Friday, November 22, 2013

Shapiro v. Greenfield case brief

Shapiro v. Greenfield case brief summary
764 A.2d 270 (2000)


CASE SYNOPSIS
Appellant corporation, officers, and directors appealed a trial court's finding they usurped a corporate opportunity and appointment of a receiver, entered by the Circuit Court for Montgomery County (Maryland), where appellee minority shareholders filed suit after one appellant proposed a joint venture to redevelop an underperforming corporate property and corporate shareholders present at a meeting unanimously approved the proposal.

CASE FACTS
Appellee minority shareholders filed a derivative suit against appellant corporation, officers, and directors after one appellant, an operating officer, proposed a joint venture to redevelop an underperforming corporate property. A special meeting was called to consider a resolution authorizing the corporation to enter into the joint venture. Advanced notice included a description of the proposed joint venture. Appellees did not attend the meeting. The shareholders present unanimously voted for it. Appellees protested that none of the directors voting were disinterested directors. Following a trial and a report by a special master, the trial court found appellants usurped a corporate opportunity and appointed a receiver. Appellants challenged that holding.

DISCUSSION

  • The court vacated the judgment. 
  • The court held appellants had not usurped a corporate opportunity, but that remand was required to determine whether interested directors were involved, and if so, whether the transaction was nevertheless fair and reasonable to the corporation. 
  • The court also held the trial court was entitled to examine whether appellees acquiesced, ratified, or participated in the transaction.

CONCLUSION
Judgment vacated and case remanded for further proceedings because the transaction did not constitute a usurpation of corporate opportunity, but remand was required to determine whether redevelopment plan involved corporate personnel with conflicts of interest, and if so, whether the transaction was fair and reasonable to the corporation, or whether appellees acquiesced, ratified or participated in objectionable transaction.

Recommended Supplements for Corporations and Business Associations Law

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