Fiduciary Duties of Corporate Officers

Corporate officers and directors are fiduciaries and owe fiduciary duties to the corporation for which they work. See International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 576-77 (Tex. 1963); Imperial Group (Texas), Inc. v. Scholnick, 709 S.W.2d 358, 363 (Tex. App.–Tyler 1986, writ ref’d n.r.e.). Corporate directors and officers have a duty to fully disclose all material facts within their knowledge that relate to the corporation’s affairs. See Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 787 (1938); Huffington v. Upchurch, 532 S.W.2d 576, 579 (Tex. 1976); Accent Energy Corp. v. Gillman, 824 S.W.2d 274, 278 (Tex. App.–Amarillo 1992, writ denied); Imperial Group, 709 S.W.2d at 363. The officers and directors have a duty to dedicate their uncorrupted business judgment for the sole benefit of the corporation. See International Bankers, 368 S.W.2d at 577. A fiduciary must act with utmost good faith and avoid any act of self dealing. See Slay v. Burnett Trust, 143 Tex. 621, 639-40, 187 S.W.2d 377, 387-88 (1945); Thywissen v. Cron, 781 S.W.2d 682, 686 (Tex. App.–Houston [1st Dist.] 1989, writ denied). Once a fiduciary relationship has been established, it is presumed to continue until it is repudiated. See Thywissen, 781 S.W.2d at 686.
A corporate fiduciary cannot usurp corporate opportunities for personal gain. If a corporate fiduciary derives a personal benefit from dealing with corporate assets, such transactions will be given strict scrutiny. See International Bankers, 368 S.W.2d at 577; Thywissen, 781 S.W.2d at 686. The corporate-opportunity doctrine is a means to test the conduct of a fiduciary regarding his duty to act with the utmost of good faith in his relations with his corporation. Imperial Group, 709 S.W.2d at 363.
The corporate-opportunity doctrine applies where a corporation has a legitimate interest or expectancy in, and the financial resources to take advantage of, a particular business opportunity. See Dyer v. Shafer, Gilliland, Davis, McCollum & Ashley, Inc., 779 S.W.2d 474, 477 (Tex. App.–El Paso 1989, writ denied). When a corporate officer or director diverts a corporate opportunity to himself, he breaches his fiduciary duty of loyalty to the corporation. In such cases, a court in equity may find that the officer or director holds the usurped opportunity as constructive trustee for the corporation. See id.; In the Matter of Safety Int’l, Inc., 775 F.2d 660, 662 (5th Cir. 1985); Southwest Livestock & Trucking v. Dooley, 884 S.W.2d 805, 809 (Tex. App.–San Antonio 1994, writ denied). The transaction is presumptively fraudulent and void, Chien v. Chen, 759 S.W.2d 484, 495 (Tex. App.–Austin 1988, no writ), as being against public policy. Guaranty Bk. (So. Oak Cliff Bk.) v. National Sur. Corp., 508 S.W.2d 928, 931 (Tex. Civ. App.–Dallas 1974, writ ref’d n.r.e.). A fiduciary will not be allowed to retain proceeds gained from a violation of his fiduciary duty. See International Bankers, 368 S.W.2d at 576; Poe v. Hutchins, 737 S.W.2d 574, 579 (Tex. App.–Dallas 1987, writ ref’d n.r.e.).
Contracts between a corporation and its officers or directors are not void but are voidable for unfairness and fraud. The burden is upon the fiduciary to prove fairness. See International Bankers, 368 S.W.2d at 576.