corporate opportunity doctrine in Delaware

2026Dec. 2, 2024) (emphasis added). 179 Broz, 673 A.2d at 155 . 26 Those factors, however, are only “guidelines to be considered” in the fact-intensive analysis and “[n]o one factor is dispositive.” 180 Notably, “[d]isclosure to and informed approval by the [entity] may insulate a director from liability where the corporate opportunity doctrine otherwise applies.” 181 PPSF did not address any of the Broz factors post-trial.

2023Mack used corporate assets to do so, taking trips to Israel to meet with Nanomerics on the company dime, 236 using Scilex staff to facilitate the usurpation,237 and asking Scilex advisers to use Scilex data to evaluate the opportunities. 238 See Broz, 673 A.2d at 156 (noting that misappropriation of the company’s proprietary information is one of the fundamental concerns underpinning the corporate opportunity doctrine).

2024First, the corporate opportunity doctrine does not require a plaintiff parent entity to 267 Coltharp Tr. 418-20 (testifying that EHC would have sought a consent solicitation for a further leverage increase if the value from pursuing additional targets was greater than the cost of obtaining consent). 268 See Cavanaugh Dep. 305 (defendants’ withdrawn expert testifying that Encompass “could have found a way to finance” the Original Acquisitions). 269 Guth, 5 A.2d at 514 . 270 See supra notes 14-16 and accompanying text. 271 See Defs.’ Pre-trial Br.

2022These allegations and reasonable inferences derived therefrom make it reasonably conceivable that Flashpoint had an interest or expectancy in the Retro and Optical Opportunities. 108 Greene, 121 A.2d at 924 (citing Guth, 5 A.2d at 515 ). 35 As to the fourth factor, Plaintiffs must allege that Defendants’ taking of a corporate opportunity placed them in a position “inimicable to his duties to the corporation.”109 Put differently, “the corporate opportunity doctrine is implicated only in cases where the fiduciary’s seizure of an opportunity results in a conflict between the fiduciary’s duties to

2019Apr. 28, 1998) (quoting Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993)). 193 673 A.2d 148, 154-55 (Del. 1996). 37 Although these four factors are articulated in the conjunctive, the Supreme Court in Broz emphasized “that the tests enunciated in Guth and subsequent cases provide guidelines to be considered by a reviewing court in balancing the equities of an individual case” and that “[n]o one factor is dispositive and all factors must be taken into account insofar as they are applicable.”194 Consistent with this approach, the Supreme Court previously referred to the “line of bu

2017The Delaware Supreme Court held in the often-cited Guth v. Loft, Inc. case that when a director pursues a corporate opportunity for himself or herself, the director violates the duty of loyalty.224 The Supreme Court in Broz v. Cellular Information Systems, Inc. explained the corporate opportunity doctrine as follows: [A] corporate officer or director may not take a business opportunity for his own if: (1) the corporation is financially able to exploit the opportunity; (2) the opportunity is within the corporation’s line of business; (3) the corporation has an interest or expectancy in the oppo

2026PPSF primarily argues GFO breached its fiduciary duty by usurping opportunities from PRF. 176 The corporate opportunity doctrine recognizes that a “fiduciary agrees to place the interests of the [entity] before his or her own in appropriate circumstances.” 177 Under the doctrine, directors and officers “must avoid advantaging themselves at the corporation’s expense [and] cannot compete with the corporation or divert corporate opportunities from it without its consent.” 178 Thus, a corporate officer or director may not take a business opportunity for his own if: (1) the corporation is financial

2020Sys., Inc., 673 A.2d 148 , 154–55 (Del. 1996) (“The corporate opportunity doctrine . . . holds that a [fiduciary] may not take a business opportunity for his own if: (1) the corporation is financially able to exploit the opportunity; (2) the opportunity is within the corporation’s line of business; (3) the corporation has an interest 64 Even if Cooper was not obliged to “share” the Noble Loan with Plaintiffs, that allowance did not give him license to harm SMP by conspiring to drive CSM into bankruptcy through the acquisition of the Noble Loan or otherwise.289 As a result, Lippo’s Motions to D

2017Further, the fairness and reasonableness “shall be considered in the context of all similar or related transactions.”47 The fair and reasonable standard is “something similar, if not equivalent to entire fairness review.”48 We find that Brinckerhoff has pled sufficient facts leading to an inference that the Alberta Clipper transaction was not “fair and reasonable to the Partnership” because EEP repurchased assets from Enbridge “less favorable to the 44 Bank of New York Mellon v. Commerzbank Capital Funding Trust II, 65 A.3d 539, 553 (Del. 2013) (internal citations omitted). 45 App. to Opening

2017Bank of New York Mellon v. Commerzbank Capital Funding Trust II, 65 A.3d 539, 553 (Del. 2013) (internal citations omitted). 45 .

