Florida Statutes 608.4225 Duty of Loyalty and Care Under Florida Corporation and Business Law

December 12, 2016

Duty Of Loyalty and Care F.S. 608.4225 No Standing as to Alpha Properties

In Count II Plaintiff, alleges that he is a member of Alpha Properties, claims that Defendant breached a duty of loyalty owed to Plaintiff as a member of Alpha Properties pursuant to F.S. 608.4225. The statute provides, generally, that each manager and managing member shall owe a duty of loyalty and a duty of care to the limited liability company and all of the members of the limited liability company. Id.

F.S. 608.4225 is clear that the duties stated therein are owed to 1) the Limited Liability Company and 2) all of the members of the limited liability company. As a result, in order to pursue an action for violations of the statute individually, Plaintiff must first establish that he is personally a member of Alpha Properties.general-contract, 608.4225

Each of the named members are professional associations, which are corporations under Florida Law. A general principle of corporate law is that a corporation is a separate legal entity, distinct from the individual persons comprising them and absent some basis to pierce the corporate veil, there is no basis for imposing liability for corporate debts and obligations upon the individuals. See Gasparini v. Pordomingo, 972 So.2d 1053, 1055 (Fla. 3d DCA 2008).

Essentially what Plaintiff is asking this Court to do is pierce his own corporate veil to provide him with standing and pierce Defendant Chandra’s corporate veil to impose liability.  There is no Florida case we have seen that states that this is legally permissible.

Plaintiff is a signatory, not a party, to the Alpha Properties operation agreement because he executed the agreement in his capacity as President, a Florida Corporation, and not in his individual capacity.  Nielsen v. Schindler, 587 So. 2d 498 (Fla. 2nd DCA 1991).

Because Plaintiff is not a member in his individual capacity, he does not have standing to pursue his claims individually.  F.S. 608.4225

Additionally, Section 12.11[1] of the operating agreement expressly precludes any rights or benefits to persons not named as a member in the agreement.  Plaintiff, having not been individually named a member under the operating agreement, has no rights as a third party pursuant to Section 12.11.  (A. 84).

Based on the clear language of the Alpha Properties operating agreement, Plaintiff is not a member of Alpha Properties and therefore does not have standing to pursue a claim under §608.4225.

[1] 12.11 No Third Party Rights. Except as otherwise provided herein, this Agreement shall not (directly or indirectly, contingently or otherwise) confer or be construed as conferring any rights or benefits on any Peron that is not named a Member or a permitted transferee of a Member hereunder.

 

RESULT: Defendant, represented by Arcadier and Associates, P.A., prevailed on all issues on appeal