Storetrax.com, Inc. v. Gurland: Keep Trax of your Board of Directors

James R. Hart III

In Storetrax.com, Inc. v. Gurland, the Maryland Court of Appeals considered whether a corporate director breached his fiduciary duty to the corporation by filing suit against the corporation, pursuing summary judgment by default, and executing the default judgment by garnishing the corporation's bank account, despite the corporation's obvious ignorance of the lawsuit. The court held that a director does not breach his fiduciary duty by filing suit and enforcing a judgment against the corporation, so long as the director makes a full disclosure, giving the corporation fair notice of the conflicting personal interest. In so holding, the court sounded a wake-up call to boards of directors to exercise greater caution in their termination of potentially disgruntled directors and to be diligent in the selection and retention of a qualified and interested resident agent.