Opinion ID: 2635243
Heading Depth: 1
Heading Rank: 4

Heading: Duty Owed to Creditors

Text: Under Colorado law, directors and officers owe both statutory and common law duties to the corporation's creditors. Statutory duties include a duty not to vote for shareholder distributions that would preclude payment of corporate debts. § 7-106-401(3)(a), C.R.S (2006). Section 7-108-403(1) allows the corporation to recover corporate assets wrongfully distributed under this provision. [7] In Ficor, we held that creditors, as a group, also may seek relief directly against directors and officers who violate this statutory duty in the name of the corporation. See 639 P.2d at 392-94 (holding that creditors may bring a claim under section 7-5-114(3), [8] the then-existing version of section 7-108-403(1)). We reasoned that creditors could bring a claim in the name of the corporation under this statute because the purpose of the statute was to protect creditors' interests. Id. at 393. The court of appeals erroneously concluded that our holding in Ficor means that a judgment lien creditor has the right to pursue all claims available to a debtor corporation before bankruptcy is declared. Anstine, 128 P.3d at 254 (citing Ficor, 639 P.2d at 393-94). Based on its misinterpretation of Ficor, the court of appeals held that any hypothetical judgment lien creditor would have standing . . . to sue BHW's president for breach of his fiduciary duty to BHW. Id. Ficor does not support the broad conclusion of the court of appeals. The purpose of the statute at issue in Ficor was to prevent directors from voting to distribute assets to shareholders before paying the corporation's creditors. 639 P.2d at 392-93. We reasoned that because the purpose of the statute is to protect creditors' claims against the corporation, to deny creditors standing under the statute would frustrate its purpose. Id. at 393-94. Because our holding was based on the specific purpose of the statute to protect creditors' interests during dissolution, our reasoning in Ficor is not broad enough to reach claims brought outside of that statutory realm. Ficor extended a specific statutory right of the corporation to creditors when their claims are precluded by improper distributions to shareholders. This case did not confer general standing on creditors to bring claims belonging to the insolvent corporation. Accord ms55, 338 B.R. at 896 n. 6. Anstine does not allege a breach of a statutory duty in this case, so we focus on the common law duty owed to creditors. Under the common law, when a corporation becomes insolvent, a duty arises in its directors and officers to the corporation's creditors. [9] Crowley v. Green, 148 Colo. 142, 147, 365 P.2d 230, 232-33 (1961). It has been said that directors and officers of an insolvent corporation are trustees for the corporation's creditors. Id. The trustee role with regard to creditors does not encompass the full set of fiduciary duties owed by directors and officers to shareholders of a solvent corporation. Rather, it is a limited duty that requires officers and directors to avoid favoring their own interests over creditors' claims. See id. ; 3 Fletcher Cyc Corp § 1015 (Perm. Ed.) (Under the common law, a director of an insolvent corporation is deemed to be a trustee for it and its creditors and, as such, owes a duty to the corporation and its creditors not to divert corporate property for his or her own benefit. (citing Walk-In Med. Ctrs., Inc. v. Breuer Capital Corp., 778 F.Supp. 1116 (D.Colo.1991))). In Crowley, for example, we held that the directors of an insolvent corporation cannot favor themselves over other creditors to the prejudice of those creditors. 148 Colo. at 147, 365 P.2d at 232-33. Our court of appeals has decided several cases employing the same reasoning. E.g., New Crawford Valley, Ltd. v. Benedict, 877 P.2d 1363, 1368-69 (Colo.App.1993) (holding that the directors of an insolvent corporation owe a duty to corporate creditors not to transfer corporate property for their own benefit); Collie v. Becknell, 762 P.2d 727, 731 (Colo.App.1988) (holding that directors of an insolvent corporation have a duty to corporate creditors not to divest corporate property for their own benefit such that they defeat a creditor's claims). We have never recognized a duty to creditors broader than this and have not defined the duty owed to creditors as fiduciary in the usual sense. See New Crawford Valley, Ltd., 877 P.2d at 1369 (noting that it may be fairly debatable whether the duty owed is that of a fiduciary nature); 1 Cathy Stricklin Krendl & James R. Krendl, Colorado Methods of Practice § 1.66, at 177 (6th ed.2005) (noting that the nature of the duty of directors to creditors of an insolvent corporation may not be a fiduciary duty). Accord 18B Am.Jur.2d Corporations § 1588 (2004) (the statement that an officer or director is a fiduciary for the corporation's creditors is not true in a technical or general and unlimited sense). In the context of a breach of fiduciary duty claim against a corporate officer, creditor claims are limited to cases where officers or directors have favored their interests over creditors' claims. [10] Because Anstine does not argue that the president's warehousing scheme involved favoring the president's interests to defeat creditors' claims, Anstine failed to allege that the president breached his limited fiduciary duty to BHW's creditors. Thus, Anstine's claim against the attorneys for aiding and abetting the president's breach of fiduciary duty also fails for a lack of standing.
Our holding as to the first issue necessarily determines the outcome of this one. Because we conclude that Anstine failed to allege that BHW's president breached a fiduciary duty owed to BHW's creditors, on the facts of this case the attorneys cannot be liable on Anstine's aiding and abetting claim. We save for another day the question of whether an attorney can ever be liable for aiding and abetting a breach of fiduciary duty to a non-client.