A corporate opportunity is any opportunity to engage in a business activity of which a director or senior executive becomes aware, either in connection with the performance of functions as a director or senior executive, or under circumstances that should reasonably lead the director or senior executive to believe that the person offering the opportunity expects it to be offered to the corporation; or through the use of corporate information or property, if the resulting opportunity is one that the director or senior executive should reasonably be expected to believe would be of interest to the corporation; or any opportunity to engage in a business activity of which a senior executive becomes aware and knows is closely related to a business in which the corporation is engaged or expects to engage.
Appellant president of a golf course purchased property surrounding the course. Appellant learned of one opportunity to purchase property in her capacity as president. She purchased a second piece of property that she learned of independent of her position. Appellant disclosed both of these purchases to appellee's board of directors. When appellant began to develop the property, appellees took no action, but created a separate organization to oppose development. The lower court found appellant usurped a corporate opportunity. The court reversed. Appellant usurped a corporate opportunity because she did not comply with the strict requirements of full disclosure before taking advantage of the opportunity. Even though she informed appellee after her decision, she usurped a corporate opportunity because the corporation was entitled to determine what was in its best interest. The court reversed because a six-year statute of limitations applied, and appellee's claims were partially barred because the period began to run when the property was purchased.
Did the Appellant usurp a corporate opportunity?
The Superior Court concluded that the Club's claim is not barred by the statute of limitations because the cause of action for usurping a corporate opportunity did not accrue as to any of the property until Harris began to actively develop the property in 1988. The court relied on the fact that Harris was an influential club member; on Harris's statement to the board of directors in 1979, when she purchased the Gilpin property, that the "Club will be protected;" that she had often purchased equipment for the Club and either leased it or sold it to the Club to prevent it from having to make large cash outlays; and that she told the Club after purchasing the Smallidge property that "she wanted the property to remain in friendly hands." The court found that the Club could reasonably have believed that Harris bought the property solely for the benefit of the Club.