Sunday, November 24, 2013

Fliegler v. Lawrence case brief

Fliegler v. Lawrence case brief summary
361 A.2d 218 (Del. 1976)


CASE SYNOPSIS
Plaintiff shareholder challenged an order of the Court of Chancery of Delaware, which held that defendant officers did not wrongfully usurp an opportunity that belonged to the corporation and that defendant officers did not wrongfully profit by causing the corporation to exercise an option to purchase defendant close corporation, a majority of whose shares were held by defendant officers.

CASE FACTS
Defendant officer (the president of the corporation), in his individual capacity, acquired certain antimony (a metallic element) properties under a lease option, which he offered to transfer to the corporation. Defendant officers (the board of directors) agreed that the corporation's legal and financial position would not permit acquisition and development of the properties. Thus, defendant officer transferred the properties to defendant close corporation, a majority of whose stock was owned by the individual defendants, granting defendant corporation an option to purchase. After the corporation exercised the option, the shareholder filed the derivative action.

DISCUSSION

  • The court held that the burden was upon defendants to demonstrate the intrinsic fairness of the transaction. 
  • The court held that defendant officers did not wrongfully usurp an opportunity belonging to the corporation and that defendants, officers and close corporation, did not wrongfully profit by causing the corporation to exercise an option to purchase that opportunity. 
  • The court held that the shareholder had shown no detrimental use of the corporation's assets.

CONCLUSION
The court affirmed the trial court judgment.

Recommended Supplements for Corporations and Business Associations Law

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