§ 38-38-130 — Liability of officers for benefit payments; civil action expense indemnification; liability insurance coverage for officers; cause of action against officers.

(A) The officers and members of the supreme governing body or a subordinate body of a society are not personally liable for the payment of any benefits provided by a society. The payment is payable only out of the funds of the society and in a manner provided by its constitution and bylaws. (B) A person may be indemnified and reimbursed by a society for expenses reasonably incurred by, and liabilities imposed upon, that person in connection with or arising out of any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, or threat of them, in which the person may be involved by reason of the fact that he is or was a director, officer, employee, or agent of the society or of a firm, corporation, or an organization which he served in a capacity at the request of the society. A person may not be indemnified or reimbursed (1) in relation to any matter in the action, suit, or proceeding as to which he is finally adjudged to be or to have been guilty of breach of a duty as a director, officer, employee, or agent of the society, or (2) in relation to any matter in the action, suit, or proceeding, or threat of them, which has been made the subject of a compromise settlement unless, in either (1) or (2) of this subsection, the person acted in good faith for a purpose the person reasonably believed to be in, or not opposed to, the best interests of the society and, in a criminal action or proceeding, in addition, had no reasonable cause to believe that his conduct was unlawful. The determination whether the conduct of the person meets the standard required in order to justify indemnification and reimbursement in relation to any matter described in (1) or (2) of this subsection may be made only by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to the action, suit, or proceeding or by a court of competent jurisdiction. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, or upon a plea of no contest, as to that person shall not in itself create a conclusive presumption that the person did not meet the standard of conduct required in order to justify indemnification and reimbursement. The right of indemnification and reimbursement is not exclusive of other rights to which the person may be entitled as a matter of law and inures to the benefit of his heirs, executors, and administrators. (C) A society is empowered to purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, or agent of the society, or who is or was serving at the request of the society as a director, officer, employee, or agent of another firm, corporation, or organization, against any liability asserted against the person and incurred by him in that capacity or arising out of his status as such, whether or not the society would have the power to indemnify the person against liability under this section. (D) A director, an officer, employee, a member, or volunteer of a society serving without compensation is not liable, and no cause of action may be brought, for damages resulting from the exercise of judgment or discretion in connection with the duties or responsibilities of that person for the society, unless the act or omission involved wilful or wanton misconduct.

Legislative History

HISTORY: 2000 Act No. 259, SECTION 1.