Kahn v. Portnoy
Delaware Court of Chancery
2008 WL 5197164 (2008)
Barry Portnoy (defendant) was a director of TravelCenters of America, LLC (TA) and Hospitality Properties Trust (HPT). HPT owned real property that it leased to TA to operate truck stops. In separate transactions, HPT acquired Petro Stopping Holdings, L.P., which owned truck stop real estate, and TA acquired Petro Stopping Centers, L.P. (Petro), which operated truck stops. HPT then leased the acquired real estate to TA. Alan Kahn (plaintiff), a shareholder of TA, brought suit, alleging that Portnoy breached his fiduciary duty to TA by approving the HPT-to-TA lease because the lease required TA to pay above-market rents to HPT, which benefitted Portnoy as an HPT director. TA’s LLC agreement adopted fiduciary duties from Delaware corporation law but then modified those duties. One such modification provided: “It shall be presumed that, in making its decision and notwithstanding that such decision may be interested, the Board of Directors acted properly and in accordance with its duties. . . .” Based on this provision, Portnoy filed a motion to dismiss for failure to state a claim. In deciding the motion, the court analyzed the LLC agreement’s language to determine whether the phrase “its decision” created the presumption of proper decision-making with respect to all the directors’ decisions, or only with respect to transactions presenting a conflict between a shareholder and the LLC or its board of directors, as opposed to transactions in which there was a conflict between the directors and the LLC.
Rule of Law
Holding and Reasoning (Chandler, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 178,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.