Court of Appeals Confirms that Corporate Directors Owe Their Duties to the Corporation

Court of Appeals Confirms that Corporate Directors Owe Their Duties to the Corporation

In a decision rendered last week, the Kentucky Court of Appeals has affirmed the rule, previously laid down in Ballard v. 1400 Willow Council of Co-owners, Inc., it relying upon KRS § 273.215, that the directors of a corporation owe their fiduciary obligations to the corporation, not to the individual members thereof. Flint v. Jacobs, No. 2015-CA-000489-MR, 2017 WL 2713456 (Ky. App. June 23, 2017).

Ed Flint, brought this action against Fred Jacobs, the latter having been the president of the Board of Directors of Coach House, Inc., a condominium association organizes as a nonprofit corporation. Flint has previously sued Coach House not less than four times, with each of those suits dismissed and those dismissals affirmed on appeal. In this instance, amongst other claims including conspiracy and discrimination, Flint alleged that Jacobs breached a fiduciary obligation owed by Jacobs to Flint.

In affirming the dismissal of Flint’s lawsuit generally and in particular this claim, in reliance upon the Ballard v. 1400 Willow, decision, the Court of Appeals wrote:

Directors of a condominium association's non-profit corporation owe a fiduciary duty only to the corporation, not to the individual condominium association members.