Elliott Levin v. William Miller, 900 F.3d 856

Irwin Financial was a bank holding company whose two subsidiary banks faltered in the 2007–2009 financial crisis; regulators and outside counsel repeatedly urged Irwin to support and capitalize the banks.
The Irwin Board (majority independent directors) repeatedly directed management to keep the banks solvent, pursue government relief (TARP), and prepare for possible FDIC resolution.
Irwin had a longstanding tax-allocation agreement to file consolidated returns and remit any subsidiary-specific refunds to the banks; management expected a large consolidated refund that largely belonged to the banks.
In June 2009 Irwin received a $76 million consolidated tax refund and transferred about $74 million to the Bank and Trust and the remainder to the Savings Bank.
The hoped-for government relief and private capital did not materialize; the banks failed and Irwin filed Chapter 11 (later Chapter 7). Trustee Levin sued two officers for breach of fiduciary duty for allegedly failing to inform the Board that earlier bankruptcy could have preserved the refund for the holding company’s estate.
The district court granted summary judgment for the officers; the Seventh Circuit affirmed, holding the officers’ duty to inform was qualified by and subordinate to the Board’s clear, lawful directives to prop up the banks.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether officers breached fiduciary duty to inform the Board that earlier bankruptcy could have preserved the $76M refund for the holding company	Levin: officers should have recognized the banks were doomed, investigated bankruptcy as an alternative, and told the Board that bankruptcy could treat the refund as a holding-company asset, maximizing estate value	Officers: Board repeatedly and lawfully directed management to support the banks based on regulator and Sullivan & Cromwell advice; officers had to follow those directives and were not required to pursue contrary investigations	Held: No breach. Duty to inform is subject to the principal’s (Board’s) manifest directions; officers properly followed Board/regulator counsel and had no obligation to second-guess or pursue bankruptcy contrary to directives
Whether officers had an obligation to retain independent experts to challenge the Board’s course (i.e., on tax/bankruptcy treatment of the refund)	Levin: officers should have hired tax/bankruptcy experts to evaluate whether refund could be recovered in bankruptcy	Officers: Board had relied on regulators and experienced outside counsel; officers weren’t required to expend resources to contradict Board/regulatory/legal guidance	Held: No duty to retain experts to contradict the Board and its advisors; the record showed the Board relied on regulators and Sullivan & Cromwell and chose to prioritize saving the banks

Levin v. Miller, 763 F.3d 667 (7th Cir. 2014) (prior standing decision in the same dispute)
In re First Cent. Fin. Corp., 377 F.3d 209 (2d Cir. 2004) (bankruptcy ruling addressing ownership of consolidated tax refunds)
Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228 (Ind. 1994) (officer duties governed by agency common law)
Good v. Ind. Teachers Ret. Fund, 31 N.E.3d 978 (Ind. Ct. App. 2015) (elements of breach of fiduciary duty under Indiana law)
Biberstine v. N.Y. Blower Co., 625 N.E.2d 1308 (Ind. Ct. App. 1993) (officers owe fiduciary duties to the corporation)