         FIRST DISTRICT COURT OF APPEAL
                STATE OF FLORIDA
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                         No. 1D17-2666
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MARY VIRGINIA GRAHAM,

    Appellant,

    v.

CONSTANCE R. UPHOLD and
BARMARRAE BOOKS, INC.,

    Appellees.
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On appeal from the Circuit Court for Alachua County.
Monica J. Brasington, Judge.

                         April 30, 2018


PER CURIAM.

     Dr. Mary Virginia Graham challenges an order appointing a
custodian to manage a small business she owns together with Dr.
Constance R. Uphold. The business is subject to a judicial
dissolution proceeding initiated by Dr. Uphold. Dr. Graham argues
that the appointment of the custodian violated the statutory stay
of the dissolution proceedings in effect when Dr. Graham elected
to purchase Dr. Uphold’s shares and requested a fair value
determination from the court. For the reasons below, we agree
with Dr. Graham and reverse.
                                Facts

     The story of Barmarrae Books, Inc. (BBI) is one of a business
relationship gone wrong. Drs. Graham and Uphold each own fifty
percent of the shares in BBI, a small corporation they formed to
sell a medical textbook they co-wrote. In recent years, multiple
conflicts between the two shareholders have destroyed what used
to be a functional business relationship.

     Dr. Uphold initiated these proceedings by filing a complaint
for involuntary dissolution of BBI pursuant to section 607.1430(2),
Florida Statutes (2016), as a result of continuing deadlock among
the parties regarding BBI’s operations and management. The
complaint also included a claim for an equitable accounting
regarding the copyright of the textbook.

     Shortly after the dissolution action was initiated, Dr. Graham
filed a notice under section 607.1436, Florida Statutes, electing to
purchase all of Dr. Uphold’s corporate shares in lieu of the
dissolution. After the parties failed to agree on the fair value of Dr.
Uphold’s shares, Dr. Graham asked the court to make the
determination pursuant to section 607.1436(4), which triggered a
stay of the dissolution proceedings.

     Approximately nine months later, Dr. Uphold moved under
sections 607.1431(3) and 607.1432, Florida Statutes, for the court
to appoint a custodian pendente lite “to preserve BBI’s assets and
to carry on and manage its business and affairs.” Dr. Uphold
alleged a series of improprieties and breaches of fiduciary duty by
Dr. Graham that “jeopardize[] the current and ongoing value of
BBI, and Dr. Uphold’s equity interest in it.” For example, Dr.
Uphold alleged that Dr. Graham and her son had taken control of
nearly all BBI’s operations—preventing Dr. Uphold from carrying
out her responsibilities as a corporate officer—and Dr. Uphold
feared Dr. Graham would waste BBI’s assets. Dr. Uphold also
alleged that Dr. Graham had refused to participate in discovery,
preventing Dr. Uphold from obtaining the information needed to
argue her case at a hearing to determine the fair value of her
shares.

    Dr. Graham categorically denied Dr. Uphold’s allegations of
misconduct and also argued that the court lacked authority to
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appoint a custodian during the statutory stay of the dissolution
proceedings in effect once the fair value determination was
requested.

     After an evidentiary hearing, the court entered an order
granting Dr. Uphold’s motion for a custodian. The court did not
make any findings of misconduct, waste, or risk of future waste
due to Dr. Graham’s actions. Rather, the court found that Dr.
Graham had refused to allow Dr. Uphold access to corporate
records. The court explained,

    Given the lack of transparency and the withholding of
    information between the members of the corporation, it is
    virtually impossible for the Court to determine whether
    a custodian is necessary to manage the business and
    affairs of the corporation. However, the Court has both
    statutory and inherent authority to exercise its discretion
    to appoint a custodian, if appropriate. In this case, the
    Court finds it appropriate and to be in the best interest of
    the corporation and its members.

     The court appointed a custodian “to serve as a neutral
overseer for the company and to insure that the corporation has its
legal obligations met.” The court further provided that the
custodian “shall exercise all powers of the corporation and shall
have exclusive authority to manage the affairs of the corporation
in the best interests of the corporation’s shareholders and
creditors.” The order recognized that the dissolution proceedings
were stayed under section 607.1436(4) but rejected the stay as
precluding a custodian’s appointment, stating that “other
causes/actions of the case are not stayed and proceed as usual.”

    This appeal followed.

                              Analysis

     Whether the trial court could appoint a custodian during the
statutory stay is a pure question of law. Questions of law are
reviewed de novo. Jackson-Shaw Co. v. Jacksonville Aviation
Auth., 8 So. 3d 1076, 1085 (Fla. 2008). Whether the court otherwise
properly entered the custodianship order is reviewed for an abuse
of discretion. See Plaza v. Plaza, 78 So. 3d 4, 6 (Fla. 3d DCA 2011).

