§ 5782. Eligible member plaintiffs and security for costs.
(a) General rule.--Except as provided in subsection (b), in any action or proceeding brought by one or
more members of a nonprofit corporation to enforce rights that the plaintiff claims
could be, but have not been, asserted by the corporation, each plaintiff has standing
to commence and maintain the derivative action if the plaintiff:
(1) was a member of the corporation at the time of the transaction or conduct of which
the plaintiff complains; and
(2) continues to be a member until the time of judgment, unless the failure to do so is
the result of corporate action that:
(i) was done merely to eliminate derivative claims; or
(ii) has the effect of a reorganization that does not affect the plaintiff's ownership
of the enterprise.
(b) Exception.--Any member who, except for the provisions of subsection (a), would be entitled to
maintain the action or proceeding and who does not meet such requirements may, nevertheless
in the discretion of the court, be allowed to maintain the action or proceeding on
preliminary showing to the court, by application and upon such verified statements
and depositions as may be required by the court, that there is a strong prima facie
case in favor of the claim asserted on behalf of the corporation and that without
the action serious injustice will result.
(c) Security for costs.--In any action or proceeding instituted or maintained by less than the smaller of 50
members of any class or 5% of the members of any class of the corporation, the corporation
in whose right the action or proceeding is brought shall be entitled at any stage
of the proceedings to require the plaintiffs to give security for the reasonable expenses,
including attorney fees, that may be incurred by the corporation in connection therewith
or for which it may become liable pursuant to section 5743 (relating to mandatory
indemnification), but only insofar as relates to actions by or in the right of the
corporation, to which security the corporation shall have recourse in such amount
as the court determines upon the termination of the action or proceeding. The amount
of security may from time to time be increased or decreased in the discretion of the
court upon showing that the security provided has or is likely to become inadequate
or excessive. The security may be denied or limited by the court if the court finds
after an evidentiary hearing that undue hardship on plaintiffs and serious injustice
would result.
(d) Failure to maintain ownership.--If a plaintiff loses the right to maintain a derivative action under subsection (a)(2),
the court may entertain a motion to substitute the corporation as the named plaintiff.
(e) Cross reference.--See section 6146 (relating to provisions applicable to all foreign corporations).
(June 22, 2001, P.L.418, No.34, eff. 60 days; Nov. 21, 2016, P.L.1328, No.170, eff.
90 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)
2022 Amendment. Act 122 amended subsec. (a), relettered former subsec. (d) to subsec. (e) and added
present subsec. (d).
2016 Amendment. Act 170 amended the section heading and subsec. (c).
2001 Amendment. Act 34 added section 5782.
Cross References. Section 5782 is referred to in sections 5781, 6146 of this title.
Notes of Decisions
McGill v. Southwark Realty Co., 828 A.2d 430 (Pa. Commw. Ct. 2003).
“In particular, a direct action by members of the Association, as individuals, against Realty and Smith was held improper, as the appropriate vehicle for the members’ claims was a derivative action under 15 Pa.C.S. § 5782(a). In July 2002, with the Association now a party,…”
In Re Est. of Bartol, 846 A.2d 209 (Pa. Commw. Ct. 2004).
“of 1988: 15 Pa.C.S. § 5782 (derivative actions *215 against directors, members of another body and officers).”
Hart v. Manning, 828 A.2d 5 (Pa. Commw. Ct. 2003).
· cites it 2× “The current provisions dealing with claims against a non-profit corporation are codified at 15 Pa.C.S. § 5782. They state: Actions against directors, members of another body and officers.”
In re: Jack Buncher Found. ~ Appeal of: A. Rubinoff (Pa. Commw. Ct. 2024).
