By: Justin C. Carlin

My last blog post addressed the differences between derivative and direct actions.  Only a few weeks ago, the Florida Third District Court of Appeal issued an opinion clarifying the requirements for a direct action.  A full copy of the opinion can be found here.

The case, Fritz v. Fritz, involved a business dispute between siblings who were shareholders of two corporations and two limited partnerships.  One of the siblings filed suit and asserted direct claims against the three others, claiming that they had breached their fiduciary duties to him regarding two matters: “(1) allegedly unearned excessive bonuses and management fees” paid by one of their mutually-owned corporations to the three siblings, and “(2) [the family’s] limited partnerships’ 2008 settlement with” a third party.  The Florida trial court entered an Order granting the three siblings’ motion for summary judgment, and the plaintiff appealed.

The Florida trial court applied the test articulated in Dinuro Investments, LLC v. Camacho, 141 So. 3d 731 (Fla. 3d DCA 2014), to find that the plaintiff failed to show a direct harm and special injury separate and distinct from that sustained by the other shareholders based on the alleged wrongdoing.  The Third District affirmed the trial court, noting that the plaintiff lacked standing to bring a direct action and should have brought his action derivatively.

If you’re involved in commercial litigation in Fort Lauderdale or elsewhere in Florida, please call a Fort Lauderdale business litigation lawyer at (954) 440–0901 to schedule a consultation.  The Carlin Law Firm, PLLC regularly provides legal advice to all kinds of business entities and regularly represents clients in commercial litigation in Florida state and federal courts.