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Filing # 62601370 E-Filed 10/09/2017 11:43:59 PM
IN THE CIRCUIT COURT OF THE NINETEENTH JUDICIAL CIRCUIT
IN AND FOR ST. LUCIE COUNTY, FLORIDA
MADELINE and WILLIAM MCCONNELL,
Plaintiffs, Case No.
562017CA001650AXXXHC
Vv.
P.D.K, INC., a Florida Corporation,
Defendant.
COMPLAINT FOR BOOKS AND RECORDS AND TO HOLD ANNUAL
SHAREHOLDER MEETING PURSUANT TO FLORIDA STATUTE
Plaintiffs, Madeline and William McConnell (“Plaintiffs”), by their attorneys, bring this
action for an order pursuant to Fla. Stat. §607.1602 permitting the inspection and copy of
corporate records of P.D.K., Inc. ( “PDK” or “Company”) and pursuant to Fla. Stat. 607.0703 to
hold a court-ordered annual shareholder meeting. In support of this application, Plaintiffs allege
the following on information and belief, except as to allegations specifically pertaining to
Plaintiffs, which are alleged on personal knowledge.
JURISDICTION
1. This Court has jurisdiction over defendants because sufficient minimum contacts
with Florida exist to render the exercise of jurisdiction by the Florida courts permissible under
traditional notions of fair play and substantial justice. In addition, PDK is a Florida corporation
with principal offices in Ft. Pierce, Florida with a mailing address and registered agent, Paul
Katchmere (“P. Katchmere”) in Hollywood, Florida.
2. Venue is proper in this Court because Company maintains its principal address at
1901-2047 S 26th St., Ft. Pierce, FL 34947 in St. Lucie County.PARTIES
3. Plaintiffs are and have been at all relevant times, along with their son Daniel
(collectively, “the McConnells”), an approximate 10% shareholder in the Company.
4. Defendant Company is a Florida corporation with offices in Ft. Pierce, Florida.
The principal officers and directors of PDK are Don Katchmere (“D. Katchmere”) and P.
Katchmere ( collectively, D. and P. Katchmere are referred to as “the Katchmeres”). The main
(if not sole) asset of PDK is a 42-unit apartment complex in Ft. Pierce known as Crystal Trace
Apartments (“Property”).
SUBSTANTIVE ALLEGATIONS
5. The Company was formed in May 2004 by the Katchmeres. On or about March
31, 2005, the McConnells entered into a shareholder’s agreement (“Agreement”) with the
Katchmeres pursuant to which the McConnells invested $121,526.72 into PDK with the
understanding that the Property would be eventually converted into a condominium. A copy of
the Agreement is annexed hereto as Exhibit A. Based upon the approximate mortgage of
$1,250,000 on the Property, the McConnells’ investment represented approximately 10% of
stock in PDK.
6. However, given the general decline in the Florida housing market over the next
several years, the Property was not converted into a condominium. In 2010, in order to make
improvements to the Property, the then-existing mortgage was re-negotiated for approximately
$1,750,000.
7. Pursuant to the terms of the Agreement, the parties agreed that all “Major”
decisions of PDK would require the unanimous approval of both the Katchmeres and the
McConnells. “Major” decisions were defined in the Agreement as including: refinancing themortgage; drafting the terms of documents relating to converting the Property into a
condominium; sale and closings of condominium units; commencing legal action to enforce the
rights of PDK regarding the Property; approving the monthly distributions of profits or net cash
flow to shareholders; and the issuance of any additional stock in the Company.
8. Mr. McConnell periodically contacted P. Katchmere to discuss the Property.
However, with the decline in the housing market, and the resulting fact that the mortgage on the
Property was “upside down”, a conversion seemed unlikely.
9. To date, the McConnells have received no distributions upon their investment in
the Company. Moreover, any information from PDK has been spotty. Mr. McConnell, on
occasion, reached out to P. Katchmere to obtain financials and/or information regarding
vacancies and other issues. However, to the best of Plaintiffs’ knowledge, neither PDK nor the
Katchmeres have held an annual shareholder meeting for the Company.
10. With the gradual improvement over time in the housing market, Mr. McConnell
has sought to meet with P. Katchmere to discuss the family’s investment in the Property. Each
time, these overtures have been rebuffed and/or ignored.
