Each question is hypothetical and needs to be in the IRAC method. There is no other data or graphic link and is not an "incomplete question"

1. Nagy is a local television personality who serves on the board of directors for a large software company. Nagy's position on the board requires that she oversee the company's investment portfolio. Nagy enjoys the prestige of serving on this board; however, she does not have any special investment expertise and she frequently fails to review the financial statements provided by the company's accountants or trends taking place in the stock market. Not surprisingly, during the year that Nagy has been overseeing the company's investment portfolio, the company's investments have performed extremely poorly. Alan, a disgruntled shareholder, files a derivative suit against Nagy.

A. What is the most likely outcome of Alan's lawsuit?

[Hint: fiduciary duties of directors]

1. Ellen, Freddie and Greg decided to form a corporation, named EFG Corp., for the purpose of owning and managing an apartment building in Cullowhee, NC. Zelda, a tenant in the building, was severely injured in an accident in one of the building's elevators. The elevator was not properly maintained and the result was the elevator fell 4 stories with Zelda inside. Zelda's claim against the EFG is for approximately $5 million.

EFG Corp. has three shareholders - they were Ellen, Freddie and Greg. EFG Corp. EFG was properly capitalized (although not sufficiently capitalized to satisfy Zelda's claim). Partners, however, rarely met and complied with corporate formalities. They used EFG's bank account and often used those accounts for personal expenditure and co-mingled personal funds.

A. If EFG Corp. does not have sufficient assets to pay for Zelda's claim, how can Zelda sue the shareholders to pay for her loss from their personal assets? Explain.

[Hint: piercing the corporate veil]