JACK DUTCH, APPELLANT,
v.
JOSEPH GORDON, MAX HOCHMAN, EDNA WISSER, SAM LINDENAUR AND TALL TREES CONDOMINIUM, INC., APPELLEES
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A shareholder/unit owner of a condominium association brought a derivative action without first serving a proper demand on the corporation. The court affirmed dismissal of the complaint, holding that a demand directed to a lawyer rather than the corporation itself, which did not request corporate action but instead demanded personal funds from individuals, was insufficient to satisfy the prerequisite demand requirement for derivative actions.
The demand was insufficient to satisfy the prerequisite demand requirement for derivative actions. A proper demand must be directed to the corporation or association itself and must request that the corporation exercise its judgment regarding some corporate action, giving its officers an opportunity to meet and consider the demand.
[1] A demand on a corporation or condominium association is a prerequisite to maintaining a stockholder or shareholder derivative action.
[2] A demand directed to an attorney representing a corporation or association is insufficient if not directed to the entity itself.
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Establishes the foundational requirement for derivative actions in Florida
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PER CURIAM.
It has been established law in this state that before a stockholder or shareholder derivative action1 can be maintained it is necessary for the complainant to serve a demand on the corporation and its proper officers requesting action on behalf of the corporation. Orlando Orange Groves Company v. Hale, 107 Fla. 304, 144 So. 674 (1932); Conlee Construction Company v. Cay Construction Co., 221 So. 2d 792 (Fla. 4th DCA 1969); 8 Fla.Jur.2d, Business Relationships § 365; 18 C.J.S., Corporations § 564.
A demand2 directed to a lawyer who may have represented the corporation, or condominium association, and certain individuals in a prior action is insufficient for several reasons. First, it was not directed to the nonprofit corporation, or condominium association, second, it did not demand that the corporation, or association, do anything, and lastly, it demanded that the writer of the letter receive certain funds from individuals within seven days. This cannot suffice as an appropriate demand which would require the officer of a corporation, or an association, to exercise a judgment in regard thereto. In this connection see the following authorities which require, as a condition precedent to bringing a derivative action, an opportunity to those in charge of the association to meet and consider the demand.3 Bartlett v. New York, N.H. & H.R. Co., 221 Mass. 530, 109 N.E. 452 (1915); Warren Telephone Co. v. Staton, 46 Ohio App. 505, 189 N.E. 660 (1933); Vol. 13, Fletcher Cyclopedia Corporations § 5967.
Therefore for the reasons above stated the order dismissing the complaint for derivative action is affirmed.
Affirmed.
. This opinion is not to be construed as passing on the validity of a derivative action by a unit owner against a condominium association.
. The appellant contends that the requirement of a demand, as a condition precedent to bringing a derivative action, has been removed in this state by the Legislature amending what was formerly Section 608.131 of the Florida Statutes, (1975) by the elimination of the following provision: "(2) The complaint must set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board of directors of such corporation or the reasons for not having made such efforts.” We do not agree with this argument because the Legislature had no right in the first instance to legislate on the subject of practice and procedure, Art. 5, Section 2(a) Constitution of the State of Florida (1968 as amended 1972), and the repeal of this section was merely a recognition that the prior statute was an infringement on the judicial department.
. See footnote 1.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Rogers & Ford Constr. Corp. v. Carlandia Corp., 626 So. 2d 1350 (Fla. 1993)…ociation and/or other unit owners. See, e.g., Bay Park Towers Condominium Ass’n, Inc. v. H.J. Ross & Assocs., 503 So. 2d 1333 (Fla. 3d DCA 1987) (condominium association allowed to intervene with [*1355] respect to common elements); Dutch v. Gordon, 481 So. 2d 1235 (Fla. 3d DCA 1985) (unit owner’s derivative action involving condominium association); Gulf Oil Realty Co. v. Windhover Ass’n, Inc., 403 So. 2d 476 (Fla. 5th DCA 1981) (class action by condominium association as class representative); Breslerman v.…
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Rappaport v. Scherr (Fla. 3d DCA 2021)…ations omitted). Thus, before filing a derivative action, the shareholder must first make a presuit demand upon the corporation, giving the corporation itself an opportunity to act or to refuse to act. As this court observed in Dutch v. Gordon, 481 So. 2d 1235, 1235 (Fla. 3d DCA 1985): “It has been established law in this state that before a stockholder or shareholder derivative action can be maintained it is necessary for the complainant to serve a demand on the corporation and its proper officers re…
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Rappaport v. Scherr (Fla. 3d DCA 2021)…citations omitted). Thus, before filing a derivative action, the shareholder must first make a presuit demand upon the corporation, giving the corporation itself an opportunity to act or to refuse to act. As this court observed in Dutch v. Gordon, 481 So. 2d 1235, 1235 (Fla. 3d DCA 1985): “It has been established law in this state that before a stockholder or shareholder derivative action can be maintained it is necessary for the complainant to serve a demand on the corporation and its proper officers reque…
Authorities Cited
- Orlando Orange Groves Co. v. Hale, 107 Fla. 304 (Fla. 1932)
- Conlee Constr. Co. v. CAY Constr. Co., 221 So. 2d 792 (Fla. 4th DCA 1969)