Opinion ID: 2680038
Heading Depth: 2
Heading Rank: 2

Heading: The Availability of a Derivative Action

Text: [¶10] America’s amended complaint alleged, “individually and derivatively on behalf of the Sunspray Condominium Association,” that the Board’s failure to 3 America eventually stipulated to their dismissal, but not until after his motion for leave to further amend the complaint had been denied. 7 enforce the smoking ban violated the MCA and the MNCA. In his brief America concedes that “Maine statutory law does not expressly provide for a derivative action on behalf of a nonprofit corporation or condominium association as such,” but he argues that he should nonetheless be allowed to bring a derivative suit as a matter of equity. [¶11] Derivative actions are explicitly allowed in the case of corporations. 13-C M.R.S. §§ 751-758 (2012). Even when allowed, a derivative suit is “an extraordinary process” wherein a shareholder “is limited to asserting the substantive rights of the corporation rather than his own personal claims.” Voisine v. Berube, 2011 ME 137, ¶¶ 4, 15, 38 A.3d 310 (quotation marks omitted). In contrast, the MNCA imposes a duty of good faith on directors and officers of a nonprofit corporation, 13-B M.R.S. §§ 717(1), 720(1), and allows “members in a representative suit” to assert that affirmative acts by corporate officers are ultra vires, 13-B M.R.S. § 203(1)(B); however, section 203(1) does not address corporate officers’ alleged failure to act. The Maine Rules of Civil Procedure governing derivative actions discuss corporations and unincorporated associations, but make no mention of nonprofit corporations or condominium associations. See M.R. Civ. P. 23A, 23B. [¶12] Like the MNCA, the MCA imposes a general “obligation of good faith” in the performance of duties it imposes, 33 M.R.S. § 1601-113, but it 8 contains no provision authorizing derivative suits. The Declaration states that Sunspray was created “pursuant to . . . the [MCA].” See 33 M.R.S. § 1601-102 (“[The MCA] applies to all condominiums created, in accordance with the provisions of this Act, within this State . . . .”). There is therefore no explicit authorization for America to bring a derivative action. Given that a derivative suit is “an extraordinary process,” Voisine, 2011 ME 137, ¶ 4, 38 A.3d 310 (quotation marks omitted), we will not infer that one is authorized when the Legislature has not so provided by statute.