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HMG/Courtland Properties, Inc. v. Gray

Delaware Chancery Court
749 A.2d 94 (1999)


Facts

Lee Gray and Norman Fieber (defendants) were two of five directors of HMG/Courtland Properties, Inc. (HMG) (plaintiff), a company that bought and sold commercial real estate. Gray was a negotiator for HMG deals and negotiated the sale of HMG real estate to NAF Associates (NAF). Fieber, who owned an interest in NAF, disclosed this interest to HMG’s other directors and abstained from voting on the proposed sale to NAF. Gray, through relatives and other businesses he owned, also owned an interest in NAF. However, Gray did not disclose his interest in NAF to the other HMG directors. Gray voted to approve the sale to NAF. Further, Fieber knew of Gray’s interest in NAF but did not disclose Gray’s interest to the other HMG directors. HMG sued Gray and Fieber for breach of their fiduciary duties of loyalty and care and for defrauding HMG.

Rule of Law

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Issue

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Holding and Reasoning (Strine, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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