In some cases, the preferred outcome is a victory on the merits of the dispute. In other situations, though, the best outcome is to avoid adjudication on the merits of the case entirely, if that adjudication would take place in some remote and disadvantageous jurisdiction. Retaining skilled Florida business lawyers is vital, whether you’re seeking to get a case thrown out for lack of jurisdiction or seeking to avoid that outcome. For a New York-based investment firm, its objective was to avoid litigating a dispute with a Florida-based company in the Florida courts. Since the Florida entity never established that the investment firm did business in Florida or committed a business tort in Florida, the out-of-state entity was able to prevail on its dismissal request.
The two sides at odds in this dispute were a Lakeland-based entity that managed broadcast towers and a New York-based investment firm that the Florida company solicited as an investor in an effort to buy broadcast towers that CC Media Holdings, Inc. (Clear Channel) was offering for sale.
The New York company agreed to invest, but the two companies’ bids to buy Clear Channel towers failed. While the negotiation for the sale of the Clear Channel towers was ongoing, the investment firm purchased a 17% stake in another company, based in Boca Raton. Ultimately, that Boca Raton company was the winning bidder in the Clear Channel tower sale.
The Lakeland company was not pleased with its investor and sued for breach of contract and breach of fiduciary duty. The investment firm sought to dismiss the case, arguing that the Florida courts did not have jurisdiction over it. The investment was incorporated in Delaware, was based in New York, and had no offices, employees, or clients in Florida.
Even if an entity has no presence in Florida, there are still other ways for Florida courts to have jurisdiction over that business. If an entity commits a tortious act in Florida or if the entity engages in a business venture in Florida, the courts here can have jurisdiction. These were the bases the trial court used to rule against the investment firm.
On appeal, though, the investment firm won its argument for dismissal. The tort that the plaintiff alleged was a breach of fiduciary duty. Even if the defendant had a fiduciary duty to the plaintiff, the plaintiff lacked proof that the breach of that duty took place in Florida. The plaintiff had evidence that the managing director of the defendant divulged information about the Clear Channel deal to the executive chairman of the Boca Raton entity, but the plaintiff lacked evidence that this disclosure took place within the boundaries of Florida. The plaintiff also could have made its case with proof that the disclosure was directed at a person in Florida, but it didn’t have that evidence either.
The defendant’s activities also fell short of the required standard for engaging in a business venture in Florida. The phone calls upon which the plaintiff relied were not enough because they solely revolved around the Clear Channel deal, and the defendant never “derived pecuniary gain as a result of the communications,” since the deal for the plaintiff to buy Clear Channel towers using the defendant’s investment was unsuccessful and never went through.
The defendant’s investment in the Boca Raton company also wasn’t enough proof. “The fact that a New York investment firm owns a minority equity interest in a Florida company as part of its portfolio does not equate with” the investment firm doing business in Florida.
Whether your business is seeking to litigate in Florida or seeking to avoid facing a case in Florida, you need skilled Florida commercial litigation counsel. The diligent South Florida business litigation attorneys at Stok Folk + Kon are here to help you. Our attorneys have many years of experience helping clients assess and plot a route to success in their breach of fiduciary duty and other commercial litigation matters. Find out how you can put our skills and resources to use for you.
Contact us online or by calling (305) 935-4440 to schedule your consultation and find out how this firm can help you protect your interests.
More blog posts:
Minority Shareholder’s Breach of Fiduciary Duty Lawsuit Booted by Florida Court as an Improper Derivative Action, Florida Business Lawyers Blog, June 9, 2017
Lack of Proof of Florida Company’s Profitability Causes Co-Founder to Lose Breach of Contract Case, Florida Business Lawyers Blog, June 14, 2016