Reference no: EM131470516

Question: Duty of Loyalty. Digital Commerce, Ltd., designed software to enable its clients to sell their products or services over the Internet. Kevin Sullivan served as a Digital vice president until 2000, when he became president. Sullivan was dissatisfied that his compensation did not include stock in Digital, but he was unable to negotiate a deal that included equity (referring to shares of ownership in the company). In May, Sullivan solicited ASR Corp.'s business for Digital while he investigated employment opportunities with ASR for himself. When ASR would not include an "equity component" in a job offer, Sullivan refused to negotiate further on Digital's behalf.

A few months later, Sullivan began to form his own firm to compete with Digital, conducting organizational and marketing activities on Digital's time, including soliciting ASR's business. In August, Sullivan resigned after first having all e-mail pertaining to the new firm deleted from Digital's computers. ASR signed a contract with Sullivan's new firm and paid it $400,000 for work through October 2001. Digital filed a suit in a federal district court against Sullivan, claiming that he had usurped a corporate opportunity. Did Sullivan breach his fiduciary duty to Digital? Explain. [In re Sullivan, 305 Bankr. 809 (W.D.Mich. 2004)]