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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1987 

                        CHAPTER 326-H.F.No. 141 
           An act relating to liability; authorizing the 
          elimination or limitation of a director's personal 
          liability to a cooperative association or its members; 
          exempting certain directors, members, and agents of 
          nonprofit corporations from civil liability; exempting 
          certain members of hospital district boards from 
          certain civil liability; amending Minnesota Statutes 
          1986, sections 317.201; and 447.32, by adding a 
          subdivision; and proposing coding for new law in 
          Minnesota Statutes, chapter 308. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [308.111] [ELIMINATION OR LIMITATION OF 
LIABILITY.] 
    A director's personal liability to the cooperative 
association or its members for monetary damages for breach of 
fiduciary duty as a director may be eliminated or limited in the 
articles.  The articles shall not eliminate or limit the 
liability of a director: 
    (1) for a breach of the director's duty of loyalty to the 
cooperative association or its members; 
    (2) for acts or omissions not in good faith or that involve 
intentional misconduct or a knowing violation of law; 
    (3) for a transaction from which the director derived an 
improper personal benefit; or 
    (4) for an act or omission occurring prior to the date when 
the provision in the articles eliminating or limiting liability 
becomes effective. 
    Sec. 2.  Minnesota Statutes 1986, section 317.201, is 
amended to read:  
    317.201 [UNPAID DIRECTORS OR TRUSTEES; LIABILITY FOR 
DAMAGES.] 
    A director or trustee of a nonprofit corporation or 
association who is not paid for services to the corporation or 
association is not individually liable for damages occasioned 
solely by reason of membership on or participation in board 
activities. 
    Subdivision 1.  [GENERALLY.] Except as provided in 
subdivision 2, no person who serves without compensation as a 
director, officer, trustee, member, or agent of an organization 
exempt from state income taxation under section 290.05, 
subdivision 2, or who serves without compensation as a fire 
chief of a nonprofit firefighting corporation or municipal 
volunteer fire department, shall be held civilly liable for an 
act or omission by that person if the act or omission was in 
good faith, was within the scope of the person's 
responsibilities as a director, officer, trustee, member, agent 
or fire chief of the organization, and did not constitute 
willful or reckless misconduct. 
    Subd. 2.  [EXCEPTIONS.] Subdivision 1 does not apply to:  
    (1) an action or proceeding brought by the attorney general 
for a breach of a fiduciary duty as a director; 
    (2) a cause of action to the extent it is based on federal 
law; 
    (3) a cause of action based on the person's express 
contractual obligation; or 
    (4) an action or proceeding based on a breach of public 
pension plan fiduciary responsibility. 
    Nothing in subdivision 1 limits an individual's liability 
for physical injury to the person of another or for wrongful 
death which is personally and directly caused by that 
individual, nor the liability of a municipality arising out of 
the performance of firefighting or related activities. 
    Subd. 3.  [DEFINITION.] For purposes of this section, the 
term "compensation" means any thing of value received for 
services rendered, except: 
    (1) reimbursement for expenses actually incurred;  
    (2) a per diem in an amount not to exceed the per diem 
authorized for state advisory councils and committees pursuant 
to section 15.059, subdivision 3; or 
    (3) payment by an organization of insurance premiums on 
behalf of a person who is or was a director, officer, trustee, 
member, or agent of an organization, or who, while a director, 
officer, trustee, member, or agent of the organization, is or 
was serving at the request of the organization as a director, 
officer, partner, trustee, employee, or agent of another 
organization or employee benefit plan against any liability 
asserted against and incurred by the person in or arising from 
that capacity. 
    Sec. 3.  Minnesota Statutes 1986, section 447.32, is 
amended by adding a subdivision to read: 
    Subd. 9.  [LIABILITY FOR DAMAGES.] Except as otherwise 
provided in this subdivision, no person who serves without 
compensation as a member of the board of a hospital district 
created or organized under sections 447.31 to 447.37 shall be 
held civilly liable for an act or omission by that person if the 
act or omission was in good faith, was within the scope of the 
person's responsibilities as a member of the board, and did not 
constitute willful or reckless misconduct.  This subdivision 
does not apply to: 
    (1) an action or proceeding brought by the attorney general 
for a breach of a fiduciary duty as a director; 
    (2) a cause of action to the extent it is based on federal 
law; or 
    (3) a cause of action based on the board member's express 
contractual obligation. 
    Nothing in this subdivision shall be construed to limit the 
liability of a member of the board for physical injury to the 
person of another or for wrongful death which is personally and 
directly caused by the board member. 
    For purposes of this subdivision the term "compensation" 
means any thing of value received for services rendered, except: 
    (1) reimbursement for expenses actually incurred; 
    (2) a per diem in an amount not to exceed the per diem 
authorized for state advisory councils and committees pursuant 
to section 15.059, subdivision 3; or 
    (3) payment by the hospital district of insurance premiums 
on behalf of a member of the board. 
    Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1, 2, and 3 are effective August 1, 1987, and 
apply to claims arising from incidents occurring after that date.
    Approved May 29, 1987