Published on:

When a Novel Legal Technique is a Good Idea in Your Florida Shareholder Litigation Case…and When It Isn’t

Just as there are many different roadway routes here in South Florida (most of which will inevitably be congested with heavy traffic) that can get you to your destination, there are also often a variety of ways you can use to get you to your desired endpoint in your shareholder litigation case. Whether you are a shareholder seeking to take action against your corporation, or you are a corporation defending against a shareholder action (or potential action,) it is important to understand what the law says you and cannot do. Be sure that you are relying on a knowledgeable South Florida commercial litigation attorney to arm you with the information you need as you make the vital decisions in protecting your interests.

A recent Tampa Bay area case is instructive on this topic. That case featured a chef who became the general manager and executive chef of a Clearwater restaurant and lounge. Two years after the restaurant opened, the chef was fired. After that, he contemplated legal action against his former employer.

In order to discover information that might help strengthen his case, the chef sought to make a shareholder demand to inspect the restaurant’s corporate records. Florida law gives corporate shareholders an “absolute right” to view and copy many of the records of the corporation. The law also gives shareholders a qualified right to inspect and copy certain other records.

Of course, in order to make these demands, you first have to be a shareholder. That was a problem for the chef because he was unsure as to whether or not he was a shareholder of the corporation. The chef selected his litigation technique and filed something called a petition for a writ of mandamus. This is a case where, if the party that filed the petition is successful, the judge issues a writ that compels someone else to perform some act.

There are several things you need in order to succeed in this type of case. You “must have a clear legal right to the requested relief,” the other side “must have an indisputable legal duty to perform the requested action,” and you “must have no other adequate remedy available.”

As the appeals court pointed out in this case, using a mandamus petition in a private commercial litigation case “is a bit – odd.” Odd though it may have been, the court also pointed out that Florida courts have long recognized the availability of “mandamus relief for shareholders in private corporations who wish to inspect their corporation’s books and records.”

Your chosen method needs, not just to work in general, but to be able to work for you

However, just because the avenue was available, that doesn’t mean that it was useful for getting this chef where he wanted to go. The corporation mounted a successful opposition because of the Catch-22 in which the chef found himself. A court can order this kind of writ if the requesting party has a “clear and certain” legal right. The only way that the chef could have a clear and certain right to inspect the books was if he was a shareholder.

However, without access to the books, he couldn’t show conclusively that he was a shareholder. Because the chef’s rights regarding inspection of the corporate records were — in the absence of those records — unclear, he wasn’t entitled to the order he sought. As the court said, a “mandamus proceeding” was “not the appropriate mechanism to resolve” the sort of factual dispute in which this chef was embroiled.

Whether you are the shareholder or the corporation caught in a shareholder dispute, there may be many different paths to get you to your desired destination. The key, then, is to choose a route that will actually get you to where you ultimately need to be. For the reliable advice and representation you need in that kind of circumstance, call upon the skilled South Florida commercial litigation attorneys at Stok Kon + Braverman. Our attorneys have been providing helpful advice and effective strategies for our shareholder dispute and other commercial litigation clients for more than two decades.

Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.

Contact Information