Dinuro Investments, LLC v. Camacho
2014 WL 3290609, 2014 Fla. App. LEXIS 10511, 141 So.3d 731 (2014)
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Rule of Law:
To bring a direct, individual lawsuit against other members of a limited liability company (LLC), a member must allege either (1) a direct harm and a special injury distinct from that suffered by other members, or (2) the breach of a separate contractual or statutory duty owed directly by the defendant member to the plaintiff member.
Facts:
- Dinuro Investments, LLC ('Dinuro'), Merici, LLC ('Merici'), and Starmac, LLC ('Starmac') formed San Remo Homes, LLC ('San Remo') to develop real property, with each holding a one-third interest.
- Merici was controlled by Felisberto Camacho, and Starmac was controlled by Javier Macedo, who also sat on the board of directors of Ocean Bank.
- San Remo obtained financing from Ocean Bank to purchase real estate.
- Facing financial difficulty, San Remo was required to negotiate loan modifications with Ocean Bank, which included a requirement for additional capital contributions from its members.
- Merici and Starmac made their contributions, but Dinuro did not, causing San Remo's loans to go into default.
- Camacho and Macedo formed a new entity, SR Acquisitions, LLC, which then purchased San Remo's defaulted loans from Ocean Bank.
- SR Acquisitions initiated foreclosure actions against San Remo's properties.
- San Remo, controlled by Camacho and Macedo, did not defend against the foreclosure, resulting in SR Acquisitions acquiring all of San Remo's assets and rendering Dinuro's ownership interest worthless.
Procedural Posture:
- Dinuro Investments, LLC filed a complaint against Felisberto Camacho, Javier Macedo, their related entities, and Ocean Bank in a Florida trial court.
- The defendants filed a motion to dismiss the complaint, arguing that Dinuro lacked individual standing because its claims were derivative in nature.
- The trial court granted the motion to dismiss, finding that Dinuro's claims were derivative and must be brought on behalf of the LLC, not by Dinuro in its individual capacity.
- Dinuro, as appellant, appealed the trial court's order of dismissal to the Florida Third District Court of Appeal.
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Issue:
Does a member of a limited liability company (LLC) have standing to bring a direct, individual action against other members for conduct that devalues the LLC, where the harm to the member flows from the devaluation of the company?
Opinions:
Majority - Rothenberg, J.
No. A member of an LLC lacks standing to bring a direct individual action when the alleged harm is indirect and flows from an injury to the company itself. Such claims are derivative and must be brought on behalf of the company. The court synthesized Florida case law to establish a two-part test: a direct action requires allegations of both (1) direct harm to the member and (2) a special injury, separate and distinct from that of other members. An exception exists if a defendant member owes a separate contractual or statutory duty directly to the plaintiff member. Here, Dinuro’s injury—the loss of its investment—was a consequence of the harm to San Remo, which lost all its assets. The harm flowed through the company to Dinuro, making it indirect. Furthermore, the LLC's operating agreement did not create a special duty making members directly liable to one another for such actions. Therefore, Dinuro’s claim is derivative, and it lacks standing to sue in its individual capacity.
Analysis:
This decision provides significant clarity on the distinction between direct and derivative actions for Florida LLCs by synthesizing decades of case law into a cohesive framework. It establishes a clear two-prong 'direct harm and special injury' test with a 'separate duty' exception, offering a predictable standard for future litigation. The ruling emphasizes that the default remedy for harm to an LLC is a derivative suit, thereby protecting the entity concept and preventing a multiplicity of individual lawsuits for a single corporate wrong. It also highlights the critical importance of explicit drafting in operating agreements if members intend to create direct, personal causes of action against one another.
