North Carolina Business Litigation Report

Oberlin Capital, L.P. v. Slavin, 2000 NCBC 6 (N.C. Super. Ct. )(Tennille), aff'd in part and rev'd in part, 147 N.C. App. 52, 554 S.E.2d 840 (2001)

A director cannot be liable, solely because of his or her capacity as a director, for the wrongdoing of others associated with the corporation in the absence of his or her own participation in the alleged wrong.  The duties of a director run directly to the corporation, indirectly to shareholders, and not to creditors, so directors do not owe duties to outsiders except for torts that they personally commit.

The directors in this case did not breach any duty by failing to disclose a particular transaction with the exception of one who took affirmative steps to conceal the transaction. Nor was there any claim against the directors for negligent misrepresentation, as that tort was not intended to apply to corporate directors who fail to disclose certain information to the corporlation's creditors.

The plaintiff had no claim for unfair and deceptive practices, because that statute does not apply to transactions involving securities.

Full Opinion

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Mack Sperling
Brooks Pierce, LLP
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