Eleventh Circuit Vacates Dismissal, Rules Bank Officers Subject To Negligence Claims Under Georgia Law

Bank Compliance

On October 24, based on the Georgia Supreme Court’s response to the federal appellate court’s certified questions, the United States Court of Appeals for the Eleventh Circuit issued a per curiam opinion overturning a district court’s order to dismiss a lawsuit under Georgia’s business judgment rule. In this case, the court addressed whether bank directors and officers of failed banking institutions could be held liable under the state’s law for claims of ordinary negligence and breach of fiduciary duty based on ordinary negligence. In light of the responses from the Georgia Supreme Court, the Eleventh Circuit noted, “a bank director or officer may violate the standard of care established by O.C.G.A. § 7–1–490, even where he acts in good faith, where, with respect to the process by which he makes decisions, he fails to exercise the diligence, care, and skill of ‘ordinarily prudent men [acting] under similar circumstances in like positions.’” The case was remanded back to the district court for further proceedings. FDIC v. Skow, No. 12-15878, WL 5394321 (11th Cir. Oct. 24, 2014)