Sunday, November 24, 2013

Broz v. Cellular Information Systems, Inc. case brief

Broz v. Cellular Information Systems, Inc. case brief summary
673 A.2d 148 (Del. 1996)


CASE SYNOPSIS
Appellants, corporation and director, challenged the judgment of the Court of Chancery of the State of Delaware in favor of appellee corporation in appellee's action that sought equitable relief based on appellants' alleged usurpation of a corporate opportunity that allegedly belonged to appellee.

CASE FACTS
After appellant corporate director purchased a cellular telephone service license for the benefit of appellant corporation, appellee corporation brought an action against appellants that sought equitable relief on the grounds that the purchase constituted a usurpation of a corporate opportunity that allegedly belonged to appellee. The trial court ruled in favor of appellee and imposed a constructive trust against the agreement, and appellant sought review.

DISCUSSION

  • On appeal, the court held that the lower court erred as a matter of law when it held that appellant corporate director had a duty to formally present the purchase opportunity to appellee's board. 
  • The court also held that the trial court erred in its application of the corporate opportunity doctrine under the facts of the case, where appellee had no interest or financial ability to acquire the opportunity. 
  • The court held that appellant corporate director was not required to consider the contingent and uncertain plans of a third party that sought to acquire appellee in reaching his determination of how to proceed.

CONCLUSION
The court reversed the judgment in favor of appellee corporation and the imposition of a constructive trust because appellant corporate director did not divert a corporate opportunity that properly belonged to appellee.

Recommended Supplements for Corporations and Business Associations Law

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