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Valparaiso Univ. Law School

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Tuesday, October 21, 2008

Business Associations Limerick of the Week: Broz v. Cellular Information Systems

Robert Broz wore two corporate hats. He was the President and sole shareholder of RFB Cellular (RFB), and he was also a member of the board of Cellular Information Systems (CIS). A broker of telephone service licenses approached Broz in his RFB capacity and asked if he would be interested in a license known as Michigan 2. Broz checked with some of the principals of CIS, who had no objections, and then purchased the license for his own company. In fact, CIS was in financial difficulties and was seeking to unload its existing licenses rather than buying new ones.

Meanwhile, another company, PriCellular, was seeking to acquire both CIS and the Michigan 2 license. PriCellular lost out to Broz in the bidding war over Michigan 2, but when it acquired CIS, it sued Broz for usurpation of a corporate opportunity. The court adopts a four-factor test, or so it says. The case really turns on the fact that, at the time Broz took the opportunity, CIS was financially unable to do so. Having so found, I don't see how the court could reason that the other factors could or should play any role. In any case, it found that Broz had not usurped a corporate opportunity.

Broz v. Cellular Information Systems

Alleging some corporate faux pas,
PriCellular sued Robert Broz.
The outcome is clear
From that sound you all hear:
It's his butler, uncorking Shiraz.

[Jeremy Telman]

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