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     A corporate shareholder may petition for judicial dissolution
of a corporation based on the limited grounds set forth in section
607.1430, Florida Statutes. As an alternative to the so-called
“corporate divorce,” one or more shareholders may elect to
purchase the shares of the complaining shareholder at the fair
value of the shares. § 607.1436(1), Fla. Stat. Once made, the
buyout election is “irrevocable unless the court determines that it
is equitable to set aside or modify the election.” Id. The buyout
election also prevents the petitioning shareholder from
discontinuing or settling the dissolution action, or selling or
otherwise disposing of his or her shares, unless the court
determines that it would be equitable for the corporation and the
other shareholders to do so. § 607.1436(2), Fla. Stat.

    After a buyout election, the parties have sixty days to reach
an agreement on the fair value of the petitioning shareholder’s
shares and the terms of purchase. § 607.1436(3), Fla. Stat. If the
parties are able to reach an agreement within that time period, the
court must direct the purchase of the shares consistent with the
parties’ agreement. Id. If the parties are unable to agree,

    the court, upon application of any party, shall stay the s.
    607.1430 proceedings and determine the fair value of the
    petitioner’s shares as of the day before the date on which
    the petition under s. 607.1430 was filed or as of such other
    date as the court deems appropriate under the
    circumstances.

§ 607.1436(4), Fla. Stat. After the court determines the fair value
of the shares, the court must direct the sale of the shares to the
shareholder(s) electing to purchase the petitioning shareholder’s
shares and dismiss the petition to dissolve the corporation.
§ 607.1436(5)-(6), Fla. Stat.

     In this case, the parties do not dispute that a statutory stay of
the dissolution proceedings was triggered upon Dr. Graham’s
request for the court to determine the fair value of Dr. Uphold’s
shares. And rightly so, as the language of section 607.1436(4)
clearly provides that a stay of the “s. 607.1430 proceedings” is
mandatory in that situation. See State v. Burris, 875 So. 2d 408,
410 (Fla. 2004) (“When a statute is clear, courts will not look

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behind the statute’s plain language for legislative intent or resort
to rules of statutory construction to ascertain intent.”).

     The parties disagree on whether the court could nonetheless
appoint a custodian pendente lite with the stay in effect. Dr.
Uphold contends the statutory stay does not operate to halt all
proceedings brought to dissolve a corporation because the court is
required to take further action in the same proceedings to achieve
the alternative end of a buyout on terms to be determined by the
court. Yet Dr. Uphold sought a custodianship “to preserve BBI’s
assets and to carry on and manage its business and affairs” under
sections 607.1431(3) and 607.1432. Similarly, the trial court relied
on its authority under section 607.1432 to appoint the custodian.
While these sections allow a court to appoint a custodian to take
possession of a corporation and manage it under the court’s
authority, they do so only in the context of judicial dissolution
proceedings. Because the dissolution proceedings were required by
statute to be stayed at the time Dr. Uphold moved for the
appointment of a custodian, the court did not have the authority
under either section 607.1431(3) or section 607.1432 to make the
appointment.

     Dr. Uphold also contends that even if the court did not have
statutory authority to appoint a custodian during the stay, it had
inherent authority to do so in connection with the fair value
determination or “any other pending counts.” Analogizing the
appointment of a custodian to the appointment of a receiver, Dr.
Uphold relies on cases involving equitable receiverships and
argues that, generally, a receiver is appropriate to protect
interested parties against a risk of loss. See Apalachicola N. R. Co.
v. Sommers, 85 So. 361, 362 (1920) (“The cases in which receivers
will be appointed are ordinarily limited to those in which it
appears that the appointment is necessary, either to prevent fraud
or to save the property from injury or threatened loss or
destruction.”).

    The appointment of a receiver “is a rare and extraordinary
remedy.” Plaza, 78 So. 3d at 6; see also Electro Mech. Prods., Inc.
v. Borona, 324 So. 2d 638, 639 (Fla. 3d DCA 1976) (“The
appointment of a receiver is a drastic matter in that it constitutes
a taking of property and, therefore, should not be used by the

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courts except in cases of necessity.”). A trial court abuses its
discretion when it “appoint[s] a receiver in the absence of a
showing that property is subject to a serious loss.” Plaza, 78 So. 3d
at 6.

     To the extent that any such inherent authority exists in this
case, the court made no finding of waste or serious risk of loss.
Indeed, based on the language of the court’s ruling, it appears that
the court itself was uncertain about the need for a custodian to
manage the business and affairs of BBI. In any event, because the
statute allows the trial court to value Dr. Uphold’s shares as of the
day before Dr. Uphold filed the dissolution action, Dr. Uphold is
already protected against the risk of loss. The appointment of the
custodian is both unauthorized by statute and unnecessary.

    Accordingly, the custodianship order is REVERSED.

RAY, BILBREY, and WINOKUR, JJ., concur.

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    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.
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Matthew J. Conigliaro of Carlton Fields Jorden Burt, P.A., Tampa,
for Appellant.

Eric A. Dibert of Bogin, Munns & Munns, P.A., Gainesville, for
Appellee Constance R. Uphold.




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