DIVORCE AND THE FAMILY BUSINESS — To Join, or Not to Join

By the Law Office of Luis E. Insignares, Attorneys at Law on Wednesday, March 19, 2014.

Married couples have been deriving a significant amount of the marital estate from family businesses since the existence of both marriage and business!

To a certain extent, the question of joining a family-owned or other small business as a party in a divorce suit is merely a subset of the broader question of whether any third party, other than the spouses themselves, should be joined. Since the two spouses are clearly the primarily important parties in any dissolution-of-marriage case, see, Chaachou v. Chaachou, 118 So.2d 73 (Fla. 3d DCA 1960) (corporations joined as parties could not plead wife’s adultery as defense to claims against corporations), Florida courts have limited the circumstances under which any third party may be joined in a dissolution-of-marriage action.

The general rule applicable to such joinder is that when the legal and property rights of third parties are sought to be actually adjudicated in a divorce action, such third parties must be joined as parties. See, e.g., Picchi v. Picchi, 100 So.2d 627 (Fla. 1958) (where court, in divorce action, determines spouses’ property rights, it is proper to bring in any third-party claimants to property in which spouses claim interest); Matajek v. Skowronska, 927 So.2d 981, 985 (Fla. 5th DCA 2006) (trial court lacked jurisdiction to adjudicate property rights regarding apartment complex in dissolution proceedings; apartment complex was titled in names of ex-husband and his son, but ex-wife neglected to join son as party to dissolution; “On remand, the court may consider the establishment of an equitable lien only if the Former Husband’s son is noticed and joined.”); Barabas v. Barabas, 923 So.2d 588 (Fla. 5th DCA 2006) (finding that trial court lacked jurisdiction to adjudicate property rights of husband’s mother, who was non-party, when deciding whether parcel of real property was marital property and thus subject to equitable distribution); Lallouz v. Lallouz, 695 So.2d 466, 468 (Fla. 3d DCA 1997) (reversing, in dissolution-of-marriage action, trial court’s denial of wife’s claims for equitable relief against husband’s mother as to real property titled in husband’s mother’s name, including claims for resulting and constructive trust as to real property located in Broward County; holding that although property was located in Broward County, trial court had in personam jurisdiction to determine equitable rights of parties, including determination as to which of parties in case, including husband’s mother, was entitled to property); Ray v. Ray, 624 So.2d 1146, 1148 (Fla. 1st DCA 1993) (reversing equitable lien trial court imposed on certain nonmarital property former husband owned with his brother and mother for purposes of securing $70,000 debt; “The rule is clear that the trial court [in a divorce proceeding] does not have jurisdiction to adjudicate property rights of non-parties.”) (bracketed material in original).

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