C. The Litigation Trust Also Fails To State A Claim Against Trenwick America’s Former Directors
The Litigation Trust also pleads a breach of fiduciary duty claim against the
directors of Trenwick America. This claim stands, in one respect, on firmer ground.
That is because as directors of Trenwick America, these defendants would be, in the
language of many of our cases,87 described as owing fiduciary duties to Trenwick
America as an entity.
But even the straightforward notion that the Trenwick America directors owed the
company fiduciary duties must not be viewed as a simple one. The context is what
matters.88 To the extent that Trenwick America was a wholly-owned solvent subsidiary
of Trenwick, the fiduciary duties owed by the Trenwick America board ran to Trenwick.
Our Supreme Court has made clear that, “in a parent and wholly-owned subsidiary
context, directors of the subsidiary are obligated only to manage the affairs of the
subsidiary in the best interests of the parent and its shareholders.”89 Likewise, this court,
, 722 A.2d 5, 10 (Del. 1998) (“The directors of Delaware corporations
stand in a fiduciary relationship not only to the stockholders but also to the corporations upon
w h o s e b o a r d s t h e y s e r v e . ” ) ( c i t i n g
5 A . 2 d 5 0 3 , 5 1 0 ( D e l . 1 9 3 9 ) ) ;
1991 WL 277613 at 34 & 34 n.55;
., 678 A.2d 533, 539
(Del. 1996) (“It is well established that the directors of a Delaware corporation have a fiduciary
88 relationship with the corporation they serve . . . .”). Professor Bainbridge’s thoughts on this subject, touched on at
note 75, have obvious
relevance here. As he points out, simply saying that a director owes duties to the firm does little to define what those duties are and the end to which they are directed.
, 717, 720 (Del. 1971)).
, 545 A.2d at 1174 (citing
, 280 A.2d