Posted by Nydia Streets of Streets Law in Florida Divorce

A corporate entity is sometimes included as a party in a Florida divorce when a spouse has an ownership interest in the entity. This is because the rights of the corporation may be affected by the divorce proceedings. This was an issue in the case Maddox v. Maddox, 2D21-517 (Fla. 2d DCA February 24, 2023).

The parties were married for approximately 31 years by the time a divorce petition was filed. The former husband worked at a company which was in the process of developing technology related to oil filtration. The former wife alleged the former husband was being deceptive about his income and assets. At trial, the owner of the company for which the former husband worked testified about the technology. He testified that he owned it and that the former husband was an employee who was hired to research and develop an improved oil filtration system. The former husband testified he was an employee, and that the technology was being developed and was not yet ready.

The trial court issued a final judgment which found the company which employed the former husband was developing intellectual property owned by the former husband. It found that the former husband was not credible in that he was misrepresenting his interest in the technology to ensure the former wife did not share in any profits from the same. The court found the technology to be intellectual property that was part of the marital estate to be divided. The corporation that employed the former husband was not a party to the case, but was ordered to create books and maintain records which tracked the intellectual property and its worth. The corporate entity, upon learning of the final judgment, filed a motion to intervene which was granted. It then filed a motion for rehearing which was denied, and an appeal followed.

The appellate court held “[The corporate entity] argues on appeal that the trial court violated its due process rights by entering a judgment that substantially affects its interests in the oil filtration system that it is in the process of developing despite that it had not been made a party to the proceeding until after the final judgment had been entered and had otherwise not been given notice that its interests would be adjudicated. We agree.”

The court concluded “The court's rulings with regard to the oil filtration system and related intellectual property necessarily require reconsideration of the equitable distribution scheme not only for the reasons discussed above, but because, as the former husband argues, the former wife did not seek distribution of intellectual property or claim intellectual property as a marital asset. [internal citations omitted]. Moreover, there was no evidence supporting that any intellectual property existed, much less that it was a marital asset.”

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