Logourl black

Thorpe v. CERBCO, Inc.

Delaware Supreme Court
676 A.2d 436 (1996)


Facts

George and Robert Erikson (the Eriksons) (defendants) were directors, officers, and controlling shareholders of CERBCO, Inc., which in turn owned a controlling stake in three subsidiaries. Only one of these subsidiaries, Insituform East, Inc. (East), was profitable. James Krugman, chairman of Insituform of North America, Inc. (INA), approached the Eriksons in their capacity as directors and proposed that CERBCO sell East to INA in January 1990. Krugman was not aware that the Eriksons were controlling shareholders. The Eriksons indicated that they would block any attempt by INA to purchase East from CERBCO, and proposed instead that INA buy the Eriksons’ stake in CERBCO. Krugman agreed to consider that offer. The Eriksons did not inform CERBCO’s outside directors of INA’s offer to buy East, but they did disclose INA’s potential purchase of their CERBCO holdings. One of the outside directors suggested that CERBCO sell East to INA instead, but the Eriksons rejected this idea. In March 1990, the Eriksons and INA signed a letter of intent to complete the sale of the Eriksons’ controlling stake in CERBCO. INA paid the Eriksons a deposit of $75,000. In May 1990, Merle Thorpe, a CERBCO minority shareholder, filed a demand with the board that the proposed sale be rejected. The outside directors of CERBCO formed a special committee to consider the situation and hired counsel. In September 1990, the letter of intent expired and the sale was never completed due to disagreements between the Eriksons and INA. Thorp filed a shareholder derivative suit against the Eriksons, alleging that they had usurped a corporate opportunity. After a trial, the Court of Chancery found that the Eriksons had breached their duty of loyalty to the corporation but awarded no damages, because the sale was not completed and because the Eriksons could have blocked the sale of East to INA even if it had been disclosed to the board. Thorpe appealed.

Rule of Law

The rule of law is the black letter law upon which the court rested its decision. To access this section, start your 7-day free trial of Quimbee for Law Students.

Issue

The issue section includes the dispositive legal issue in the case phrased as a question. To access this section, start your 7-day free trial of Quimbee for Law Students.

Holding and Reasoning (Walsh, J.)

The holding and reasoning section includes:

  • 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.).

To access this section, start your 7-day free trial of Quimbee for Law Students.

Here's why 73,000 law students rely on our case briefs:

  • Reliable - written by law professors and practitioners not other law students.
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your class - works on your mobile and tablet.
  • 10,433 briefs - keyed to 136 casebooks.
  • Uniform format for every case brief.
  • Written in plain English - not in legalese and not just repeating the court's language.
  • Massive library of related video lessons - and practice questions.
  • Ability to tag case briefs in an outlining tool.
  • Top-notch customer support.
Start Your Free Trial Now