Kahn v. Portnoy

Barry Portnoy (defendant) served as a director of both TravelCenters of America, LLC (TA) and Hospitality Properties Trust (HPT). HPT owned truck-stop real estate that it leased to TA, and in related transactions HPT acquired Petro's real estate holdings while TA acquired Petro's truck-stop operations; HPT then leased the newly acquired real estate to TA. Alan Kahn (plaintiff), a TA shareholder, sued Portnoy for breaching his fiduciary duty by approving the HPT-to-TA lease, which required TA to pay above-market rent that benefited Portnoy in his capacity as an HPT director. TA's LLC agreement had adopted Delaware corporate-law fiduciary duties but then added a clause presuming the board acted properly whenever it made 'its decision,' even an interested one. Portnoy moved to dismiss based on that presumption, and the dispute turned on whether the clause presumed propriety for all board decisions, or only for decisions posing a conflict between a shareholder and the board (as opposed to a conflict between the directors themselves and the company).