In their respective briefs in support of, and in opposition to, the defendants' motion to dismiss, the parties discussed the somewhat conflicting decisional law that has emerged out of this district on the issue whether, in Virginia, an individual shareholder of a corporation may sue an officer or director of that corporation for breach of fiduciary duty. Compare American General Ins. Co. v. Equitable General Corp., 493 F. Supp. 721 (E.D.Va. 1980), with Byelick v. Vivadelli, 79 F. Supp.2d 610 (E.D.Va. 1999). It is unnecessary to examine Storey's breach of fiduciary duties claim in perspective of the American General Ins. Co. and Byelick decisions, however, because, since they were decided, the Supreme Court of Virginia authoritatively has decided the precise issue that the parties dispute.

Directors and officers of Virginia corporations owe fiduciary duties to their corporation and to the corporation's shareholders. Byelick v. Vivadelli, 79 F.Supp.2d 610, 623 (E.D. Va. 1999); A.I.M. Percolating Corp. v. Ferrodine Chem. Corp., 124 S.E. 442, 445 (Va. 1924). The law considers directors and officers to have a “quasi trust” relation with the corporation and the stockholders as a class, meaning that they “must act in the utmost good faith, and this good faith forbids placing himself in a position where his individual interest clashes with his duty to his corporation.” Rowland v. Kable, 6 S.E.2d 633, 642-43 (Va. 1940).

When confronted with uncertain state law, a federal court sitting in diversity jurisdiction must predict what course the highest court in the state would take. Byelick v. Vivadelli, 79 F.Supp.2d 610, 623 (E.D.Va.1999). The federal court may base its prediction on "canons of construction, restatements of the law, treatises, recent pronouncements of general rules or policies by the state's highest court, well considered dicta, and the state's trial court decisions."

When faced with the task of predicting state law, "[a] federal court may base its prediction on canons of construction, restatements of the law, treatises, recent pronouncements of general rules or policies by the state's highest court, well considered dicta, and the state's trial court decisions." Wells v. Liddy, 186 F.3d 505, 528 (4th Cir. 1999); see also Byelick v. Vivadelli, 79 F. Supp. 2d 610, 623 (E.D. Va. 1999). With this in mind, it is notable that the Supreme Court of Virginia has been willing to follow the Restatement of Torts, but has not broadly accepted all associated Restatement provisions. See Appalachian Power Company v. Sanders, 232 Va. 189, 349 S.E.2d 101 (1986) (rejecting certain sections of the Second Restatement).

Specifically, the Liquidating Trustee alleges that these Defendants breached their duties of care and loyalty by perpetuating HDL's fraudulent scheme despite warnings from counsel and various other actions. See Byelick v. Vivadelli, 79 F. Supp. 2d 610, 623 (E.D.Va.1999) ("It is well settled that '[a] Virginia corporation's directors and officers owe a duty of loyalty both to the corporation and to the corporation's shareholders.'") (quoting WLR Foods v. Tyson Foods, Inc., 869 F. Supp. 419, 421 (W.D.Va. 1994)); Glass v. Glass, 228 Va. 39, 47, 321 S.E.2d 69, 74 (1984) ("Corporate officers and directors have a fiduciary duty in their dealings with shareholders and must exercise good faith in such dealings."); see also Va. Code § 13.1-690 ("A director shall discharge his duties as a director, including his duties as a member of a committee, in accordance with his good faith business judgment of the best interests of the corporation."); Willard v. Moneta Building Supply, Inc., 258 Va. 140, 151 ("[I]n Virginia, a director's discharge of duties is not measured by what a reasonable person would do in similar circumstances or by the rationality of the ultimate decision. Instead, a director must act in accordance with his/her good faith business judgment of