2023C. § 122(17). 90 See Thorpe v. CERBCO, Inc., 676 A.2d 436, 442 (Del. 1996); Guth v. Loft, Inc., 5 A.2d 503, 511 (Del. 1939). 47 to contract out of a significant portion of the duty of loyalty.”91 Not only that, but the opt- out arrangement need not appear in the charter, disconfirming the theory that all forms of fiduciary tailoring must be charter-based.

2023Accessories Corp. v. Summagraphics Corp., 425 A.2d 957 , 963–64 (Del. 1980) (“[T]he law of corporate opportunity sets the parameters of permissible employee conduct consistent with an employee’s fiduciary duties to his employers of loyalty and fair dealing.”). 89 See, e.g., Skye, 2020 WL 881544 , at *25. 27 The 777 Partners Defendants argue the usurpation claim is foreclosed by Section 4.8 of the Operating Agreement, which they contend “expressly disclaims the corporate opportunity doctrine.”90 Numbered for clarity, that section reads: [1] No Manager shall be required to manage the Company as

2020Compl. ¶ 33. 145 Gotham P’rs, 795 A.2d at 34 (refusing to allow a USACafes-type fiduciary duty claim against a second-tier controller where the core fiduciary (in this case Stonemar MM) complied with the constitutive agreement to which it was a party). 146 SCA § 10.4. 35 provision [] qualifies the meaning of the general one.”147 Third, Section 4.9 of the CRA provides that Cookeville Retail’s members and their respective affiliates have the right directly and indirectly to compete with Cookeville Retail.148 In other words, far from bringing corporate opportunities back to life, the CRA, like th

2020Compl. ¶ 33. 145 Gotham P’rs, 795 A.2d at 34 (refusing to allow a USACafes-type fiduciary duty claim against a second-tier controller where the core fiduciary (in this case Stonemar MM) complied with the constitutive agreement to which it was a party). 146 SCA § 10.4. 35 provision [] qualifies the meaning of the general one.”147 Third, Section 4.9 of the CRA provides that Cookeville Retail’s members and their respective affiliates have the right directly and indirectly to compete with Cookeville Retail.148 In other words, far from bringing corporate opportunities back to life, the CRA, like th

2020Compl. ¶ 33. 145 Gotham P’rs, 795 A.2d at 34 (refusing to allow a USACafes-type fiduciary duty claim against a second-tier controller where the core fiduciary (in this case Stonemar MM) complied with the constitutive agreement to which it was a party). 146 SCA § 10.4. 35 provision [] qualifies the meaning of the general one.”147 Third, Section 4.9 of the CRA provides that Cookeville Retail’s members and their respective affiliates have the right directly and indirectly to compete with Cookeville Retail.148 In other words, far from bringing corporate opportunities back to life, the CRA, like th

2020Compl. ¶ 33. 145 Gotham P’rs, 795 A.2d at 34 (refusing to allow a USACafes-type fiduciary duty claim against a second-tier controller where the core fiduciary (in this case Stonemar MM) complied with the constitutive agreement to which it was a party). 146 SCA § 10.4. 35 provision [] qualifies the meaning of the general one.”147 Third, Section 4.9 of the CRA provides that Cookeville Retail’s members and their respective affiliates have the right directly and indirectly to compete with Cookeville Retail.148 In other words, far from bringing corporate opportunities back to life, the CRA, like th

2020Apr. 27, 2009) (“[W]ell settled rules of contract construction require that, in a conflict between provisions, the more specific language should control.”). 148 CRA § 4.9. 149 Compare CRA § 4.9 (“each Member, Manager or Affiliate . . . may engage in and possess interests in other business ventures . . . including ones in direct or indirect competition with the Company.”), with SCA § 10.4. (“Each Member acknowledges that: (i) the other Members (including the Managing Member) and their respective Affiliates . . . may have other business interests . . . some of which may be in conflict or competi

2020See Compl. ¶ 6 (“Defendant LCR is an entity that owns and controls DXS and PacNet and, on information and belief, is owned and controlled by the Riady family, and/or its affiliates and controlled parties.”). 309 SMP Agreement § 4.6(a). 310 See, e.g., Norton, 67 A.3d at 361 (discussing agreements in the alternative entity space that “attempt to modify, rather than eliminate, fiduciary duties” and holding that a 71 Section 4.3 unambiguously “eschews the corporate opportunity doctrine.”311 Section 4.6, however, is more complicated.

