Kirtley v. McClelland

Kirtley (defendant) became the director of the condominium-owners association (the association) (plaintiff) for The Pointe, a planned residential community. The condominium’s declaration and restrictions prohibited unit owners from maintaining outside antennae. The association had the exclusive right to provide television service to its members. During Kirtley’s tenure, Kirtley took advantage of a corporate opportunity for the association by upgrading the television-reception system to cable and charging members for services when Kirtley knew that the association was about to make such an upgrade. Kirtley purchased the necessary equipment for the upgrade, and instead of selling the system to the association, for two years he billed the unit owners at a rate from which he profited and that was commercially reasonable and well below the market rate. Thereafter, Kirtley exchanged the association’s exclusive right to provide television services at the condominium for a service contract with a provider on the same day he sold his equipment that he had purchased with a covenant not to compete. The association filed a derivative action against Kirtley, alleging that Kirtley had breached his fiduciary to the association. The trial court ruled for the association after finding that the association had the corporate and financial capacity to provide the television-reception service that Kirtley had personally appropriated. Kirtley appealed.