Georgia Supreme Court and Court of Appeals Building. (Photo: John Disney/ALM)

A federal appeal of a $5 million judgment against the defunct Buckhead Community Bank over its 2009 collapse has landed in front of the Supreme Court of Georgia on a question of who ultimately should pay.

The state high court will hear oral arguments Tuesday on a question the U.S. Court of Appeals for the Eleventh Circuit posed on three unsettled matters of state law that it must resolve before it rules on the bank’s two-year-old appeal.

The Eleventh Circuit has asked for a ruling on the state’s apportionment statute and a determination as to whether members of the bank’s board of directors should be held “jointly and severally liable” and, as a result, must determine themselves how to divide any judgment payoff.

Former bank directors, who were held personally liable for the judgment after a 2016 jury trial, appealed in part on how to apportion the judgment. They argued that some of the bank’s directors and officers were more liable than others for decisions behind a series of high-dollar loans that ultimately fell into default and took down the bank. Chief Judge Thomas Thrash of the U.S. District Court for the Northern District of Georgia had determined that the directors acted “in concert,” a finding the defendants have denied.

A federal appeals panel that includes Chief Judge Gerald Tjoflat and Judge Beverly Martin and Senior Judge Robert Lanier Anderson are asking the state Supreme Court to decide whether the state apportionment statute applies to purely financial losses against bank directors and corporate officers. The federal panel also seeks a ruling on how to determine liability when defendants are found to have acted in concert.

The dispute, the panel said, presents “two interdependent questions: first, whether Georgia’s rule imposing joint and several liability on tortfeasors acting in concert survives; and, second, if so, whether a decision of a bank’s board members qualifies as such a concerted action when the claim against those directors is premised on each director’s negligence in his decisional processes leading up to the board’s actions.”

The $5 million judgment stems from a civil case against eight directors of the defunct bank brought by the Federal Deposit Insurance Corp. The directors named as defendants, including some of Atlanta’s most prominent businessmen and the bank’s top executives, were all members of the bank’s loan committee. The FDIC, which guaranteed bank customers’ deposits when Buckhead collapsed, originally sought to claw back more than $17 million in losses stemming from a string of risky, high-dollar real estate development loans that turned sour as the housing market collapsed in 2008.

The case has been watched by banking lawyers across the state since 2014 when the state Supreme Court responded to a certified question from Thrash, who presided over the federal trial.

The state high court overturned previous rulings by the Court of Appeals that had created a virtual exemption from personal liability for all company officers and directors who might have demonstrated ordinary negligence that later contributed to a company’s collapse. In a unanimous decision, the state Supreme Court determined that whether a business decision “was a product of deliberation, reasonably informed by due diligence, and made in good faith is open to judicial scrutiny.”

A 2005 law did away with joint and several liability in cases “brought against one or more person for injury to person or property,” and Thrash ruled the bank directors acted “in concert” and that the law did not apply to such actions.

The directors argued that Thrash should have allowed the damages to be apportioned because “injury to person or property” includes economic property.