A Florida court has reversed a lower court's decision in a family business dispute involving Deltona Transformer Corporation (DTC) and its former subsidiary, Deltran Operations USA, Inc. The case centers on a family conflict regarding control of the companies and the application of Florida's buyout election statute. The ruling allows for equitable considerations in determining the validity of buyout elections, impacting how family-owned businesses can resolve internal disputes.
The case, Deltona Transformer Corporation v. Deltran Operations USA, Inc., et al., was filed under docket number 5D2024-1156. The decision was issued by the Fifth District Court of Appeal of Florida on June 26, 2026. This ruling could have significant implications for other family-owned businesses facing similar disputes, as it clarifies the application of the state's buyout election law.
Background
The dispute involves DTC, a family-owned corporation founded in 1965 by Michael G. Prelec, and its subsidiary, Deltran, which was established in 2013. The company produces the popular Battery Tender® line of battery chargers. Over the years, family tensions arose regarding the management of the companies, leading to legal action.
In 2021, DTC, along with family members, filed a complaint seeking to dissolve Deltran, citing various allegations of misconduct by other family members who held shares in the company. In response, Deltran and its shareholders, including Michael Prelec, Jr. and his cousins, filed a notice of election to purchase the shares owned by DTC and one of the family members. This election was based on Florida's buyout election statute, which allows for the purchase of shares instead of dissolving a corporation.
The Ruling
The Fifth District Court of Appeal ruled that the lower court erred in its interpretation of the buyout election statute, specifically section 607.1436(1) of Florida Statutes. The court stated, "An election is 'irrevocable unless the court determines that it is equitable to set aside or modify the election.'" This ruling emphasizes that the statute allows a trial court to consider equitable grounds for setting aside or modifying an election, regardless of whether the petitioning shareholder or the electing party raises the issue.
The appellate court found that the trial court mistakenly believed it lacked the authority to entertain a motion from DTC, the petitioning shareholder, to set aside the election. The court concluded that the statutory language indicates that the irrevocability of an election is not absolute and can be modified based on equitable considerations.
Impact
This ruling could significantly alter how family-owned businesses in Florida handle internal disputes. By allowing courts to consider equitable grounds for setting aside buyout elections, the decision provides a pathway for resolving conflicts without resorting to dissolution. This is particularly important for closely held corporations, where family dynamics can complicate business operations.
The ruling may also set a precedent for future cases involving similar disputes in Florida and potentially influence how other states interpret their buyout election statutes. The court's decision underscores the importance of equitable considerations in business disputes, especially in family-run enterprises where personal relationships are intertwined with business interests.
What's Next
The case has been remanded to the trial court for further proceedings to determine whether it is equitable to set aside or modify the election based on the facts presented. It is unclear if the decision will be appealed further, but the ruling opens the door for additional legal interpretations of the buyout election statute in Florida.