Broz v. Cellular Information Systems, Inc.
Delaware Supreme Court
673 A.2d 148 (Del. 1996)
Broz (defendant), a director of financially struggling CIS (plaintiff) who also owned a competing cellular company (RFBC), was approached about buying a cellular license CIS was never offered; informal conversations with other CIS directors confirmed CIS had no interest in or ability to afford the license. Around the same time, a separate company, PriCellular, was independently negotiating both to acquire CIS and to acquire the same license through an option contract allowing a higher competing bid; Broz, through RFBC, outbid Mackinac's option holder for the license shortly before PriCellular completed its acquisition of CIS. The Delaware Court of Chancery found Broz breached his fiduciary duty by not considering PriCellular's future plans and not formally presenting the opportunity to CIS's board, and Broz appealed.
Whether, under the corporate opportunity doctrine, a director must formally present a business opportunity to his corporation's board when the corporation lacks both an interest in and the financial ability to pursue that opportunity.