· cites it 7× “The Directors based their request on Count III of the petition for rule to show cause, which the Rubinoffs brought “derivatively on behalf of the Foundation and individually as presumptive directors” against Balestrieri, Doring, and Jackovic under Section 5782 of the Nonprofit…”
A. Patterson v. K. Shelton, Individually & President of the Bd. of Trs. (Pa. Commw. Ct. 2015).
· cites it 3× “On remand, Shelton moved for summary judgment on the ground that Patterson lacked “statutory standing” under Section 5782 of the NCL, 15 Pa.C.S. §5782. Shelton argued that only an officer, director, or member of a nonprofit corporation has “statutory standing” to enforce a right…”
A. Patterson v. K. Shelton (Pa. Commw. Ct. 2019).
“On remand, Shelton moved for summary judgment on the ground that Patterson lacked “statutory standing” under Section 5782 of the NCL, 15 Pa.C.S. §5782. Shelton argued that only an officer, director, or member of a nonprofit corporation has “statutory standing” to enforce a right…”
A. Patterson v. K. Shelton (Pa. Commw. Ct. 2019).
“On remand, Shelton moved for summary judgment on the ground that Patterson lacked “statutory standing” under Section 5782 of the NCL, 15 Pa.C.S. §5782. Shelton argued that only an officer, director, or member of a nonprofit corporation has “statutory standing” to enforce a right…”
J. Dana v. Lofts at 1234 Condo. Assoc. (Pa. Commw. Ct. 2020).
“See 15 Pa. C.S. § 5782(a) (requiring that a plaintiff in a derivative suit be “a member of the corporation at the time of the transaction of which he complains”).”
R.P. Cooley v. Lofts at 1234 Condo. Assoc. (Pa. Commw. Ct. 2020).
“See 15 Pa. C.S. § 5782(a) (requiring that a plaintiff in a derivative suit be “a member of the corporation at the time of the transaction of which he complains”).”
Joseph Askew v. Trs. Gen Assembly Church (3d Cir. 2012).
“15 Pa. Cons. Stat. § 5782 . Askew does not contest the District Court’s finding that he was not a member of the Corporation, but rather maintains that a separate provision of the PNCL, 15 Pa.”
15 Pa. Cons. Stat. § 5782(a): 5 cases
McGill v. Southwark Realty Co., 828 A.2d 430 (Pa. Commw. Ct. 2003).
“In particular, a direct action by members of the Association, as individuals, against Realty and Smith was held improper, as the appropriate vehicle for the members’ claims was a derivative action under 15 Pa.C.S. § 5782(a). In July 2002, with the Association now a party,…”
Hart v. Manning, 828 A.2d 5 (Pa. Commw. Ct. 2003).
“The current provisions dealing with claims against a non-profit corporation are codified at 15 Pa.C.S. § 5782. They state: Actions against directors, members of another body and officers.”
J. Dana v. Lofts at 1234 Condo. Assoc. (Pa. Commw. Ct. 2020).
“See 15 Pa. C.S. § 5782(a) (requiring that a plaintiff in a derivative suit be “a member of the corporation at the time of the transaction of which he complains”).”
R.P. Cooley v. Lofts at 1234 Condo. Assoc. (Pa. Commw. Ct. 2020).
“See 15 Pa. C.S. § 5782(a) (requiring that a plaintiff in a derivative suit be “a member of the corporation at the time of the transaction of which he complains”).”
In re: Jack Buncher Found. ~ Appeal of: A. Rubinoff (Pa. Commw. Ct. 2024).
“The Directors based their request on Count III of the petition for rule to show cause, which the Rubinoffs brought “derivatively on behalf of the Foundation and individually as presumptive directors” against Balestrieri, Doring, and Jackovic under Section 5782 of the Nonprofit…”
15 Pa. Cons. Stat. § 5782(b): 1 case
In re: Jack Buncher Found. ~ Appeal of: A. Rubinoff (Pa. Commw. Ct. 2024).
“The Directors based their request on Count III of the petition for rule to show cause, which the Rubinoffs brought “derivatively on behalf of the Foundation and individually as presumptive directors” against Balestrieri, Doring, and Jackovic under Section 5782 of the Nonprofit…”
15 Pa. Cons. Stat. § 5782(c): 1 case
In re: Jack Buncher Found. ~ Appeal of: A. Rubinoff (Pa. Commw. Ct. 2024).
“The Directors based their request on Count III of the petition for rule to show cause, which the Rubinoffs brought “derivatively on behalf of the Foundation and individually as presumptive directors” against Balestrieri, Doring, and Jackovic under Section 5782 of the Nonprofit…”
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