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Farber v. Servan Land Company, Inc.
United States Court of Appeals for the Fifth Circuit
662 F.2d 371 (5th Cir. 1981)
Charles Serianni, A.I. Savin, and other investors formed Servan Land Company, Inc. (Servan) (defendant) to build a golf course. Serianni and Savin owned four-sevenths of Servan stock. Serianni was the president of Servan and the only active director. Servan purchased 160 acres on which to build the course. Subsequently, Servan purchased an additional 20 acres. At an annual stockholder meeting, a director stated that the seller was also willing to sell a 160-acre tract abutting the golf course, for use as an additional golf course. The stockholders discussed the opportunity at the meeting, but ultimately did not take a vote on the possible purchase. The following year, Serianni and Savin (defendants), the principal officers of Servan, purchased the additional 160 acres for themselves. Approximately four years later, Serianni, Savin, and Servan sold both 160-acre tracts. All stockholders except Jack Farber (plaintiff) approved the sale. Farber brought a shareholder derivative suit against Serianni, Savin, and Servan, claiming that the ability to purchase the additional 160-acre tract was a corporate opportunity, and that Serianni and Savin breached their fiduciary duty by purchasing the land individually. The district court ruled in favor of the defendants. The court made three findings: there was no corporate opportunity; even if there was, it was rejected by Servan; and the Servan stockholders ratified the additional purchase with their subsequent approval of the sale of both 160-acre tracts. Farber appealed.
Rule of Law
Holding and Reasoning (Tjoflat, J.)
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