Energy Resources Corporation, Inc. v. Porter

In 1976, James Porter (defendant) served as vice president and chief scientist for Energy Resources Corporation, Inc. (ERCO) (plaintiff). Porter worked on the ERCO initiative to develop an energy efficient coal-fired furnace. In 1977, Porter met with two Howard University faculty members, Cannon and Jackson. Cannon and Jackson agreed to submit a joint proposal with ERCO to the Department of Energy (DOE) to receive a grant for fluidized-bed-combustion development. Porter and the faculty members decided that Howard University would be listed as the primary applicant for the grant and ERCO would be listed as a proposed subcontractor. This decision was based on Jackson’s belief that the DOE would be inclined to support Howard University because it was a minority institution. After five months of collaboration, Jackson informed Porter that he had concerns about ERCO using Howard University to receive money intended for minorities. Porter tried to alleviate Jackson’s concerns but was unsuccessful. Jackson told Porter that Howard University would not collaborate with ERCO. Jackson spoke to the DOE about obtaining another subcontractor. The DOE informed Jackson that Porter had to be the subcontractor, regardless of whether he was affiliated with ERCO. Porter, Jackson, and Cannon then decided that Porter would create his own company for the project but, upon seeking advice from outside counsel, would not work on the proposal itself. Following this meeting, Porter told the ERCO president on two occasions that ERCO was not going to be awarded the subcontractor position and no further questions were asked. Shortly after DOE awarded Howard University the grant, Porter resigned. Porter told ERCO that was starting his own corporation to focus on computerized cars. However, ERCO then became aware that Porter’s new company, Energy & Environmental Engineering, Inc. (EEE), took the subcontractor opportunity with Howard University. ERCO sued Porter for breaching his fiduciary duty to ERCO by diverting a corporate opportunity for his own benefit. Porter claimed that because Jackson refused to work with ERCO, there was no corporate opportunity. The trial court agreed with Porter and returned a verdict in his favor. The matter was appealed.