Code of the District of Columbia

Subchapter XIII. Action by Member.


§ 29–1013.01. Derivative action.

A member may maintain a derivative action in the Superior Court to enforce a right of a limited cooperative association if:

(1) The member demands that the association bring an action to enforce the right; and

(2) Any of the following occur:

(A) The association does not, within 90 days after the member makes the demand, agree to bring the action;

(B) The association notifies the member that it has rejected the demand;

(C) Irreparable harm to the association would result by waiting 90 days after the member makes the demand;

(D) The association agrees to bring an action demanded and fails to bring the action within a reasonable time; or

(E) A demand under paragraph (1) of this subsection would be futile.


(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720; Mar. 5, 2013, D.C. Law 19-210, § 2(j)(9)(A), 59 DCR 13171.)

Section References

This section is referenced in § 29-1013.03.

Effect of Amendments

The 2013 amendment by D.C. Law 19-210 added (2)(E) and made related changes.

Editor's Notes

Uniform Law: This section is based on § 1301 of the Uniform Limited Cooperative Association Act.

Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.


§ 29–1013.02. Proper plaintiff.

(a) A derivative action to enforce a right of a limited cooperative association shall be maintained only by a person that:

(1) Is a member or a dissociated member at the time the action is commenced and:

(A) Was a member when the conduct giving rise to the action occurred; or

(B) Whose status as a member devolved upon the person by operation of law or the organic rules from a person that was a member at the time of the conduct; and

(2) Adequately represents the interests of the association.

(b) If the sole plaintiff in a derivative action dies while the action is pending, the Superior Court may permit another member who meets the requirements of subsection (a) of this section to be substituted as plaintiff.


(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720.)

Editor's Notes

Uniform Law: This section is based on § 1302 of the Uniform Limited Cooperative Association Act.


§ 29–1013.03. Pleading.

In a derivative action to enforce a right of a limited cooperative association, the complaint shall state:

(1) The date and content of the plaintiff’s demand under § 29-1013.01(1) and the association’s response;

(2) If 90 days have not expired since the demand, how irreparable harm to the association would result by waiting for the expiration of 90 days;

(3) If the association agreed to bring an action demanded, that the action has not been brought within a reasonable time; and

(4) If the demand should be excused as futile, the reasons therefor.


(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720; Mar. 5, 2013, D.C. Law 19-210, § 2(j)(9)(B), 59 DCR 13171.)

Effect of Amendments

The 2013 amendment by D.C. Law 19-210 added (4) and made related changes.

Editor's Notes

Uniform Law: This section is based on § 1303 of the Uniform Limited Cooperative Association Act.

Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.


§ 29–1013.04. Approval for discontinuance or settlement.

A derivative action to enforce a right of a limited cooperative association shall not be discontinued or settled without the Superior Court’s approval.


(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720.)

Editor's Notes

Uniform Law: This section is based on § 1304 of the Uniform Limited Cooperative Association Act.


§ 29–1013.05. Proceeds and expenses.

(a) Except as otherwise provided in subsection (b) of this section:

(1) Any proceeds or other benefits of a derivative action to enforce a right of a limited cooperative association, whether by judgment, compromise, or settlement, belong to the association and not to the plaintiff; and

(2) If the plaintiff in the derivative action receives any proceeds, the plaintiff shall immediately remit them to the association.

(b) If a derivative action to enforce a right of a limited cooperative association is successful in whole or in part, the Superior Court may award the plaintiff reasonable expenses, including reasonable attorneys’ fees and costs, from the recovery of the association.


(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720.)

Editor's Notes

Uniform Law: This section is based on § 1305 of the Uniform Limited Cooperative Association Act.


§ 29–1013.06. Special litigation committee.

(a) If a limited cooperative association is named as or made a party in a derivative proceeding, the association may appoint a special litigation committee to investigate the claims asserted in the proceeding and determine whether pursuing the action is in the best interests of the company. If the association appoints a special litigation committee, on motion by the committee made in the name of the association, except for good cause shown, the court shall stay discovery for the time reasonably necessary to permit the committee to complete its investigation. This subsection does not prevent the court from enforcing a person’s right to information under § 29-1005.05 or, for good cause shown, granting extraordinary relief in the form of a temporary restraining order or preliminary injunction.

(b) A special litigation committee may be composed of one or more disinterested and independent individuals, who may be members.

(c) A special litigation committee may be appointed:

(1) By a majority of the directors not named as defendants or plaintiffs in the proceeding; and

(2) If all directors are named as defendants or plaintiffs in the proceeding, by a majority of the directors named as defendants.

(d) After appropriate investigation, a special litigation committee may determine that it is in the best interests of the limited cooperative association that the proceeding:

(1) Continue under the control of the plaintiff;

(2) Continue under the control of the committee;

(3) Be settled on terms approved by the committee; or

(4) Be dismissed.

(e) After making a determination under subsection (d) of this section, a special litigation committee shall file with the court a statement of its determination and its report supporting its determination and shall serve each party with a copy of the determination and report. The court shall determine whether the members of the committee were disinterested and independent and whether the committee conducted its investigation and made its recommendation in good faith, independently, and with reasonable care, with the committee having the burden of proof. If the court finds that the members of the committee were disinterested and independent and that the committee acted in good faith, independently, and with reasonable care, the court shall enforce the determination of the committee. Otherwise, the court shall dissolve the stay of discovery entered under subsection (a) of this section and allow the action to proceed under the direction of the plaintiff.


(Mar. 5, 2013, D.C. Law 19-210, § 2(j)(9)(C), 59 DCR 13171.)

Editor's Notes

Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.