Yau v. Iwdwarriors, Corp.
| Decision Date | 18 August 2014 |
| Docket Number | No. 1D13–1698.,1D13–1698. |
| Citation | 144 So.3d 557 |
| Parties | Jo–Anne YAU, Appellant, v. IWDWARRIORS, CORP., A Florida Corporation; Ken Yarbrough, an Individual; and Fish Tales Marketing, Inc., d/b/a Coastal Angler Magazine of Northeast Florida, a Florida Corporation, Appellee. |
| Court | Florida District Court of Appeals |
OPINION TEXT STARTS HERE
Rutledge R. Liles and John A. Carlisle of Liles, Gavin, & George, P.A., Jacksonville, for Appellant.
IWDWarriors, Corp., a Florida Corporation; Ken Yarbrough, an individual; and Fish Tales Marketing, Inc., d/b/a Coastal Angler Magazine of Northeast Florida, a Florida Corporation, pro se.
On March 23, 2012, attorney Jo–Anne Yau filed an eight-count complaint on behalf of her client IWDWarriors, Corp. (IWD) alleging that Ken Yarbrough and Fish Tales Marketing, Inc. d/b/a Coastal Angler Magazine of Northeast Florida (collectively “Fish Tales”) were liable for breaches of contract and intentional interference with IWD's contractual relationships with third parties, namely the organization and promotion of a fishing tournament known as the “Clash,” which Fish Tales was alleged to have usurped for itself.
Fish Tales moved for summary judgment, arguing that IWD lacked standing and capacity to sue because, according to IWD's electronic articles of incorporation, its corporate existence did not commence formally until May 7, 2012, even though the filing of its articles occurred on March 13, 2012. The trial court agreed, granting summary judgment for Fish Tales, who then filed a one-sentence motion for attorney fees under section 57.105, Florida Statutes, soon accompanied by an attorney's fees affidavit. Yau filed a legal memorandum in response and a hearing was held in January 2013 (but no transcript of the proceedings has been filed on appeal).
On February 8, 2013, the trial court granted Fish Tales's fees motion, entering a final judgment against Yau personally and stating that “[IWD] was a nonexistent entity at the time that the action was commenced, so Jo–Anne Yau should bear the entirety of the Defendants' reasonable attorney fees.” It ordered Ms. Yau to pay fees totaling $7,875 plus interest. The order further stated that Yau was an officer of IWD and failed to prove she acted in good faith. On February 19, 2013, Yau filed a motion for reconsideration, which was denied on April 1, 2013. Two days later, Yau filed an amended motion for reconsideration and mentioned, for the first time, section 607.1904, Florida Statutes, which she said precluded Fish Tales from claiming IWD's lack of formal corporate existence as a defense against claims for breach of contract and intentional interference with its contractual relationships with third parties. The trial court did not rule on the amended motion prior to Yau filing a notice of appeal.
On appeal, Yau argues that the trial court erred by granting Fish Tales' motion for summary judgment and thereby erred by entering a final judgment imposing sanctions against her. Though Yau challenges the entry of final judgment against IWD, no notice of appeal was filed from that judgment on the merits, so we are left with only the final judgment against Yau imposing sanctions.
The focal point of her brief 1 is the statutory argument, presented in her amended motion for reconsideration, that section 607.1904 bars Fish Tales from asserting as a defense that IWD was not yet incorporated. Indeed, there is long-standing corporation law in Florida going back at least 125 years that a person contracting with or injured by an association assumed to be acting as a corporation may not set up as a defense that the corporation was not properly incorporated. As the Florida Supreme Court said in the latter part of the 19th Century:
A person who has contracted with an association assuming to be incorporated and acting in a corporate capacity cannot, after having received the benefit of the contract, set up as a defense to an action brought by such company that the latter was not legally incorporated, or had no authority to enter into the contract in a corporate capacity. ... It is settled that a conveyance by a corporation will not be treated as invalid merely because the corporation was not formed under authority of law, and the same rule applies to transfers of personal property and choses in actions by corporations de facto.
Booske v. Gulf Ice Co., 24 Fla. 550, 5 So. 247, 251–52 (1888); Ch. 1639, Laws of Fla. (1868). This bedrock principle has been relied upon both within and without Florida over the decades (and is reflected in the first portion of section 607.1904, which is set forth below).2
Vice versa, a person sued for an alleged breach of a contract with, or for injury to, a corporation cannot raise lack of legal organization as a defense (though other grounds might exist). See Catlin Specialty Ins. Co. v. Cohen, 883 F.Supp.2d 1182, 1192 (M.D.Fla.2012). This latter principle, though not as firmly established and mentioned less frequently in the caselaw as the former, is reflected in the second portion of section 607.1904, Florida Statutes (), which states:
No body of persons acting as a corporation shall be permitted to set up the lack of legal organization as a defense to an action against them as a corporation, nor shall any person sued on a contract made with the corporation or sued for an injury to its property or a wrong done to its interests be permitted to set up the lack of such legal organization in his or her defense.
§ 607.1904, Fla. Stat. (emphasis added). The highlighted language—literally and as applied in the limited caselaw addressing it—appears to provide a potential basis for the relief for IWD. See Catlin Specialty, 883 F.Supp.2d at 1192 (). Had this statute been brought timely to the trial court's attention, the suit against Fish Tales would not have been summarily dismissed; at a minimum, no grounds for the sanctions order under section 57.105 would have existed.
But, this statutory argument—though raised in her amended motion for reconsideration—was abandoned when Yau filed a notice of appeal without obtaining a ruling on the motion. SeeFla. R. App. P. 9.020(h)(1) & (3). As a consequence, we cannot reverse on this unpreserved claim of error absent fundamental error, which is one that “goes to the foundation of the case or goes to the merits of the cause of action.” Sanford v. Rubin, 237 So.2d 134, 137 (Fla.1970). An appellate court “should exercise its discretion under the doctrine of fundamental error very guardedly.” Id. To do otherwise would undermine the orderly adjudication of claims and inject a degree of arbitrariness into the appellate process.
We begin by noting that a series of missteps occurred. Fish Tales advanced a basis for dismissal/sanctions that was erroneous, Yau failed to defend the matter in a substantively-helpful and timely way, and the sanctions order would be reversible had the statutory argument been timely raised and not waived. All this does not mean fundamental error exists. Rather, there are only a limited category of errors that “courts universally allow to be raised for the first time on appeal because of the very nature of the error” including subject matter jurisdiction and judgments entered without notice that deny due process. O'Brien v. Florida Birth–Related Neurological Injury Comp. Ass'n, 710 So.2d 51, 52 (Fla. 4th DCA 1998); See also Valeria Hendricks, Pop Quiz: Why is Fundamental Error Like Pornography?, 76 Fla. B.J. 77, 78 (2002) (...
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