Broz v. Cellular Information Systems, Inc. (Del. 1996)
FACTS
Broz was President of RFBC and also on the board of a peer corporation [CIS]. He
received an opportunity that was not offered to CIS.
-Broz individually contacted a number of CIS directors, who told him that CIS would
not be interested in the opportunity.
-In trial, all CIS directors agreed that they would
have let Broz pursue the opportunity.
-At the time, CIS was being courted by PriCellular for acquisition. PriCellular and
RFBC competed for the opportunity described above.
RULES
Guth case said that director must offer opportunity to board if:
o Corporation is financially able to undertake the opportunity
o Opportunity is in line with corporation’s business and of practical advantage
to it.
o By embracing the offer, self-interest of director would come into conflict with
interests of the corporation
HOLDING
Court finds that although there hadn’t been a formal process, the informal contacts
proved that Broz had not acted in bad faith.
FACTS
Broz was President of RFBC and also on the board of a peer corporation [CIS]. He
received an opportunity that was not offered to CIS.
-Broz individually contacted a number of CIS directors, who told him that CIS would
not be interested in the opportunity.
-In trial, all CIS directors agreed that they would
have let Broz pursue the opportunity.
-At the time, CIS was being courted by PriCellular for acquisition. PriCellular and
RFBC competed for the opportunity described above.
RULES
Guth case said that director must offer opportunity to board if:
o Corporation is financially able to undertake the opportunity
o Opportunity is in line with corporation’s business and of practical advantage
to it.
o By embracing the offer, self-interest of director would come into conflict with
interests of the corporation
HOLDING
Court finds that although there hadn’t been a formal process, the informal contacts
proved that Broz had not acted in bad faith.
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