UVa IFC Incorporates to help insure board members

[DeltAlum]

UVa fraternities pursue benefits of incorporating

By Kate Andrews / Daily Progress staff writer

Let’s say an underage student drinks at a fraternity house, gets behind the wheel and crashes his car, injuring his passengers.

An “aggressive plaintiff’s counsel,” according to Charlottesville attorney Dave Dallas, would sue not only the driver, but also the fraternity and the council that oversees the university’s Greek system.

“Most chapters purchase some sort of liability insurance,” he said, protecting fraternities to a degree.

But more and more, fraternities are incorporating, an extra step that proponents say protects individual members from lawsuits and assists fraternities in real estate purchases.

Now, the University of Virginia’s Inter-Fraternity Council is taking steps to incorporate itself by the start of the school year, an unusual move for such a group.

For IFC President David Bowman, though, incorporation makes sense. Unlike similar organizations at other colleges, UVa’s council is only tenuously connected to the university because of the doctrine of student self-governance.

Although its position gives the IFC greater autonomy, it also leaves its members more vulnerable to legal action, Bowman said. The council has never been sued over an incident stemming from a fraternity party, but members say it could happen one day. And if it happens, they want to be protected.

“Instead of a group of 46 individuals,” Bowman said, “you become one ‘it.’”

The concern over lawsuits stems from the IFC “Party Patrol,” said Dallas, who is handling the council’s incorporation. During the school year, pairs of undercover student patrollers go out to frat houses every Thursday, Friday and Saturday night to see if house residents are living up to council rules.

That means IDs are checked at the door, under-21 partiers are identified and refused alcohol, among other regulations. If a house breaks the rules, a case can be sent to the council’s judicial committee for a hearing.

But if a patroller fails to report a drinking violation, for instance, and an underage student drives drunk and crashes, the IFC could be held liable, Bowman said. As a corporation, though, the negligent patroller can be indemnified, protecting the rest of the council from a lawsuit.

Most of the 30 fraternities governed by the IFC are incorporated, said Alex Berrang, the council’s public relations director, and he and others would like to see the rest take the step.

The council’s incorporation “sets a good example,” he said.

Many fraternities form corporations to buy houses, Dallas said, and chapters rent from the corporations.

If a chapter is hit with a significant lawsuit, plaintiffs cannot win any real estate, nor can federal agencies seize the property, a possibility in an early 1990s drug sting at UVa, Dallas noted. “Incorporation provides some stability.”

It also is relatively cheap. The IFC is paying legal fees for Dallas’ help, but it will have to pay less than $100 annually to the Virginia State Corporation Commission, which grants corporation status to applicants. The council president will serve as president of the corporation board, Bowman said.

The council also is applying to the Internal Revenue Service for tax-exempt status, a standard procedure for groups applying to become not-for-profit entities.

Although the IFC hopes to be incorporated by the start of the fall semester later this month, it will take longer for the group to choose an insurance policy. Bowman said he hopes the corporation will pick one by the end of the fall semester.

Even if a lawsuit never comes, Dallas said, the IFC’s incorporated status will “allow them to get a little better sleep at night.”