In 1988, Dan Anderson and Dean Paulson formed a corporation - Bearing Puller, Inc. (BPI), to make and market bearing pullers. Anderson and Paulson each received half of the stock. Initially operating in the city Anderson lived in, BPI moved to a nearby city in 1994 into a building owned by Paulson. After the move, Anderson's participation in BPI diminished, and Paulson's increased.
In 2008, Paulson formed DP Manufacturing as his own business to make components for the bearing pullers and sell the parts to BPI. The start-up costs included a $450,000 loan from a regional electric cooperative. BPI executed the loan documents and indorsed the check.
The proceeds were deposited into an account for DP Manufacturing, which did not sign a promissory note payable to BPI until 2010. When Anderson learned of DP Manufacturing and the loan, he filed a suit in a state court against Paulson, alleging, in part, a breach of fiduciary duty.
What is one fiduciary duty a director owes to his or her corporation? What does this duty require? Do you feel this is an appropriate duty? Does it require too much or too little of the director? (Try to choose a fiduciary duty that has not yet been identified. Don't just copy and paste the duty into your post. Share what the duty requires in your own words and your opinion of the duty.)
Did Paulson breach a fiduciary duty? If so, which one(s)? If not, why not?
Please write 2-3 paragraphs