"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 court can base this prediction on "canons of construction . . . recent pronouncements of general rules or policies by the state's highest court, well considered dicta, and the state's trial court decisions."

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.

"The district court also `must view the evidence presented through the prism of the substantive evidentiary burden.'" Byelick v. Vivadelli, 79 F. Supp.2d 610, 616 (E.D. Va. 1999) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-52 (1986)) (in the context of motion for summary judgment) B. The Constructive Fraud Verdict

The willingness of the Supreme Court of Virginia to cite federal cases, together with the common origin and rationale of the state and federal doctrines, signal that federal immunity decisions are persuasive when there are no Virginia immunity decisions on point. See Byelick v. Vivadelli , 79 F.Supp.2d 610, 623 (E.D.Va.1999) (noting that, when confronted with uncertain state law, a federal court applying state law in diversity cases must predict what course the highest court in the state would take); see also Warren Bros. Co. v. Cardi Corp. , 471 F.2d 1304, 1307 (1st Cir.1973) (noting that, in the absence of state law cases, federal cases are “relevant” to a court's determination of what the state “courts would decide if faced with the issues before us”).

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).

The shareholders, however, are not plaintiffs in this case and any injuries they may have suffered as a result of the Defendants' actions are not properly before the Court. See Byelick v. Vivadelli, 79 F. Supp. 2d 610, 625 (E.D. Va. 1999) (noting that individual shareholders can bring suit against corporate directors for injuries personally suffered). Thus, if there is any duty to disclose, it would run to DII through its board of directors.

A director of a Virginia corporation owes fiduciary duties "both to the corporation and to the corporation's shareholders." Byelick v. Vivadelli, 79 F. Supp. 2d 610, 623 (E.D. Va. 1999) (internal citations omitted). Once a Virginia corporation becomes insolvent, the fiduciary duties owed by directors also extend to the corporation's creditors.

A director of a Virginia corporation owes fiduciary duties "both to the corporation and to the corporation's shareholders." Byelick v. Vivadelli, 79 F. Supp. 2d 610, 623 (E.D. Va. 1999) (internal citations omitted). Once a Virginia corporation becomes insolvent, the fiduciary duties owed by directors also extend to the corporation's creditors.

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

The law of Virginia is clear that corporate directors have a fiduciary duty to the corporation and to its shareholders, and they must govern themselves accordingly. Va. Code § 13.1-690;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.").