The same duty that applies in a director or officer's dealings with shareholders applies with equal force with respect to their dealings with the corporation itself. See Rowland v. Kable, 174 Va. 343, 366, 6 S.E.2d 633, 642 (1940) ; see also 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) (internal quotations and alterations omitted))).

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.

This interpretation of the limitations standard has metamorphosed into the majority view. See, e.g., Rothman v. Gregor, 220 F.3d 81, 97-98 (2d Cir. 2000); Morton's Mkt. Inc. v. Gustafson's Dairy, Inc., 198 F.3d 823, 836 (11th Cir. 1999); Sterlin, 154 F.3d at 1201; Marks, 122 F.3d at 368; Byelick v. Vivadelli, 79 F.Supp.2d 610, 619 (E.D.Va. 1999); see also Berry v. Valence Tech., Inc., 175 F.3d 699, 704 (9th Cir. 1999) (predicting that the Ninth Circuit, were it to adopt the inquiry notice rule, would subscribe to the Sterlin court's approach). This consensus has become particularly evident since Lampf.

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 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."

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 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."

In re Kaplan, 143 F.3d 807, 812 (3d Cir. 1998); Davis v. U.S. Gypsum Co., 451 F.2d 659, 662 (3d Cir. 1971) ("It is hornbook law that claims asserted for the benefit of stockholders qua stockholders in a corporation because of the tortious acts of its officers or those actions in conjunction with them is a class suit, a derivative action, and recovery is for the benefit of the corporation directly and indirectly to its stockholders. It is equally clear that where a corporation, tortiously conspires with others to damage an individual and does so a cause of action arises which belongs to the individual."); Schupp v. Jump! Info. Technologies, Inc., 65 F. App'x 450, 454 (4th Cir. 2003) (non-precedential) ("Virginia law may permit an individual shareholder to bring an action for breach of fiduciary duty against the directors or officers of a closely held corporation" (citing Byelick v. Vivadelli, 79 F. Supp. 2d 610, 625 (E.D. Va. 1999) (emphasis in original)). While "[b]reach of a fiduciary obligation is a tort claim, and thus requires the showing of a duty, a breach, an injury, and causation," Madsen does not challenge any of these elements.

But even without this finding, the allegation concerning Envion's financial state in April 2012 does not render earlier statements about Carlucci's potential investment return false at the time those statements were made. See Byelick v. Vivadelli, 79 F.Supp.2d 610, 616–17 (E.D.Va.1999) (noting that to prevail on a Section 10(b) claim, the plaintiff must demonstrate that “the defendant made a statement of material fact that was false when made”). For these reasons, that portion of Carlucci's Section 10(b) claim that is timely is dismissed for failure to plead a material misrepresentation with requisite particularity.

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).