Personal Liability Exposure for Nursing Home Operators: Canavan’s Encroachment on the Business Judgment Rule
The Estate of Canavan v. National Healthcare Corp., 889 So. 2d 825 (Fla. 2d DCA 2004), has proven to be the most dangerous tool at the disposal of a plaintiff’s attorney seeking to hold a company’s directors or statutory managers personally liable for alleged negligence in the operation of a long-term care facility. In Canavan, Florida’s Second District authorized a cause of action brought by the estate of a deceased nursing home resident against a director, in his individual capacity, for alleged negligence in making certain policy-level decisions affecting the nursing home. Canavan purports to recognize the well-settled rule that corporate directors are personally liable for their own tortious conduct, even if such conduct is performed in their official capacity.1 The decision, however, is arguably an example of personal liability founded on business decisions normally protected by the “business judgment rule,” which immunizes directors’ business decisions from claims founded on simple negligence.
This article proposes that Florida’s codified business judgment rule (BJR) conflicts with the Canavan decision, which expanded, one step too far, the principle that corporate directors are personally liable for their own tortious conduct. This article suggests that a framework to properly analyze the bounds of this principle lies in acknowledging a distinction between “policy-level” and “operational” conduct, just as this distinction is recognized and analyzed in the context of state immunity from tort liability.2 More specifically, Florida law can be harmonized by preserving the protections of the BJR in cases of “policy-level” negligence, while preserving the legal principle applied in Canavan in cases of “operational” negligence, as these terms were analyzed by the Florida Supreme Court in Lee v. Department of Health and Rehabilitative Services, 698 So. 2d 1194 (Fla. 1997). Although it results in the conclusion that Canavan applied an improper standard of care, this framework is entirely consistent with the legal doctrine cited in Canavan and with Florida’s BJR as codified in F.S. Chs. 607 and 608.3
Florida’s Codified “Business Judgment Rule”
Under the BJR, a company’s directors are given liberal discretion to make management and policy decisions, and a court should not substitute its judgment for that of the directors.4 An important justification for this rule is to guard against courts’ second guessing the wisdom of business decisions, given that courts institutionally are ill-suited to do so.5 The rule also attempts to avoid excess personal liability exposure, which could either deter individuals from serving as corporate directors or promote overly conservative decisionmaking by the directors.6
Directors owe fiduciary obligations to the corporation itself and to shareholders, and must act in the best interests of the corporation.7 Necessarily, the BJR creates a limited presumption of correctness in such actions and decisions,8 And requires culpability higher than simple negligence for individual liability to arise.9
The rule is commonly applied when directors are sued by shareholders or the corporation itself; however, Florida’s statutory scheme expressly contemplates application in suits “by or in the right of someone other than the corporation or shareholder.”10
F.S. §607.0831(1) provides that a director of a corporation:
is not personally liable for monetary damages to … any other person for any statement, vote, decision, or failure to act, regarding corporate management or policy … unless … [t]he director breached or failed to perform his or her duties as a director; and … [i]n a proceeding by or in the right of someone other than the corporation or a shareholder, [said breach or failure constitutes] recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.
Similarly, F.S. §608.4228(1) provides that a statutory manager or a managing member of a limited liability company:
shall not be personally liable for monetary damages to … any other person for any statement, vote, decision, or failure to act regarding management or policy decisions … unless … [t]he manager or managing member breached or failed to perform the duties as a manager or managing member; and … [i]n a proceeding by or in the right of someone other than the limited liability company or a member, [said breach or failure constitutes] recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.
In sum, the protections afforded in Chs. 607 and 608 are not limited in application to derivative suits brought by the entity itself or suits brought by an individual member or shareholder. Rather, both statutes are intended to limit circumstances in which monetary damages are awardable from an individual officer or statutory manager to “any other person” as a result of “management or policy decisions.”
Surprisingly, the seminal decision that has paved the way for lawsuits against individually named officers and statutory managers in nursing home cases did not mention Chs. 607 or 608, even though the individual defendant’s conduct involved management and policy decisions.
