Director and Officer Liability Requires Intentional or Knowing Violations

by R. Christopher Reade on Apr. 02, 2020

Business Business Organization Business  Corporate Lawsuit & Dispute  Litigation 

Summary: The Nevada Supreme Court has just made director and officer liability harder to reach.

Plaintiffs often attempt to hold officers and directors individually liable as fiduciaries.  The Nevada Supreme Court has recently held that individual liability has a very high threshold in Chur v. Eighth Judicial Dist. Court of Nev., 458 P.3d 336 (Nev. 2020).

NRS 78.138 provides the sole mechanism to hold directors and officers individually liable for damages in Nevada.  NRS 78.138(3) provides that "[a] director or officer is not individually liable for damages as a result of an act or failure to act in his or her capacity as a director or officer except under circumstances described in subsection 7 [of that statute]." NRS 78.138(7) requires a two-step analysis to impose individual liability on a director or officer.

  1. the presumptions of the business judgment rule must be rebutted. The business judgment rule states that "directors and officers, in deciding upon matters of business, are presumed to act in good faith, on an informed basis and with a view to the interests of the corporation."
  2. The "director's or officer's act or failure to act" must constitute "a breach of his or her fiduciary duties" and that breach must further involve "intentional misconduct, fraud or a knowing violation of law”

NRS 78.138 provides for the sole circumstance under which a director or officer may be held individually liable for damages stemming from the director's or officer's conduct in an official capacity.

To prove an intentional or knowing violation of the law, the claimant must establish that the director or officer had knowledge that the alleged conduct was wrongful in order to show a "knowing violation of law" or "intentional misconduct" pursuant to NRS 78.138(7)(b).   Knowledge of wrongdoing, as required by NRS 78.138(7)(b), is an appreciably higher standard than gross negligence.   This is a very high standard to meet for director or officer liability. 

When questions of corporate or officer liability arise, our firm stands ready to assist you in your business matters.

Legal Articles Additional Disclaimer is not a law firm and does not offer legal advice. Content posted on is the sole responsibility of the person from whom such content originated and is not reviewed or commented on by The application of law to any set of facts is a highly specialized skill, practiced by lawyers and often dependent on jurisdiction. Content on the site of a legal nature may or may not be accurate for a particular state or jurisdiction and may largely depend on specific circumstances surrounding individual cases, which may or may not be consistent with your circumstances or may no longer be up-to-date to the extent that laws have changed since posting. Legal articles therefore are for review as general research and for use in helping to gauge a lawyer's expertise on a matter. If you are seeking specific legal advice, recommends that you contact a lawyer to review your specific issues. See's full Terms of Use for more information.