JI CI CHOU, TIM CHOU, AND FLORIDA GRINDING GROUP, INC. vs YUEING SHI, YAYUN "KATE" CHOU, INDIVIDUALLY AND DERIVATIVELY AS A SHAREHOLDER OF BORG INCORPORATED GROUP, AN INACTIVE FLORIDA CORPORATION

• Court: District Court of Appeal of Florida
• Decided: June 9, 2023
• Docket: 22-0803
• Status: Published

Opinion

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

JI CI CHOU, TIM CHOU, AND FLORIDA GRINDING GROUP, INC.,

Appellants,

v. Case Nos. 5D22-803 5D22-2446 LT Case No. 2017-DR-000421

YUEING SHI, YAYUN "KATE" CHOU, INDIVIDUALLY AND DERIVATIVELY AS A SHAREHOLDER OF BORG INCORPORATED GROUP, AN INACTIVE FLORIDA CORPORATION,

Appellees. ________________________________/ Opinion filed June 9, 2023

Appeal from the Circuit Court for Flagler County, Christopher A. France, Judge.

Shannon McLin, William D. Palmer and Erin Pogue Newell, of Florida Appeals, Orlando, for Appellants.

John N. Bogdanoff and Christopher V. Caryle, of The Carlyle Appellate Law Firm, Orlando, for Appellees.

Wallis, J. This consolidated appeal involves disputes about a family business

and a dissolution of marriage. Appellant, Ji Ci Chou (“Father”), and Appellee,

Yueing Shi (“Mother”), were married in 1974 and together they have two

adult children, Yayun “Kate” Chou (“Kate”) and Tim Chou (“Tim”). In 2008,

Father and Kate formed Borg Incorporated Group (“Borg”) in California and,

several years later, Borg was domesticated in Florida. In early 2017, Father

filed a petition for dissolution of his marriage to Mother. Around the same

time, Father and Kate decided to dissolve Borg. Soon after that decision

was made, Tim filed Articles of Incorporation with Florida’s Division of

Corporations for a new company, which was later converted to Florida

Grinding Group, Inc.

In 2019, while her parents’ dissolution case was pending, Kate brought

a shareholder derivative action on behalf of Borg and against Father, Tim,

and Florida Grinding Group (collectively “Appellants”), alleging counts for

conversion, violation of the Florida Uniform Trade Secrets Act, and civil

conspiracy. She also alleged counts against Father, individually, for breach

of oral contract and breach of fiduciary duty. Kate’s derivative suit was based

on allegations that Father stole money from Borg’s bank accounts and gave

2 Borg’s property to Tim to use at Florida Grinding instead of selling that

property to benefit Borg.

The two cases were consolidated for trial. Ultimately, the trial court

entered an Amended Final Judgment in Kate’s favor in the derivative suit

based on its finding that she was a 50% shareholder of Borg. The judgment

against Father was for $2,272,677, and the judgments against Tim and

Florida Grinding were for $1,222,302. The judgments entered against

Appellants were joint and several up to $1,222,302.

The Amended Final Judgment also dissolved Mother’s and Father’s

marriage and distributed their marital assets and liabilities, as set forth in an

attached Equitable Distribution Worksheet. Of relevance here, the trial court

found that the marital value of Borg’s assets was $701,156 and distributed

that amount to Father. It further stated, “Any liabilities associated with the

marital business, shall be equally borne by the parties, just as all assets

accumulated from the business have been split equally.” Although the

portion of the Equitable Distribution Worksheet related to Borg included a

column for “Shareholder Derivative Damages,” no monetary amount was

listed in that column; instead, “TBD” was included.

After the Amended Final Judgment was issued, Father requested that

the judgment be amended to include the shareholder derivative damages of 3 $2,272,677 as a marital liability on the Equitable Distribution Worksheet to

be split equally between Mother and him. The trial court denied this request,

which resulted in the “TBD” determination remaining on the Equitable

Distribution Worksheet.

In addition, Kate moved for entry of a judgment setting prejudgment

interest in the derivative suit. The trial court entered an Amended Final

Judgment awarding Kate prejudgment interest.

On appeal, Appellants argue that the trial court erred in three respects.

First, Father alleges that the Amended Final Judgment was incomplete and

contained inconsistencies because it failed to distribute the liability

associated with the derivative suit on the Equitable Distribution Worksheet

and, instead, left “TBD” where an amount should have been listed. Second,

Appellants allege that the trial court erred by denying their Motion to Dismiss

the derivative action and in entering judgment on the derivative claims.

Third, Appellants allege that the trial court’s liability determinations and

damage awards were clearly erroneous and must be reversed.

We affirm without discussion the trial court’s denial of the Motion to

Dismiss the derivative action and the trial court’s liability determinations and

4 damages awards.1 We write, however, to address Appellants’ first

argument, namely that the trial court erred when it failed to include a specific

monetary amount on the portion of the Equitable Distribution Worksheet that

was for “Shareholder Derivative Damages” and left “TBD” in that space. 2

The Amended Final Judgment does not make an express finding that

the derivative suit damages were a marital liability. And, based on the facts

before us, it does not appear that Borg, which was a plaintiff below, has any

liability as a result of the derivative judgment. Presumably, the trial court

agreed that Borg was not liable for the derivative damages because it denied

Father’s post-judgment motion requesting that it split the damages from the

derivative suit evenly between Mother and Father. Nonetheless, the

Equitable Distribution Worksheet is inconsistent with the Amended Final

Judgment in that the Amended Final Judgment is intended to distribute all

assets and liabilities, but the Equitable Distribution Worksheet does not

identify the amount of the liability associated with the “Shareholder Derivative

1 We note that the trial court’s factual findings are supported by competent, substantial evidence. Specifically, the record in this case clearly established that Father stole from Borg and its shareholders when he took Borg’s money for his personal use and gave Borg’s property to Tim to use for the creation of another, nearly identical business.

2We reject Mother’s argument that Father stipulated to the use of “TBD” on the Equitable Distribution Worksheet.

5 Damages.” Therefore, we reverse and remand the portion of the Amended

Final Judgment dissolving Mother’s and Father’s marriage for the trial court

to include a precise value on the Equitable Distribution Worksheet that is

associated with the shareholder derivative damages. 3 See Weymouth v.

Weymouth, 87 So. 3d 30, 36 (Fla. 4th DCA 2012). We note that part of the

trial court’s work on remand should include considering whether any portion

of the derivative suit damages should be a marital liability. This consideration

is extremely important given the absence of evidence implicating Mother in

the tortious conduct that harmed the family business. In all other respects,

we affirm the Amended Final Judgment. We likewise affirm the Amended

Final Judgment awarding prejudgment interest.

AFFIRMED IN PART; REVERSED IN PART; REMANDED WITH

INSTRUCTIONS.

JAY and HARRIS, JJ., concur.

3 It is worth noting that including the damages from the derivative judgment as a marital liability in the dissolution case would be highly inequitable based on the facts of this case. There is no evidence that Mother was aware of Father’s tortious conduct against the business. To hold the Mother 50% liable for Father’s conduct would be extremely unfair, especially because Father is a 50% shareholder of Borg, and, as such, he will receive 50% of the proceeds of the damages he pays to Borg. Treating the damages from the derivative suit as a marital liability would result in Father receiving a windfall while also punishing Mother for Father’s conduct. 6