MORTIMER FRIED, APPELLANT,
v.
EDWARD W. EASTON, APPELLEE
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A shareholder (Fried) appealed the dismissal of his counterclaim against the president of a corporation (Easton) for breach of fiduciary duty. The court affirmed the dismissal, holding that the shareholder failed to allege a direct injury to himself distinct from injury to the corporation, and therefore lacked standing to bring the claim.
A shareholder may sue in his own right only for injuries sustained directly by him that are separate and distinct from injuries to other shareholders or the corporation generally. Where the injury is primarily against the corporation or shareholders generally, the cause of action belongs to the corporation. Here, Fried alleged no direct personal injury and therefore lacked standing to bring the counterclaim.
[1] A stockholder may bring a suit in their own right to redress an injury sustained directly by them, separate and distinct from injuries sustained by other stockholders.
[2] If an injury is primarily against a corporation or stockholders generally, the cause of action belongs to the corporation, and an individual's right to sue is derived fro…
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Join FLexlaw to unlock all legal intelligence“A stockholder may bring a suit in his own right to redress an injury sustained directly by him, and which is separate and distinct from that sustained by other stockholders; however, if injury is primarily against corporations, or stockholders generally, then the cause of action is in the corporation and the individual's right to bring it is derived from the corporation.”
Establishes the fundamental rule governing when a shareholder has standing to sue in his own right versus when the cause of action belongs to the corporation.
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Join FLexlaw to unlock all legal intelligenceEaston sued Fried based on a written guaranty agreement requiring Fried to contribute his pro-rata share of payments made as co-guarantor on notes exe…
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PER CURIAM.
Defendant-appellant seeks review of the trial court’s order dismissing his amended counterclaim with prejudice.
Plaintiff filed a suit against the defendant based upon a written guaranty agreement for contribution by the defendant of his prorata share of payments made by the plaintiff as co-guarantor with the defend ant and others on notes executed by E.W. E. Industries, Inc. In response thereto defendant filed an answer and a counterclaim. Thereafter plaintiff filed a motion to dismiss the counterclaim on the grounds that the right of action on which the counterclaim was founded was vested in a non-party to the suit, to wit: E.W.E. Industries, Inc., and not in the defendant. The motion to dismiss was granted and thereafter appellant filed an amended counterclaim wherein he alleged that he was a shareholder in E.W.E. Industries, Inc. and that plaintiff-counterdefendant, the president and chief executive officer thereof, had disregarded the interest of the corporation and the stockholders in violation of his fiduciary duties and intended to convert certain assets of the corporation to his own use and benefit. In support thereof, the counterclaim listed specific acts of maladministration on the part of plaintiff. Again, plaintiff filed a motion to dismiss the counterclaim which was granted with prejudice. Defendant-counterclaimant appeals therefrom.
A stockholder may bring a suit in his own right to redress an injury sustained directly by him, and which is separate and distinct from that sustained by other stockholders; however, if injury is primarily against corporations, or stockholders generally, then the cause of action is in the corporation and the individual’s right to bring it is derived from the corporation. Citizens National Bank of St. Petersburg v. Peters, Fla.App.1965, 175 So. 2d 54.
After a careful reading of the counterclaim, we find that the counter-claimant alleges therein no injury directly sustained by him, but rather only injuries inflicted upon the corporation. Thus, we conclude that the trial judge was correct in dismissing the counterclaim with prejudice as countercomplainant alleged no personal right of action therein.
Accordingly, the order herein appealed is affirmed.
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Denis Rety v. Green, 546 So. 2d 410 (Fla. 3d DCA 1989)…n value of his corporate stock for a tort committed exclusively against the corporation are inapplicable to this case. See, e.g., Martens v. Barrett, 245 F. 2d 844 (5th Cir.1957); Alario v. Miller, 354 So. 2d 925 (Fla. 2d DCA 1978); Fried v. Easton, 293 So. 2d 87 (Fla. 3d DCA 1974); James Talcott, Inc. v. McDowell, 148 So. 2d 36 (Fla. 3d DCA 1962). Unlike those cases, the action sued upon in this case was a defamation of Rety himself, the 100% stockholder in La Belle Epoque, Inc., and was not exclusively con…
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Dinuro Invs., LLC v. Felisberto Figueira Camacho, 141 So. 3d 731 (Fla. 3d DCA 2014)…9) (quoting Fort Pierce Corp. v. Ivey, 671 So. 2d 206, 207 (Fla. 4th DCA 1996)); Ivey, 671 So. 2d at 207 (quoting Peters, 175 So. 2d at 56); Alano v. Miller, 354 So. 2d 925, 926 (Fla. 2d DCA 1978) (quoting Peters, 175 So. 2d at 56); Fried v. Easton, 293 So. 2d 87, 88 (Fla. 3d DCA 1974) (quoting Peters, 175 So. 2d at 56). This two-prong approach can be relatively simple, and Florida is certainly not unique in requiring multiple tests to be satisfied prior to the initiation of a direct action. See, e.g., Altr…
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Charles "Bebe" Rebozo v. Royal Indem. Co. & Baldwin Ins. Agency, Inc., 369 So. 2d 644 (Fla. 3d DCA 1979)…. 2d 223 (Fla. 3rd DCA 1976), cert. denied, 345 So. 2d 426 (Fla.1977), this court held that Rebozo’s personal excess policy with United States Fire did not cover the judgment against Washwell, Inc. .The appellees cite such cases as Fried v. Easton, 293 So. 2d 87 (Fla. 3d DCA 1974), and Nelson v. Miller, 212 So. 2d 66 (Fla. 3d DCA 1968). But see Dubbin v. Touche Ross & Co., 324 So. 2d 128 (Fla. 3d DCA 1975), cert. denied, 336 So. 2d 1181 (Fla.1976) (quoting exception that “[a] stockholder may bring a suit in…
Previewing 3 of 9 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Citizens Nat'l Bank OF ST. Petersburg v. Peters, 175 So. 2d 54 (Fla. 2d DCA 1965)