Florida Business Litigation

Published on: August 21, 2017

Members of LLC’s Should Be Prepared To Prove Discrete Harms Before Bringing A Lawsuit Against A Fellow LLC Member

Under Florida law, if a member of an LLC wishes to individually sue another member for damages arising out of the membership, the plaintiff-member must prove: “(1) a direct harm to the … member such that the alleged injury does not flow subsequently from an initial harm to the company and (2) a special injury to the … member that is separate and distinct from those sustained by the other … members.” Dinuro Investments, LLC v. Camacho, 141 So. 3d 731, 739-740 (Fla. 3d DCA 2014). Alternatively, a plaintiff-member may prove that the defendant-member owes a separate duty to the plaintiff member that is distinct from the duties owed by the members to the LLC. See Dinuro Investments, LLC v. Camacho at 740. The Mavrick Law Firm regularly represents businesses and their owners in business litigation in Miami, Fort Lauderdale, and Palm Beach.

To initiate a lawsuit, a plaintiff must have standing, otherwise described as the right to sue. Accordingly, the right to sue varies depending on the particular context of the plaintiff’s alleged harm. § 605.0802, Fla. Stat. allows for a member to “maintain a derivative action to enforce a right of a limited liability company,” but the statute does not provide the right to sue individually. A derivative action seeks to “enforce a corporate right or to prevent or remedy a wrong to the corporation,” when “the corporation, because it is controlled by the wrongdoers or for other reasons, fails and refuses to take appropriate action for its own protection.” Salit v. Ruden, McClosky, Smith, Schuster & Russell, P.A., 742 So. 2d 381, 388 (Fla. 4th DCA 1999). Whereas, an individual suit seeks to recover damages that the plaintiff suffered as a result of a wrong done to the corporation. Thus, the right to sue individually as a member of an LLC presents special considerations that were confusing and opaque in Florida until recently.

In Dinuro Investments, LLC v. Camacho, the Third District Court of Appeal used a two-prong test that has been adopted throughout Florida to resolve the issue of individual standing in actions for individual damages in LLC disputes. See Strazzulla v. Riverside Banking Co., 175 So. 3d 879, 884 (Fla. 4th DCA 2015) (“we agree with the Third District[‘s decision in Dinuro Investments, LLC v. Camacho] and adopt a two-prong test”). The South Florida offices of The Mavrick Law Firm represents plaintiff-members and defendant-members in disputes throughout the judicial circuits that are bound by Third and Fourth DCA decisions. In Dinuro Investments, LLC v. Camacho, the court thoroughly examined the three tests routinely are routinely applied to resolve the direct versus derivative claim question: The Direct Harm Test, The Special Injury Test, and The Duty Owed Test. After addressing the pros and cons of each of the tests, and in an attempt to “reconcile nearly fifty years of apparently divergent case law” the court reasoned that a two-prong test was appropriate. See 141 So. 3d at 740.

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Published on: August 15, 2017

Fraud Claims Cannot Be Based on Puffery

By Mavrick Law Firm

Most businesses that sell products or services encourage their salesmen to do whatever it takes to make a sale. This leads to the salesmen exaggerating regarding the quality of the product or service they are selling. Although exaggerations or statements promoting the quality of a product or service can lead to increased sales, it could also be problematic for businesses. Customers who rely on such statements when purchasing a product or service can be severely disappointed if the product or service does not live up to salesman’s exaggerations, and this often leads to lawsuits for fraudulent misrepresentations or fraud in the inducement. Fortunately, Florida law provides a useful avenue to defend against these types of fraud lawsuits. To allege a claim for fraud, a person must demonstrate that a seller made a “misrepresentation of material fact.” Florida courts have consistently held that a seller’s exaggerations or statements of opinion, otherwise known as puffery, cannot constitute a misrepresentation of material fact. The leading case on this issue in Florida is Wasser v. Sassoni, 652 So. 2d 411 (Fla. 3d DCA 1995).

In Wasser, the purchaser of a 67-year-old apartment building sued the seller for, inter alia, fraudulent misrepresentation based on the seller’s statements that the building was “a very good building” requiring “normal type of maintenance,” and “an excellent deal.” The Third District Court of Appeal found that such statements were merely “puffing” or statements of opinion that could not constitute fraudulent misrepresentations. Based on the foregoing, the court affirmed summary judgment in favor of the seller.

More recently, the Fourth District Court of Appeal was confronted with a fraud claim based on puffery in MDVIP, Inc. v. Beber, 2017 WL 2364729 (Fla. 4th DCA May 31, 2017). The plaintiff brought suit against a personalized healthcare program after a doctor employed by the program failed to diagnose and misdiagnosed the plaintiff’s leg pain, forcing the plaintiff to undergo an above-the-knee amputation. The plaintiff’s fraud claim was based on the defendant’s statements that it would provide “exceptional doctors, exceptional care, and exceptional results.” The plaintiff also alleged the defendant made promises that the plaintiff “would be seen by the finest national specialists with advanced treatment” and defendants claimed to be “a network fraternity of some of the nation’s finest physicians,” among other things. In making its decision, the court relied in part on Wasser and determined that the plaintiff’s fraud claims could not be maintained to the extent they depended on defendant’s alleged statements, as such statements constituted non-actionable puffery or statements of opinion.

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Published on: November 29, 2012

Legal Issues Involving Shareholder Disputes

By Mavrick Law Firm

Disputes among shareholders happen for a wide variety of reasons and if not properly addressed, can result in serious financial and legal problems. In general, the specific rights and responsibilities of shareholders vary according to the particular corporate form as well as the procedures used in implementing and enforcing them. Corporations, partnerships and other business entities also can alter the default provisions of Florida law through drafting bylaws and agreements tailored to the form of the business entity, and develop other agreements that specifically anticipate and address the kinds of situations that shareholders might need to resolve.Regardless of the preventative measures that businesses can implement to avoid shareholder disputes, there is no foolproof way to prevent these types of issues. Typically, both minority and majority shareholders tend to raise disputes over the following:

Decisions made by owners or managers of the company
The alleged breach of fiduciary duties by corporate officers and owners due to disloyalty, self-dealing, or not acting in the best interests of the company

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