park Street, Suite 301C, Paso Robles, CA 93446 or ABCI, 1209 Park Street, Suite 301C, Paso Robles, CA 93446be delivered as directed by James F. Seaman (also known as Fred Seaman).

Peter F. Pontzer
Administrative Judge