BUSINESS ENTITIES: LIMITED LIABILITY COMPANY: STANDING: MEMBER MUST BRING DERIVATIVE, RATHER THAN DIRECT, ACTION TO ADDRESS WRONGFUL ACTS THAT DEVALUE LIMITED LIABILITY COMPANY  

Dinuro Investments, LLC v. Camacho, ___ So. 3d ___, 39 Fla. L. Weekly D1428 (Fla. 3d DCA July 9, 2014)

Three members formed a limited liability company to develop real property.  The company obtained a bank loan to finance its operations.  When the bank required the members to make additional contributions to the company, only two of them complied.  As a result, two notes went into default.  The contributing members formed a new limited liability company, which purchased the defaulted notes from the bank and filed two foreclosure actions against the old company.  The contributing members allowed the old company to default, and the new company acquired title to all of the old company’s real estate.  The non-contributing member sued the individuals who controlled the contributing members and the entities that those individuals controlled for breach of the operating agreement and sued the members of the new company and the bank for tortious interference.  The trial court dismissed these claims for lack of standing, and the appellate court affirmed. The court held that a member of a limited liability company may bring a direct action against other members “only if (1) there is a direct harm to the shareholder or member such that the alleged injury does not flow subsequently from an initial harm to the company and (2) there is a special injury to the shareholder or member that is separate and distinct from those sustained by the other shareholders or members.”  An exception to this rule exists if a contract or statute imposes a special duty upon the defendants to the individual plaintiff.  In this case, the plaintiff did not suffer direct harm because his injuries flowed from the devaluation of the company, and the defendants did not owe a special duty to him.  “Conspicuously missing from the operating agreement [was] any provision stating that the members shall be directly liable to each other for breaches of the terms of the operating agreement.  Absent such a stipulation, [the court] presume[d] individual members [were] not liable for obligations or decisions of the company, as limited liability is one of the paramount reasons for forming an LLC.”