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Banco Industrial de Venezuela, C.A. v de Saad

Case No. SC10-21 (FL S.Ct., Jun. 9, 2011)

Banco Industrial de Venezuela, C.A., Miami Agency, and its subsidiary, BIV Investments and Management, Inc. (collectively referred to as “BIV”), seek review of the decision of the Third District Court of Appeal in Banco Industrial de Venezuela, C.A., Miami Agency v. de Saad, 21 So. 3d 46 (Fla. 3d DCA 2009). For the reasons expressed below, we quash the Third District‟s decision.

I. BACKGROUND

The following facts are set forth in the Third District‟s decision:
De Saad is the former vice-president and general manager of Banco [Industrial de Venezuela]‟s Miami agency, BIV. As part of an undercover sting operation involving a U.S. Customs confidential informant, de Saad was alleged to have facilitated the deposit of approximately $4 million in drug proceeds into BIV accounts. On May 19, 1998, the United States charged de Saad with ten counts of money laundering and one count of conspiracy to launder money while acting in her capacity as the vice-president of BIV. De Saad retained the services of attorney Beeler to represent her in the criminal proceedings. As part of their fee agreement, de Saad assigned Beeler her right to seek indemnification for attorney‟s fees and costs under sections 607.0850(1) and (3), Florida Statutes . . . . After a lengthy trial in which the jury found her guilty on all counts, the trial judge granted de Saad‟s motion for judgment of acquittal as to all counts finding that the United States had failed to prove all of the necessary elements of the alleged crimes. The United States filed an appeal of the trial court‟s acquittal. Seven months after her acquittal, de Saad was charged and pled guilty to one count of money structuring on the condition that the government drop the appeal of the judgment of acquittal on the money laundering and conspiracy charges. The government dropped the appeal. De Saad then sought from BIV her past wages pursuant to her contract of employment and also sought indemnification for attorney‟s fees incurred in her defense of the money laundering and conspiracy charges. BIV denied both claims.

De Saad then filed the present state court action against BIV. Her amended complaint seeks statutory indemnification pursuant to section 607.0850 to recover the costs and attorney‟s fees in defending the money laundering charges and claims past wages based on breach of her Employment Contract with BIV. Beeler filed a complaint in intervention based on the assigned right to attorney‟s fees and costs in defending de Saad on the money laundering charges. De Saad, Beeler and BIV moved for summary judgment on the indemnification claims. The trial court entered summary judgment on liability in favor of de Saad and Beeler on the statutory indemnification counts. The trial court held a bench trial on indemnification damages and awarded de Saad $2,895,096.41 on the indemnification claim and Beeler $1,636,168.13. Following the bench trial, both sides moved for summary judgment on the breach of contract claims. . . . On the breach of contract claims, the trial court entered final summary judgment in favor of de Saad and Beeler and awarded $1,058,023.82 to de Saad exclusively.
Banco, 21 So. 3d at 47-48 (footnotes omitted).

On appeal, BIV contended that summary judgment in favor of de Saad and Beeler on the indemnification claim was improper because a question remained as to whether the statutory requirements of indemnification were satisfied. Id. at 48. However, applying a Delaware case interpreting a Delaware indemnification statute, the Third District affirmed the trial court, explaining that “de Saad was prosecuted „by reason of the fact‟ that she was [a] director, officer, employee, or agent of the corporation and was acquitted because she was „successful on the merits or otherwise.‟ ” Id. at 49 (quoting § 607.0850(1), (3), Fla. Stat.).
 

 

Judge(s): Ricky Polston
Jurisdiction: Florida Supreme Court
Related Categories: Damages , Employment
 
Supreme Court Judge(s)
Charles Canady
Jorge Labarga
Fred Lewis
Barbara Pariente
James Perry
Ricky Polston
Peggy Quince

 
Appellant Lawyer(s) Appellant Law Firm(s)
Mark Cheskin Hogan Lovells
Jessica Ellsworth Hogan Lovells
Brian Lerner Hogan Lovells
Carol Licko Hogan Lovells
Richard Lorenzo Hogan Lovells

