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Stamp v. Touche Ross & Co., 263 Ill. App. 3d 1010, 636 N.E.2d 616 (Ill. App. Ct.
1993). The plaintiff alleged that the defendant non‐management directors
of Pine Top, an insolvent insurer, failed to perform their fiduciary duties
owed to the company and that the directors negligently mismanaged the
affairs of the company. The trial court dismissed the complaint based upon
the Liquidator's failure to assert any allegation of fraud, illegality, or selfdealing.
On appeal, the court agreed with the lower court that the business
judgment rule "shields directors who have been diligent and careful in
performing their duties from liability for honest errors or mistakes of
judgment." The court, however, determined that the Liquidator should be
granted leave to amend the pleading because it would have been futile for
him to ask for amendment at the trial court level. Because the trial court
dismissed the complaint based upon a legal insufficiency, the failure to plead
fraud, illegality, or self‐dealing, and did not address the factual sufficiency of
the negligence claim, the appellate court held that the Liquidator would
have gained nothing by moving for an amendment to the complaint at that
time. As a result, the court denied Liquidator's appeal from the trial court's
dismissal, but remanded the case to allow for leave to amend.
Holland v. Stenhouse, 1991 U.S. Dist. LEXIS 2518 (N.D. Ill. March 11, 1991). The
receiver of the bankrupt holding company of an insolvent insurer filed a
complaint against the company's officers and directors, alleging that the
officers and directors devised a scheme to hide the subsidiary's insolvency,
including concealing their knowledge that accountants' reports
misrepresented the insurer's solvency. Defendants asserted that the
plaintiff trustee lacked standing to sue, and that they were insulated from
liability by Delaware's business judgment rule. The court held that he
Delaware business judgment rule does not fully immunize insurance
company directors from liability for actions they take or fail to take that
cause or deepen the insurance company's insolvency. Whether the directors
acted in good faith reliance on information given to them is a fact question
to be resolved at trial.
Washburn v. Becker, 186 Ill. App. 3d 629, 542 N.E.2d 764 (Ill. App. Ct. 1989).
The Illinois Director of Insurance filed a complaint seeking damages and
injunctive relief from the officers and directors of a New York based holding
company of an insolvent Illinois insurer for the alleged participation in
voidable transfers, negligent actions, and for breaching the fiduciary duty
owed to the plaintiffs and policyholders. The Defendants argued that they
were not subject to personal jurisdiction in Illinois under the fiduciary shield
doctrine, which provides that if an individual's contact with a state is only by
virtue of the acts as a fiduciary of a corporation, such acts do not form the
predicate for personal jurisdiction over the individual. The court held that
because the fiduciary shield doctrine is equitable in nature, it would go
against those equitable principles to automatically bar every case that fit the
factual profile for the fiduciary shield doctrine. Rather, the appellate court
concluded that equity required a discretionary application of the fiduciary
shield doctrine, and that the circuit court should consider on remand
whether application of the doctrine was appropriate under these
circumstances.
Indiana
Welliver v. Coate, 65 Ind. App. 195, 114 N.E. 775 (1917). The receiver of an
insolvent insurer brought an action to recover funds against the directors and
officers of the insolvent insurer. Since the $20,000 in question had been
"advanced" to the company during organization, it had been returned to the