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A Trial Judge has Broad Discretion under the Florida Declaratory Action Act to Determine the Ownership of Business Entities and Percentages of Ownership

  •       Holding

The trial court was authorized by the declaratory judgment statute to declare the ownership structure of corporation, and to declare rights, status, and obligations of the ownership structure.

  • Facts

In April of 2005, Hyman (Plaintiff and daughter of Defendant) incorporated Bouganvilla Investments, Inc. (the “Corporation”) for the purposes of acquiring real property in Miami Beach (the “Property”). Hyman personally guaranteed the Corporation’s purchase money mortgage, and the remaining portion of the purchase price of the property. All closing costs were paid by Titan Signs, Inc., a corporation owned and controlled by Hyman’s father, Daoud for the property.

After the Corporation purchased the Property in January of 2006, Daoud moved into the Property as his residence and managed the associated rental apartments. Daoud’s trust, while not having any direct ownership interest in the Corporation, paid any shortfall for expenses related to the Property that collected rents did not cover. Hyman alleged that a dispute existed as to her ownership interest in the corporation, and the ownership structure of, the Corporation. As a remedy, Hyman sought a decree declaring that Hyman owned one hundred percent of the stock of the Corporation as well as a declaration of “the ownership structure of the corporation.”

After a two-(2) day trial, the Court determined that Hyman and Daoud each owned fifty percent-(50%) of the Corporation whose shares were to be held by Daoud’s trust. Daoud was entitled to a life estate in the property and responsible for rents and expenses.

  • Issues

Hyman appealed on several grounds including whether the trial court’s remedy relating to the corporate stock was authorized under Chapter 86 of the Florida Statutes, Florida’s declaratory judgment act.

  • Rationale

The third district affirmed in all respects. The appellate court adroitly noted that the trial court provided the precise declaration sought by Hyman in her complaint, to wit: a declaration of the ownership structure of the Corporation. Fla. Stat. § 86.011 specifically authorizes trial courts to declare the existence or nonexistence of any power, privilege or right, and authorizes the trial court to make the appropriate factual determinations necessary in order to make such decrees. Further, parties seeking declaratory relief may seek “… additional, alternative, coercive, subsequent or supplemental relief …” in the declaratory judgment action.

There were “tangled and competing interests” involved in this matter, and this “corporate mess” was “aptly cleaned up” by the trial court as authorized under Florida Chapter 86

Editor’s Note:   The Appellant/Plaintiff only sought to challenge authorization of the trial court when the she did not receive relief she was expecting and specifically sought from the trial court.

“You Can’t Always Get What You Want”

-Mick Jagger

-Third District Court of Appeal (Florida)


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