Official Comm. of Unsecured Creditors v. Baldwin
Decision Date | 20 October 2011 |
Docket Number | No. 10-4456,10-4456 |
Parties | In re: LEMINGTON HOME FOR THE AGED OFFICIAL COMMITTEE OF UNSECURED CREDITORS, ON BEHALF OF THE ESTATE OF LEMINGTON HOME FOR THE AGED, Appellant v. ARTHUR BALDWIN; LINDA COBB; JEROME BULLOCK; ANGELA FORD; JOANNE ANDIORIO; J.W. WALLACE; TWYLA JOHNSON; NICOLE GAINES; WILLIAM THOMPKINS; ROY PENNER; MELODY CAUSEY; JAMES SHEALEY; LEONARD R. DUNCAN; RENEE FRAZIER; CLAUDIA ALLEN; EUGENE DOWNING; GEORGE CALLOWAY; B. J. LEBER; REVEREND RONALD PETERS |
Court | U.S. Court of Appeals — Third Circuit |
PRECEDENTIAL
On Appeal from the United States District Court
for the Western District of Pennsylvania
Before: SLOVITER, FUENTES and VANASKIE,
Robert S. Bernstein, Esq.
Kirk B. Burkley, Esq.
Nicholas D. Krawec, Esq. Argued
Krawec Bernstein Law Firm, PC
Mark R. Hamilton, Esq. Argued
Philip J. Sbrolla, Esq.
Cipriani & Werner
Todd M. Raskin, Esq.
Mazanec, Raskin & Ryder
Suzanne B. Merrick
Thomas, Thomas & Hafer
ORDER AMENDING OPINION
IT IS NOW ORDERED the above captioned case be
amended as follows:
Footnote 5 shall now read:
The District Court erroneously held that the presumption of the business judgment rule is overcome only by evidence of gross negligence. The District Court cited a Delaware Supreme Court case which held that "under the business judgment rule director liability is predicated upon concepts of gross negligence." Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984) ( ). Pennsylvania, however, recognizes directors' and officers' liability for negligent breach of fiduciary duty. See, e.g., Wolf v. Fried, 373 A.2d 734, 735 (Pa. 1977) (). Of course, a non-profit corporation may restrict the circumstances under which a director may have personal liability for negligent acts by adoption of an appropriate by-law, see 15 Pa. C.S. § 5713(a), in which event a director may be liable for a breach of fiduciary duties or a failure to perform the duties of the office only if "the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness." 15 Pa. C.S. § 5713(a)(2). While the Home adopted an appropriate by-law, there is a genuine dispute of fact as to whether alleged breaches of fiduciary duties constituted self-dealing. Moreover, there is no comparable statutory limitation of liability for the officers of a non-profit corporation. Thus, a trial is required on the claims against Causey and Shealey on the question of whether they failed to exercise "such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances." 15 Pa. C.S. § 5712(c).
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