If you serve on the board of directors for a Florida company, or if you are a shareholder in a Florida corporation, you should consider reading a September 2, 2015 ruling from the Palm Beach appeals court on an important Florida business litigation lawsuit. Directors of Florida corporations should understand how to defend a business lawsuit or a shareholder lawsuitin Florida and understand the different types of harms which shareholders may allege. Likewise, shareholders of Florida corporations, at least in the 4th District Court of Appeal, have a guidepost for suing a Florida corporation or directors of that Florida company. This is a case which your corporate litigation law firm West Palm Beach will want to read.
Allegations by Shareholders Against Corporate Directors: mis-representation
- Mid 2000’s: the company started purchasing high risk securities
- 2007: Bear Stearns collapses
- March 2008: shareholders meeting in Florida
- After 2008 shareholders meeting: two directors of the Florida corporation are asked if the bank owns any high risk securities
- Directors assured shareholders that Florida bank/company assets consist almost entirely of safe investments
- The complaint alleged that the bank or Florida company did indeed own risky assetswhich caused the value of the shareholders’s stock to become worthless, or to decrease from approximately $6 Million to nothing
- This case appears, from the Florida 4th DCA appellate opinion, to be a classic case of allegations of corporate directors of a Florida corporation mis-leading or lying to shareholders and the loss of the Florida shareholders stock value; a loss of millions of dollars in a Florida company
Did Directors of Florida Corporation Lie or Committ Fraudulent Misrepresentation?
- Remember: in Florida, a board of directors runs the Florida company and appoints a CEO
- The Florida board of directors has committees which are supposed to make the company run well and function properly.
- This Florida company had an investment committee
- Remember that a board of directors is supposed to help shareholders and work in their best interests
- When someone tells a lie in Florida, and there is a corporation or business partner or director or shareholder involved, can you sue for fraud?
- If you lie, that can be fraud in the state of Florida
- If you owe a duty to someone, a fiduciary duty, and you lie or mis-represent a set of facts, that may be fraud or fraudulent mis-representation
- In this Florida shareholder lawsuit, the amended complaint alleged that the assurances by the Board of Directors’ two memebers, or directors, was negligent misrepresentation and fraudulent misrepresentation
- One element of this business lawsuit Florida or shareholder lawsuit was that the shareholders could have supposedly sold their shares for approximately $6 Millionunder a stock buyback program back at the time the directors supposedly lied to the shareholders
Can Shareholders Sue Florida Company Board of Directors?
- Was the harm or financial damage suffered by the Florida shareholders unique or was it a financial injury common to ALL shareholders?
- This case, at least in Florida’s 4th District Court of Appeal, considers the legal question ofwhether individual shareholders can bring a lawsuit in their individual capacity, as a direct action, as opposed as a derivative action on behalf of the corporation
- In this 4th DCA business litigation case, the 4th DCA held that since the amended complaint alleged a direct harm and a special injury, the shareholders have legalstanding to bring a direct action for this Florida business litigation
- This business litigation case Palm Beach County (Indian River County) appears to be a victory for shareholders
- While this issue has been resolved in Florida’s 4th DCA, those interested in the legal analysis behind it should consider reading two things:
- One, you can read this entire opinion of the 4th DCA by clicking on this link:http://4dca.org/opinions/Sept.%202015/9-02-15/4D14-768.op.pdf
- Two, consider reading Dinuro Investments, LLC v. Camacho, 141 So. 3d 731 (Fla. 3rd DCA, 2014) for a survey of this law in Florida and around the country
How Do I File a Shareholder Lawsuit in Florida
- Do you know how to allege that you suffered a direct harm under this business litigation case?
- Do you know how to allege a special injury if you are a Florida shareholder?
- Are you familiar with the duties owed by a Florida corporation’s board of directors to Florida shareholders?
- Consider that Florida, still a growing state, attracts businesses and business persons, including professional and non professional service providers who are incorporating Florida businesses daily, and moving other private, and public corporations to Florida
- Knowing your rights as a Florida shareholder is important, just as it is for directors of a Florida corporation to understand what their duties are to shareholders and the Florida business
- For a shareholder of a Florida company to bring a direct action in their individual capacity as a shareholder, the complaint or business lawsuit Florida must satisfy a 2 prong test and allege both a direct harm and a special injury or must meet the exception of alleging a special duty to the individual shareholders