In the

        United States Court of Appeals
                       For the Seventh Circuit
                           ____________________
No. 17-1775
ELLIOTT D. LEVIN, as Chapter 7 Trustee for
Irwin Financial Corporation,
                                                          Plaintiff-Appellant,

                                         v.

WILLIAM I. MILLER,
GREGORY F. EHLINGER, and
THOMAS D. WASHBURN,
                                                       Defendants-Appellees.
                           ____________________

            Appeal from the United States District Court for the
             Southern District of Indiana, Indianapolis Division.
          No. 1:11-cv-01264-SEB-MPB — Sarah Evans Barker, Judge.
                           ____________________

       ARGUED OCTOBER 25, 2017 — DECIDED AUGUST 17, 2018
                   ____________________

   Before KANNE and SYKES, Circuit Judges, and DARROW,
District Judge.*




*   Of the Central District of Illinois, sitting by designation.
2                                                  No. 17-1775

    SYKES, Circuit Judge. Irwin Financial Corporation was a
holding company for two banks that failed in the wake of
the 2007–2008 financial crisis. When the crisis began, regula-
tors and Irwin’s outside legal counsel both advised the
company to buoy up its sinking subsidiaries. Irwin’s Board
of Directors therefore instructed the officers to do everything
they could to save the banks. The officers tried to raise
capital and applied for government aid, but the chances of
success were slim. Private investors showed little interest in
the company, and federal regulators signaled that a bailout
was unlikely.
    A small glimmer of hope flickered in 2009: Irwin received
a $76 million tax refund. The Board authorized Irwin’s
officers to transfer the refund to the subsidiary banks and for
good reason: The Board believed that the refund legally
belonged to the banks and hoped the cash infusion would
keep them above water long enough for help to arrive. But
the refund was not enough to save the day. Management
could not raise sufficient capital, the hoped-for government
relief never materialized, the banks failed, and Irwin filed for
bankruptcy.
   Elliott Levin was appointed as Chapter 7 trustee for Ir-
win’s bankruptcy estate, and he promptly filed suit against
three of Irwin’s former officers. The suit alleged, among
other things, that the officers breached their fiduciary duty
to provide the Board with material information concerning
the tax refund. Levin’s legal theory rested on an elaborate
chain of assertions. He claimed the officers should have
known the banks were going to fail, so they should have
investigated alternatives to transferring the tax refund—
specifically, an earlier bankruptcy—despite the Board’s clear
No. 17-1775                                                  3

directive to support the banks. Had the officers done so, they
would have discovered that Irwin might be able to claim the
$76 million tax refund as an asset in bankruptcy. And if the
officers had presented this information to the Board, the
Board would have declared bankruptcy before transferring
the refund to the banks, thereby maximizing the holding
company’s value for creditors.
    The district judge didn’t buy Levin’s speculative theory
and neither do we. Corporate officers have a duty to furnish
the Board of Directors with material information, but that
duty is subject to the Board’s contrary directives. The record
clearly establishes that on the advice of government regula-
tors and expert outside legal counsel, the Board had priori-
tized saving the banks. The officers had no authority to
second-guess the Board’s judgment with their own inde-
pendent investigation. We affirm.
                       I. Background
    Before its bankruptcy, Irwin was the holding company
for two subsidiary banks: Irwin Union Bank and Trust
Company, which we’ll call the “Bank and Trust,” and Irwin
Union Bank, FSB, which we’ll call the “Savings Bank.”
William Miller was Irwin’s CEO and Gregory Ehlinger was
its CFO. Irwin’s Board of Directors was largely independent:
A supermajority of ten members were independent outside
directors, and the Board held an executive session without
Irwin’s officers after each meeting. At the executive sessions,
the directors discussed concerns and developed recommen-
dations for management. Lance Odden, the designated lead
director, would pass along these directives to Irwin’s offic-
ers.
4                                                No. 17-1775

