Background
Little Brownie Properties, Inc. (LBP), a family-operated real estate company, appealed an amended final order on proceedings supplementary. LBP and ROP Holding Group, Inc. (ROP) had purchased judgments from creditors of John Paul Brown and Peter Wood, who had been LBP shareholders. The appeal required the Sixth District to determine who possessed the LBP shares originally owned by Brown and Wood and whether the trial court properly awarded them unpaid management fees characterized as “disguised dividends.” The lower-tribunal judge was Jeffrey L. Ashton of the Circuit Court for Orange County.
LBP issued Brown seventy shares in 1978 and Wood ten shares in 1996. A 1996 shareholders’ agreement required notice of a possible involuntary transfer and gave LBP a sixty-day purchase option. After Banc of America Leasing & Capital, LLC (BALC) obtained a consent judgment exceeding $500,000 against Brown and Wood, Wood delivered his ten shares to BALC under a 2014 turnover order. In 2018, Brown and Wood each received 62.5 shares from Brown’s father’s estate and delivered those certificates to BALC to avoid estate garnishment, bringing the disputed total to 135 shares. Brown said BALC was merely “holding” them while they negotiated their return.
BALC demanded that LBP exercise its purchase option. Brown and Wood then notified LBP that they had “voluntarily delivered” the shares to BALC, although they questioned whether the involuntary-transfer provision applied. In January 2019, BALC sold the 135 shares and assigned its judgment rights to LBP for $435,000. Brown and Wood received notice of the planned transfer, an opportunity to object, the approval motion, the hearing, and the February 2019 approval order, but did not object, intervene, seek rehearing, or appeal. LBP canceled the certificates. ROP later purchased another judgment exceeding $1 million, intervened, and sought execution on property including those shares.
The Court’s Holding
The court affirmed that competent, substantial evidence supported the trial court’s rulings that neither Brown nor Wood legally transferred shares, voluntarily or involuntarily, to BALC; that LBP’s management fees were disguised dividends; and that Brown did not involuntarily transfer his remaining seventy shares to LBP. It nevertheless held that the trial court erred in rejecting LBP’s waiver defense. The opinion expressly cautioned: “This opinion involves a unique set of facts, likely restricting its holding to the parties involved in this appeal.”
Under the unique factual circumstances in this case, the court held that Brown and Wood waived their right to contend that they had not transferred their combined 135 shares to BALC, which then assigned those shares to LBP. The court relied on the combination of their notices confirming voluntary delivery, their repeated silence after notice of the opportunity to object, the transfer-approval motion, hearing, and resulting order, their silence after LBP canceled the certificates, Wood’s nearly decade-long silence concerning his shares, and their objections only after arranging a separate deal to sell shares to satisfy ROP’s judgment. It distinguished authority finding no waiver after only a few weeks’ inaction, emphasizing that Brown’s and Wood’s silence lasted years.
The resulting disposition was specific: Wood owns no LBP shares; Brown owns seventy shares rather than the 132.5 shares determined by the trial court; ROP cannot execute on the 135 shares but can execute on Brown’s remaining seventy shares. Wood was not entitled to management fees because he had no shares when LBP distributed what the trial court concluded were disguised dividends. The court remanded for recalculation of Brown’s dividends based on its decision and affirmed in part, reversed in part, and remanded.
Key Takeaways
- The waiver ruling rests on Brown’s and Wood’s combined conduct and the opinion’s express factual limitation, not a universal rule that shareholder silence or failure to object always constitutes waiver.
- The court preserved the evidentiary findings concerning the absence of legal transfers to BALC, the disguised-dividend characterization, and Brown’s remaining seventy shares while reversing the waiver ruling.
- Wood receives no management fees because he owned no shares at the relevant distribution; Brown’s dividend award requires recalculation on remand.
- ROP cannot execute on the 135 shares but may execute on Brown’s remaining seventy LBP shares.
Why It Matters
The decision separates the legal effect of a transfer from a party’s ability, through prolonged conduct and repeated nonobjection, to contest that transfer. Its practical significance is deliberately narrow: the court tied waiver to this record and expressly indicated that its holding likely is restricted to these parties.
For judgment creditors and closely held companies, the opinion also shows how share ownership determines both execution rights and entitlement to distributions characterized as disguised dividends. The remand concerns Brown’s recalculation, while Wood’s fee claim and ROP’s ability to reach the 135 shares were resolved adversely to them.