Shareholder Inspections; Attorneys Fees
Richman v. Calzaretta, No. 5D21-1307, decided May 13, 2022. The Florida Court of Appeal held that Sec. 607.1604 of the Florida corporation law, which provides that a court that orders a corporation to allow a shareholder to inspect records shall also order the corporation to pay the shareholder’s attorney fees, does not authorize the court to award attorney’s fees in a garnishment action brought by the shareholder to collect the attorney fee judgment.
1044 Beach Blvd., LLC v. Live Oak Banking Co. (In re NRP Lease Holdings, LLC), 2021 US App. LEXIS 36637, decided December 10, 2021. The U.S. Court of Appeals, Eleventh Circuit certified the following questions to the Florida Supreme Court: (1) Is the search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, limited to or otherwise satisfied by the initial page of 20 names displayed to the user of the Registry's search function, (2) If not, does that search consist of all names in the filing office's database, which the user can browse using the command tabs displayed on the initial page, (3) If the search consists of all names in the filing office's database, are there any limitations on a user's obligation to review the names and, if so, what factors should courts consider when determining whether a user has satisfied those obligations?
In this case, the financing statements identify the debtor as "1944 Beach Blvd., LLC," instead of its legal name, "1944 Beach Boulevard, LLC.” It was undisputed that the financing statements did not appear on the initial page of 20 names generated by a Registry search using the debtor’s correct legal name, but that they did appear on an immediately preceding page that the user can view by clicking the "PREVIOUS" command tab on the screen displaying the page listing the 20 names. Above the tab is the statement, "[u]se the Previous and Next buttons to display additional results." The debtor in possession contended that the initial page of 20 names is both the beginning and the end of the "seriously misleading" inquiry, while the creditor contended that it is just the beginning and that its financing statement appearing on the preceding page fell into the statutory safe harbor. The Court of Appeals noted that the existing case law contained two competing interpretations of what "search" means for purposes of the safe harbor. When faced with substantial doubt on a dispositive state law issue, “the better option is to certify the question to the state supreme court”. Thus the Court of Appeals deferred its decision in this case until the Florida Supreme Court has had the opportunity to consider the certified questions and determine whether to exercise its discretion in answering them.
Abdo v. Abdo, No. 2D20-1229, decided March 19, 2021. The Florida Court of Appeal reversed a contempt order against the individual defendant for failing to turn over to the plaintiff certain assets belonging to two foreign entities over which the trial court lacked personal jurisdiction. The court rejected the trial court’s attempt to assert jurisdiction over the foreign entities through the defendant based on a theory of in rem jurisdiction over the assets at issue. The court also noted that it had previously been found that personal jurisdiction over the foreign entities was lacking based on a piercing the veil theory.
Piercing the Corporate Veil
BEO Management Corp. v. Horta, No. 3D19-1989, decided November 18, 2020. The Florida Court of Appeal reversed the trial court’s decision to pierce the veil of two corporations to hold their shareholder liable for a judgment against the corporations arising out of a dishonored post-dated check issued by one corporation to guarantee the debt of the other. The plaintiffs failed to establish as a matter of law that the corporations had no independent existence nor was there evidence that the shareholder used the corporations fraudulently or for an improper purpose in the disputed transaction. Both corporations were in good standing at the time and there was no evidence the shareholder knew, when he signed the post-dated check and guarantee, that a year later one corporation would default on the loan and the other would lack the funds to pay on the guarantee.
LLC Member Withdrawal
Palma v. South Florida Pulmonary & Critical Care LLC, No. 3D19-1347, decided September 16, 2020. The Florida Court of Appeals held that members of an LLC who were named as co-owners on a note but who were not beneficiaries of the loan proceeds were not required to pay a share of the outstanding balance on the notes after withdrawing from the LLC where the governing agreement did not authorize the collection of the outstanding balance upon withdrawal.
Discovery of Records
UBS Financial Services, Inc. v. Efron, Nos. 3D19-1410 & 3D18-2612, decided August 5, 2020. The Florida Court of Appeal ruled that relying on the fact that domestic and foreign affiliated corporations were part of the same extended corporate family and shared a brand fell short of meeting the burden to establish the domestic corporation’s control of and legal right to obtain the foreign affiliate’s records.
Hock v. Triad Guaranty Insurance Corp., Case No. 16-4008, decided March 4, 2020. The Florida Court of Appeal held that an administratively dissolved corporation can commence a lawsuit if it is appropriate to wind up and liquidate.