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Keywords

lawsuitdefendantstatuteappealmotioncorporationstatute of limitationsmotion to dismiss
lawsuitdefendantstatutecorporation

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Levine v. Levine, 734 So.2d 1191, 24 Fla. L. Weekly D1568

Facts

LZD, a professional association of physicians, was administratively dissolved in 1995 after ceasing business in 1990. The corporation's shares were owned equally by Drs. Levine, Zweibach, and Davis. In 1997, Zweibach and Davis voted to remove Levine from the board and subsequently filed a lawsuit against the Levines and Tampa Obstetrics, alleging improper asset transfers. The Circuit Court dismissed the action, claiming the corporation lacked standing and failed to adhere to statutory requirements for the removal of a director.

The corporation, which we refer to as “LZD,” ceased to do business in December 1990, and it was administratively dissolved by the Florida Department of State in August 1995.

Issue

Did the corporation improperly remove the director, and could the statute of limitations be used as grounds for dismissing the corporation's complaint?

The defendants maintain that LZD had no right to file the lawsuit because the board of directors that authorized the action was improperly constituted.

Rule

Under Florida law, a director may be removed by shareholders at a noticed meeting, but shareholders may also act by written consent if they hold sufficient votes. A dissolved corporation can maintain legal actions to wind up its affairs, and the statute of limitations must be conclusively established by facts in the complaint.

A director may be removed by the shareholders at a meeting of shareholders, provided the notice of the meeting states that the purpose, or one of the purposes, of the meeting is removal of the director.

Analysis

The court found that the removal of Dr. Levine was valid as the shareholders had sufficient votes to act by written consent without a noticed meeting. The court also determined that the statute of limitations could not be applied at the motion to dismiss stage since the complaint did not conclusively demonstrate the defendants' entitlement to prevail on that ground. Furthermore, the court ruled that LZD could maintain its suit despite its dissolution, as the actions fell within the permissible activities of a dissolved corporation.

Drs. Zweibach and Davis properly employed the written consent statute to remove Dr. Levine from LZD's board of directors and elect Dr. Davis to serve in his stead.

Conclusion

The District Court of Appeal reversed the Circuit Court's dismissal of LZD's action and remanded the case with directions to reinstate it, except for one count that was dismissed without prejudice for failure to state a cause of action.

We reverse the dismissal of LZD's action and remand with directions to reinstate it, save for count three.

Who won?

LZD prevailed in the appeal because the court found that the removal of Dr. Levine was valid and that the corporation could maintain its lawsuit despite its dissolution.

Drs. Zweibach and Davis properly employed the written consent statute to remove Dr. Levine from LZD's board of directors and elect Dr. Davis to serve in his stead.

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