Rejecting the Second Circuit’s Wagoner rule and agreeing with the First, Third, Fifth, and Eleventh Circuits, the United States Court of Appeals for the Eighth Circuit held that the collusion of corporate insiders with third parties to injure the corporation does not deprive the corporation’s trustee of standing to sue third parties, resulting in a greater rift between Second Circuit and the other Courts of Appeals on this issue. Moratzka v. Morris, 482 F.3d 997, 1004 (8th Cir. 2007). Nevertheless, the court affirmed that such a situation may give rise to the defense of in pari delicto barring the trustee’s action. Although the decision in Moratzka affirms the idea that trustee standing and the in pari delicto defense are two issues that should be dealt with separately, the implications of the case may be less substantial than expected. Although the circuits disagreed about whether issues of standing and in pari delicto should be separated, the Eight Circuit affirms the rule that in pari delicto may be asserted as a defense against a plaintiff-trustee defeating his recovery. This article focuses on two issues: first it will examine why the constitutional issue of standing requires a separate and distinct analysis from affirmative defenses, like in pari delicto and second the article will examine the impact of the Eight Circuit’s decision.
> View Full PDF
Elizabeth L. Anderson, J.D. Candidate 2010 No. 1, Vol. 1 (2009)