Your co-owner has halted distributions, or a vote didn’t happen the way your company’s rules say it should. You want to know if you can take the dispute to court. Yes, Florida law lets LLC members sue each other in some situations, and the operating agreement is usually the first document a court reads.
This guide explains how Florida courts handle an LLC member dispute lawsuit, from the agreement to the type of claim, buyouts, and deadlock. Read it alongside your own documents.
What a Florida LLC Member Dispute Lawsuit Covers
An LLC member dispute lawsuit is a court case between owners of the same company over ownership, control, money, or conduct. The company’s members are its owners. The Sunbiz LLC FAQ explains that an LLC can be member-managed or manager-managed.
Disputes usually involve:
- Members, including majority and minority owners
- Managers, in a manager-managed company
- Former owners who were removed or bought out
Common triggers include:
- Distributions held back from an owner
- Disputed votes or blocked decisions
- Denied access to company records
- An owner competing with the company
- Company money used for personal purposes
Partnerships work differently. According to Sunbiz corporate structure guidance, partners in a general partnership co-own the business, have equal rights and responsibilities, and are responsible for partnership debts.
Most of these cases are filed in Florida circuit court. Under Fla. Stat. § 47.011, an action must be brought only in the county where the defendant resides, where the cause of action accrued, or where the disputed property is located; this section does not apply to actions against nonresidents.
If a co-owner has halted your distributions or sent you an expulsion notice, you may have a claim worth reviewing, and our team can talk through your options with you. Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.
Does the Operating Agreement Control the Dispute?
Usually, yes. The operating agreement governs relations among members and between members and the company. Where an LLC’s operating agreement does not otherwise provide for a matter, Florida’s LLC chapter governs that matter.
The agreement has limits. It cannot relieve a person of liability for bad faith, willful or intentional misconduct, or a knowing violation of law.
Oral promises are harder to enforce. In DK Arena v. EB Acquisitions, the Florida Supreme Court held that promissory estoppel cannot be used to enforce an oral agreement that the Statute of Frauds requires to be in a signed writing.
Gather these documents first:
- The signed operating agreement and every amendment
- Sections on voting, transfers, and information rights
- Notice and dispute resolution clauses
- Any written consents or side letters
Direct or Derivative: Which Claim Fits?
A direct claim is for harm to you as a member. A derivative claim is for harm to the company. The label matters, so the claim should match the harm you suffered.
For a direct claim, Fla. Stat. § 605.0801 requires you to plead and prove either an injury that is not solely the result of harm to the company, or an injury from breach of a separate statutory or contractual duty owed to you. A denied distribution is a common example.
For a derivative claim, Fla. Stat. § 605.0802 generally requires a demand first. You ask the other members or managers to act, and they do not act within a reasonable time, not to exceed 90 days. The demand can be skipped if it would be futile or if waiting would cause irreparable injury to the company. Misused company funds often lead to this type of claim.
What Duties Apply When the Agreement Is Silent?
Florida law sets default duties for owners. Under Fla. Stat. § 605.04091, each manager of a manager-managed LLC and member of a member-managed LLC owes fiduciary duties of loyalty and care to the company and its members.
The duty of loyalty means:
- Giving the company any profit or benefit you gained from its property or opportunities
- Not dealing with the company as, or on behalf of, a person with an interest adverse to it, unless the transaction satisfies the requirements of s. 605.04092
- Not competing with the company before it dissolves
The duty of care means refraining from grossly negligent or reckless conduct, willful misconduct, or a knowing violation of law. Managers of manager-managed LLCs and members of member-managed LLCs must also discharge their duties and exercise their rights consistently with good faith and fair dealing.
Records access is a practical lever. Under Fla. Stat. § 605.0410, a member of a member-managed LLC may inspect and copy company records during regular business hours on reasonable notice. When an LLC will not let a member who has made a proper request inspect and copy the records it is required to keep available, the member can apply to the appropriate circuit court, which may summarily order inspection and copying at the company’s expense under Fla. Stat. § 605.0411. If the court grants that order, it must also require the company to pay the costs the member reasonably incurred to obtain and enforce it, including reasonable attorney fees, unless the company proves it acted in good faith because it had a reasonable basis to doubt the member’s right to the records.
