Ex parte Caribe Resort Condominium Association Board of Directors, et al., [Ms. SC-2023-0624, Dec. 13, 2024] __ So. 3d __ (Ala. 2024). The Court (Stewart, J.; Parker, C.J., and Mitchell and Cook, JJ., concur; Shaw, J., concurs in part and concurs in the result; Bryan, J., concurs in the result; Sellers, concurs in part and dissents in part, which Wise and Mendheim, JJ., join) denies in part and grants in part a petition for writ of mandamus filed by Caribe Resort Condominium Association Board of Directors (“the board”), Larry Wireman, and Judy Wireman (collectively referred to as “the board defendants”), Caribe Realty, Inc., Caribe, Inc., and Sentinels, LLC (the latter two companies collectively referred to as “the Wireman companies”). The Wireman companies perform repairs and other services for Caribe Resort, a 608-unit condominium in Orange Beach.
The plaintiffs are members of the Caribe Resort Condominium Association (“the Caribe association”), a nonprofit corporation formed under the Alabama Nonprofit Corporation Act (“the Nonprofit act”), § 10- 3-1.01 et seq., Ala. Code 1975, to provide for the acquisition, management, maintenance, and care of Caribe Resort. The writ of mandamus sought to require the Baldwin Circuit Court to grant defendants’ motion to dismiss derivative claims asserted by Robert Simmons, among others, on behalf of Caribe association.
The Court holds that “Alabama law does not recognize derivative actions for nonprofit corporations generally.” Ms. *7. The Court explains that the Alabama Nonprofit Corporation Law, see Ala. Acts 2023, Act No. 2023-503 (codified at § 10A-3A-1.01, Ala. Code 1975) “adopted the American Bar Association’s Model Nonprofit Corporation Act of 2021 almost in full. Notably, however, the Legislature rejected the chapter of the model act concerning ‘Derivative Proceedings,’ which would have allowed for derivative claims on behalf of nonprofit corporations generally.” Ms. *7. The Court concludes this rejection “indicates a policy disfavoring derivative actions for nonprofit corporations.” Ms. **7-8, citing 42B Norman J. Singer & J.D. ShambieSinger, Statutes and Statutory Construction § 52:5 (7th rev. ed. 2012) (“[W]hen a legislature models a statute after a uniform act, but does not adopt particular language, courts conclude the omission was ‘deliberate,’ or ‘intentional,’ and that the legislature rejected a particular policy of the uniform act.”).
However, the Court holds that members of a nonprofit corporation “have the ability to bring a derivative action ‘against the officers or directors of the nonprofit corporation for exceeding their authority.’ § 10A-3-2.44(2).” Ms. *16. Further, the Court rejects defendants’ argument that the issue of whether the plaintiffs will fairly and adequately represent the interest of other members raises a jurisdictional challenge subject to mandamus review and holds “[t]he question whether the Caribe members will fairly and adequately represent the Caribe association is a fact inquiry that is not a jurisdictional matter.” Ms. **14-15. Accordingly, the Court orders the Caribe members’ derivative claims asserted against the Wireman companies dismissed but denies the writ as to the derivative claims against the board defendants. Ms. **16-17.