    As financial institutions, Irwin and the banks were, of
course, subject to considerable governmental oversight.
Irwin was registered as a bank holding company with the
Board of Governors of the Federal Reserve System. As a
state-chartered member of the Federal Reserve System, the
Band and Trust answered to both the Federal Reserve and
the Indiana Department of Financial Institutions. The Sav-
ings Bank was a federally chartered savings bank regulated
by the Office of Thrift Supervision. Finally, because the
banks held federally insured deposits, both fell under the
supervision of the FDIC.
    In the midst of the 2007–2008 financial crisis, the Bank
and Trust began to flounder. Regulators insisted that Irwin
had a duty to support its struggling subsidiary. On
February 28, 2008, a representative from the Federal Reserve
Bank of Chicago attended a board meeting to discuss “regu-
latory concerns about [the Bank and Trust’s] liquidity and
[Irwin’s] expected role as a source of strength for the
[b]ank[s].” The representative “emphasized the preservation
of capital at the [b]ank and the need to maintain liquidity.”
    Heeding the regulator’s advice, Irwin adopted a resolu-
tion affirming its commitment to keeping the Bank and Trust
capitalized. Among other things, the resolution emphasized
“the importance of ensuring that the enterprise maintains
adequate capital to support its business operations.”
   As the crisis raged on, Irwin turned to independent legal
counsel for advice. The Board retained Rodgin Cohen and
other attorneys at Sullivan & Cromwell for advice on the
Board’s duties in the fraught regulatory landscape. The
Board began meeting every Friday with outside counsel
present. Cohen and his colleagues reported directly to the
No. 17-1775                                                 5

Board, and the Board expected Irwin’s management to
follow their advice.
    Cohen urged the Board to support the banks. He advised
the directors of their duty under the Source of Strength
Doctrine, which requires bank holding companies to provide
assistance to subsidiaries in times of financial distress. The
Board members apparently took his advice to heart. Accord-
ing to one director, the Board was committed to saving the
banks because it “was the prudent course of action and
consistent with our fiduciary duties based on Mr. Cohen’s
counsel [and] statements from regulators.”
   That commitment was soon put to the test. In May 2008
the Chicago Federal Reserve and Indiana Department of
Financial Institutions advised Irwin that the Bank and Trust
was in trouble and supervisory action would follow. Two
months later the regulators sent a Memorandum of Under-
standing demanding that Irwin obtain a $50 million cash
infusion by the end of August. On Cohen’s advice the Board
directed management to sign and deliver the memorandum.
    Irwin failed to raise $50 million by the deadline. Regula-
tors then sent the Board a formal Written Agreement requir-
ing Irwin and the Bank and Trust to develop a plan to
“improve management of [their] liquidity positions” and
“maintain sufficient capital.” Faced with these demands and
uncertain of its duties, the Board again turned to outside
counsel for advice. At the October 10, 2008 meeting, counsel
advised the Board to “be actively engaged in doing whatev-
er [it] can to ensure the bank remains solvent.” That same
day the Board approved the Written Agreement and author-
ized Miller, the CEO, to execute it.
6                                                No. 17-1775

    In the meantime Irwin began looking to federal programs
for relief. In October 2008 Congress created the Troubled
Asset Relief Program (“TARP”), which authorized the
Treasury Department to purchase troubled assets from
financial institutions after considering various factors,
including the “long-term viability of the financial institu-
tion.” 12 U.S.C. § 5213(4). The standard for analyzing a
bank’s viability was left to the discretion of regulatory
agencies, which included the discretion to decide whether
TARP funds should be included in the analysis. In
November 2008 the Board authorized and submitted an
application for $148 million in TARP funds.
   The application faced an uphill battle. On November 21
the Board learned that a bank with a financial health rating
of 4 or 5 would receive TARP funding only as part of an
acquisition by another bank. Irwin had a rating of 4, and the
prospects of a buyout looked grim.
    The Board continued to prioritize the Bank and Trust’s
capitalization. During the December 4 meeting, the Board
affirmed that the Written Agreement’s capital-sufficiency
requirement was “of critical importance and should remain
a primary focus of management.” The Board then “author-
ized management to move additional equity capital from
[Irwin] into [the Bank and Trust],” and the officers duly
transferred $14 million.
    Yet the Bank and Trust’s fortunes continued to decline.
At the December 17 meeting, the Board learned that the
Reserve Bank had downgraded its financial health rating to
a 5. While ominous, the downgrade didn’t mean certain
failure. The bank remained adequately capitalized, and
Cohen reassured the Board that he had seen banks with a 5
No. 17-1775                                                 7

