Fed. Deposit Ins. Corp. v. Loudermilk

The U.S. District Court for the Northern District of Georgia certified a question of Georgia law to the Georgia Supreme Court. As the receiver of the Buckhead Community Bank, the Federal Deposit Insurance Corporation sued nine former officers and directors of the bank, alleging that they were negligent with respect to the making of loans, which, according to the FDIC, led the bank, to suffer nearly $22 million in losses. The defendants moved to dismiss the lawsuit, arguing that the business judgment rule relieved officers and directors of any liability for ordinary negligence. The FDIC responded that such a business judgment rule is no part of the common law in Georgia, and even if it were, it did not apply to bank officers and directors, insofar as the statutory law in Georgia explicitly requires bank officers and directors to exercise ordinary diligence and care. Unable to "discern clear and controlling precedent the federal district court asked: "[d]oes the business judgment rule in Georgia preclude as a matter of law a claim for ordinary negligence against the officers and directors of a bank in a lawsuit brought by the FDIC as receiver for the bank?" The Georgia Court answered that question in the negative. View "Fed. Deposit Ins. Corp. v. Loudermilk" on Justia Law