GAIL J. DANIELS, APPELLANT,
v.
MARIAN L. VANN, ON BEHALF OF LIBERATED LADY, INC., AND MARIAN L. VANN, INDIVIDUALLY, APPELLEE

Fla. 4th DCA | 1981-02-11
No. 79-2555
RIVKIND, LEONARD, Associate Judge, concurs., ANSTEAD, J., dissents with opinion.
396 So. 2d 723 Florida District Court of Appeal, Fourth District (1981) Caution
Cited by 6 cases

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Synopsis

In a stockholder derivative suit, the plaintiff sued another stockholder on behalf of a corporation but failed to name the corporation as a party defendant. The trial court denied repeated motions to dismiss for failure to join an indispensable party and rendered judgment. The appellate court reversed, holding that the corporation is an indispensable party to a derivative action whose absence divests the court of jurisdiction over the derivative claim.


Holding

The corporation is an indispensable party to a stockholder's derivative action, and its absence as at least a nominal party divests the court of jurisdiction over the derivative claim. Therefore, the judgment on the corporate claim must be reversed and remanded.


Headnotes

[1] In a stockholder's derivative action, the corporation on whose behalf the action is brought is an indispensable party.

[2] The absence of the corporation as at least a nominal party in a stockholder's derivative suit divests the court of jurisdiction over the corporate claim.

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Key Quotes

“In a stockholder's derivative action, the corporation on whose behalf the action is brought is an indispensable party. The absence of the corporate defendant as at least a nominal party serves to divest the court of jurisdiction as to this aspect of the case.”

Establishes the core legal principle that the corporation must be a party to derivative actions and that its absence is jurisdictional.

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Facts & Procedural History

Gail Daniels, a stockholder and president of Liberated Lady, Inc., brought a derivative action against Marian Vann, another stockholder, purportedly o…

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Opinion of the Court
BERANEK, Judge.

BERANEK, Judge.

This is an appeal from a final judgment in a stockholder’s derivative suit which also involved a counterclaim. The parties agree that the main suit below was a derivative action wherein one stockholder was suing “on behalf of” the corporation to enforce a corporate right. The defendant/appellant in the action was another stockholder in the corporation who defended and counterclaimed. No attempt was made to name the corporation as a party in the action by plaintiff. Plaintiff instead simply took the position in resisting motions to dismiss for failure to join an indispensable party that any money awarded in the lawsuit was recovered “on behalf of the corporation” and would be given to the corporation. The trial court denied the defendant’s repeated motions to dismiss for failure to join an indispensable party and after jury trial rendered final judgment in favor of the individual plaintiff and against defendant on the counterclaim. Although the corporation was never made a party to the action, the final judgment contains the words “on behalf of’ the corporation. The record indicates the. corporation was available and amenable to service of process. Indeed, plaintiff was the president of the corporation and could have accepted service of process on behalf of the corporation. Section 48.081(l)(a), Florida Statutes (1979).

The law on this subject is clear. In a stockholder’s derivative action, the corporation on whose behalf the action is brought is an indispensable party. The absence of the corporate defendant as at least a nominal party serves to divest the court of jurisdiction as to this aspect of the case. See Alario v. Miller, 354 So. 2d 925 (Fla. 2d DCA 1978), and the authorities cited therein. This issue was repeatedly raised before the trial court. The final judgment on the corporate claim is reversed as is the later order assessing attorneys’ fees. The matter is remanded to the trial court for further proceedings. The counterclaim was between the individual parties over whom the court did have jurisdiction and the final judgment on this claim is affirmed.

REVERSED AND REMANDED.

RIVKIND, LEONARD, Associate Judge, concurs.

ANSTEAD, J., dissents with opinion.

Dissent
ANSTEAD, Judge,

ANSTEAD, Judge,

dissenting:

I believe that any error that occurred by reason of the failure to formally join the corporation as a party was harmless. There were only two stockholders, the appellant and the appellee, and the action was brought on behalf of the corporation as well as individually. As pointed out in the majority opinion judgment was recovered on behalf of the corporation. In essence the corporation was a party to the lawsuit and recovered a judgment against the appellant. In answer to a specific interrogatory posed in the verdict the jury found that the appellant “breached her fiduciary duty to the Corporation, LIBERATED LADY, INC.,” and awarded damages to the appellee “on behalf of the Corporation.”

To require these parties to relitigate this cause now will result in a total waste and duplication of time and effort and possibly in contradictory results since the counterclaim of the appellant, which was decided adversely to appellant, really involved the same issues that were involved in the main suit.


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Citator

Cited By

  • Johns v. Dannels, 186 So. 3d 620 (Fla. 5th DCA 2016)
    …g a derivative action but woefully failed to meet the pleading dictates of section 608.601(2), Florida Statutes (2013). Whether the company was made a party is unclear from the record. If it was not a party, it should have been. See Daniels v. Vann, 396 So. 2d 723, 723 (Fla. 4th DCA 1981) (corporation is indispensable party in action “on behalf of’ corporation). If it was a party, the final, order makes no disposition of the derivative claim. The company party is left dangling. Instead of seeking damages for…
  • …thout a cause of action and the court without jurisdiction.” (emphasis omitted). Alario v. Miller, 354 So. 2d 925, 927 (Fla. 2d DCA 1978) (quoting 13 W. Fletcher, Cyclopedia of the Law of Private Corporations § 5997 (rev. ed 1970)); Daniels v. Vann, 396 So. 2d 723 (Fla. 4th DCA 1981). See also Liddy v. Urbanek, 707 F. 2d 1222 (11th Cir.1983) (if complaint alleges that dominant officials are guilty of malfeasance, antagonism is evident and corporation should be named as a defendant). Although the court granted…
  • City OF Miami v. Vill. OF KEY Biscayne, 199 So. 3d 300 (Fla. 3d DCA 2016)
    …n indispensable party comes from cases involving stockholder derivative actions, in which the the stockholders failed to name the corporation, on whose behalf they were suing, as a party. Alario v. Miller, 354 So. 2d 925 (Fla.1978); Daniels v. Vann, 396 So. 2d 723 (Fla. 4th DCA 1981). . In our briefing order, we cited 1800 Atlantic Condominium Association, Inc. v. 1800 Atlantic Developers, 569 So. 2d 885 (Fla. 3d DCA 1990) (reversing the trial court's temporary injunction, holding that when a party seeks to…

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