rating survive with additional capital. And the possibility of
a government bailout was still on the table. A representative
from the Federal Reserve explained that the TARP eligibility
criteria were not static, and although it would be “extremely
challenging” for Irwin to receive approval, the Federal
Reserve remained “receptive to listening.” The representa-
tive advised that the Board’s plan to raise $50 million in
equity could be a game changer and would make TARP
funding more likely.
    To stand a chance, Irwin believed it needed the Federal
Reserve to endorse its TARP application. In January 2009
Miller and Odden reached out to the Federal Reserve and
asked what Irwin needed to do to win support. After several
weeks of silence, the Federal Reserve finally responded. The
demands were staggering. Among other things, Irwin would
need to raise $150 million in capital and appoint a new CEO.
And even with the Federal Reserve’s support, there was no
guarantee that the Treasury Department would approve
Irwin’s application. In a subsequent board meeting, Irwin’s
investment-banking advisor dismissed the possibility of
raising $150 million as “remote” and cautioned against
basing future plans on that possibility. Unless the govern-
ment changed the policy, the TARP application was certain
to fail. Irwin accordingly lobbied the Treasury to enact a
policy more favorable to its application.
    Around this same time the Board approved the 2009 Tax
Allocation Agreement that lies at the heart of this controver-
sy. The agreement provided, as it had since 1999, that Irwin
would file consolidated federal income-tax returns on behalf
of itself and the banks. Under the agreement if a bank would
have been entitled to a tax refund had it filed separately,
8                                                    No. 17-1775

Irwin would transfer the appropriate amount after receiving
the consolidated refund from the IRS. Miller projected that
Irwin would receive $90 million in tax refunds, most of
which would be owed to the banks.
    Irwin believed that the refunds were the banks’ property,
and it held the refunds in trust on their behalf. That was
consistent with nonbinding regulatory guidance issued in
1998. See Interagency Policy Statement on Income Tax Allocation
in a Holding Company Structure, 63 FR 64757-01 (Nov. 23,
1998). Several years after regulators issued this guidance,
however, a bankruptcy judge in New York issued a contrary
ruling, holding that a consolidated refund belonged to the
parent and any payment owed to a subsidiary merely consti-
tuted a debt that became an unsecured claim in the parent’s
bankruptcy estate. See Superintendent of Ins. for the State of
N.Y. v. First Cent. Fin. Corp. (In re First Cent. Fin. Corp.),

(Bankr. E.D.N.Y. 2001), aff’d sub nom. Superinten-
dent of Ins. for the State of N.Y. v. Ochs (In re First Cent. Fin.
Corp.), 

(2d Cir. 2004).
    Regulators continued to urge the Board to prop up the
Bank and Trust. On May 7, 2009, just weeks before the
disputed tax refund arrived, the Board’s independent direc-
tors met in executive session with outside counsel and
representatives from the Indiana Department of Financial
Institutions, the FDIC, and the Chicago Federal Reserve.
During the meeting, the Indiana Department of Financial
Institutions warned of the consequences if the bank dropped
below the “adequately capitalized” status. The FDIC ex-
plained its resolution process for managing the assets of
insured banks that declare bankruptcy and urged Irwin to
protect depositors by moving uninsured deposits into
No. 17-1775                                                 9

insured status. The Chicago Federal Reserve expressed
concern about the bank’s liquidity but suggested that the
anticipated tax refund could help. Finally, the FDIC advised
Irwin to continue efforts to raise capital—especially by
lobbying for changes in the TARP program—while the FDIC
prepared for a possible resolution.
    The Board agreed and once more directed the officers to
keep the banks solvent. After excusing the regulators, the
Board called Miller and the other officers back into the
meeting and declared a dual-track strategy: Irwin would
seek to “secure new capital with a government partnership,”
or should that endeavor fail, “manage a resolution process.”
The Board accordingly directed the officers “to pursue its
policy approach with the US Treasury” and “mitigate nega-
tive outcomes of a[n] [FDIC] resolution for stakeholders.”
The Board also directed management to “focus[] on convert-
ing as much of the remaining uninsured deposit base as
possible to fully insured status.” In order to accomplish this
task, the officers needed to financially support the banks
long enough to convert uninsured deposits into insured
status.
    Shortly before the refund arrived, the Board faced yet
another setback. Irwin had previously hired the accounting
firm Ernst & Young to assist with the year-end 2008 audit,
and the audit indicated that the Bank and Trust remained
adequately capitalized. However, that result rested on a
particular accounting assumption that Ernst & Young urged
Irwin to confirm with the SEC. The SEC then issued guid-
ance that contradicted Irwin’s assumption and cast doubt on
the bank’s status. In a March 31, 2009 letter, Ernst & Young
informed Irwin that after correcting the mistaken assump-
10                                                No. 17-1775

