257 So. 3d 640
Fla. Dist. Ct. App.2018Background
- In 2003 LaSalla and Mullin formed Florida-Maryland Properties, LLC; LaSalla loaned the LLC $290,000 secured by mortgage.
- In 2006 LaSalla and Mullin agreed to sell lot 4 to satisfy the loan; Home Title acted as escrow and completed that closing; lot 2 was supposed to be conveyed to an LLC formed by LaSalla but was not transferred.
- In 2012 Mullin falsely told Home Title he and his wife were the LLC's only members and asked Home Title to convey lots 1, 2, and 3 to them; Home Title conveyed those lots to the Mullins.
- LaSalla sued Home Title (and others) in Florida alleging breach of fiduciary duty based on the 2006 failure to convey lot 2 and the 2012 transfer of lots 1–3; the trial court found liability and awarded LaSalla $60,382 under the wrongful act doctrine.
- Home Title moved for involuntary dismissal at trial arguing LaSalla lacked standing because the 2012 injury was to the LLC, not to LaSalla individually; the trial court denied that motion.
- The Second District reversed, holding LaSalla lacked standing to sue in his individual capacity for the 2012 transfer because the direct injury was to the LLC and LaSalla did not bring a derivative action on the LLC's behalf.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LaSalla had individual standing to sue for Home Title's 2012 transfer of LLC property | LaSalla argued his injury was distinct because he was one of only two members and suffered a direct, special harm | Home Title argued the harm was to the LLC and thus any claim was derivative and belonged to the LLC | Held: No individual standing; the 2012 injury was to the LLC and LaSalla failed to bring a derivative action |
| Whether the two-prong Dinuro test was met (direct harm and special injury) | LaSalla claimed his harm was direct and special as the only other member harmed by Mullin's actions | Home Title argued the harm flowed from the LLC's loss and was not separate or direct to LaSalla | Held: Two-prong test not met; harm flowed from injury to the LLC |
| Whether an independent contractual or statutory duty to LaSalla made the claim direct | LaSalla relied on an alleged 2006 escrow agreement duty owed personally to him | Home Title argued any duty related to 2006 was time-barred and no separate duty existed with respect to the 2012 transfer | Held: 2006 claim was time-barred; no separate contractual/statutory duty to LaSalla regarding 2012 transfer was shown |
| Whether the trial court properly denied involuntary dismissal and entered judgment for LaSalla | LaSalla relied on trial findings of fiduciary breach and damages under the wrongful act doctrine | Home Title sought dismissal for lack of standing and argued judgment should be reversed | Held: Reversed; trial court erred—remanded with directions to enter involuntary dismissal for lack of standing |
Key Cases Cited
- Purificato v. Nationstar Mortg., LLC, 182 So. 3d 821 (Fla. 4th DCA 2016) (standard of review for dismissal for lack of standing)
- Alario v. Miller, 354 So. 2d 925 (Fla. 2d DCA 1978) (individual cannot sue for injury derived from corporation or LLC)
- Dinuro Invests., LLC v. Camacho, 141 So. 3d 731 (Fla. 3d DCA 2014) (two-prong test for direct suit by member: direct harm and special injury; exception if separate duty exists)
- Strazzulla v. Riverside Banking Co., 175 So. 3d 879 (Fla. 4th DCA 2015) (adopting Dinuro two-prong test)
- Goodwin v. Sphatt, 114 So. 3d 1092 (Fla. 2d DCA 2013) (breach of fiduciary duty governed by four-year statute of limitations)
- Halkey-Roberts Corp. v. Mackal, 641 So. 2d 445 (Fla. 2d DCA 1994) (statute of limitations for fiduciary breach)
- Lincoln Oldsmobile, Inc. v. Branch, 574 So. 2d 1111 (Fla. 2d DCA 1990) (sole shareholder still must sue in corporate name when injury is to corporation)
- Citizens Nat'l Bank v. Peters, 175 So. 2d 54 (Fla. 2d DCA 1965) (principle that actions for injury to corporation belong to corporation)
- Schaffer v. Universal Rundle Corp., 397 F.2d 893 (5th Cir. 1968) (federal precedent that individual must sue in corporate name for corporate injuries)