§15.15 Effect of Concerted Action

The Case: Resolution Trust Corp. v. Block , 924 S.W.2d 354 (Tenn. 1996).

The Basic Facts: Plaintiff, conservator and then receiver for a savings and loan association, brought suit against former officers of the savings and loan association for breach of fiduciary duty, negligence per se and breach of contract after Defendants approved several loans made by the corporation.

The Bottom Line:

• “In an action for damages on behalf of a corporation against its officers and directors who are found to be liable for their collective breach of fiduciary duty and contract and for negligence, the liability of the officers and directors to the corporation is joint and several, not proportional to fault.” 924 S.W.2d at 355.
• “Even those commentators who have advocated the abolition of joint and several liability as a corollary to the adoption of comparative fault have acknowledged the need for retaining its application to collective or concerted actions. See C. Mutter, [Moving to Comparative Negligence in an Era of Tort Reform: Decisions for Tennessee, 57 Tenn. L. Rev., 199, 305 (1990)] (hereafter 57 Tenn. L. Rev. at § ____); [Prosser and Keeton on Torts], § 52 (W. Page Keeton ed.) (5th ed. 1984); 19 C.J.S. “Corporations,” § 484 (1990). For example, in an article published before our decision in McIntyre, Professor Mutter advocated the adoption of a comparative fault system in Tennessee. While noting that ‘comparative negligence and joint and several liability do not mesh,’ 57 Tenn. L. Rev. at 318-19, she added the following:

  In order to understand joint and several liability it is necessary to advert to some of the general principles applicable to joint tortfeasors. Initially at common law, a ‘joint tort’ was limited to actual concerted action. Thus, all individuals, who with a common purpose, committed a tort against the plaintiff were liable for the entire damage done, ‘although one might have battered, while another imprisoned the plaintiff, and a third stole the plaintiff’s silver buttons.’ Only a tacit understanding, not an express agreement was necessary. Liability for concerted action continues to be joint and several today, and in general opponents of the rule have no quarrel with its application in this context.

  Id . at 305 (emphasis added) (citations omitted).” Id. at 357.
• “Under either the historic or modern approach, the result is the same. In an action for damages by or on behalf of a corporation against the officers and directors of the corporation in which the officers and directors are found to be liable as the result of their collective breach of fiduciary duty, negligence, or breach of contract, the liability of the defendants to the corporation is joint and several.” Id.