tion, the bank was no longer considered well capitalized. As
a result, Irwin’s ability to continue as a going concern was in
serious doubt.
    On June 2, 2009, Irwin received mixed messages from the
Indiana Department of Financial Institutions and the Chica-
go Federal Reserve. In a joint letter to the Board, the regula-
tors advised that the banks needed substantially more than
$150 million to remain viable; Irwin’s plan to raise
$50 million was inadequate, and without capital infusion,
the Bank and Trust’s “likelihood of failure [was] imminent.”
Later that day, however, Cohen reported that after discuss-
ing the letter with the Chicago Federal Reserve, the regula-
tors clarified that they were “not saying the [Bank and Trust]
is in imminent danger of failure.” Cohen also advised that
the bank needed to remain adequately capitalized through
June 30 to buy enough time to negotiate the TARP applica-
tion with the Treasury. Although the negotiation might not
succeed, Cohen said “there [was] a reasonable possibility.”
   Two days later Miller informed the Board that Irwin had
received the consolidated tax refund, which he described as
“great news for liquidity.” On June 11 Irwin transferred the
$76 million refund to the banks. Just over $74 million went to
the Bank and Trust; the remainder went to the Savings Bank.
    Irwin and its subsidiaries continued to hold out hope. In
July Irwin received encouraging news that the Treasury had
expressed interest in helping small- and medium-sized
banks. Later that month the Board asked Cohen “if there was
an alternative course of action that ha[d] not been identified
by management.” Cohen responded “that he [did] not know
of additional things that could be done now other than what
No. 17-1775                                                         11

management [was] doing.” As late as August 13, 2009,
Cohen maintained that there was hope for TARP funds.
   But the TARP application was never approved. The
banks closed and Irwin filed for bankruptcy on
September 18, 2009. Levin was appointed Chapter 7 trustee
of Irwin’s bankruptcy estate while the FDIC was named
receiver for the banks.
    In September 2011 Levin filed suit in district court, see
28 U.S.C. § 1334(b), raising seven claims under Indiana law
for breach of fiduciary duty against Miller, Ehlinger, and a
third former Irwin officer.1 The district judge initially dis-
missed the complaint for lack of standing because she be-
lieved that every count was derivative of claims that
belonged to the FDIC as receiver for the banks. We affirmed
in part and reversed in part, holding that Levin had standing
to assert two of his claims. Levin v. Miller, 

(7th
Cir. 2014).
    On remand Levin filed an amended complaint limiting
his claims to the two he had standing pursue. As relevant
here, he alleged that Miller and Ehlinger breached their duty
to provide the Board with material information. The trustee
maintained that Miller and Ehlinger should have informed
the Board that Irwin could maximize its value if it had
declared bankruptcy before transferring the tax refund to the
banks. The judge entered summary judgment for the offic-
ers, and Levin appealed.

1 Thomas Washburn, who served as Irwin’s Executive Vice President
from 2000 until January 2008, was named as the third defendant, but the
claims against him are not at issue here.
12                                                 No. 17-1775

                        II. Discussion
   We review the summary judgment de novo, drawing all
reasonable inferences in Levin’s favor. Pain Ctr. of Se. Ind.
LLC v. Origin Healthcare Sols. LLC, 

, 459 (7th Cir.
2018).
    To prevail on a claim for breach of fiduciary duty, a
plaintiff must show: “(1) the existence of a fiduciary relation-
ship; (2) a breach of the duty owed by the fiduciary to the
beneficiary; and (3) harm to the beneficiary.” Good v. Ind.
Teachers Ret. Fund, 

, 983 (Ind. Ct. App. 2015)
(internal quotation marks omitted). No one disputes that a
fiduciary relationship existed; officers owe fiduciary duties
to the corporation they serve. See, e.g., Biberstine v. N.Y.
Blower Co., 

, 1318 (Ind. Ct. App. 1993).
    Levin claims that the officers breached their duty to pro-
vide information to the Board. In Indiana an officer’s duties
are “determined by common law rules of agency,” Winkler v.
V.G. Reed & Sons, Inc., 

