6-8 Jennings text, p. 631, Questions, and Problems, #1

"Gailey, Inc., incorporated in 1980, removed asbestos and mechanical insulation on contract jobs that required union labor. Richard Gailey had been the president, controlling shareholder, and director of Gailey, Inc., from its inception. Universal Labs, Inc., was incorporated by Mr. Gai-ley in March 1984 to analyze asbestos samples and air samples and to perform general laboratory work. Mr. Gailey was the sole shareholder of Universal Labs. As president and director of Gailey, Inc., Mr. Gailey directed Gailey to pay certain debts of Universal Labs. After that, Gailey, Inc., provided $14,500 to Universal Labs to pay for the latter's start-up expenses and costs. Gailey, Inc., filed a voluntary petition pursuant to Chapter 11 of the Bankruptcy Code and the case was later converted to a Chapter 7. The trustee in bankruptcy filed suit alleging that Mr. Gailey usurped a corporate business opportunity belonging to Gailey, Inc. when he incorporated Universal Labs. Is the trustee correct? [In re Gailey, Inc., 119 B.R. 504 (Bankr. W.D. Pa. 1990)]"

You are required to:

1. What is the rule of law broken?

1. What is the court precedent or history of court cases and sentences for cases like this?

1. What is the ethical theory that applies?

Reference