A three-judge panel of the D.C. Court of Appeals heard oral arguments May 7 on whether a 2023 decision by a D.C. Superior Court judge dismissing a lawsuit against seven of the eight former board members of the now-defunct Casa Ruby LGBTQ community services center should be overturned.

The Wanda Alston Foundation, an LGBTQ youth housing services group that assumed control over the operations of Casa Ruby in August 2022 under a court appointed receivership role, filed its lawsuit against the former board members in December 2022 under the Casa Ruby name.

It accuses them of violating D.C.’s nonprofit corporations’ law by failing to “hold regular meetings/or maintain official records – thereby exercising no oversight or governance over the organization.” 

Among other things, the lawsuit said the former board members failed to take steps to prevent Casa Ruby’s founder and former executive director, Ruby Corado, from embezzling large sums of Casa Ruby funds for personal use.

Corado, who was arrested in March 2024 on multiple embezzlement related charges, pleaded guilty in July 2024 to a single charge of wire fraud under a plea agreement with prosecutors. She is scheduled to be sentenced on July 29, 2025.

The lawsuit called on the court to require Corado and the former board members to pay “restitution, compensatory damages, punitive damages, receivership fees and expenses, court costs, attorneys’ fees and expenses and any other relief the court deems necessary and proper.”

In May 2023, at the request of defense attorneys, D.C. Superior Court Judge Danya A. Dayson dismissed the lawsuit against seven of the eight former board members but did not dismiss the case against Corado and one of the board members who allegedly received improper financial benefits from Corado.

Dayson stated in her dismissal decision that it was based on her interpretation of a D.C. law that members of an organization’s board of directors can only be held liable for harming an organization like Casa Ruby if they “intentionally, rather than negligently, inflicted harm on Casa Ruby.”

According to Dayson, the law in question also says board members can be held responsible for harming an organization if a “board member intentionally violated a criminal law or that the board member received some amount of money to which they were not entitled.” She states in her decision that the Alston Foundation lawsuit did not provide sufficient evidence that the seven board members committed those types of violations.

Attorneys for the Alston Foundation disputed Dayson’s interpretation of the law in their initial legal brief filed before the D.C. Court of Appeals in February 2024. Among other things, the brief argued that the Alston Foundation’s Third Interim Report in its role as Casa Ruby receiver provides sufficient evidence that the former board members are legally liable for harming Casa Ruby.

That and follow-up briefs and their oral arguments at the May 7, 2025, hearing state that the appeals court can find that the former board members “were deliberately indifferent’ or ‘willfully blind’ to the alleged wrongful conduct of the nonprofit’s executive director amounting to actual knowledge on their part that inaction would harm the non-profit, ultimately and forcibly leading to its financial inability to continue operating.”

A follow-up brief filed by Alston Foundation attorney Theodore Howard argues that the former board members violated Casa Ruby’s by-laws by conducting only one board meeting in six years.

According to the brief, that “allowed Ms. Corado to maintain complete authority over the organization, including by allowing her to unilaterally appoint new Board members” and allowed her “to maintain sole control over Casa Ruby’s bank and financial accounts, even after Ms. Corado cut off access to those accounts to anyone but herself.”

An opposing brief filed by attorney Marlin Grifith, who is representing former board member Miguel Rivera, states that the decision dismissing the lawsuit correctly interpreted the law pertaining to nonprofit corporations.

“The Superior Court did not err…,” the brief states, adding “there are no facts alleged that support a conclusion of reasonable inference that the individual board members acted with actual knowledge that their inaction would cause harm to the organization.”

Howard, the attorney representing the Alston Foundation in its role as Casa Ruby receiver, said the attorneys on both sides of the case are now waiting for the three-judge appeals court panel to issue their decision. 

If they rule in favor of Casa Ruby/Alston Foundation, the case will be sent back to the Superior Court for further proceedings on the lawsuit, Howard said. He said negotiations would likely begin for a possible out-of-court settlement.

If the appeals court rules in favor of the former board members by finding they did not intentionally and knowingly inflict harm to Casa Ruby, “then the case, at least as between Casa Ruby [via the Alston Foundation] and the former board of directors, will be over,” Howard said.