The Canavan Decision
In Canavan, the estate of a deceased nursing home resident, Patrick Canavan, brought common law and statutory negligence claims against several entities and an individual, Roger Friedbauer. A limited liability company, called 1620 Health Partners, LLC, held the license to operate the nursing home where Mr. Canavan was injured.11 Mr. Friedbauer was a director of the corporation called Southern Hospitality Developers, Inc., which served as the statutory manager of 1620 Health Partners, LLC.12 Mr. Friedbauer also served as the sole member of the nursing home’s governing body, which is responsible under federal regulation for appointing the nursing home’s administrator and for establishing and implementing policies for the management and operation of the facility.13
The plaintiff contended that Mr. Friedbauer caused injuries to Mr. Canavan through negligence in managing the nursing home’s budget by cutting expenses and ignoring complaints of insufficient staffing.14 The plaintiff alleged that understaffing directly resulted in the malnutrition, dehydration, pressure sores, and infections suffered by Mr. Canavan.15 The trial court entered a directed verdict in favor of Mr. Friedbauer based on its suggestion that personal liability could not exist without piercing the corporate veil.16
On appeal, the Second District reversed and remanded for a new trial, holding that this was not a case where piercing the corporate veil was applicable.17 It explained that a jury could reasonably have found that Mr. Friedbauer’s conduct in ignoring documented problems at the nursing home constituted negligence that contributed to Mr. Canavan’s injuries, and such tortious conduct is not shielded from personal liability.18 The district court relied on three decisions, standing for the general rule that “officers of a corporation may be held liable for their own torts even if such acts are performed as corporate officers.”19
Canavan ’s Conflict with the BJR
Although Florida’s codified BJR can harmoniously coexist with the doctrine providing that directors are personally liable for their own torts, it directly conflicts with Canavan ’s expansion of this doctrine.
• Canavan Is Different than its Predecessors — The line of cases relied upon in Canavan represents the long-standing rule that directors are personally liable for their own torts.20 Significantly, the facts of the cases relied upon in Canavan did not implicate the BJR, and the courts properly applied a simple negligence standard of care for the corporate directors. The three cases providing the foundation for the Canavan decision are Fla. Specialty, Inc. v. H 2 Ology, Inc., 742 So. 2d 523 (Fla. 1st DCA 1999); McElveen v. Peeler, 544 So. 2d 270 (Fla. 1st DCA 1989); and Orlovsky v. Solid Surf, Inc., 405 So. 2d 1363 (Fla. 4th DCA 1981).
Neither Fla. Specialty nor McElveen involve a factual scenario where a director’s “decision, or failure to act, regarding corporate management or policy” gave rise to the suit. In Fla. Specialty, the corporate officer allegedly committed the tortious act at issue by personally causing a corrosive liquid to flow onto public streets.21 In McElveen, the corporate officer allegedly committed the tortious act at issue by personally allowing a child to frequent his tire shop and have access to its hazardous environment.22 Neither of these cases conflict with §§607.0831 or 608.4228, because the alleged acts and omissions do not pertain to “corporate management or policy.” Unlike Canavan, the facts of these cases did not implicate Florida’s codified BJR.
Perhaps the easiest way to see why the BJR is inapplicable to Fla. Specialty and McElveen is to view them in light of the BJR’s rationale. Although the individuals’ conduct in these cases was performed in their official capacity as directors, the individuals’ acts and omissions did not involve business judgment such that a court would be ill-suited to question. Neither acquiescing to a child frequenting one’s dangerous property nor causing a corrosive substance to flow onto public streets calls for a judge’s or jury’s technical assessment of business acumen.
Whether the conduct at issue in Orlovski implicates the BJR is not as easy to analyze. In Orlovski, the corporate officer allegedly committed the tortious acts at issue by negligently renting defective equipment and failing to implement adequate safety precautions at a skateboard park.23 However, an analysis as to whether the facts of Orlovski implicate the BJR is unnecessary because the case was decided in 1981, prior to the enactment of F.S. §607.0831.24 Thus, unlike Canavan, the facts of this decision could not have implicated Florida’s BJR, because its provisions had not yet been enacted. The Orlovski court properly applied a simple negligence standard of care for the action against the corporate director.
