While a lower court said a man surrendered his ownership of a soccer field rental company when he allegedly embezzled money, an appeals court reversed the order.
Florida’s Third District Court of Appeal disagreed with the Circuit Court for Miami-Dade County’s ruling against Jorge Espinosa on March 30.
“Because neither the Florida Limited Liability Company Act or [company] Sanespi, LLC Operating Agreement provide for the forfeiture of Espinosa’s shares for the alleged theft, we reverse,” Judge Norma S. Lindsey wrote. Judges Vance E. Salter and Eric Hendon concurred.
While Pardo Investments, the company that purchased Sanespi after it dissolved (following Espinosa’s removal), said that the Operating Agreement gives it the green light to take away Espinosa’s interest after Espinosa didn’t contribute the alleged money he stole, the appeals court disagreed.
“Although the Operation Agreement specifically allows for a member’s interest to be forfeited for failure to make a contribution, we reject Pardo Investments’ argument because Espinosa as not required to make a cash contribution under the Operating Agreement,” the judges ruled.
Espinosa was accused of stealing money from Sanespi, a company he created in 2008 that rented two soccer fields on an office building rooftop. He allegedly used the money to pay for renovations to his home. He had hired the same contractor that constructed the soccer fields for Sanespi. While he maintained his innocence, he was voted out as manager and his interest in the company was pulled.
The other members then sold their shares to Pardo Investments. Espinosa sued for breach of contract, breach of fiduciary duty, breach of statutory duty of care, breach of duty of loyalty, breach of implied covenant of good faith and fair dealing, an accounting, constructive trust and judicial dissolution of Sanespi.
Pardo argued that Espinosa shouldn’t get any relief since he allegedly stole money from the company and breached the Operating Agreement he signed in its earlier days. The lower court sided with Pardo and Espinosa appealed.