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Directors Not Personally Liable For Defaults Under Lease
Nonprofit and Church Legal Trends - Free Edition - July August 2008 (free edition)
Volunteer Protection Act does not protect directors in this case but “Economic loss rule” prevents personal liability for contractual damages.
According to a recent appeal court in Washington state, directors of a nonprofit horse rescue organization cannot be held personally liable for damages resulting from the organization’s breach of a lease agreement.
The further concluded that the individual defendants could not rely on a volunteer directors’ protection act, but the “economic loss rule” limits the landlord to contract remedies against the corporation, the Court held. (Eastwood v. Horse Harbor Foundation, Ct. of App., WA, Div. Two, No. 34995-7-II, 4/22/08.)
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