Human Resource Selection 9th Edition by Marianne Jennings

Exercise 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. Gailey 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. Subsequent to that, $14,500 was provided by Gailey, Inc. 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 on January 28, 1985. The case was converted to a Chapter 7 proceeding on September 30, 1985.
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)]