In sum, the courts in Fla. Speciality, McElveen, and Orlovski properly applied the general rule that directors are personally liable for their own torts, even simple negligence. Canavan, however, involved business decisions that are beyond the reach of the general rule and within the limited protection provided by the Florida Legislature in Chs. 607 and 608.
• Canavan ’s Encroachment on the BJR — The Canavan decision expanded, one step too far, the general rule that corporate directors are personally liable for their own tortious conduct. No distinction was acknowledged between the conduct of the individually named director, Mr. Friedbauer, and the conduct of the individually named parties in Fla. Speciality, McElveen, and Orlovski. Chs. 607 and 608 were not mentioned in Canavan in any manner, and it is unclear whether there was special significance to the fact that Mr. Friedbauer was the sole member of the nursing home’s governing body. There was little qualification made in the Second District’s holding, and, understandably, it has been used for the unrestricted proposition that personal liability can always exist for simple negligence in making policy-level decisions in the operation of a long-term care facility.
In Canavan,
Mr. Friedbauer was alleged to have negligently managed the nursing home’s budget by cutting expenses and ignoring complaints of insufficient staffing at the nursing home. In other words, the cause of action in Canavan was based on alleged poor budgetary decisions and failures to act in response to documented problems. First, this class of conduct certainly constitutes a “decision, or failure to act, regarding corporate management or policy.” Second, the suit was brought by the Estate of Mr. Canavan, which constitutes an action brought “by or in the right of someone other than the corporation or a shareholder.” Therefore, pursuant to §§607.0831 and 608.4228, for personal liability to exist, Mr. Friedbauer must have “breached or failed to perform his…duties as a director,” and, additionally, his conduct must have amounted to “recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.” On remand, Mr. Friedbauer, whether deserving or not, was entitled to the benefit of this “recklessness” standard.
In sum, the Second District in Canavan incorrectly expanded and applied the general rule that corporate directors are personally liable for simple negligence. The suit in Canavan involved business decisions that are beyond the reach of the general rule and squarely within the provisions of Chs. 607 and 608, which require at least “recklessness” for personal liability to attach when the suit is based on a decision or failure to act regarding company management or policy.
• A Layer of Complexity: F.S. §400.023(3 ) — No Florida appellate court has touched or even scratched the surface of the following convoluted, but necessary, analysis. Ch. 400, which provides for basic standards for the operation of nursing homes,25 adds a layer of complexity to this analysis and arguably creates a conflict among statutes. In any claim brought pursuant to F.S. §400.023(3), “a licensee, person, or entity shall have a duty to exercise reasonable care. ”26 An argument can be made that this statute conflicts with the provisions of F.S. §§607.0831 and 608.4228, which apply a recklessness standard to actions against company directors and statutory managers. Since any “person” as referenced in F.S. §400.023(3) could broadly include anyone, a plaintiff’s attorney will contend that the standard of care set forth in F.S. §400.023(3) should encompass even corporate directors and statutory managers in suits arising from management or policy decisions within their companies. Are corporate directors and statutory managers entitled to the benefit of the “recklessness” standard for business decisions or does the nursing home statute mandate a “reasonable care” standard in this situation?
Superficially, the “purpose”27 sections of Chs. 607 and 608 seem to expressly answer this question. Under §607.0301, corporations may be organized under Ch. 607 for any lawful purpose, and the provisions of Ch. 607 extend to all corporations, “except that special statutes for the regulation and control of types of business and corporations shall control when in conflict herewith.” Similarly, under §608.403, a limited liability company may be organized under Ch. 608 for any lawful purpose, but the company remains subject to Florida laws and regulations “for regulating and controlling its business, which shall control when in conflict with this [c]hapter.”
Should these “purpose” sections be read to permit conflicting statutes, such as §400.023(3), to dictate the personal liability exposure of directors and statutory managers, or do these “purpose” sections only make the company subject to those provisions of Ch. 400, which regulate the company’s business? Indeed, a limited liability company is separate and distinct from its members and managers, and a corporation is separate and distinct from its shareholders and directors.28 The “purpose” sections of Chs. 607 and 608 do not mention shareholders, directors, members, or managers in any manner. Section 608.403, for example, expressly makes the company subject to other Florida laws and regulations pertaining to its specific business when there is a conflict, but it does not expressly provide that the company’s members or statutory managers are subject to other Florida laws and regulations in the event of a conflict.