2019Apr. 28, 1998) (quoting Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993)). 193 673 A.2d 148, 154-55 (Del. 1996). 37 Although these four factors are articulated in the conjunctive, the Supreme Court in Broz emphasized “that the tests enunciated in Guth and subsequent cases provide guidelines to be considered by a reviewing court in balancing the equities of an individual case” and that “[n]o one factor is dispositive and all factors must be taken into account insofar as they are applicable.”194 Consistent with this approach, the Supreme Court previously referred to the “line of bu

2019Apr. 28, 1998) (quoting Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993)). 193 673 A.2d 148, 154-55 (Del. 1996). 37 Although these four factors are articulated in the conjunctive, the Supreme Court in Broz emphasized “that the tests enunciated in Guth and subsequent cases provide guidelines to be considered by a reviewing court in balancing the equities of an individual case” and that “[n]o one factor is dispositive and all factors must be taken into account insofar as they are applicable.”194 Consistent with this approach, the Supreme Court previously referred to the “line of bu

2019Eighty years ago, in its seminal decision of Guth v. Loft, Inc., our Supreme Court described the corporate opportunity doctrine as follows: [I]f there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake, is, from its nature, in the line of the corporation’s business and is of 186 Emerald P’rs, 726 A.2d at 1224 (“Issues not briefed are deemed waived.”). 187 Physiotherapy Corp. v. Moncure, 2018 WL 1256492 , at *3 (Del.

2019Ch. 2003) (finding that stockholder failed to state a claim for usurpation of a corporate opportunity based “[o]n balancing the four factors” enumerated in Broz), aff’d, 845 A.2d 1040 (Del. 2004); Kohls v. Duthie, 791 A.2d 772, 784 (Del.

2015Distinguishing among standards of review is an important 49 E.g., Allied Capital Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1030 (Del.

2006See Kohls v. Duthie, 765 A.2d 1274 (Del.Ch.2000).

2002Compare American Recovery, 96 F.3d at 94 (requiring arbitration of a corporate opportunity claim because the duty of loyalty breach was based upon a business expectancy created by the underlying agreement), with Havens at !V, *5 (holding that a corporate opportunity does not fall under the arbitration clause of a voting agreement because the claim involved usurpation of a business prospect that did not "turn on” a contract that merely governs voting rights and dividend distributions among stockholders). 28 .

1996See Fliegler v. Lawrence, Del.Supr., 361 A.2d 218, 220 (1976).

1989See Weinberger v. UOP, Inc., 457 at 713-14; Rabkin v. Philip A. Hunt Chemical Corp., Del.Supr., 498 A.2d 1099, 1105 (1985).

1989Thompson v. D’Angelo, Del.Supr., 320 A.2d 729, 734 (1974).

1979See also Gamble v. Penn Valley Crude Oil Corp., Del.Ch., 34 Del.Ch. 359 , 104 A.2d 257 (1954), cross-motions for summary judgment as to right of plaintiff to exercise and receive stock options were denied on the state of the record, the Court stating, “Vital facts are either lacking or in conflict and it would therefore be inappropriate to attempt either to assume them or to evaluate them on cross-motions for summary judgment.” 104 A.2d at 263.

1979See also Gamble v. Penn Valley Crude Oil Corp., Del.Ch., 34 Del.Ch. 359 , 104 A.2d 257 (1954), cross-motions for summary judgment as to right of plaintiff to exercise and receive stock options were denied on the state of the record, the Court stating, “Vital facts are either lacking or in conflict and it would therefore be inappropriate to attempt either to assume them or to evaluate them on cross-motions for summary judgment.” 104 A.2d at 263.

1979See also Gamble v. Penn Valley Crude Oil Corp., Del.Ch., 34 Del.Ch. 359 , 104 A.2d 257 (1954), cross-motions for summary judgment as to right of plaintiff to exercise and receive stock options were denied on the state of the record, the Court stating, “Vital facts are either lacking or in conflict and it would therefore be inappropriate to attempt either to assume them or to evaluate them on cross-motions for summary judgment.” 104 A.2d at 263.