, 1231 (Ind. 1994), and
according to these rules, an agent has a duty to provide
relevant information to the principal, see RESTATEMENT
(THIRD) OF AGENCY § 8.11 (AM. LAW INST. 2006). To fulfill this
duty, officers must “use reasonable effort to provide the
principal with facts that the agent … should know when …
the agent … has reason to know that the principal would
wish to have the facts or the facts are material to the agent’s
duties to the principal.” 

the officers for failing to inform the Board
that an earlier bankruptcy could have maximized Irwin’s
value. His theory rests on a series of assumptions: (1) the
officers should have seen the writing on the wall and real-
No. 17-1775                                                 13

ized that the banks were doomed to fail and that transferring
the tax refund would be a waste; (2) they should have
investigated whether filing for bankruptcy earlier was a
better option; (3) had they investigated, they would have
hired a tax and bankruptcy expert who would have advised
that Irwin could claim the refund as an asset in bankruptcy
(based on the New York bankruptcy judge’s decision); and
(4) had the officers reported this information, the Board
would have declared bankruptcy earlier, before transferring
the tax refund, thereby maximizing Irwin’s value and the
size of the bankruptcy estate for the creditors.
    Even on its own terms, Levin’s complicated theory is du-
bious. The argument’s intricate chain of inferences rests on a
series of speculative and increasingly questionable links—
especially the assertion that, contrary to both regulatory
guidance and Irwin’s years-long understanding (memorial-
ized in a written agreement), the Board would have tried to
claim the tax refund as its own asset in bankruptcy. Color us
skeptical.
    Nevertheless, Levin’s theory fails for a more fundamental
reason. The duty to provide information is not absolute; it is
qualified by the duty to obey the Board’s lawful instructions.
Corporate “officers are chosen by, report to[,] and are subject
to the direction of the board of directors.” IND. CODE § 23-1-
36-2 official cmt. Under the rules of agency, they have “a
duty to comply with all lawful instructions” received from
the Board, and they must comply with those instructions
even if they “believe[] that doing otherwise would be better
for the principal.” RESTATEMENT (THIRD) OF AGENCY § 8.09(2)
(AM. LAW. INST. 2006); 

Crucially, the duty to
comply supersedes the duty to inform: An agent’s obligation
14                                                No. 17-1775

to provide information is “subject to any manifestation by
the principal.” 

    As the financial crisis deepened, the Board clearly mani-
fested the intention to save the banks and directed the
officers accordingly. In February 2008 the Board resolved to
keep the Bank and Trust well capitalized. Later that year the
Board authorized Miller to execute the written agreement
requiring Irwin to maintain sufficient capital at the bank.
The Board ordered Miller to make a $14 million capital
contribution to the bank in December, and in May 2009 it
directed the officers to continue trying to raise capital while
preparing the bank’s deposit accounts for a possible resolu-
tion.
   As agents of the Board, the officers had a duty to execute
the Board’s strategy and directives. And that strategy was
plainly incompatible with declaring bankruptcy. Insolvency
would have killed any chance of government relief and cut
short efforts to insure deposit accounts. The officers had no
right—much less a duty—to pursue a course of action that
directly contradicted the Board’s clear instructions.
    Nor did the officers have a fiduciary duty to hire an ex-
pert to second-guess the Board’s judgment. The Board made
its decisions based on the advice of regulatory agencies and
deeply experienced outside counsel. The Chicago Federal
Reserve, Indiana Department of Financial Institutions, and
the FDIC all urged the Board to financially support its
subsidiaries. The lawyers from Sullivan & Cromwell, whom
the Board specifically retained for advice on fiduciary duties,
agreed. The officers were not obligated to retain their own
expert to challenge regulators, counsel, and the Board itself.
No. 17-1775                                                 15

    Levin insists that the Board never manifested a desire to
not receive information about Irwin’s potential value in
bankruptcy. He claims the Board was not irrevocably com-
mitted to propping up the banks and that it may have
changed course had it known that an earlier bankruptcy
could maximize value. It would only be logical, Levin
argues, for the directors to be interested in such information.
Without it, he argues, the Board “hardly could have mani-
fested a desire not to receive such information.”
    This argument rests on speculation and cannot be recon-
ciled with the record. The Board’s response to the crisis was
driven by the demands of federal and state regulators and
guided by expert outside counsel. Taking account of the
regulatory directives and expert legal advice, the Board
exercised its judgment and chose to devote its resources to
saving the banks. As agents, the officers had no right to
spend company resources pursuing a different strategy.
                                                    AFFIRMED.