Starkes v. Flechner et al
ORDER denying 33 Motion for Corporate Defendants to Identify Their Directing Principals. Signed by Judge James I. Cohn on 2/1/2012. (prd)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-62220-CIV-COHN/SELTZER
RAYMOND HENRY STARKES, III,
JACK B. FLECHNER, ILENE FLECHNER,
GREG FEIT, PAMELA FEIT, CANE BURGERS, LLC,
CANE BURGERS II, LLC, et al.,
ORDER DENYING MOTION FOR DISCLOSURE OF DIRECTING PRINCIPAL(S)
THIS CAUSE is before the Court upon Plaintiff’s Cross-Motion and Expedited
Motion for the Corporate Defendants to Identify Their Directing Principals [DE’s 31 and
33] and Defendant Cane Burgers, LLC, et al.’s Response [DE 43]. The Court has
carefully considered the motion and response, is fully advised in the premises, and
notes that no reply memorandum was filed by the January 30, 2012 deadline.
Plaintiff Raymond Henry Starkes, III (“Starkes” or “Plaintiff”) filed this action
against his business partners, Gregory Feit and Jack Flechner, along with their wives,
Ilene Feit and Pamela Flechner, and various closely held corporations. Starkes alleges
that he formed Defendant Cane Burgers, LLC (“Root LLC”) with Feit and Flechner in
order to purchase and operate franchises in Florida of Five Guys, a premium fast food
restaurant chain. Starkes, Feit and Flechner each owned 25% of Root LLC, with the
remaining 25% split among an operations manager and several investors. First
Amended Complaint, ¶¶ 59-61, 64 [DE 24]. Starkes alleges that the Five Guys
franchises purchased by Root LLC in 2005 made significant profits, but only Feit and
Flechner enjoyed those profits by obtaining wrongful distributions from Root LLC and
creating spinoff corporations, also named as Defendants in this action. Id., ¶¶ 81-82,
88. Plaintiff alleges that Feit and Flechner refused his attempts to obtain an accounting
of Root LLC. In 2011, Plaintiff alleges that a third party purchased all of the assets of
Root LLC and its progeny for over $5.7 million dollars, paid only to Feit and Flechner.
Id., ¶¶ 89-90.
The First Amended Complaint contains derivative claims on behalf of Root, LLC
against Feit and Flechner for misappropriation of a business opportunity, breach of
fiduciary duty, civil conspiracy, as well as an additional derivative claim for accounting
against Feit, Flechner, and Root LLC (Counts I to IV). In addition, Starkes asserts
direct claims against Flechner and Feit for conversion, distribution of profits pursuant to
Fla. Stat. § 608.4261, civil conspiracy, and unjust enrichment (Counts V to VIII). One
week after the First Amended Complaint was filed, Defendants Gregory Feit and Jack
Flechner filed for bankruptcy, resulting in a stay of this litigation as to those two
defendants [DE’s 27, 28 and 29].
After the corporate defendants moved for an extension of time to respond to the
Complaint, Plaintiff filed a cross-motion asking the Court to direct counsel for the
corporate defendants to identify the natural persons directing his actions, and to
disclose the minutes of all meetings concurrent with Feit and Flechner’s bankruptcy
filings wherein any corporate defendant determined or elected a principal as a
managing member or as a controlling interest. Defendants oppose the motion.
Plaintiff argues that pursuant to Fla. Stat. § 608.4237(1)(b), Feit and Flechner
automatically lost their interest in their Florida limited liability companies. Section
608.4237(1)(b) states that a person ceases to be a member of a limited liability
company upon the filing of a voluntary petition in bankruptcy, unless otherwise provided
for in the articles of organization. There is no indication in the record that Cane
Burgers, LLC had a provision in its articles of organization that governed bankruptcy
Plaintiff relies upon Campellone v. Cragan, 910 So. 2d 363, 365 (Fla. Dist. Ct.
App. 2005), for the proposition that corporate counsel could have a conflict representing
both a corporation and its principal where allegations exist of serious wrongdoing by the
principal injurious to the corporation.1 In the present action, however, the individual
defendants have separate counsel from the corporate defendants.
In opposition to the motion, Defendants impliedly answer the question that
Plaintiff asks – counsel for the corporate Defendants “has taken direction in the
handling of this lawsuit from Flechner and Feit, who are the duly authorized managers
of Cane Burgers, L.L.C.” Response, ¶ 3. Defendants contend that because Feit and
Flechner’s interest in Cane Burgers, LLC is owned in conjunction with their spouses as
tenancies by the entireties, it is not subject to termination under § 608.4237(1)(b). In
Beal Bank, SSB v. Almand and Associates, 780 So. 2d 45 (Fla. 2001), the Florida
Supreme Court held that when a husband and wife take personal property, a
presumption exists that they take title as tenants by the entireties. 780 So. 2d at 57;
Cacciatore v. Fisherman’s Wharf Realty Lt. Partnership, 821 So. 2d 1251, 1254 (Fla.
Dist. Ct. App. 2002) (presumption extends to stock certificates). Defendants argue that
the husband and wife’s undividable interest cannot be compromised pursuant to
The second cited decision, Razin v. A Milestone, LLC, 67 So. 3d 391 (Fla.
Dist. Ct. App. 2011), dealt with a conflict arising from retention of counsel by two 50%
owners that is not applicable to the issue before the Court.
§ 608.4237(1)(b) because of the husband’s bankruptcy filing. Defendants also contend
that Feit and Flechner are managers of Cane Burgers, LLC, separate and apart from
whether they are still members of the company. Florida law contemplates that an LLC
could be run by a manager. Fla. Stat. § 608.422(3).
Upon consideration of the parties’ arguments, the Court notes that the narrow
relief sought by Plaintiffs – the disclosure of who is directing counsel’s actions – has
already been provided in Defendant’s response. This federal court, sitting in diversity,
is reluctant to opine on an area of Florida limited liability company law in which neither
party has cited to any Florida court decisions addressing the application of
§ 608.4237(1)(b) to an interest held by a tenancy by the entirety.2 The Court concludes
that Plaintiff’s motion can be denied as moot.3
Accordingly, it is ORDERED AND ADJUDGED that Plaintiff’s Cross-Motion and
Expedited Motion for the Corporate Defendants to Identify Their Directing Principals
[DE’s 31 and 33] are hereby DENIED as moot.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,
Florida, this 1st day of February, 2012.
counsel listed on CM/ECF
The Court has not found such a case in its research.
To the extent Plaintiff also seeks discovery of any minutes of any managerial
changes to the corporate defendants, the discovery process should be utilized to obtain
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