11. | On September 27, 2017, undersigned counsel sent by overnight mail through the
USS. Postal Service a letter requesting the inspection of corporate books and records pursuant to
Fla. Stat. §607.1601 and 607.1602. A copy of the September 27, 2017 letter is annexed hereto as
Exhibit B. The records sought include: all minutes of the Board of Directors and shareholder
meetings since September 27, 2014; all records of shareholder actions taken without a meeting
since September 27, 2014; all accounting records of the Company, including financial
statements, general ledger entries, spreadsheets, bank statements or the like which reflect
payments to and from PDK involving the Property since September 27, 2011; resolutionsregarding the creation and rights, preferences and limitations of any classes or series of stock; the
operative by-laws of PDK and former versions; documents regarding the consideration of any
modification or re-negotiation of the mortgage on the Property since 2010; a list of shareholders;
documentation regarding the buy-out of any prior shareholders of PDK; and documents
regarding the vacancy rate of the Property since September 27, 2014.
12. The records sought are those expressly permitted under Fla. Stat. §§ 607.1601 and
607.1602.
13. Plaintiffs request these records in good faith, and for a proper purpose, which is
threefold: i) to investigate potential wrongdoing, mismanagement and breaches of fiduciary duty
by the Katchmeres and/or the Company, including the fact that the McConnells have never
received any monthly distributions on their investment in PDK; ii) to ascertain whether the assets
of the Company have been used properly, and if not, to take appropriate action including the
filing of a derivative action and/or an action seeking dissolution of the Company, if appropriate;
and iii) to ascertain the fair value of the McConnells’ shareholdings in the Company in
anticipation of a buy-out or sale.
14. The records sought are directly related to Plaintiffs’ stock ownership and the
purposes for which they seek the records.
15. More than five business days have passed since the letter was received by P.
Katchmere, as registered agent for PDK at the listed address. However, no response has been
forthcoming.
16. Plaintiffs respectfully request that this Court summarily order the production of
the records sought.17. Plaintiffs also seek a Court order compelling the holding of an annual shareholder
meeting so that Plaintiffs may question the Katchmeres regarding the Property and Plaintiffs’
investment.
COUNTI
(For an Order Pursuant to § 607.1604)
18. Plaintiffs repeat and reallege paragraphs 1 through 17 as if fully set forth herein.
19. Fla. Stat. §607.1604 states in relevant part that if a corporation fails to comply
with Fla. Stat. § 607.1601 and 607.1602, the Circuit Court in the county in which the corporation
maintains its principal office may summarily order the inspection of copying of the records
demanded at the corporation’s expense on an expedited basis.
20. Plaintiffs have requested to inspect and copy pertinent records, many of which are
expressly mandated to be made available under the law, and the remaining categories which are
sought in good faith and for a proper purpose related to the McConnells’ status as shareholders
of the Company, in order to, inter alia, determine the fair value of their holdings and/or re-
negotiate the mortgage on the Property.
21. The Company has failed to respond to Plaintiffs’ demand, and has failed to
provide such records within the time set forth in the Florida Statutes.
22. Plaintiffs are entitled to such records, at the expense of the Company.
COUNT I
(For an Order Compelling an Annual Shareholder Meeting)
23. Plaintiffs repeat and reallege paragraphs 1 through 17 as if fully set forth herein.
24. Plaintiffs have been, and continue to be, shareholders of PDK.25. No annual meeting of shareholders has been held within the prior 13-month
period as set forth in Fla. Stat. §607.0703. Indeed, Plaintiffs are unaware of any shareholder
meeting since they entered into the Agreement.
26. Plaintiffs pointed out the lack of shareholder meeting in the demand attached
hereto as Exhibit B. No response has been forthcoming from PDK or its directors.
27. Plaintiffs respectfully request that this Court fix the time and place of the meeting,
specify a record date, determine the shares entitled to participate and vote at the meeting,
prescribe the form and content of the meeting notice and enter any other orders as may be
appropriate pursuant to Fla. Stat. §607.0703.
COUNT III
(For costs and attorneys fees pursuant to § 607.1604 (3))
28. Plaintiffs repeat and reallege paragraphs 1 through 22 as if fully set forth herein.
29. Pursuant to Fla. Stat. § 607.1604(3), Plaintiffs are entitled to their costs and
reasonable attorney’s fees incurred to obtain an order permitting inspection and copying and to
enforce their rights. Plaintiffs request that this Court award costs and fees.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs request judgment against Defendant as follows:
(a) Order on an expedited basis that the Company permit Plaintiffs or their agent(s)
to inspect and copy the records set forth in the September 27, 2017 letter;
(b) Order that PDK hold an annual shareholder meeting on the terms set by this
Court;
(b) Award costs, expenses and disbursements of this action, including reasonable
attorneys’ fees and expenses; and(c) Award any other compensatory, equitable and declaratory relief as this Court
deems just, equitable and proper.
October 9, 2017
KOMLOSSY LAW P.A.
