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Article: California Court Erects A Strong Barrier To Creditor Claims Against Corporate Directors And Officers.
- Article from:
- Mondaq Business Briefing
- Article date:
- November 5, 2009
CopyrightCOPYRIGHT 2009 Mondaq Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The Sixth District Court of Appeal, resolving a previously unanswered question in California, has drawn a bright line shielding company directors
and officers from personal liability arising from creditor claims of breach of fiduciary duty. Berg & Berg Enterprises, LLC v. Boyle, --- Cal. App. 4th ---, 2009 WL 3470631, 09 Cal. Daily Op. Serv. 13, 305 (Oct. 29, 2009). California has now joined Delaware in holding that directors do not owe creditors a fiduciary duty, even when the corporation is operating in the so-called "zone of insolvency."
Berg & Berg Enterprises, LLC, was the largest creditor of Pluris, Inc. when Pluris did an assignment for the ...