Turner v. Victoria - Case Brief

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Turner v. Victoria

Case Number: D076318

Court: Cal. Ct. App.

Date Filed: 2021-08-17

Case Brief – Turner v. Victoria

Court: COURT OF APPEAL, FOURTH APPELLATE DISTRICT
Date: 2025‑09‑04
Case Number: D076318
Disposition: Modified in part, affirmed in part, vacated in part, and remanded with directions.

Holding

The court held that a director who is not re‑elected during the pendency of litigation loses standing to pursue fiduciary‑duty and derivative claims on behalf of a nonprofit public benefit corporation; the statutory schemes of Cal. Corp. Code §§ 5142, 5233, 5223, and 5710 require a continuous, “special and definite” relationship with the corporation throughout the action.

Narrative

Lead. The Fourth Appellate District’s decision in Turner v. Victoria sharpens the line between a former director’s past authority and the present‑day standing required to enforce fiduciary duties of a nonprofit public benefit corporation. By holding that loss of directorship severs standing, the court places the onus on the Attorney General—or a presently‑serving officer, director, or member—to carry forward any derivative or breach‑of‑trust actions, a ruling that will reverberate through California’s charitable‑trust litigation landscape.

Procedural backdrop. Debra Turner, a former director and president of the Conrad Prebys Foundation (the “Foundation”), sued four fellow directors and Laurie Anne Victoria, the Foundation’s trustee of the Conrad Prebys Trust (the “Trust”), alleging breach of fiduciary duty, self‑dealing, and improper diversion of Trust assets to a non‑charitable purpose. Turner filed the actions in both probate and civil courts, invoking Cal. Corp. Code §§ 5142 (charitable‑trust enforcement), 5233 (self‑dealing), 5223 (director removal), and 5710 (member‑derivative actions). While the actions were pending, the Foundation’s annual election on November 7, 2017 resulted in Turner’s exclusion from the board; her term expired and she was not re‑elected as director or officer.

Both the probate and civil courts dismissed Turner’s complaints on the ground that she no longer possessed standing after her removal. The probate court transferred the first‑through‑fourth causes of action to the civil forum, and the civil court sustained the demurrers without leave to amend. Turner appealed, contending that standing attaches at the moment a suit is filed and that the statutes she relied upon do not require continuous directorship.

Key issues. The appellate court was asked to decide: (1) whether the language of §§ 5142, 5233, 5223, and 5710 imposes a continuing‑standing requirement; (2) whether legislative history or the statutes’ structure suggests an exception for former directors; and (3) what remedy, if any, the Attorney General may provide when a former director loses standing.

Statutory framework. §§ 5142(a)(2)–(3) and 5233(c)(2)–(3) expressly name “a director of the corporation” as a class of persons authorized to sue for breach of charitable trust or self‑dealing. § 5223(a) permits “the suit of a director” to remove another director for fraud, dishonesty, or gross abuse of authority. By contrast, § 5710(b) governs member‑derivative actions and uses the phrase “may be instituted or maintained…by any member…unless…(1) the plaintiff was a member at the time of the transaction…(2) the plaintiff alleges with particularity…efforts to secure board action.” The operative distinction is the inclusion of “maintained” in § 5710, which signals a continuous‑standing requirement, whereas the other provisions speak only of who “may bring” an action.

Interpretive approach. The court applied the standard of review for demurrer rulings—an independent assessment of the complaint’s factual allegations under T.H. v. Novartis (2017) 4 Cal.5th 145. It then turned to statutory construction principles: the plain language, the statutory scheme’s internal coherence, and legislative history. The court noted that the 1978 nonprofit‑corporation overhaul deliberately mirrored the General Corporation Law (GCL) language to avoid “erroneous speculation” (Assembly Select Committee Report, 1979‑80). Accordingly, the court read the nonprofit provisions in the same vein as the GCL’s standing rules, which require a plaintiff to retain a “special and definite” interest throughout the litigation.

Legislative history offered no indication that the drafters intended to carve out an exception for former directors. The Committee’s report emphasized fidelity to the GCL’s language and purpose—protecting the corporation and the public—without mentioning a “once‑a‑director‑always‑a‑plaintiff” rule. The court therefore concluded that the statutes’ silence on continuous standing should be read as a default to the general principle that standing must exist at all times until judgment.

