ARTURO A. MUNDER AND 444 INVERRARY CORP., APPELLANTS,
v.
CIRCLE ONE CONDOMINIUM, INC., THE CIRCLE VILLAS CONDOMINIUM ASSOCIATION, INC., BOTH FLORIDA NOT-FOR-PROFIT CORPORATIONS, AND THE CIRCLE PROPERTY OWNERS ASSOCIATION, INC., APPELLEES
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A condominium developer appeals a judgment holding both the developer corporation and its president/sole stockholder liable for breach of fiduciary duty when the clubhouse fire insurance policy was not renewed. The court affirms liability against the corporation but reverses the personal liability finding against the individual officer, holding that mere corporate failure to maintain insurance does not pierce the corporate veil absent fraud, self-dealing, or unjust enrichment.
The corporation remains liable for failing to maintain the required insurance under the association's bylaws; however, the president and sole stockholder cannot be held personally liable for the corporate failure absent some basis for piercing the corporate veil, such as fraud, self-dealing, unjust enrichment, or betrayal of trust.
[1] A corporation is generally not liable for the acts of its directors, officers, or stockholders simply by virtue of their relationship to the corporation.
[2] Individual liability for corporate acts may arise from fraud, self-dealing, unjust enrichment, or betrayal of trust.
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Join FLexlaw to unlock all legal intelligence“directors, officers and stockholders are not liable for corporate acts simply by reason of their official relation to the corporation”
Establishes the general rule of corporate liability insulation that protects individual officers and stockholders from personal liability for corporate acts
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Join FLexlaw to unlock all legal intelligenceA condominium developer corporation controlled a condominium association and retained full control of association duties, including the obligation to …
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[*145] LETTS, Judge.
A condominium developer, in both his corporate and individual capacity, appeals a final judgment rendered in favor of a condominium association by reason of fire damage to the uninsured clubhouse recreation center. We affirm the corporate judgment but reverse the finding of individual liability.
The breach of fiduciary duty upon which the trial judge based the personal liability consisted of the developer’s failure to renew a fire insurance policy on the clubhouse.1 Clearly, the development corporation had the obligation under the association’s bylaws to maintain the insurance and pay for it. The developer corporation had not created a board of directors as required under the bylaws and had retained unto itself full control of the association’s duties which included the requirement to purchase the insurance. As a consequence, we have no quarrel with the judgment as it pertains to the corporate developer. However, the personal judgment against the president and sole stockholder of that corporation is another matter. The main body of corporate law is to the effect that directors, officers and stockholders are not liable for corporate acts simply by reason of their official relation to the corporation. See Cottle v. Storer Communication, Inc., 849 F. 2d 570 (11th Cir.1988). This insulation from liability is not without exception. Fraud, self-dealing, unjust enrichment and betrayal of trust, may well result in individual liability. See Avila South Condominium Ass’n v. Kappa Corp., 347 So. 2d 599 (Fla.1977). We conclude, however, that the transgression here does not rise to such levels.
The developer corporation simply failed to maintain and pay for the fire insurance. Such a failure though an obvious wrong, was not, without more, sufficient to subject the president/sole stockholder to personal liability absent some basis for piercing the corporate veil. No such basis has been alleged in the case at bar. Several courts have grappled with similar problems. In Olympian West Condominium Ass’n, Inc. v. Kramer, 427 So. 2d 1039 (Fla. 3d DCA), rev. denied, 438 So. 2d 833 (Fla.1983), the Third District held that the corporate developer-builder, serving as a director, of the condominium association prior to assumption of control by the unit owners, was not personally liable for construction defects created by himself as the actual builder. Similarly, in Bodin Apparel, Inc. v. Superior Steam Service, Inc., 328 So. 2d 533 (Fla. 3d DCA 1976), the officers and board of directors were found not personally liable even though the corporation failed to provide required workers compensation insurance which would have covered an electrocuted employee. On the other hand, we acknowledge conflict with another Third District case, B & J Holding Corporation v. Weiss, 353 So. 2d 141 (Fla. 3d DCA 1978), where the initial officers and directors of the developer corporation which built a condominium were held personally liable for failure to make the maintenance payments required by statute on unsold units.2
We find no reversible error in the remaining points on appeal.
AFFIRMED IN PART; REVERSED IN PART.
ANSTEAD, J., and FRANK, RICHARD H., Associate Judge, concur. . The project was in trouble, the clubhouse unused and unusable. The developer made the monetary decision not to renew the insurance. This is not a case where the premium was overlooked.
. Judge Schwartz distinguished Weiss in Kramer, but we are not sure we agree that the distinction should make a difference.
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Lipsig v. Zahid A. Ramlawi, 760 So. 2d 170 (Fla. 3d DCA 2000)…, or is a mere instrumentality or agent of another corporation or individual owning all or most of its stock, or where the purpose is to evade some statute or tq accomplish some'fraud or illegal purpose”); see also Munder v. Circle One Condo., Inc., 596 So. 2d 144, 145 (Fla. 4th DCA 1992) (directors, officers and stockholders may lose their insulation .from liability for corporate acts if they engage in fraud, self-dealing, unjust enrichment or betrayal of trust). There was no evidence whatsoever that Zaminc…
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Segal v. Rhumbline Int'l, Inc., 688 So. 2d 397 (Fla. 4th DCA 1997)…not be personally liable for the statements of other corporate officers and the staff. While we agree that he would not be liable for negligent misrepresentations simply because he was a corporate officer, see Munder v. Circle One Condominium, Inc., 596 So. 2d 144 (Fla. 4th DCA 1992); Cottle v. Storer Communication, Inc., 849 F. 2d 570 (11th Cir.1988), there may be individual liability where fraud is alleged. Munder, 596 So. 2d at 145. In Nicholson v. Kellin, 481 So. 2d 931 (Fla. 5th DCA 1985), the individual…
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Sonny BOY, L.L.C. v. Bhagwan Asnani, 879 So. 2d 25 (Fla. 5th DCA 2004)…at in general, corporate directors and officers cannot be personally liable for corporate acts absent actual wrongdoing in the form of fraud, self-dealing or unjust enrichment to trigger individual liability); Munder v. Circle One Condominium, Inc., 596 So. 2d 144 (Fla. 4th DCA 1992) (reversing lower court’s finding of individual liability by condominium developer). Similarly, section 617.0834(1), Florida Statutes [*28] (2002)1 and section 607.0831(1), Florida Statutes (2002)2 provide insulation for condomini…1 / 2
Previewing 3 of 13 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Avila S. Condo. Ass'n v. Kappa Corp., 347 So. 2d 599 (Fla. 1976)
- B & J Holding Corp. v. Weiss, 353 So. 2d 141 (Fla. 3d DCA 1977)
- Cottle v. Storer Communication, 849 F.2d 570 (11th Cir. 1988)
- Olympian W. Condo. Ass'n, Inc. v. Kramer, 427 So. 2d 1039 (Fla. 3d DCA 1983)
- Hatcher v. Miller, 427 So. 2d 1039 (Fla. 1st DCA 1983)
- Bodin Apparel, Inc. v. Superior Steam Serv., Inc., 328 So. 2d 533 (Fla. 3d DCA 1976)