Creditors Can’t Directly Sue Officers and Directors of an Insolvent Corporation in Tennessee
On December 17, 2010, the Tennessee Supreme Court held “that a creditor of an insolvent corporation may not bring a direct claim, only a derivative claim, against officers and directors for breach of fiduciary duties they owe to the corporation.” Sanford v. Waugh, 2010 WL 5139496 (Tenn. 2010). With this holding, the Supreme Court reversed the Court of Appeals and instead adopted the reasoning of the Delaware Supreme Court.
By Good Faith and Fair Dealing Is Not an Independent Tort Claim
In a lawsuit by former wide receiver David Givens against the Tennessee Titans, Givens alleged that the team was aware of a defect in his left knee and did not tell him about the problem. As a result, Givens alleged, he continued to play football until he was injured in a game in November 2006. Givens never played professional football again. Among other claims against the Titans, Givens asserted a cause of action for “the legal wrong, whether styled in quasi contract or tort, of performing its contractual obligations in bad faith.” Givens further alleged that this claim was a tort claim that did not require an interpretation of the collective bargaining agreement in place between the Titans and the NFL Players Association.