The “purpose” sections’ reference to laws regulating and controlling the company’s business further adds ambiguity. Do only some provisions of Ch. 400 “regulate” and “control” the company’s business, or does Ch. 400 as a whole regulate and control the company’s business, thus, making all Ch. 400 provisions controlling in the event of a conflict? In other words, does every section and subsection of Ch. 400, even those not regulating or controlling the company’s business, trump Chs. 607 and 608?
Prior to 2001, lawsuits brought under §400.023 were permitted only “against any licensee responsible for the violation.”29 Section 400.023 was amended in 2001, and this language was dropped.30 The statute was adjusted to expressly permit claims under §400.023 against any “licensee, person, or entity.”31 Thus, the scope of defendants subject to a Ch. 400 suit was expanded in 2001. Section 400.023(3) requires any “licensee, person, or entity” in a “claim brought pursuant to section 400.023(3)” to “have a duty to exercise reasonable care” — should this provision be considered one that regulates or controls the company’s business, or does it just control Ch. 400 litigation?
The plain language of §400.023(3) indicates the section only comes into play once a “claim brought pursuant to section 400.023(3)” exists. Logically, a provision regulating or controlling a company’s business certainly would not be dormant until the initiation of a Ch. 400 claim. If the provision is one that regulates or controls the company’s business, it should be clearly applicable prior to the start of a Ch. 400 claim against the defendant. Thus, this provision seems to control the scope of defendants subject to a Ch. 400 suit rather than actually regulate or control the company’s business. If §400.023(3) does not regulate or control the company’s business, then the “purpose” sections of Chs. 607 and 608 arguably do not authorize §400.023(3) to set the standard of care in the event of a conflict.
Florida’s common law on statutory interpretation does not provide a definitive answer either. The common law rule is that, generally, when there is a conflict among statutes, the more specific statute controls, regardless of which statute was enacted later in time.32 A statute relating to a specific portion of a general subject “will operate as an exception to or qualification of the general terms of the more comprehensive statute to the extent only of the repugnancy.”33
A defense attorney would argue that §§607.0831 or 608.4228 provide an “exception or qualification” to the broad term “person” contained in §400.023. Under this view, a corporate director or statutory manager would retain the protection of the BJR as an exception to the nursing home statute requiring every “person” to exercise reasonable care. On the other hand, a plaintiff’s attorney would argue that the nursing home statute should serve as an exception to the generally applicable statutes governing business entities. Under this view, the nursing home statute’s reasonable care standard should apply and serve as an exception to rule immunizing directors’ business decisions from claims founded on simple negligence.
Perhaps the most analogous example was addressed in McClelland v. Cool, 547 So. 2d 975 (Fla. 2d DCA 1989). In Cool, §768.28, which waives sovereign immunity for state employees for willful and wanton acts, was held to be a more specific statute than §440.11, a workers’ compensation statute waiving immunity for acts of gross negligence.34 Under §440.11, workers’ compensation law applies generally “to all employers, and extends limited immunity to employers and their employees.”35 Whereas, §768.28, the more specific statute, provides limited immunity to “officers, employees and agents of the state.”36 Thus, §768.28 was held to control when in conflict with §440.11.37 Based on this analysis, §§607.0831 and 608.4228 should trump the more broadly applicable §400.023(3), which contains the broad, imprecise term “person.” Ch. 400 encompasses a special area of law, like Ch. 440, yet the provisions of §§607.0831 and 608.4228 apply to a more defined class of persons, like §768.28. However, even this analysis does not appear conclusive.
Although §400.023(3) sets a reasonable care standard for persons in a Ch. 400 claim, it remains unclear whether this provision trumps the recklessness standard applicable under the BJR. The “purpose” sections of Chs. 607 and 608 do not appear to conclusively resolve the issue, and neither does Florida’s common law governing statutory interpretation. Therefore, without clear authority indicating that §400.023(3) sets the standard of care in suits against directors, members, and managers, it remains worthwhile to discuss the proper bounds of the BJR in the context of nursing home suits.
