I. THE CONTENTIONS OF THE PARTIES AND THE DECISION BELOW

Robert F. Broz (“Broz”) is the President and sole stockholder of RFB Cellular, Inc. (“RFBC”), a Delaware corporation engaged in the business of providing cellular telephone service in the Midwestern United States. At the time of the conduct at issue in this appeal, Broz was also a member of the board of directors of plaintiff below-appellee, Cellular Information Systems, Inc. (“CIS”). CIS is a publicly held Delaware corporation and a competitor of RFBC.


The conduct before the Court involves the purchase by Broz of a cellular telephone service license for the benefit of RFBC. The license in question, known as the Michigan-2 Rural Service Area Cellular License (“Michigan-2”), is issued by the Federal Communications Commission (“FCC”) and entitles its holder to provide cellular telephone service to a portion of northern Michigan.

II. FACTS

RFBC owns and operates an FCC license area, known as the Michigan-4 Rural Service Area Cellular License (“Michigan-4”). The license entitles RFBC to provide cellular telephone service to a portion of rural Michigan. Although Broz' efforts have been devoted primarily to the business operations of RFBC, he also served as an outside director of CIS at the time of the events at issue in this case.

In April of 1994, Mackinac Cellular Corp. (“Mackinac”) sought to divest itself of Michigan-2, the license area immediately adjacent to Michigan-4. To this end, Mackinac contacted Daniels & Associates (“Daniels”) and arranged for the brokerage firm to seek potential purchasers for Michigan-2. In compiling a list of prospects, Daniels included RFBC as a likely candidate. In May of 1994, David Rhodes, a representative of Daniels, contacted Broz and broached the subject of RFBC's possible acquisition of Michigan-2.

Michigan-2 was not, however, offered to CIS. Apparently, Daniels did not consider CIS to be a viable purchaser for Michigan-2 in light of CIS' recent financial difficulties. *152 The record shows that, at the time Michigan-2 was offered to Broz, CIS had recently emerged from lengthy and contentious insolvency reorganization.

During the period from early 1992 until the time of CIS' emergence from bankruptcy in 1994, CIS divested itself of some fifteen separate cellular license systems. CIS contracted to sell four additional license areas on May 27, 1994, leaving CIS with only five remaining license areas, all of which were outside of the Midwest.

On June 13, 1994, following a meeting of the CIS board, Broz spoke with CIS' Chief Executive Officer, Richard Treibick (“Treibick”), concerning his interest in acquiring Michigan-2. Treibick communicated to Broz that CIS was not interested in Michigan-2. Treibick further stated that he had been made aware of the Michigan-2 opportunity prior to the conversation with Broz, and that any offer to acquire Michigan-2 was rejected. In August of 1994, Broz contacted another CIS director, Peter Schiff (“Schiff”), to discuss the possible acquisition of Michigan-2 by RFBC. Schiff, like Treibick, indicated that CIS had neither the wherewithal nor the inclination to purchase Michigan-2. In late September of 1994, Broz also contacted Stanley Bloch (“Bloch”), a director and counsel for CIS, to request that Bloch represent RFBC in its dealings with Mackinac. Bloch agreed to represent RFBC, and, like Schiff and Treibick, expressed his belief that CIS was not at all interested in the transaction. Ultimately, all the CIS directors testified at trial that, had Broz inquired at that time, they each would have expressed the opinion that CIS was not interested in Michigan-2. #p#分页标题#e#

On June 28, 1994, following various overtures from PriCellular concerning an acquisition of CIS, six CIS directors entered into agreements with PriCellular to sell their shares in CIS at a price of $2.00 per share. These agreements were contingent upon, inter alia, the consummation of a PriCellular tender offer for all CIS shares at the same price.

Financing difficulties ultimately caused PriCellular to delay the closing date of the tender offer from September 16, 1994 until October 14, 1994 and then again until November 9, 1994.

On August 6, September 6 and September 21, 1994, Broz submitted written offers to Mackinac for the purchase of Michigan-2. During this time period, PriCellular also began negotiations with Mackinac to arrange an option for the purchase of Michigan-2. PriCellular's interest in Michigan-2 was fully disclosed to CIS' chief executive, Treibick, who did not express any interest in Michigan-2, and was actually incredulous that PriCellular would want to acquire the license.

In late September of 1994, PriCellular reached agreement with Mackinac on an option to purchase Michigan-2. The exercise price of the option agreement was set at $6.7 million, with the option remaining in force until December 15, 1994. The agreement further provided that Mackinac was free to sell Michigan-2 to any party who was willing to exceed the exercise price of the Mackinac-PriCellular option contract by at least $500,000. On November 14, 1994, Broz agreed to pay Mackinac $7.2 million for the Michigan-2 license, thereby meeting the terms of the option agreement. An asset purchase agreement was thereafter executed by Mackinac and RFBC.

Nine days later, on November 23, 1994, PriCellular completed its financing and closed its tender offer for CIS. Prior to that point, PriCellular owned no equity interest in CIS.

