Maryland Appellate Court Affirms Business Judgment Protection

In November 2025, the Maryland Appellate Court affirmed the dismissal of stockholder claims arising from a cash-out merger. The case is Special Situations Fund III QP, L.P., et al. v. TravelCenters of America Inc., et al.

Venable reports that the court addressed whether directors breached their duties by declining to pursue a later, higher-priced unsolicited proposal, and clarified the standard governing board decision-making under Maryland law, emphasizing statutory deference to informed, good-faith judgments.

The dispute followed TravelCenters’ agreement to be acquired by BP Products North America Inc. for $86 per share after a multistage pre-market process involving numerous potential bidders and an independent financial advisor.

Subsequent to execution and proxy disclosures, a competitor submitted a $92 per share proposal conditioned on financing and third-party approvals. The board considered consent rights held by a key landlord, overlapping relationships with affiliated entities, and transactional certainty before determining that the proposal was not superior. Stockholders later approved the merger by an overwhelming margin.

Affirming the trial court, the appellate panel held that the Maryland General Corporation Law supplies the exclusive source of director duties and does not impose enhanced scrutiny for acquisitions. The statute codifies the business judgment presumption, placing the burden on plaintiffs to plead fraud, bad faith, or conflicted decision-making.

The court rejected claims that directors were obligated to accept the highest nominal price, conduct an auction, or disregard contingencies. It also found disclosed relationships neutralized alleged conflicts through stockholder approval.

For lawyers advising Maryland corporations, the decision reinforces reliance on documented process, informed deliberation, and statutory protections when evaluating competing bids. Boards may weigh certainty, regulatory risk, and contractual constraints without judicial second-guessing.

The opinion also confirms that Maryland’s narrow exculpation regime can be addressed at the pleading stage. This will inform litigation strategy and counseling concerning merger approvals, disclosure practices, and fiduciary duty claims in complex corporate transactions and statewide disputes.