Opinion ID: 1255223
Heading Depth: 1
Heading Rank: 3

Heading: Degree of culpability.

Text: The directors argue that the better reasoned cases hold that application of the adverse domination doctrine should be limited to cases of fraud and fraudulent concealment. Additionally, they rely upon certain legislative enactments which they assert demonstrate the Legislature's intent that bank directors should be shielded from liability for their negligent acts. Resolution Trust relies upon Oklahoma case law demonstrating that the discovery rule is not applied merely to cases of fraud and intentional wrongdoing and upon extant case law for the proposition that the adverse domination doctrine applies to causes in which fraud and overt wrongdoing are not alleged. Resolution Trust relies upon cases in which the discovery rule has been applied in negligence actions to support its argument that fraudulent conduct on behalf of directors is not a prerequisite to application of the adverse domination doctrine. [25] However, this Court has not applied the discovery rule in a broad range of negligence actions. [26] Whether the discovery doctrine will apply in professional negligence actions is a judicial determination which must be made on a case by case basis. [27] Just as there are two views on whether the doctrine of adverse domination should be recognized, there is a split of authority on whether, once the doctrine is incorporated, it will apply in negligence actions. [28] The rationale of courts applying the doctrine to cases of negligence argue that it is not only in situations involving fraud which a corporation can be prevented from learning of a potential claim against its directors and officers. They reason that, even in cases of negligence, it may be unlikely that directors will take the affirmative step of communicating information which could cause criticism of their performance. [29] However, those courts refusing to apply the doctrine to cases of negligence rest their argument on the premise that the doctrine is founded on the presumption that those who engage in fraudulent activity likely will make it difficult for others to discover their misconduct. The courts which have refused to extend the doctrine to cases of negligence reason that to do so would effectively eliminate the statute of limitations in all cases involving a corporation's claims against its own directors. [30] The necessity for a finding of active conduct was recently enunciated by the Fifth Circuit in Resolution Trust Corp. v. Acton, 49 F.3d 1086, 1090 (5th Cir.1995). The federal court wrote: [ Federal Deposit Ins. Corp. v. Dawson, 4 F.3d 1303, 1309 (5th Cir.1993)] requires intentional conduct. The words `active participants in wrongdoing or fraud' are more consistent with intentional conduct than with negligent conduct. The fact that the Dawson court required not only fraudulent conduct or wrongdoing but also `active participation' therein is significant. (Footnote omitted.) The doctrine of adverse domination is very narrow. [31] We find persuasive the reasoning of those courts which hold that to extend the doctrine to cases involving conduct less culpable than fraud would be to eliminate the statute of limitations in director-liability actions. Furthermore, this reasoning is supported by recent legislative enactments allowing the insertion of liability-limiting clauses in bylaws and certificates of incorporation. [32] Therefore, we find that application of the doctrine of adverse domination to delay accrual or toll the statute of limitations is limited to situations involving fraudulent conduct. B.