Fritz v. Fritz
219 So. 3d 234
| Fla. Dist. Ct. App. | 2017Background
- Five Fritz siblings are owners of Melrose Nursery, two limited partnerships (including JW Fritz Partners LP), and JW Fritz Partners, Inc.; dispute centers on alleged self-dealing by three brothers (John, Jeffrey, Jack).
- James sued individually alleging the Brothers breached fiduciary duties by (1) receiving unearned excessive bonuses/management fees from Melrose Nursery and (2) arranging a 2008 settlement with Newsouth that resulted in a 10-acre parcel being conveyed to Biloxi, LLC (owned by the Brothers).
- The trial court granted the Brothers summary judgment holding James lacked standing to bring direct claims because the harms were derivative, relying on Dinuro and §620.2001(2). Final summary judgment followed.
- After summary judgment, James initiated arbitration on behalf of JW Fritz Partners LP and JW Fritz Partners, Inc. about the Newsouth settlement; the trial court stayed/arbitration finding James waived the right to arbitrate by prior litigation conduct.
- This consolidated appeal challenges (a) the summary judgment on standing/direct vs. derivative claims and (b) the stay of arbitration for waiver; the district court affirmed both rulings.
Issues
| Issue | Plaintiff's Argument (Fritz) | Defendant's Argument (Brothers) | Held |
|---|---|---|---|
| Whether James may sue individually for excessive bonuses/fees paid by Melrose Nursery | James argued the payments injured him directly as a shareholder | Brothers argued any injury is to the corporation and must be pursued derivatively | Court: derivative—no direct/special injury; affirm summary judgment |
| Whether James may sue individually over the Newsouth 2008 settlement transferring land to Biloxi | James asserted the settlement and transfer harmed him individually/separately | Brothers argued any harm flowed to the partnership and all partners equally | Court: derivative—injury was to the partnership, not an individualized harm; affirm summary judgment |
| Whether contractual/statutory exception allows direct suit despite Dinuro two‑prong test | James contended an exception or special duty applied | Brothers contended no separate contractual/statutory duty or fraud was pled | Court: no exception shown; two‑prong test not satisfied; claims are derivative |
| Whether James waived arbitration by prior litigation conduct | James initiated arbitration on behalf of the entities after summary judgment | Brothers argued he litigated the same matter for years and acted inconsistently with arbitration rights | Court: waiver/failure to safeguard arbitration right; stay of arbitration affirmed |
Key Cases Cited
- Dinuro Investments, LLC v. Camacho, 141 So. 3d 731 (Fla. 3d DCA 2014) (establishes two‑prong test for direct shareholder/member claims and recognizes contractual/statutory exception)
- Karten v. Woltin, 23 So. 3d 839 (Fla. 4th DCA 2009) (excessive compensation claims by minority shareholder are generally derivative)
- Orlinsky v. Patraka, 971 So. 2d 796 (Fla. 3d DCA 2007) (payment of excessive compensation requires derivative action for corporate waste)
- Raymond James Fin. Servs., Inc. v. Saldukas, 896 So. 2d 707 (Fla. 2005) (a party may waive arbitration by participating in litigation or acting inconsistently with arbitration right)
- Cassedy v. Hofmann, 153 So. 3d 938 (Fla. 1st DCA 2014) (claims of waiver of arbitration based on prior litigation conduct are presumptively for the court)