Guth v. Loft, Inc.

Guth (defendant), president and dominant director of Loft, Inc. (plaintiff), a major retail cola seller, was personally offered discounted shares in Pepsi-Cola by a Pepsi official - an opportunity that, if taken on Loft's behalf, could have cut Loft's cola supply costs and boosted its profits. Instead, Guth used Loft's own money to buy the Pepsi shares for himself and his family's company, Grace, without consulting or getting approval from Loft's board, and then ran all three companies in ways that benefited himself, Grace, and Pepsi while harming Loft. After Guth lost control of Loft's board, Loft sued to recover the Pepsi shares, and the Chancery Court ordered Guth and Grace to transfer them to Loft; Guth, Pepsi, and Grace appealed.