The Supreme Court of Virginia has held that a corporate officer who did not disclose a corporate opportunity to the corporation did not violate her duty of loyalty because she did not form an intent to accept the opportunity until after her termination. In Today Homes, Inc. v. Williams, Williams was Vice President of Operations for Today Homes, Inc., a property developer doing business under the name of Chesapeake Homes. Another officer made Williams aware of the Sinclair Property, which the company could purchase and develop. About three months later Williams was terminated and formed Majestic Homes, Inc. Majestic then purchased the Sinclair Property, developed it, and realized about $4.5 million in profit. Chesapeake Homes sued for breach of fiduciary duty and sought a constructive trust on the profits.
Justice Agee, writing for a unanimous court, held that Williams could not be liable for usurping a corporate opportunity. He noted that an officer’s fiduciary duty continues after resignation or termination only for transactions that began during, or that were founded on information gained during, the fiduciary relationship. Williams did not have a duty to disclose the Sinclair Property opportunity because, while she was a fiduciary, she did not intend to purchase it for herself. Only after she was terminated did she decide to buy the land but by then she was not a fiduciary.
The implication is that simply possessing information about a corporate opportunity does not trigger a duty to disclose. The duty is triggered by possessing such information and intending to take the opportunity for oneself. It is not immediately apparent to me that this is correct. Surely the information about the corporate opportunity came to Williams in her official capacity. Assume she knew of ten such properties (or a hundred). Was she entitled to accept any or all of them after her termination without breaching a duty, assuming she did not form an intent to accept them for herself until after she was terminated? Shouldn’t Williams’ fiduciary duty continue to prohibit her from accepting opportunities that she became aware of in her fiduciary capacity (in the absence of permission from the corporation)?
This opinion seems to illustrate a kind of tunnel vision that is not infrequent in analyzing fiduciary duty cases. Even if Williams did not usurp a corporate opportunity, didn’t she breach her duty of loyalty by not alerting her employer to the possibility of acquiring the Sinclair Property?