September 22, 2010
Business Judgment Rule
In the first case of its kind that I'm aware of, a Florida court has held that the business judgment rule standards are different for different types of businesses. In Hollywood Towers Condominium Association v. Hampton, a Florida appellate court said that the business judgement rules as it applies to condominium associations is "...courts must give deference to a condominium association's decision if that decision is within the scope of the association's authority and it is reasonable - that is, not arbitrary, capricious, or in bad faith".
Under the business judgment rule in Florida for all other corporations, a director is protected under the business judgment rule unless the plaintiff also shows that the director's breach of his duties constitutes a knowing criminal violation, a transaction involving self-dealing, willful misconduct, recklessness, or an act/ omission committed in bad faith or maliciously. F.S. 607.0831.
If the case is not appealled or if appealled, upheald by the Florida Supreme Court, this lower standard for a business judgment rule may open the floodgates on condominium litigations.
September 22, 2010 | Permalink
Seems like a very dangerous ruling. I wonder sometimes what the real motivations are behind making such a ruling. Not questioning ethics as much as maybe some desire to change what he/she feels isn't fair.
Thanks for the post, good info.
Posted by: droz | Sep 22, 2010 10:02:38 AM
It is a very dangerous ruling. I didn't even bring up the sister ruling by the administrative agency that regulates condos that evicerates the attorney-client priviledge. When the Board of Directors says something to the members to the effect that "we referred that to our legal counsel", at that point the legal counsel's advice should be discoverable.
Posted by: Joel | Sep 22, 2010 11:09:19 AM