Drawing a Line Between “Policy-making” and “Operational” Negligence
Under Florida law, corporate officers and statutory managers of limited liability companies are not, and should not be, subject to liability for simple negligence in all circumstances. The subject of this article is the proper boundary between the protections of the BJR and the common law rule that corporate directors are personally liable for their own torts. This boundary is uncertain because there is no clear guidance as to what type of conduct is contemplated in §607.0831 by the phrase “decision, or failure to act, regarding corporate management or policy” or in §608.4228 by the phrase “decision, or failure to act, regarding management or policy.”
To shed light on this important language, courts should draw a line between “policy-making” and “operational” negligence, just as these concepts are distinguished in the context of state immunity for tort liability under F.S. §768.28. Defining decisions and omissions pertaining to company management or policy in a similar fashion as the Florida Supreme Court has defined “policy-making” negligence provides a workable framework to make sense of Florida law.
• The Lee Framework — In Lee v. Department of Health and Rehabilitative Services, 698 So. 2d 1194 (Fla. 1997), the plaintiff brought an action against the Department of Health and Rehabilitative Services (HRS) for alleged negligence in the care and supervision of a mentally disabled woman who had become pregnant while in HRS custody. In determining that some of HRS’ conduct was sovereignly immune from tort liability and some was not, the Florida Supreme Court analyzed the distinction between the policy-making function of HRS versus its operational duties.38 Under the doctrine of sovereign immunity, HRS is immune from liability for negligence in policy-making duties.39 Whereas, the Florida Legislature has waived state immunity for negligence in carrying out operational activities.40
Under this framework, the Florida Supreme Court in Lee parsed out HRS’ conduct into the two categories, “policy-level” and “operational” conduct. The plaintiff had presented evidence at trial of insufficient staffing and an insufficient budget for the facility, and argued that HRS failed to implement a sufficient staff-to-patient ratio to supervise the patients.41 On this point, the Florida Supreme Court held that “the interpretation and implementation of rules governing the supervision of patients” constitute policy-level functions and are immune from tort liability.42 More specifically, the court held that assignment of staff to supervise patients “requires the exercise of evaluation, judgment, and expertise on the part of the directors of the facility,” all of which constitutes policy-level decisions.43 The court noted that the judiciary is ill-equipped to second-guess HRS’ decisions regarding its provision of services, which represents a rationale squarely analogous to that underlying the BJR.44
The Florida Supreme Court has generally defined “operational” functions as those implementing already established policies.45 In Lee, the Florida Supreme Court found that conduct is “operational” in nature if, for example, HRS staff left patients unattended at social activities, staff failed to file reports of prior abuses, or staff failed to take remedial interventions to prevent recurrence of abuse.46
• Applying Lee ’s Framework to Harmonize Florida Law — Utilizing a Lee -type framework, which draws a distinction between “policy-level” and “operational” conduct, provides guidance as to which conduct the BJR should govern. Lee ’s interpretation of “policy-level” conduct can be used to color in the phrase “decision, or failure to act, regarding corporate management or policy,” as contained in §§607.0831 and 608.4228. This provides a logical place to draw the line between the reach of the BJR and the common law rule that corporate directors are liable for their own torts. It also provides a base of authority and factual comparisons to serve as guidance when analyzing which conduct falls within the reach of the BJR.
The conduct in Canavan, which involved alleged negligence in managing the facility’s budget and staffing levels, is very similar to the conduct in Lee, which involved alleged negligence in providing an insufficient facility budget and staffing ratio. As in Lee, the type of conduct in Canavan should be viewed as “policy-level” negligence, because this conduct involves “the exercise of evaluation, judgment, and expertise on the part of the directors of the facility.” Although there cannot be a bright-line rule, Canavan should represent a threshold set of facts calling for application of the BJR.
