Current Uniform Acts

Unincorporated Non-profit Associations Statement of Principles 2007

SECTIONS FROM THE CALIFORNIA CORPORATION CODE:

18310.

Termination of membership

18310.

(a) Unless otherwise provided by an unincorporated association’s governing principles,

membership in the unincorporated association is terminated by any of the following events:

(1) Resignation of the member.

(2) Expiration of the fixed term of the membership, unless the membership is renewed before its expiration.

(3) Expulsion of the member.

(4) Death of the member.

(5) Termination of the legal existence of a member that is not a natural person.

(b) Termination of membership does not relieve a person from an obligation incurred as a

member before termination.

(c) Termination of membership does not affect the right of an unincorporated association to

enforce an obligation against a person incurred as a member before termination, or to obtain damages for its breach.

Comment

Section 18310 is new. Subdivision (b) makes clear that termination of membership does not relieve a former member from an obligation incurred before termination of membership. Such an obligation might include an obligation for a charge, assessment, fee, or dues, or an obligation for a service or benefit rendered before termination. See also Sections 18015 (“member” defined), 18035 (“unincorporated association” defined).

18320. Expulsion or suspension of membership

18320.

(a) This section only applies if membership in an unincorporated association includes a property right or if expulsion or suspension of a member would affect an important, substantial economic interest. This section does not apply to an unincorporated association that has a religious purpose.

(b) Expulsion or suspension of a member shall be done in good faith and in a fair and reasonable manner. A procedure that satisfies the requirements of subdivision (c) is fair and

reasonable, but a court may also determine that another procedure is fair and reasonable taking into account the full circumstances of the expulsion or suspension.

(c) A procedure for expulsion or suspension of a member that satisfies the following

requirements is fair and reasonable:

(1) The procedure is included in the governing documents of the unincorporated association.

(2) The member to be expelled or suspended is given notice, including a statement of the reasons for the expulsion or suspension. The notice shall be delivered at least 15 days before the effective date of the expulsion or suspension.

(3) The member to be expelled or suspended is given an opportunity to be heard by the person or body deciding the matter, orally or in writing, not less than five days before the effective date of the expulsion or suspension.

(d) A notice pursuant to this section may be delivered by any method reasonably calculated

to provide actual notice. A notice delivered by mail shall be sent by first-class, certified, or registered mail to the last address of the member shown on the unincorporated association’s records.

(e) A member may commence a proceeding to challenge the expulsion or suspension of the

member, including a claim alleging defective notice, within one year after the effective date of the expulsion or suspension. The court may order any relief, including reinstatement, it determines is equitable under the circumstances. A vote of the members or of the board may not be set aside solely because a person was wrongfully excluded from voting by virtue of the challenged expulsion or suspension, unless the court determines that the wrongful expulsion or suspension was in bad faith and for the purpose, and with the effect, of wrongfully excluding the member from the vote or from the meeting at which the vote took place, so as to affect the outcome of the vote.

(f) This section governs only the procedure for expulsion or suspension and not the

substantive grounds for expulsion or suspension. An expulsion or suspension based on substantive grounds that violate contractual or other rights of the member or are otherwise unlawful is not made valid by compliance with this section.

Comment

Section 18320 is new. It requires good faith and use of a fair procedure before terminating or suspending membership in an unincorporated association, where membership involves a property right or where expulsion or suspension of a member would affect “an important, substantial economic interest,” for example, the right to carry on one’s trade or profession. See generally Potvin v. Metropolitan Life Ins. Co., 22 Cal. 4th 1060, 997 P.2d 1153, 95 Cal. Rptr. 2d 496 (2000)(expulsion of doctor from list of insurance company’s preferred providers could impair ability of competent physician to practice medicine and affected “important, substantial economic interest”). See also Swital v. Real Estate Comm’r, 116 Cal. App. 2d 677, 254 P.2d 587 (1953)(member may not be expelled from local realty board without fair procedure).

Nothing in this section affects the common law right of fair procedure as it applies to a decision to exclude a person from membership in a private association. See Pinsker v. Pacific Coast Soc’y of Orthodontists, 12 Cal. 3d 541, 550, 116 Cal. Rptr. 245, 526 P.2d 253 (1974)(“Taken together, these decisions establish the common law principle that whenever a private association is legally required to refrain from arbitrary action, the association’s action must be both substantively rational and procedurally fair.”); Pinsker v. Pacific Coast Soc’y of Orthodontists, 1 Cal. 3d 160, 81 Cal. Rptr. 623, 460 P.2d 495 (1969).

To avoid state interference with the free exercise of religion, this section does not apply to an unincorporated association with a religious purpose. Cf. Section 7341 (expulsion, suspension, or termination of membership in nonprofit mutual benefit corporation). See also Sections 18003 (“board” defined), 18008 (“governing documents” defined), 18015 (“member” defined), 18035 (“unincorporated association” defined).

Next Annual Meeting

2018 Conference (Centennial)

Delta Hotel

Québec City, QC

August 12 - 16, 2018