If you find yourself needing to utilize the court system in order to sort out a dispute between yourself and another of your fellow members of a limited liability company, it is important to understand what you’ll need to win your case. In a dispute among members of a sun visor LLC, one member’s lawsuit ultimately failed when the Fifth District Court of Appeal decided that he did not have enough of the correct type of evidence to succeed. The member’s case rested largely upon his own affidavit, and that affidavit did not include required information indicating how the member came to know the things about which he alleged to have “personal knowledge.”
The case emerged in the wake of a dispute between members of a limited liability company. The company sold Vizers, a variety of sun visor product that was brightly colored and floated in water. Stephen Johns owned 50% of the LLC, Kirk Dannels owned 30%, and a third member owned 20%. After the dispute between Dannels and Johns flared, Dannels sued on behalf of himself and the LLC. Dannels alternately accused Johns of orchestrating the sale of LLC assets without consulting the other two owners and “purport[ing] to sell the assets.” Dannels also alleged that he demanded an accounting (access to certain of the LLC’s books and records), but Johns did not provide that accounting. Additionally, Dannels alleged that he was wrongfully kicked out of the LLC.
The trial court sided with Dannels, awarding summary judgment in his favor and damages in the amount of $45,000. The court also ordered Johns removed as a managing member of the company.
Johns appealed and won. The problem in the case was the lack of the right kind of evidence. In order for Dannels to recover, he should have shown that Johns sold LLC assets and diverted the proceeds to himself. In this case, the appeals court stated, the evidence Dannels had, mostly consisting of an affidavit, made certain accusations regarding LLC assets, including “orchestrated” and “purported,” but it never alleged that Johns actually sold anything belonging to the LLC, much less that he took the money from the sale and gave it to himself.
Furthermore, in a case like this, in which the suing member is building his case largely around his own affidavit, the suing member needs to include information telling the court how he knew the things he alleged. Affidavits in support of one party’s summary judgment motion must, in order to be considered by the court, be based upon personal knowledge. This means more than just stating in a perfunctory way that the information was based upon direct personal knowledge. Instead, the law requires the affidavit to show affirmatively how the person creating the affidavit came to know the things he alleged to be true. In Dannels’ affidavit, “it is not possible to determine how [Dannels] came to have knowledge of the facts he asserted in his affidavit.” As a result, his affidavit was insufficient and should not have warranted an award of summary judgment in his favor.
If you’re embroiled in a lawsuit with a fellow member of your LLC, contact the diligent Florida corporate litigation attorneys at Stok Folk + Kon. Our attorneys can give you the knowledgeable advice and determined representation you need.
Contact us online or by calling (954) 237-1777 to schedule your consultation.
More blog posts:
LLC Member Unable to Use Garnishment to Recover Judgment from Terminated Member, Florida Business Lawyers Blog, Feb. 26, 2015
The New Florida LLC Act, Florida Business Lawyers Blog, Dec. 13, 2013