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Fritz v. Fritz

Florida Court of Appeals, Third District

May 17, 2017

James Louis Fritz, Appellant,
v.
John Calvin Fritz, et al., Appellees.

         Not final until disposition of timely filed motion for rehearing.

         Appeals from the Circuit Court for Miami-Dade County Lower Tribunal Nos. 13-33823 and 16-18449, John W. Thornton, Jr., Judge.

          Joel S. Perwin, P.A., and Joel S. Perwin; Trembly Law Firm, and Fred Viera, for appellant.

          Homer Bonner Jacobs, and Peter W. Homer and Christopher J. King, for appellees.

          Before ROTHENBERG, SALTER, and FERNANDEZ, JJ.

          ROTHENBERG, J.

         These consolidated appeals stem from a dispute between five siblings- James Louis Fritz, Jennifer Floyd, [1] John Calvin Fritz, Jeffrey Errol Fritz, and Jack Steven Fritz. In case number 3D16-479, James appeals from the trial court's order granting summary judgment in favor of his three brothers, John, Jeffrey, and Jack (collectively, "the Brothers"), in which the trial court found that James lacked standing to bring a direct action against the Brothers for breach of fiduciary duty because the claims "are derivative in nature and not direct as [James] contends, " and from the subsequently entered final summary judgment (lower tribunal case number 13-33823). In case number 3D16-2229, James appeals from the trial court's order granting the Brothers' motion to stay the arbitration proceeding initiated by James on behalf of JW Fritz Partners Limited Partnership and JW Fritz Partners, Inc., against the Brothers, JW Fritz Partners Limited Partnership, and JW Fritz Partners, Inc. For the reasons that follow, we affirm.

         The Fritz family owns several entities, including Melrose Nursery, Inc. ("Melrose Nursery"); two limited partnerships, JW Fritz Partners Limited Partnership and Five Fritz Partners Limited Partnership (collectively, "the limited partnerships"); and JW Fritz Partners, Inc., the sole general partner of JW Fritz Partners Limited Partnership. The five siblings are shareholders of Melrose Nursery and JW Fritz Partners, Inc. and limited partners of the limited partnerships.

         Melrose Nursery operated on five parcels of land, which were acquired by the limited partnerships in 2003. In 2005, the limited partnerships sold the five parcels to a third party, Newsouth, LLC ("Newsouth"), and Newsouth executed mortgages and promissory notes in favor of the limited partnerships. Although Newsouth made all of the payments due under the promissory notes and mortgages, in 2008 Newsouth notified the limited partnerships that it could no longer make payments. Prior to the filing of a foreclosure action, Newsouth and the limited partnerships entered into a settlement agreement which allowed Newsouth to retain two of the five parcels transferred to Newsouth in 2005 in exchange for Newsouth's agreement to convey the three remaining parcels to the limited partnerships or an entity designated by the limited partnerships. Based on tax advice from the attorney who handled the Fritz family estate matters, the limited partnerships instructed Newsouth to transfer a ten acre lot, which was previously owned by JW Fritz Partners Limited Partnership, to Biloxi 3, LLC ("Biloxi"), which is owned by the Brothers.

         Appellate Case Number 3D16-479

         In the third amended complaint, James asserted direct claims against the Brothers, alleging that they breached their fiduciary duty to him regarding two matters-(1) allegedly unearned excessive bonuses and management fees paid by Melrose Nursery to the Brothers, and (2) the limited partnerships' 2008 settlement with Newsouth.

         The Brothers moved for summary judgment arguing, in part, that James, who is a partner of the limited partnerships and a shareholder of Melrose Nursery, lacks standing in his individual capacity to bring a direct action against the Brothers, and instead, he should have brought the suit derivatively on behalf of Melrose Nursery and the limited partnerships. Following a hearing, the trial court entered an order granting the Brothers' motion for summary judgment, relying on this Court's opinion in Dinuro Investments, LLC v. Camacho, 141 So.3d 731 (Fla. 3d DCA 2014), and section 620.2001(2), Florida Statutes (2015).

         In applying Dinuro and section 620.2001(2), the trial court concluded that based on the allegations of the third amended complaint, the claims asserted are derivative in nature, not direct. Specifically, as to the claims stemming from the alleged unearned excessive bonuses and management fees paid by Melrose Nursery to the Brothers, the trial court concluded that James "failed to show a direct harm and special injury separate and distinct from that sustained by the other shareholders." Similarly, as to the limited partnerships' settlement with Newsouth, the trial court concluded that James "failed to show a direct harm and a special injury separate and distinct from that sustained by the other partners." The trial court also concluded that James cannot benefit from the exception to the test set forth in Dinuro because the third amended complaint "fails to plead a special contractual or statutory duty owed to [James], much less fraud." Thereafter, the trial court entered final summary judgment in favor of the Brothers.

         James contends that the trial court erred by granting summary judgment in favor of the Brothers on the ground that he lacked standing to bring an action directly against the Brothers for breach of fiduciary duty. Because our review of the third amended complaint supports the trial court's ...


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