Lefoldt v. Rentfro

After Natchez Regional Medical Center (“NRMC”) filed for Chapter 9 bankruptcy, H. Kenneth Lefoldt, who had been appointed trustee for the NRMC Liquidation Trust, sued NRMC’s former directors and officers in the United States District Court for the Southern District of Mississippi, alleging breach of fiduciary duties of care, good faith, and loyalty. The directors and officers sought dismissal under Federal Rule of Civil Procedure 12(b)(6) and argued that they were immune under the Mississippi Tort Claims Act (“MTCA”). The district court agreed and granted dismissal to the directors and officers. Lefoldt appealed, and the Fifth Circuit certified questions of Mississippi Law to the Mississippi Supreme Court pertaining to the MTCA as the exclusive remedy for a bankruptcy trustee standing in the shoes of a public hospital corporation against the employees or directors of that public corporation. If indeed the MTCA was the exclusive remedy, then did the MTCA permit the trustee to pursue any claims against the officers and directors in their personal capacity? The Mississippi Supreme Court answered the first question in the negative: the MTCA did not furnish the exclusive remedy for the bankruptcy trustee. View "Lefoldt v. Rentfro" on Justia Law