1. What consequences, if any, do directors face for a breach of fiduciary duty?
2. Brown, the president and director of a corporation engaged in owning and operating a chain of motels, was advised, on what seemed to be good authority that a superhighway was to be constructed through the town of X, which would be a most desirable location for a motel. Brown presented these facts to the board of directors of the motel corporation and recommended that the corporation build a motel in the town of X at the location described. The board of directors agreed, and the new motel was constructed. However, the superhighway plans were changed after the motel was constructed, and the highway was never built. Later, a packinghouse was built on property adjoining the motel, and as a result the corporation sustained a considerable loss. The shareholders brought an appropriate action against Brown, charging that his proposal had caused the corporation a substantial loss.
Has Brown breached his fiduciary duty? Explain.