Any conduct that Lee would consider “operational” negligence should be governed by the common law rule that corporate directors are liable for their own torts, as in Fla. Specialty and McElveen. Fla. Specialty, which involved a corporate officer who allegedly caused a corrosive liquid to flow onto public streets,47 And McElveen, which involved a corporate officer who personally allowed a child to frequent his tire shop and have access to its hazardous environment,48 both involve “operational” conduct under Lee. Perhaps the easiest way to identify “operational” conduct is to rule out whether it requires “the exercise of evaluation, judgment, and expertise on the part of the directors of the facility,” which describes policy-level conduct. The negligent actions and omissions by the individuals in Fla. Specialty and McElveen certainly did not involve the exercise of business evaluation, judgment, and expertise, such that a judge or jury would be ill-suited to question the conduct.
This framework is entirely consistent with the policy justifications behind the BJR. Just as judges and juries are ill-equipped to second-guess HRS policy decisions on budgetary and staffing allocation, they are ill-equipped to do so in the context of business decisions regarding a nursing home’s budget or staffing allocations. Under both the BJR and sovereign immunity doctrines, liberal discretion is permitted to make management and policy decisions, and judges and juries should not substitute their judgment for that of the state or corporate directors. As discussed, there are important policy justifications for providing limited immunity under these circumstances.
Whether one agrees that Canavan was decided incorrectly is not important. The thrust of this article is that Canavan represents a set of facts on the threshold, or very close to the threshold, where application of the common law rule ceases to be appropriate and the BJR should apply. Canavan provides the backdrop to illustrate the competing principles of law between the BJR and the common law rule that corporate directors are liable for their own torts. In future cases, when personal liability is sought against nursing home affiliates, the defendant’s conduct should be analyzed to determine whether the cause of action is founded on “operational” or “policy-level” negligence, as these terms have been defined by the Florida Supreme Court. While corporate directors or statutory managers should be personally liable for simple negligence for operational conduct, policy-level decisions and omissions should be afforded the protections of the recklessness standard contained in Chs. 607 and 608.
1 Canavan, 889 So. 2d at 827.
2 E.g., Lee v. Department of Health and Rehabilitative Services, 698 So. 2d 1194 (Fla. 1997); Carter v. City of Stuart, 468 So. 2d 955 (Fla. 1985); Commercial Carrier Corp. v. Indian River County, 371 So. 2d 1010 (Fla. 1979).
3 Florida’s Business Judgment Rule is codified in
Fla. Stat. §§607.0831 and 608.4228.
4 Lobato-Bleidt v. Lobato, 688 So. 2d 431, 434 (Fla. 5th D.C.A. 1997).
5 Freedman v. Restaurant Associates Industries, Inc., 1987 WL 14323, *8 (Del. Ch. 1987); Auerbach v. Bennett 393 N.E.2d 994, 1000 (N.Y. 1979); Lake Region Packing Ass’n, Inc. v. Furze, 327 So. 2d 212, 216 (Fla. 1976) (“In Florida, corporate directors generally have wide discretion in the performance of their duties and a court of equity will not attempt to pass upon questions of the mere exercise of business judgment, which is vested by law in the governing body of the corporation.”); F.D.I.C. v. Stahl, 89 F.3d 1510, 1517 (C.A.11 Fla. 1996) (quoting International Ins. Co. v. Johns, 874 F.2d 1447, 1458 n. 20 (11th Cir.1989) (“The [BJR] is a policy of judicial restraint born of the recognition that directors are, in most cases, more qualified to make business decisions than are judges.”).
6 Smith v. Brown-Borhek Co., 200 A.2d 398, 401 (Pa. 1964) (“If the test of negligence which is applicable in the field of torts or in the [e]state field were similarly applicable in the business or banking field, it would realistically be very difficult if not almost impossible to secure the services of able and experienced corporate directors.”); Coffee, Shareholders Versus Managers: The Strain in the Corporate Web, 85
Mich. L. Rev.
1, 26 (1986).
