DiGiovanni v. All-Pro Golf, Inc., ALL-PRO

• Citation: 332 So.2d 91
• Decision Date: 12 May 1976
• Docket Number: No. 75--599,ALL-PRO,75--599
• Court: Court of Appeal of Florida (US)
• Parties: Salvatore DiGIOVANNI, Appellant, v.GOLF, INC. and John R. Peterson, Appellees.

Page 91

332 So.2d 91

Salvatore DiGIOVANNI, Appellant, v. ALL-PRO GOLF, INC. and John R. Peterson, Appellees.

No. 75--599.

District Court of Appeal of Florida, Second District.

May 12, 1976.

Rehearing Denied June 2, 1976.

Wayne Floyd, Wilson, Wilson & O'Connell, Sarasota, for appellant.

Charles J. Cheves, Jr., Cheves & Hazen, Venice, for appellees.

McNULTY, Chief Judge.

Appellant Salvatore DiGiovanni brings this interlocutory appeal from an order dismissing with prejudice, as sham, his counterclaim to an action brought by appellees, All-Pro Golf, Inc. and John Peterson. He also appeals the vacating of a previous order requiring appellee Peterson, as President of All-Pro Golf, Inc., to produce the financial and business records of the corporation. We reverse.

In 1973, appellee Peterson, a golf professional, and one Belfiore entered into an agreement launching All-Pro Golf, Inc. which operated a golf shop and driving range in Sarasota, Florida. Belfiore, for consideration, secured financing for the venture but did not receive any of its capital stock. Appellant DiGiovanni received twenty-five (25%) percent of the stock in exchange for a $5,000 contribution to capital and appellee Peterson received the remaining seventy-five (75%) percent. One Lavarini, Belfiore's personal secretary, had made several cash advances to Peterson prior to incorporation. All four named participants were made directors of the corporation and a fifth director never became involved in this controversy.

A number of written agreements were executed by the parties in conjunction with the incorporation of the business venture. One of these was a stock pledge agreement which provided that Peterson and the appellant would deposit their stock certificates as security for a $35,000 bank loan initially obtained through, and subsequently assumed by, Belfiore; but apparently the stock certificates were never delivered. The pledge agreement further provided that Belfiore was entitled to sell any of the pledged securities upon failure of All-Pro Golf to repay its indebtedness when due or in the event of a conflict of interest arising between Belfiore and DiGiovanni. Additionally, Belfiore as trustee of a voting trust held the voting rights to all the stock of the corporation.

During 1974, Belfiore and Lavarini became dissatisfied with Peterson's management of the business and decided to call a shareholder's meeting to unseat Peterson. DiGiovanni was informed of the decision and signed his name to a notice of the meeting and to a demand for corporate records. Peterson then filed this suit for injunctive relief and, thereafter, Belfiore caused an answer to be filed together with three counterclaims on behalf, respectively, of himself, DiGiovanni and Lavarini. The record confirms that Belfiore's attorney filed all of the pleadings and DiGiovanni admitted in his deposition that he merely acquiesced in the proceedings. In short, it is undisputed that Belfiore was 'calling the shots' and that he and Peterson are the principal protagonists herein.

DiGiovanni's stricken counterclaim was in the nature of a stockholder's derivative suit by which it was sought to bring Peterson, as President and general manager of the corporation, to account for suspected mismanagement. The motion to strike it as sham was based on the fact that Belfiore, who lacked standing as a stockholder, was the real instigator thereof without DiGiovanni's prior knowledge. Additionally, Peterson and the corporation contended that the derivative suit was superfluous or moot because Belfiore had the right to foreclose on DiGiovanni's stock under the terms of the pledge agreement. The trial court agreed; and the order appealed from expressly stated that it was based on a consideration of DiGiovanni's deposition, there being no evidence presented in rebuttal. A prior order requiring the plaintiffs to produce the corporate records was vacated too because of its connection with the now defunct derivative suit; and this latter provision forms the second point on this appeal.

As a prologue, we record that during the pendency of the instant appeal this court was notified that All-Pro Golf, Inc. had been adjudicated bankrupt. We received a copy of an order of the United States District Court for the Middle District of Florida providing for an automatic stay of certain state court proceedings. Thus a preliminary question before us is whether the order of the United States District Court automatically stays this appeal. We think not.

A bankruptcy petition operates as an automatic stay only where the pending state proceeding is founded upon an unsecured provable debt dischargeable under the Bankruptcy Act or is an action against property either in the custody of the Bankruptcy Court or recoverable by the Trustee in Bankruptcy. ¹ Clearly the appellant's counterclaim, a stockholder's derivative suit, is not within the ambit of these rules.

Proceeding now to the first of the two issues raised by appellant, we hold that the lower court erred in dismissing the appellant's counterclaim as sham for several reasons. First of all, a motion to dismiss as sham should be granted only upon the convergence of two factors: the absence of any genuine issues of material fact, and a pleading good on the surface but set up in bad faith. ² Admittedly, DiGiovanni's deposition, which was evidently the only source of evidence considered by the trial court, provides little if any factual support for the allegations of...