Can I Sue My Business Partner Personally in Florida?

Short Answer: Can I Sue My Business Partner Personally in Florida?

Yes, in many cases you can sue a business partner as an individual. Most personal claims target the partner’s own wrongful conduct, such as taking company money or misleading the other owners. Being a co-owner alone does not create a personal claim.

Whether a claim works depends on the facts, the documents you signed and the Florida law that governs your business. A claim for your own injury is different from a claim the company can bring. This page covers the claim types, the company shield, the rules that shape a case, and what to do if your partner sues first.

Claims You Can Bring Against a Partner Personally

Breach of fiduciary duty, breach of the governing agreement, fraud and misuse of company property are the most common personal claims. Each one rests on a duty the partner owed you or a wrong the partner committed.

• Breach of fiduciary duty. Each manager of a manager-managed LLC and member of a member-managed LLC owes duties of loyalty and care to the company and its members, under Fla. Stat. § 605.04091. General partners’ duties are set out in Fla. Stat. § 620.8404.
• Breach of the agreement. A member can sue another member, a manager or the company to enforce its rights, including rights under the operating agreement, if the member pleads and proves either an injury that is not solely the result of an injury to the company, or an injury resulting from a violation of a separate statutory or contractual duty owed to the member, as Fla. Stat. § 605.0801 allows.
• Fraud or deception. Fraud generally requires a false statement of a material fact, the speaker’s knowledge that it was false, an intent to induce reliance, and injury. See Frutafino v. Dole Chile.
• Misuse of company property. A manager or member must account for and hold as trustee for the company any profit or benefit derived in the conduct or winding up of the company’s activities, from use of company property, or from appropriation of a company opportunity, under Florida’s LLC conduct statute.

The duty of care is narrow. It covers grossly negligent or reckless conduct, intentional misconduct and knowing violations of law.

Records often decide the case. Bank statements, ledgers, emails and meeting minutes often show what the partner actually did.

Why the LLC or Corporation Does Not Always Shield a Partner

An LLC shields its owners from company debts, but that shield does not change what a partner did personally. Under Fla. Stat. § 605.0304, a company debt is solely the company’s. A member is not personally liable just for being a member or manager.

General partnerships work differently. Under Fla. Stat. § 620.8306, partners are generally jointly and severally liable for partnership obligations unless a claimant agrees otherwise or the law provides otherwise, but a person admitted into an existing partnership is not personally liable for obligations incurred before admission. A partner in a limited liability partnership generally is not personally liable, just for being a partner, for partnership obligations incurred while the partnership is a limited liability partnership; a partnership that became one before the effective date of that subsection could waive this protection for written contractual obligations by filing a notice with the Secretary of State, but only during the first 6 months after that effective date. Fla. Stat. § 620.8306 reads: “If a limited liability partnership executes and delivers such a notice, each partner of the limited liability partnership is jointly and severally liable for the contractual obligations of the partnership which are the subject of the notice, except that no partner is liable under any such contract for any amount in excess of the amount for which the partner would have been liable under the laws of this state as they existed immediately before the effective date of this subsection.”

Piercing requires a “showing of improper conduct,” meaning proof that “the corporation was actually organized or used to mislead creditors or to perpetrate a fraud upon them.” (Wurtzebach v. Flooring Depot FTL, Inc.) Wurtzebach v. Flooring Depot FTL applies that rule. Courts look for improper conduct, such as proof that the company was actually organized or used to mislead creditors or to perpetrate a fraud upon them. (Wurtzebach v. Flooring Depot FTL, Inc.)

A personal claim is separate from a company claim. A member who wants to enforce a company right must first demand action from the other members of a member-managed LLC, or from the managers of a manager-managed LLC, under § 605.0802, unless that demand would be futile or irreparable injury would result to the company by waiting for the other members or the managers to act. The response period is not to exceed 90 days, under Fla. Stat. § 605.0802.

Florida Rules That Shape a Partner Lawsuit

Your governing agreement sets many rules, so read it before you act. An operating agreement may not authorize willful or intentional misconduct or a knowing violation of law.

Check these points early:

• Arbitration clauses. A written agreement to arbitrate existing or future disputes is valid and enforceable, except on grounds that allow a contract to be revoked. The court decides whether the agreement exists, under Fla. Stat. § 682.02.
• Section 44.102 governs court-ordered mediation: a court’s duty to refer a filed civil action for monetary damages to mediation, when one party requests it and that party is willing and able to pay the mediation costs or the costs can be equitably divided between the parties, does not apply in the situations listed in Fla. Stat. § 44.102(2)(a), including where the parties have agreed to binding arbitration.
• Deadlines. Filing deadlines vary by claim type and can be short.
• If a court orders inspection or copying of records demanded from an LLC, Fla. Stat. § 605.0411 requires the court to also order the company to pay the costs, including reasonable attorney fees reasonably incurred by the member, manager, or other person seeking the records, unless the company proves that it refused inspection in good faith because it had a reasonable basis for doubt about the requester’s right to inspect or copy the records.

Deception and Fraud Claims Against a Partner

Yes, deception that causes financial loss can support a fraud claim against the partner who made it. You must show a false statement of a material fact, the speaker’s knowledge of falsity, intent to induce reliance, and injury to you.

A promise can count too. A promise of future action may be fraud if the partner made it with no intention of keeping it, as Frutafino explains.

Waiting can cost you. As a general rule, a voidable contract can be ratified when the party who could cancel it fails to act after learning the facts. Flaherty v. Flaherty states that rule. It is a general rule, not an automatic result.

Typical losses include money taken, the value of diverted assets and profits the business lost.

How a Partner Dispute Moves Forward

A partner dispute usually moves through records, a written demand and talks. Mediation, arbitration or a court case follows if talks fail. Timelines vary widely, so no schedule can be promised at the start.

1. Document review. Gather the governing agreement, financial records and messages. List every deadline.
2. Case evaluation. Match each possible claim to the facts. Consider who could be held personally liable.
3. Written demand. Many disputes settle after a demand, a negotiated buyout or a change in ownership terms.
4. Mediation or arbitration. These steps apply when the agreement requires them or both sides agree.
5. Court filing and discovery. If needed, the case is filed. Discovery can include document requests, depositions and testimony from third-party witnesses.
6. Resolution. The case ends by settlement, court ruling or trial.

If Your Partner Sues You First

Review any complaint quickly, because response deadlines are short. Set aside time as soon as papers arrive.

Defense options can include the agreement’s dispute terms, such as mediation or arbitration.

You may also have claims against the partner. Evaluate counterclaims together with your defense, because they can change the strategy.

Other paths include a negotiated buyout or a change in ownership terms.

Why Ayala Law PA for Business Partner Disputes

Ayala Law PA focuses on business litigation. That includes commercial and contract disputes, shareholder and partnership disputes, construction litigation, real estate litigation and international trade litigation in Florida courts and arbitration.

Eduardo A. Maura is the lawyer responsible for this page. Our team includes assistants and office staff who support our lawyers.

Our office is at 1646 W Snow Ave, Tampa, Florida. We serve businesses and owners in Hillsborough County and the Tampa Bay area.

We review fee terms with you before any engagement. Every matter is different. A prospective client may not obtain the same or similar results.

Frequently Asked Questions About Suing a Business Partner in Florida