7 Tillis v. United Parts, Inc., 395 So. 2d 618, 619 (Fla. 5th D.C.A. 1981).
8 See Aerospace Accessory Service, Inc. v. Abiseid, 943 So. 2d 866, 867 (Fla. 3d D.C.A. 2006).
9 Fla. Stat. §§607.0831(1) and 608.4228(1).
10 Fla. Stat. §607.0831(1)(b)(5).
11 Canavan, 889 So. 2d at 826.
12 Id.
13 Id.
14 Id.
15 Id.
16 Id. at 826-827.
17 Id. at 827.
18 Id.
19 Id. at 827 (citing Fla. Specialty, Inc. v. H 2 Ology, Inc., 742 So. 2d 523, 527 (Fla. 1st D.C.A. 1999); McElveen v. Peeler, 544 So. 2d 270 (Fla. 1st D.C.A. 1989); Orlovsky v. Solid Surf, Inc., 405 So. 2d 1363, 1364 (Fla. 4th D.C.A. 1981)).
20 See id. at n. 20.
21 Fla. Specialty, 742 So. 2d at 527.
22 McElveen, 544 So. 2d at 271.
23 Orlovsky, 405 So. 2d at 1364.
24 The Florida Legislature passed
Fla. Stat. §607.1645 (1987), later codified at
Fla. Stat. §§607.0830 and 607.0831, providing corporate officers and directors heightened protection from personal liability, and applying to actions accruing on or after July 1, 1987. F.D.I.C. v. Stahl, 89 F.3d 1510, 1516 n. 12 (C.A.11 Fla. 1996); F.D.I.C. v. Gonzalez-Gorrondona, 833 F. Supp. 1545, 1556 (S.D. Fla. 1993); see also Evaluating Recent State Legislation on Director and Officer Liability Limitation and Indemnification, 43
Bus. Law. 1207 (August 1988).
25 Fla. Stat. §400.011.
26 Fla. Stat. §429.29(3) (emphasis added) (pertaining to assisted living facilities, mirrors §400.023(3)).
27 & #x201c;Purpose” sections of state LLC statutes typically govern what type of businesses in which the company can engage. See Eric Fox, Piercing the Corporate Veil of Liability Companies, 62
Geo. Wash. L. Rev. 1143, 1177 (1994).
28 Olmstead v. F.T.C., 44 So. 3d 76, 85 (Fla. 2010) (Lewis, J., dissenting); Lobato-Bleidt v. Lobato, 688 So. 2d 431, 434 (Fla. 5th D.C.A. 1997).
29 Fla. Stat. §400.023 (2000) (emphasis added).
30 Fla. Stat. §400.023 (2001).
31 Fla. Stat. §400.023(3) (2001).
32 McClelland v. Cool, 547 So. 2d 975, 976 (Fla. 2d D.C.A. 1989).
33 Parker v. Baker, 499 So. 2d 843, 845 (Fla. 2d D.C.A. 1986) (quoting Adams v. Culver, 111 So. 2d 665, 667 (Fla.1959) (quoting Stewart v. DeLand-Lake Helen Special Road & Bridge Dist., 71 So. 42, 47 (1916) (quoting State ex rel. Loftin v. McMillan, 45 So. 882 (1908))).
34 Cool, 547 So. 2d at 976.
35 Id. (citing
Fla. Stat. §440.11(1) (1987)).
36 Id. ;
Fla. Stat. §768.28(9)(a).
37 Id.
38 Lee, 698 So. 2d at 1197-1199.
39 Id. at 1197.
40 Id.
41 Id. at 1198.
42 Id.
43 Id. at 1199.
44 Id. See also Commercial Carrier Corp. v. Indian River County, 371 So. 2d 1010, 1017-1018 (Fla. 1979) (“[C]ertain functions of coordinate branches of government may not be subjected to scrutiny by judge or jury as to the wisdom of their performance.”).
45 Carter v. City of Stuart, 468 So. 2d 955, 956 (Fla. 1985); Commercial Carrier Corp. v. Indian River County, 371 So. 2d 1010, 1021 (Fla. 1979).
46 Lee, 698 So. 2d at 1199.
47 Fla. Specialty, 742 So. 2d at 527
48 McElveen, 544 So. 2d at 271.
Christopher A. Cazin is an associate with Wicker Smith O’Hara McCoy & Ford, P.A. He received his B.A. from the University of Florida in 2002 and his J.D. from Stetson University College of Law in 2007.
This column is submitted on behalf of the Business Law Section, Michael J. Higer, chair, and Melanie E. Damian and Peter F. Valori, editors.