Case law guidance. The court surveyed precedent on charitable‑trust enforcement. Holt v. College of Osteopathic Physicians & Surgeons (1964) 61 Cal.2d 750 established that “responsible individuals” (trustees, directors) may sue on behalf of a charity, but the decision was premised on the plaintiff’s ongoing fiduciary role. Later cases, such as Boy Scouts of America v. City of Escondido (1971) 14 Cal.App.3d 189, treated standing as contingent on the plaintiff’s current interest in the charitable assets. The appellate court found no authority permitting a former director to retain a “vested” interest after removal.

Application to the facts. Turner’s original filing satisfied the “at the time of filing” prong of § 5710(b)(1) and the statutory language of §§ 5142 and 5233 that a director “may bring” an action. However, after the November 2017 election, Turner ceased to be a director, officer, and member of the Foundation. The court held that the statutory scheme—particularly the public‑policy goal of ensuring that the plaintiff has a “continuous relationship” with the corporation to guard against frivolous or vindictive suits—requires that Turner maintain her official capacity throughout the action. Consequently, her standing terminated with her removal, and the lower courts’ dismissals were affirmed.

Remand and Attorney General role. While affirming the dismissals, the court recognized a gap: the Foundation’s claims may still be viable if brought by a properly‑standing plaintiff. The court therefore remanded with instructions to grant the parties 60 days to amend the complaints to substitute a current director, officer, or a member who can satisfy the continuous‑standing requirement. The court also directed the trial courts to consider whether the Attorney General should intervene directly or grant relator status to Turner—or another individual—under § 5142 or § 5710, preserving the state’s protective oversight of charitable assets.

Impact and unresolved questions. Turner clarifies that the right to enforce fiduciary duties of a nonprofit public benefit corporation is not a personal, transferable right that survives loss of office. Practitioners must now assess, at the pleading stage, whether the named plaintiff will remain in a qualifying position for the duration of the case. The decision may encourage boards to time elections strategically, potentially limiting internal challenges. It also raises the question of whether the Attorney General’s discretionary power to grant relator status will be invoked more frequently to rescue claims when a director is ousted.

Another unresolved issue is the interplay between § 5710’s “maintained” language and the “may bring” language of §§ 5142 and 5233. The court treated the former as imposing a stricter standard, but future litigants may argue that the same continuous‑standing principle should apply uniformly across all four statutes. Moreover, the decision leaves open whether a former director who resigns voluntarily—rather than being voted out—might retain standing under a different factual analysis.

Bottom line for practitioners. When representing a nonprofit, counsel should: (1) verify that any derivative or breach‑of‑trust plaintiff will retain director, officer, or member status throughout the suit; (2) anticipate the need to substitute a plaintiff promptly if a board election threatens standing; and (3) monitor the Attorney General’s willingness to intervene, especially in high‑stakes charitable‑trust disputes. Turner thus adds a procedural safeguard to California’s nonprofit governance regime, reinforcing the principle that only those with an ongoing fiduciary relationship may enforce the corporation’s charitable mission in court.

Referenced Statutes and Doctrines

  • Cal. Corp. Code §§ 5142 – Enforcement of charitable‑trust breaches; identifies who may sue (corporation, member under § 5710, officer, director, reversionary interest holder, Attorney General).
  • Cal. Corp. Code §§ 5233 – Self‑dealing transactions; parties authorized to bring actions (corporation, member under § 5710, director, officer, relator).
  • Cal. Corp. Code §§ 5223 – Removal of directors for fraud, dishonesty, or gross abuse; action may be brought “at the suit of a director.”
  • Cal. Corp. Code § 5710 – Member‑derivative actions; requires plaintiff to have been a member at the time of the transaction and to maintain the action throughout.
  • Probate Code § 801 – Allows severance of causes of action for probate‑court‑inappropriate claims.
  • General standing principles – Californians for Disability Rights v. Mervyn’s (2006) 39 Cal.4th 223; Wolf v. CDS Devco (2010) 185 Cal.App.4th 903.
  • Key case law – Holt v. College of Osteopathic Physicians & Surgeons (1964) 61 Cal.2d 750 (responsible individuals may sue); Boy Scouts of America v. City of Escondido (1971) 14 Cal.App.3d 189 (standing tied to current interest); T.H. v. Novartis (2017) 4 Cal.5th 145 (demurrer standard).