Can a Member Be Removed, Bought Out, or Blocked?
Removal turns on the operating agreement’s terms. Check whether it allows removal, what notice it requires, and what vote it needs.
Deadlock happens when managers or members cannot break a tie in running the company. Under Fla. Stat. § 605.0702, if the managers or members are deadlocked, cannot break the deadlock, and irreparable injury to the company is threatened or being suffered, and the agreement has a deadlock sale provision that was started before a court finds grounds for dissolution, that provision can apply instead of a court dissolution order, so long as the provision is thereafter initiated and effectuated under its terms. The same section lists grounds for dissolution, such as illegal or fraudulent control and misappropriated company assets.
Under Fla. Stat. § 605.0706, when a member petitions to dissolve the LLC, the company (or, if it does not, one or more other members) may elect to buy the petitioner’s entire interest at fair value, and that election may be filed within 90 days after the petition, unless the court allows more time. The court sets a fair value and may allow payment in installments when equity requires. Fla. Stat. § 605.0706 reads: “(5) Upon determining the fair value of the petitioner’s interest in the company, unless the petitioner’s interest has been acquired pursuant to a deadlock sale provision before the order, the court shall enter an order directing the purchase upon such terms and conditions as the court deems appropriate, which may include: payment of the purchase price in installments, when necessary in the interests of equity; a provision for security to ensure payment of the purchase price and additional costs, fees, and expenses as may have been awarded; and, if the interest is to be purchased by members, the allocation of the interest among those members.”
What to Expect: Steps in a Member Dispute
A typical member dispute moves through these stages:
- Document review. We review the agreement, amendments, financial records, and correspondence.
- Written demand. A demand may resolve the issue or narrow it. Derivative claims generally require one first.
- Filing. The complaint goes to the proper court, or to arbitration if the agreement requires it.
- Discovery. Both sides exchange documents, take depositions, and review the company’s finances.
- Mediation. Under Fla. Stat. § 44.102, a court must refer a filed civil action for monetary damages to mediation on one party’s request, if the requesting party is willing and able to pay the mediation costs or the costs can be equitably divided between the parties, unless an exception applies. Binding arbitration is one exception.
- Settlement or trial. Many disputes end in a negotiated agreement, and the rest proceed to trial.
Timelines vary with complexity, court schedules, and how far the owners agree. No single timeline fits every case.
Not sure what your next step is?
Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.
Why Owners Bring These Disputes to Ayala Law PA
Ayala Law PA focuses on business litigation for companies and owners. The firm’s practice areas include:
- Business litigation and commercial litigation
- Contract disputes
- Shareholder and partnership disputes
- Construction litigation
- Real estate litigation
- International trade litigation
Eduardo A. Maura is the lawyer responsible for this page. The firm’s office is at 1646 W Snow Ave in Tampa, Florida. The firm handles matters for businesses in Tampa, Hillsborough County, Brandon, Riverview, Plant City, Temple Terrace, and the Tampa Bay area.
Support staff help organize documents and handle case administration. Our team reviews the agreement and the record before discussing options. Learn more about shareholder and partnership disputes.
No outcome is promised. Each dispute turns on its own agreement, facts, and evidence.
Common Questions About LLC Member Disputes
Can members of a Florida LLC sue each other?
Yes, when the operating agreement or Florida law gives them a basis to sue. A member may bring a direct action under Fla. Stat. § 605.0801 to enforce the member’s own rights, but must plead and prove 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.
Can I be removed without a remedy?
Whether a removal is enforceable turns on the agreement’s terms and the notice and vote it required. An agreement cannot excuse bad faith or willful misconduct.
Do I have a deadline to act?
Time limits apply to these claims, and they vary by claim type. Review your options soon after a dispute begins.
Who pays attorney’s fees?
Under Florida law, each party generally bears its own attorneys’ fees unless a contract or statute provides otherwise, as stated in Price v. Tyler.
How are fees handled?
Fee terms are explained in writing before any engagement.
If a co-owner has halted distributions, sent an expulsion notice, or stalled a vote, you may have a claim worth reviewing. Call (305) 570-2208 or contact our team to discuss your agreement and next steps.
