HMG/Courtland Properties, Inc. v. Gray
Delaware Court of Chancery
749 A.2d 94 (1999)
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
Holding and Reasoning (Strine, J.)
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