Northeast Harbor Golf Club, Inc. v. Harris, 661 A.2d 1146 (Me. 1995)
Northeast Harbor Golf Club, Inc. v.
Did the Club president and director breach her duty of loyalty by usurping corporate opportunities when she acquired nearby parcels suitable for Club expansion—opportunities she learned of due to her corporate position—without first fully disclosing them to, and obtaining a disinterested rejection from, the Club?
Adopting the ALI Principles of Corporate Governance § 5.05, the court held that a "corporate opportunity" includes opportunities to engage in a business activity of which a director or senior executive becomes aware (1) in connection with performing corporate functions or under circumstances signaling that the offeror expects the opportunity to be offered to the corporation; (2) through the use of corporate information or property; or (3) that are closely related to a business in which the corporation is engaged or expects to engage. A director or senior executive may not take a corporate opportunity unless, before doing so, the fiduciary: (a) offers the opportunity to the corporation and makes full disclosure of the conflict and the material facts, and the corporation—acting through disinterested directors or disinterested shareholders—properly rejects it; or (b) can prove that the corporation has no interest or expectancy in the opportunity, the opportunity is not essential to the corporation, and taking it does not create a conflict or otherwise breach the duty of loyalty. Timely, informed, and disinterested corporate renunciation is a central safe harbor under this approach.
The court vacated the judgment for Harris and remanded. It adopted the ALI corporate opportunity standard and concluded that Harris's post-acquisition disclosures and informal inquiries did not satisfy the safe harbor of prior full disclosure and disinterested rejection. The lower court must determine on remand whether the parcels were corporate opportunities under the ALI framework and, if so, the appropriate equitable relief.
Northeast Harbor modernizes Maine's corporate opportunity doctrine by adopting the ALI's disclosure-and-renunciation model. It teaches that process is paramount: fiduciaries must present opportunities learned through their roles to the corporation before acting personally. The case is widely taught because it highlights the duty of loyalty's reach in both nonprofit and for-profit settings, clarifies that lack of immediate funds does not excuse nondisclosure, and provides a practical roadmap for avoiding liability through timely, full disclosure and disinterested rejection. It also underscores the availability of equitable remedies—like constructive trusts—when fiduciaries usurp opportunities.