Our CFL course taught you a lot about disputes involving marital and business partnerships. What happens when former spouses are now business partners, and one of them wants to increase a line of credit to expand the business? The Florida appeals court case of Lapcuic v. Lapciuc tackled that challenge.
Isaac Lapcuic and Sandra Landman (also known as Lapcuic) entered into a marital settlement agreement (MSA) in 2013 and 2017 that named Isaac the majority shareholder of a corporation, DelValle Brands. Sandra held a minority stake.
In 2018, Isaac applied to increase the corporation’s line of credit (LOC) to an additional $7 million to keep up with product demand. Sandra opposed the LOC on the grounds that she had the right to approve or reject the new line of credit. Their MSA also stated that Isaac couldn’t incur certain debts under the corporation “[e]xcept for commercially reasonable and prudent expenditures on behalf of the New Business.”
The bank declined the increased LOC because Sandra refused to consent to it. As a result of that and new business contracts that would be affected from the lack of investment, Isaac filed a motion to enforce the settlement agreement.
At an August 2018 hearing, the trial court noted that Sandra withdrew her objection to the LOC, but she maintained that she didn’t “consent” to the LOC or waive her rights to challenge it later. The trial court partially granted Isaac’s motion to enforce the MSA, and authorized the companies involved (DelValle and Precision) to enter into the LOC. Sandra appealed.
State of Florida Third District Court of Appeal Verdict
The appellate court affirmed the decision in part and reversed it in part.
The court sided with Sandra in holding, “The crux of [the former wife’s] objection to the increased LOC – and indeed, the salient issue at the hearing – was whether that additional indebtedness was ‘commercially reasonable and prudent,’ as provision 2(c)iii of the Settlement Agreement required.
The determination of that question, however, necessitated a full evidentiary hearing. Nevertheless, over [the former wife’s] counsel’s strenuous objection, and without any documentary or testimonial evidence that the increased LOC was a ‘commercially reasonable and prudent’ expenditure, the trial court implicitly found that the LOC was commercially appropriate by authorizing Del Valle and Precision to proceed with the LOC. The trial court should not have decided the merits of the motion to enforce the Settlement Agreement without any evidentiary support in the record to evaluate the commercial reasonableness, or not, of the increased LOC.”
Find out how to negotiate these and other difficult marital and business disputes in our CFL course. Learn why it’s not who you know, it’s what you know — through increased knowledge and advanced skills — that will gain new clients in our free information packet today.
Justia Law. (2019). SANDRA LAPCIUC, et al., vs ISAAC LAPCIUC, et al.,. [online] Available at: https://law.justia.com/cases/florida/third-district-court-of-appeal/2019/3d18-1804.html [Accessed 1 Nov. 2019].