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

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
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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
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$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
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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.
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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.
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