Turner v. Victoria

Summary

A director of a nonprofit public benefit corporation who brings a lawsuit under Corporations Code sections 5142 (breach of charitable trust), 5233 (self-dealing transactions), and 5223 (removal of directors for malfeasance) does not lose standing to maintain the action if the director subsequently loses that position. The California Supreme Court held that these statutes require only that the plaintiff be a director at the time the action is commenced; there is no continuous directorship requirement. The court rejected analogies to shareholder derivative actions under section 800, emphasized the legislative intent to expand standing and prevent gamesmanship by accused directors, and concluded that former directors may continue litigating even after removal or failure to be reelected.

Holdings

1. A director of a nonprofit public benefit corporation who brings a lawsuit pursuant to Corporations Code sections 5142, 5233, and 5223 does not lose standing to continue litigating the suit if the director subsequently loses that position.

Questions Presented

1. Whether a director of a nonprofit public benefit corporation who loses that position after instituting a lawsuit under Corporations Code sections 5142, 5233, and 5223 loses standing to maintain the lawsuit.

Disposition

reversed