IV. APPLICATION OF THE CORPORATE OPPORTUNITY DOCTRINE

The doctrine of corporate opportunity represents but one species of the broad fiduciary duties assumed by a corporate director or officer. A corporate fiduciary agrees to place the interests of the corporation before his or her own in appropriate circumstances. The classic statement of the doctrine is derived from the venerable case of Guth v. Loft, Inc. In Guth, this Court held that:

if there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake, is, from its nature, in the line of the corporation's business and is of practical advantage to it, is one in which the corporation has an interest or a reasonable expectancy, and, by embracing the opportunity, the self-interest of the officer or director will be brought into conflict with that of the corporation, the law will not permit him to seize the opportunity for himself.
Guth, 5 A.2d at 510-11.

We note at the outset that Broz became aware of the Michigan-2 opportunity in his individual and not his corporate capacity. In fact, it is clear from the record that Mackinac did not consider CIS a viable candidate for the acquisition of Michigan-2. Accordingly, Mackinac did not offer the property to CIS. In this factual posture, many of the fundamental concerns undergirding the law of corporate opportunity are not present ( e.g., misappropriation of the corporation's proprietary information). The burden imposed upon Broz to show adherence to his fiduciary duties to CIS is thus lessened to some extent. Nevertheless, this fact is not dispositive. #p#分页标题#e#

We turn now to an analysis of the factors relied on by the trial court. First, we find that CIS was not financially capable of exploiting the Michigan-2 opportunity. Although the Court of Chancery concluded otherwise, we hold that this finding was not supported by the evidence. Levitt, 287 A.2d at 673. The record shows that CIS was in a precarious financial position at the time Mackinac presented the Michigan-2 opportunity to Broz.

While it may be said with some certainty that the Michigan-2 opportunity was within CIS' line of business, it is not equally clear that CIS had a cognizable interest or expectancy in the license. Despite the fact that the nature of the Michigan-2 opportunity was historically close to the core operations of CIS, changes were in process. At the time the opportunity was presented, CIS was actively engaged in the process of divesting its cellular license holdings. CIS' articulated business plan did not involve any new acquisitions. Further, as indicated by the testimony of the entire CIS board, the Michigan-2 license would not have been of interest to CIS even absent CIS' financial difficulties and CIS' then current desire to liquidate its cellular license holdings. Thus, CIS had no *157 interest or expectancy in the Michigan-2 opportunity.

Finally, the corporate opportunity doctrine is implicated only in cases where the fiduciary's seizure of an opportunity results in a conflict between the fiduciary's duties to the corporation and the self-interest of the director as actualized by the exploitation of the opportunity. In the instant case, Broz' interest in acquiring and profiting from Michigan-2 created no duties that were inimicable to his obligations to CIS. Broz comported himself in a manner that was wholly in accord with his obligations to CIS. Broz took care not to usurp any opportunity which CIS was willing and able to pursue. Broz sought only to compete with an outside entity, PriCellular, for acquisition of an opportunity which both sought to possess. Broz was not obligated to refrain from competition with PriCellular.

In concluding that Broz had usurped a corporate opportunity, the Court of Chancery placed great emphasis on the fact that Broz had not formally presented the matter to the CIS board. In so holding, the trial court erroneously grafted a new requirement onto the law of corporate opportunity, viz., the requirement of formal presentation under circumstances where the corporation does not have an interest, expectancy or financial ability.

The teaching of Guth and its progeny is that the director or officer must analyze the situation ex ante to determine whether the opportunity is one rightfully belonging to the corporation. If the director or officer believes, based on one of the factors articulated above, that the corporation is not entitled to the opportunity, then he may take it for himself. Of course, presenting the opportunity to the board creates a kind of “safe harbor” for the director, which removes the specter of a post hoc judicial determination that the director or officer has improperly usurped a corporate opportunity. It is not the law of Delaware that presentation to the board is a necessary prerequisite to a finding that a corporate opportunity has not been usurped. #p#分页标题#e#

In concluding that Broz usurped an opportunity properly belonging to CIS, the Court of Chancery held that “[f]or practical business reasons CIS' interests with respect to the Mackinac transaction came to merge with those of PriCellular, even before the closing of its tender offer for CIS stock.” Based on this fact, the trial court concluded that Broz was required to consider PriCellular's prospective, post-acquisition plans for CIS in determining whether to forego the opportunity or seize it for himself. Had Broz done this, the Court of Chancery determined that he would have concluded that CIS was entitled to the opportunity by virtue of the alignment of its interests with those of PriCellular.

We disagree. Broz was under no duty to consider the contingent and uncertain plans of PriCellular in reaching his determination of how to proceed.

Broz, as an active participant in the cellular telephone industry, was entitled to proceed in his own economic interest in the absence of any countervailing duty. The right of a director or officer to engage in business affairs outside of his or her fiduciary capacity would be illusory if these individuals were required to consider every potential, future occurrence in determining whether a particular business strategy would implicate fiduciary duty concerns.

V. CONCLUSION

Therefore, we hold that Broz did not breach his fiduciary duties to CIS.