Question

Klinicki and Lundgren incorporated Berlinair, Inc., a closely held Oregon corporation. Lundgren was president and responsible for developing business. Klinicki served as vice president and director responsible for operations and maintenance. Klinicki owned one-third of the stock, and Lundgren controlled the rest. They both met with BFR, a consortium of Berlin travel agents, about contracting to operate some charter flights. After the initial meeting, all contracts with BFR were made by Lundgren, who learned that there was a good chance that the BFR contract would be available. He incorporated Air Berlin Charter Co. (ABC) and was its sole owner. He presented BFR with a contract proposal, and it awarded the contract to ABC. Although Lundgren was using Berlinair’s working time and facilities, he managed to keep the negotiations a secret from Klinicki. When Klinicki discovered Lundgren’s actions, he sued him for usurping a corporate opportunity for Berlinair. Lundgren contended that it was not a usurpation of corporate opportunity because Berlinair did not have the financial ability to undertake the contract with BFR. Decide. Are any ethical principles applicable to this case? Consider the applicability of Chief Justice Cardozo’s statement in Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928), concerning the level of conduct for fiduciaries: “A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctillo of an honor the most sensitive is then the standard of behavior. .” [Klinicki v. Lundgren, 695 P.2d 906 (Or.)]



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