/s/ Emily C Komlossy
Emily Komlossy (FBN 7714)
ekomlossy@komlossylaw.com
Ross Appel (FBN 90865)
raa@komlossylaw.com
4700 Sheridan St., Suite J
Hollywood, FL 33021
Phone: (954) 842-2021
Fax: (954) 416-6223
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Filing # 62601370 E-Filed 10/09/2017 11:43:59 PM IN THE CIRCUIT COURT OF THE NINETEENTH JUDICIAL CIRCUIT IN AND FOR ST. LUCIE COUNTY, FLORIDA MADELINE and WILLIAM MCCONNELL, Plaintiffs, Case No. 562017CA001650AXXXHC Vv. P.D.K, INC., a Florida Corporation, Defendant. COMPLAINT FOR BOOKS AND RECORDS AND TO HOLD ANNUAL SHAREHOLDER MEETING PURSUANT TO FLORIDA STATUTE Plaintiffs, Madeline and William McConnell (“Plaintiffs”), by their attorneys, bring this action for an order pursuant to Fla. Stat. §607.1602 permitting the inspection and copy of corporate records of P.D.K., Inc. ( “PDK” or “Company”) and pursuant to Fla. Stat. 607.0703 to hold a court-ordered annual shareholder meeting. In support of this application, Plaintiffs allege the following on information and belief, except as to allegations specifically pertaining to Plaintiffs, which are alleged on personal knowledge. JURISDICTION 1. This Court has jurisdiction over defendants because sufficient minimum contacts with Florida exist to render the exercise of jurisdiction by the Florida courts permissible under traditional notions of fair play and substantial justice. In addition, PDK is a Florida corporation with principal offices in Ft. Pierce, Florida with a mailing address and registered agent, Paul Katchmere (“P. Katchmere”) in Hollywood, Florida. 2. Venue is proper in this Court because Company maintains its principal address at 1901-2047 S 26th St., Ft. Pierce, FL 34947 in St. Lucie County.PARTIES 3. Plaintiffs are and have been at all relevant times, along with their son Daniel (collectively, “the McConnells”), an approximate 10% shareholder in the Company. 4. Defendant Company is a Florida corporation with offices in Ft. Pierce, Florida. The principal officers and directors of PDK are Don Katchmere (“D. Katchmere”) and P. Katchmere ( collectively, D. and P. Katchmere are referred to as “the Katchmeres”). The main (if not sole) asset of PDK is a 42-unit apartment complex in Ft. Pierce known as Crystal Trace Apartments (“Property”). SUBSTANTIVE ALLEGATIONS 5. The Company was formed in May 2004 by the Katchmeres. On or about March 31, 2005, the McConnells entered into a shareholder’s agreement (“Agreement”) with the Katchmeres pursuant to which the McConnells invested $121,526.72 into PDK with the understanding that the Property would be eventually converted into a condominium. A copy of the Agreement is annexed hereto as Exhibit A. Based upon the approximate mortgage of $1,250,000 on the Property, the McConnells’ investment represented approximately 10% of stock in PDK. 6. However, given the general decline in the Florida housing market over the next several years, the Property was not converted into a condominium. In 2010, in order to make improvements to the Property, the then-existing mortgage was re-negotiated for approximately $1,750,000. 7. Pursuant to the terms of the Agreement, the parties agreed that all “Major” decisions of PDK would require the unanimous approval of both the Katchmeres and the McConnells. “Major” decisions were defined in the Agreement as including: refinancing themortgage; drafting the terms of documents relating to converting the Property into a condominium; sale and closings of condominium units; commencing legal action to enforce the rights of PDK regarding the Property; approving the monthly distributions of profits or net cash flow to shareholders; and the issuance of any additional stock in the Company. 8. Mr. McConnell periodically contacted P. Katchmere to discuss the Property. However, with the decline in the housing market, and the resulting fact that the mortgage on the Property was “upside down”, a conversion seemed unlikely. 9. To date, the McConnells have received no distributions upon their investment in the Company. Moreover, any information from PDK has been spotty. Mr. McConnell, on occasion, reached out to P. Katchmere to obtain financials and/or information regarding vacancies and other issues. However, to the best of Plaintiffs’ knowledge, neither PDK nor the Katchmeres have held an annual shareholder meeting for the Company. 10. With the gradual improvement over time in the housing market, Mr. McConnell has sought to meet with P. Katchmere to discuss the family’s investment in the Property. Each time, these overtures have been rebuffed and/or ignored. 11. | On September 27, 2017, undersigned counsel sent by overnight mail through the USS. Postal Service a letter requesting the inspection of corporate books and records pursuant to Fla. Stat. §607.1601 and 607.1602. A copy of the September 27, 2017 letter is annexed hereto as Exhibit B. The records sought include: all minutes of the Board of Directors and shareholder meetings since September 27, 2014; all records of shareholder actions taken without a meeting since September 27, 2014; all accounting records of the Company, including financial statements, general ledger entries, spreadsheets, bank statements or the like which reflect payments to and from PDK involving the Property since September 27, 2011; resolutionsregarding the creation and rights, preferences and limitations of any classes or series of stock; the operative by-laws of PDK and former versions; documents regarding the consideration of any modification or re-negotiation of the mortgage on the Property since 2010; a list of shareholders; documentation regarding the buy-out of any prior shareholders of PDK; and documents regarding the vacancy rate of the Property since September 27, 2014. 