Opinion ID: 778306
Heading Depth: 2
Heading Rank: 2

Heading: Count III: Fiduciary Duties

Text: 28 The third count of Appellant's complaint alleges that [t]he individual officers and directors of Twin and Foodtown are fiduciaries with respect to Union Employees who were Plan participants represented by Plaintiff. Am.Compl. ¶ 85. Appellees argue that they are not fiduciaries under ERISA. The district court, however, stated that Appellant's fiduciary duty claims were being brought under state and common law and not under ERISA. Appellant's Br., Ex. B, at 4 & n. 2 (The Fund's theory of liability is not based on Defendants' status as `fiduciaries' per se under ERISA but as fiduciaries to the Fund as a creditor of Twin, an insolvent corporation.) (quoting Pl.'s Br. at 36). 29 Generally, corporate directors owe a fiduciary duty only to the corporation's shareholders. This duty includes an obligation not to take action which would be adverse to the Corporation's interests. AYR Composition, Inc. v. Rosenberg, 261 N.J.Super. 495, 501, 619 A.2d 592 (App.Div.1993) (internal quotations omitted). Once a corporation becomes insolvent, however, the directors assume a fiduciary or quasi-trust duty to the corporation's creditors. See id. at 505, 619 A.2d 592. In this quasi-trust relationship, officers and directors cannot prefer one creditor over another, and they have a `special duty not to prefer themselves.' In re Stevens, 476 F.Supp. 147, 153 n. 5 (D.N.J.1979). Based on the allegations here, the trial court could find that the individual officers and directors of Twin and Foodtown breached their duties under their quasi-trust relationship by withholding and diverting for their own benefit the monies that should have been used to make ... contributions. Am.Comp. ¶ 85. 30