INDEPENDENT OPTICAL COMPANY OF WINTER HAVEN AND W. O. WREN, APPELLANTS,
v.
TRAVIS ELMORE ET AL., APPELLEES

Fla. 2d DCA | 1974-01-30
No. 73-685
McNULTY, A. C. J., concurs., BOARDMAN, J., concurs specially with opinion.
289 So. 2d 24 Florida District Court of Appeal, Second District (1974) Positive Treatment
Cited by 8 cases

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Synopsis

Independent Optical Company sued officers and directors of its corporation for breach of fiduciary duty, alleging they systematically dismantled the business while still in their positions. The appellate court reversed the trial court's dismissal, holding that the complaint adequately stated a cause of action for breach of fiduciary duty.


Holding

The court held that the complaint adequately stated a cause of action for breach of fiduciary duty. The allegations that the Elmores, while still officers, directors and employees, engaged in conduct deliberately destructive of the corporation's business and profited improperly from that conduct state sufficient grounds to survive a motion to dismiss.


Headnotes

[1] Corporate officers and directors owe a fiduciary duty to the corporation and cannot profit from their official position at the corporation's detriment.

[2] Corporate officers and directors are prohibited from acquiring interests adverse or antagonistic to the corporation for their own advantage.

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Key Quotes

“It is a cardinal principle that an officer or director of a corporation will not be permitted to make profit out of his official position and because of their fiduciary character, officers and directors will not be permitted to acquire for their own advantage interests adverse or antagonistic to the corporation.”

Establishes the fundamental fiduciary duty owed by corporate officers and directors

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Facts & Procedural History

Independent Optical Company and its majority stockholder W.O. Wren sued Travis Elmore, Joanne Elmore, and Travis Optical Company. The Elmores were pri…

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Opinion of the Court
FERRIS, JOHN G., Associate Judge.

FERRIS, JOHN G., Associate Judge.

Plaintiff corporation and its majority stockholder, hereinafter referred to as Independent, sued Travis Elmore, Joanne El-more and Travis Optical Company, hereinafter referred to as the Elmores, in six counts and are appealing the trial court’s dismissal with prejudice of the first four counts for failure to state a cause of action. The question before this court then is whether the allegations of the complaint are adequate to state a cause of action, and thus withstand a motion to dismiss, without consideration of any evidentiary matters not alleged in the complaint and without regard at this time as to the ability of Independent to prove such allegations. State of Florida ex rel. Shevin v. Turner, Fla.App.1973, 285 So. 2d 623.

Independent alleges the Elmores were from the beginnings of Independent the principal employees of the corporation. It further alleges that the Elmores were and are (emphasis supplied) officers, directors and stockholders of Independent, although they left Independent’s active employ on February 12, 1973, with no notice. The complaint then alleges conduct by the El-mores prior to February 12, 1973, such as

1. inducing all of plaintiff’s employees to leave and work for the Elmores,

2. unlawfully transferring property of the plaintiff to defendant corporation,

3. selling and performing services under plaintiff’s trade name and billing such customers under defendant corporation’s name,

4. utilizing the assets, equipment, facilities and goodwill of Independent in promoting the business of defendant corporation,

all of which plaintiff says effectively destroyed plaintiff’s business. Independent thus seeks damages as a result of the claimed breach of fiduciary duty by the Elmores, and in addition the appointment of a receiver to account for such sums as were obtained by the Elmores as a result of their conspiracy against Independent.

The allegations of the complaint, which must be taken as true for the purpose of this appeal, indicate that the Elmores have been and are still officers and directors of plaintiff corporation and that they engaged in conduct which was deliberately destructive of plaintiff’s business and from which they have improperly profited to the detriment of Independent while they were still active officers, directors and employees.

It is a cardinal principle that an officer or director of a corporation' will not be permitted to make profit out of his official position and because of their fiduciary character, officers and directors will not be permitted to acquire for their own advantage interests adverse or antagonistic to the corporation. 7 Fla.Jur., Corporations, Sections 302-303. While it is true that corporate officers or directors are not precluded, because of the fiduciary nature of their position, from entering into and engaging in another similar enterprise separate from the corporation, they must refrain from interfering with the business of the corporation and they must act in good faith. Renpak, Inc. v. Oppenheimer (Fla.App.1958) 104 So. 2d 642.

Tested by these principles, we believe the first four counts of the complaint do state a cause of action against the three defendants and are sufficient to withstand a motion to dismiss. It therefore follows that the trial judge was in error in granting defendant’s motion to dismiss these counts with prejudice.

Reversed and remanded.

McNULTY, A. C. J., concurs.

BOARDMAN, J., concurs specially with opinion.

Concurrence
BOARDMAN, Judge

BOARDMAN, Judge

(concurring specially) .

I concur as to the result reached in the majority opinion, but feel that the result should not be bottomed solely on the fact that the appellees were officers and stockholders in the complaining corporation.

The complaint, in its first four counts, in essence alleges that the Elmores inter fered with prospective advantages of the Independent Optical Company. This, in my view, suffices to state a cause of action. Interference with existing contractual relationships has long been recognized as actionable. Y.B., 1410, 11 Hen. IV 47. In Temperton v. Russel, 1 Q.B. 715 (1893) it was declared that the principles of liability for interference with contract extended beyond existing contractual relations, and that a similar action would lie for interference with relations which were merely prospective or potential. Prosser, Law of Torts 949. (4th Ed. 1971). American decisions on expectancies thus protected have been those such as prospects of obtaining employment, or employees or the opportunity of obtaining customers. Pros-ser, supra.


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Citator

Cited By

  • Schein v. Chasen, 313 So. 2d 739 (Fla. 1975)
    …Flight Equipment and Engineering Corporation v. Shelton, 103 So. 2d 615 (Fla.1958); Doeg v. Thornton, 174 So. 2d 570 (Fla.App.3, 1965); Etheredge v. Barrow, 102 So. 2d 660 (Fla.App.2, 1958); Independent Optical Co. of Winter Haven et al. v. Elmore, 289 So. 2d 24 (Fla.App.2, 1974); Renpak, Inc. v. Oppenheimer, 104 So. 2d 642 (Fla.App.2, 1958). We would not extend the innovative ruling of the New York Court of Appeals in Diamond, supra. We conclude that under the facts alleged in the complaint, Florida law d…
  • United States v. DE LA Mata, 266 F.3d 1275 (11th Cir. 2001)
    …undisclosed profit adverse to the corporation’s interests and because of their fiduciary character will not be permitted to acquire for their own advantage interests adverse or antagonistic to the corporation. See Independent Optical Co. v. Elmore, 289 So. 2d 24, 25 (Fla. 2nd DCA 1974). Indeed, Florida law continues to recognize official liability for misappropriation of a corporate opportunity. See Florida Discount Properties v. Windermere Condo., Inc., 786 So. 2d 1271, 1272 (Fla. 4th DCA 2001); see also C…
  • City OF Miami Beach v. Smith, 551 F.2d 1370 (5th Cir. 1977)
    …rporate opportunities. See, e. g., Etheredge v. Barrow, 102 So. 2d 660, 662 (Fla.Dist.Ct.App. 1956) (officers and directors “occupy a fiduciary or quasi-fiduciary relation to the corporation and its stockholders”); Independent Optical Co. v. Elmore, 289 So. 2d 24, 25 (Fla.Dist.Ct.App.1974) (officers and directors, because of their “fiduciary character,” may not acquire personally advantageous interests adverse to that of the corporation). Granting that the Ratners’ 50% interests certainly would facilitate pl…

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