12. The records sought are those expressly permitted under Fla. Stat. §§ 607.1601 and 607.1602. 13. Plaintiffs request these records in good faith, and for a proper purpose, which is threefold: i) to investigate potential wrongdoing, mismanagement and breaches of fiduciary duty by the Katchmeres and/or the Company, including the fact that the McConnells have never received any monthly distributions on their investment in PDK; ii) to ascertain whether the assets of the Company have been used properly, and if not, to take appropriate action including the filing of a derivative action and/or an action seeking dissolution of the Company, if appropriate; and iii) to ascertain the fair value of the McConnells’ shareholdings in the Company in anticipation of a buy-out or sale. 14. The records sought are directly related to Plaintiffs’ stock ownership and the purposes for which they seek the records. 15. More than five business days have passed since the letter was received by P. Katchmere, as registered agent for PDK at the listed address. However, no response has been forthcoming. 16. Plaintiffs respectfully request that this Court summarily order the production of the records sought.17. Plaintiffs also seek a Court order compelling the holding of an annual shareholder meeting so that Plaintiffs may question the Katchmeres regarding the Property and Plaintiffs’ investment. COUNTI (For an Order Pursuant to § 607.1604) 18. Plaintiffs repeat and reallege paragraphs 1 through 17 as if fully set forth herein. 19. Fla. Stat. §607.1604 states in relevant part that if a corporation fails to comply with Fla. Stat. § 607.1601 and 607.1602, the Circuit Court in the county in which the corporation maintains its principal office may summarily order the inspection of copying of the records demanded at the corporation’s expense on an expedited basis. 20. Plaintiffs have requested to inspect and copy pertinent records, many of which are expressly mandated to be made available under the law, and the remaining categories which are sought in good faith and for a proper purpose related to the McConnells’ status as shareholders of the Company, in order to, inter alia, determine the fair value of their holdings and/or re- negotiate the mortgage on the Property. 21. The Company has failed to respond to Plaintiffs’ demand, and has failed to provide such records within the time set forth in the Florida Statutes. 22. Plaintiffs are entitled to such records, at the expense of the Company. COUNT I (For an Order Compelling an Annual Shareholder Meeting) 23. Plaintiffs repeat and reallege paragraphs 1 through 17 as if fully set forth herein. 24. Plaintiffs have been, and continue to be, shareholders of PDK.25. No annual meeting of shareholders has been held within the prior 13-month period as set forth in Fla. Stat. §607.0703. Indeed, Plaintiffs are unaware of any shareholder meeting since they entered into the Agreement. 26. Plaintiffs pointed out the lack of shareholder meeting in the demand attached hereto as Exhibit B. No response has been forthcoming from PDK or its directors. 27. Plaintiffs respectfully request that this Court fix the time and place of the meeting, specify a record date, determine the shares entitled to participate and vote at the meeting, prescribe the form and content of the meeting notice and enter any other orders as may be appropriate pursuant to Fla. Stat. §607.0703. COUNT III (For costs and attorneys fees pursuant to § 607.1604 (3)) 28. Plaintiffs repeat and reallege paragraphs 1 through 22 as if fully set forth herein. 29. Pursuant to Fla. Stat. § 607.1604(3), Plaintiffs are entitled to their costs and reasonable attorney’s fees incurred to obtain an order permitting inspection and copying and to enforce their rights. Plaintiffs request that this Court award costs and fees. PRAYER FOR RELIEF WHEREFORE, Plaintiffs request judgment against Defendant as follows: (a) Order on an expedited basis that the Company permit Plaintiffs or their agent(s) to inspect and copy the records set forth in the September 27, 2017 letter; (b) Order that PDK hold an annual shareholder meeting on the terms set by this Court; (b) Award costs, expenses and disbursements of this action, including reasonable attorneys’ fees and expenses; and(c) Award any other compensatory, equitable and declaratory relief as this Court deems just, equitable and proper. October 9, 2017 KOMLOSSY LAW P.A. /s/ Emily C Komlossy Emily Komlossy (FBN 7714) ekomlossy@komlossylaw.com Ross Appel (FBN 90865) raa@komlossylaw.com 4700 Sheridan St., Suite J Hollywood, FL 33021 Phone: (954) 842-2021 Fax: (954) 416-6223