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How Florida’s Business Judgment Rule Protects Corporate Directors One of the main reasons that people create a legal entity for their business, such as a corporation or a limited liability company, is for liability protection. That is to say, such entities shield individual owners or directors from personal liability for actions taken by the business as a whole. An aggrieved party can therefore only seek monetary damages against the entity itself. To strengthen this concept, American law has long recognized a principle known as the business judgment rule. This basically states that a judge (or jury) should not second-guess business decisions made by the directors or managers of a company, presuming they acted in good faith and within the scope of their legal authority. For example, a person cannot sue the individual members of a corporation’s board of directors simply because he disagrees with a business decision made by the board as a whole. While the business judgment rule has long been recognized by the courts as part of the common law, it has also been codified by the Florida legislature. Section 607.0831 of the Florida Statutes expressly provides that a director is normally “not personally liable for monetary damages to the corporation or any other person” with respect to their actions (or inactions) as a director. Again, there are exceptions, such as for bad faith or where the director obtained an improper benefit from their actions. Florida Appeals Court: Defendant Not Required to Plead Business Judgment as an Affirmative Defense Section 607.0831 broadly applies to the directors of corporations, LLCs, and non-profit corporations. The Florida courts, however, have extended its provisions to also cover certain “common interest associations.” For instance, the Florida Third District Court of Appeals recently noted the business judgment rule also protects the decisions made by a condominium association’s board of directors. The case before the Third District, New Horizons Condominium Master Association, Inc. v. Harding, involved what it described as a “garden-variety condominium dispute over assessments.” Basically, there was a master association comprised of seven sub-associations. Each sub-association appointed a member of the master association’s board. A dispute arose between one of the sub-associations (and its appointed director) and the master association’s board over a payment to a cable company. When the sub-association sued, the master association said its actions were protected by the business judgment rule. The trial court rejected that position and ruled in favor of the sub-association. On appeal, however, the Third District sided with the master association and held the rule did apply. The legal question was whether the master association was required to plead the business judgment rule as an “affirmative defense” to the sub-association’s lawsuit. The Third District said there was no prior Florida case imposing such a requirement. And as it read section 607.0831, immunity under the business judgment rule automatically protected the defendant unless the plaintiff–in this case, the sub-association–offered proof as to why some exception to the rule should apply. Contact Us Today Business disputes arise every day over a variety of reasons. If you are involved in such a dispute and need legal advice from a qualified Tampa business and corporate attorney, contact HD Law Partners today to schedule a consultation. Source: leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0607/Sections/0607.0831.html scholar.google.com/scholar_case?case=813-253-5333300259989 Posted in Business Corporate | No Comments » Connect with us Archives May 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 September 2025 July 2025 June 2025 January 2025 January 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 June 2023 May 2023 April 2023 March 2023 February 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 May 2022 April 2022 March 2022 November 2021 October 2021 September 2021 August 2021 July 2021 May 2021 April 2021 March 2021 February 2021 January 2021 December 2020 November 2020 October 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 November 13 Categories Alimony Appellate Arbitration Auto Accidents Auto Insurance Business Corporate Business Insurance Law Child Custody Child Support Criminal Law Divorce Family Law FEMA Insurance Payments Florida’s Mandatory 2‑Hour Legal Professionalism CLE: Foreclosure Defense Fort Myers Hurricane Insurance Attorney General Guardianship HD Law Partners Service HOA/Property Management Homeowners Association Homeowners Insurance Hurricane Claims Hurricane Insurance Insurance Bad Faith Insurance Claims Insurance Defense Insurance Litigation Landlord Tenant Law Enforcement Liability Loan Modifications Mold Water Damage Parental Rights Paternity Personal Injury Premises Liability Law Prenuptial Agreements Private Security Property Distribution Property Owner Law Sarasota Insurance Litigation Attorney Slip Fall Tampa Business and Corporate Attorneys tampa family attorney Tampa Insurance Attorneys Timeshare Timesharing Uncategorized HD Law Partners is proud to be your trusted full-service law firm Quick Links Property & Casualty Business & Corporate Litigation Family Law Contact Us Careers Get In Touch 2002 North Lois Avenue Suite 510 Tampa, FL 33607 813-253-5333 Contact Us