 
Appellee Lawyer(s) Appellee Law Firm(s)
Mark Hicks Hicks Porter Ebenfeld & Stein PA
Shannon Kain Hicks Porter Ebenfeld & Stein PA
Dinah Stein Hicks Porter Ebenfeld & Stein PA
Eugene Lindsey, III Katz Barron Squitero Faust Friedberg English & Allen PA
William Petros Petros & Elegant
Catherine Christie William Richey PA
William Richey William Richey PA

 

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Click the maroon box above for a formatted PDF of the decision.
jj., concur. comparison, subsection (3) describes when a corporation must indemnify its agent. were contrary to corporate policy. 607.0850(1), fla. stat. furthermore, unlawful pled guilty to money structuring. therefore, summary judgment in favor of de matter therein, he or she shall be indemnified against expenses actually and which he or she reasonably believed to be in, or not opposed to, the condition that the government drop the appeal of the judgment of vs. p.a., miami, florida, even after the december 20, 1999, jury verdict finding her guilty on all counts and the requirements of section 607.0850(1). furthermore, because clarification of the sections 607.0850(1) and (3), florida statutes . . . .[2 personnel manual that provides for suspension of an employee while charges are subsection (3)--i.e., when a corporation has the right to indemnify a corporate no. sc10-21 that de saad was a corporate officer, other requirements for indemnification under accordingly, we quash the third districts contrary decision and remand with that the [laws] of other states and countries shall not be applicable to this contract certificate of authority and possesses the same rights, privileges, duties, " ,,foreign corporation means a corporation for profit incorporated under laws corporation has been successful on the merits or otherwise in defense subject to the provisions of this act." 607.01401(5), fla. stat. in contrast, money structuring charge in february 2001, which was after the employment describes when it is within the power of a corporation to indemnify its agent. in however, applying a delaware case interpreting a delaware indemnification the subsequent judgment of acquittal. ultimately, de saads suspension continued laws of fla.; ch. 97-102, 30, laws of fla. 742 so. 2d 215, 217 n.6 (fla. 1999) (noting that claims raised in appellate brief that executed a resolution to suspend de saad immediately after her arrest without pay foreign corporations, such as banco. and even if the statute did apply to biv, de "[c]onclusive evidence of dishonesty or involvement in a misdemeanor or felony." as explained above, floridas indemnification statute does not apply to corporation: proceeding by judgment, order, settlement, or conviction or upon a trial in which the jury found her guilty on all counts, the trial judge - 12 - exception: "this act does not authorize this state to regulate the organization or therefore, summary judgment on the indemnification claim was improperly - 10 - of any proceeding referred to in subsection (1) or subsection (2), or in to one year of probation, and agreed never to seek or accept employment with any here, de saad did not meet the requirements for indemnification under iii. breach of contract - 4 - before the third district and this court, biv has waived all grounds for contesting corporate indemnification. court held a bench trial on indemnification damages and awarded de employee, or agent of another corporation, partnership, joint venture, management, inc., de saad is not entitled to statutory indemnification because she defending de saad on the money laundering charges. de saad, beeler clear and free from doubt or uncertainty about the pending charges until de saad would still not be entitled to indemnification because the requirements of the not final until time expires to file rehearing motion, and corporation," as evidenced by her guilty plea as well as the fact that her actions de saad argues that banco subjected itself to section 607.0850 by executing in contrast, the third district concluded that the charges against de saad granted de saads motion for judgment of acquittal as to all counts corporation that is not subject to regulation of its internal affairs, including were clarified by the united states filing of the superseding indictment or bivs believed to be in, or not opposed to, the best interests of the corporation." id. nor it is so ordered. undercover sting operation involving a u.s. customs confidential section 607.0850 to recover the costs and attorneys fees in defending subsection (1) because she was not prosecuted "by reason of the fact" that she was before the third district, biv also argued that the trial court erred in restrictions, penalties, and liabilities now or later imposed on, a plea of nolo contendere or its equivalent shall not, of itself, create a statutory indemnification provisions. first, summary judgment in favor of de saad criteria for subsection (1) indemnification are established. see 607.0850(3), fla. are negative, her remunerative payment will be acknowledged retroactively." to understand the nature of the charges against de saad. see id. however, in this review of the decision of the third district court of appeal in banco industrial de canady, c.j, and pariente, lewis, quince, labarga, and perry, application for review of the decision of the district court of appeal - direct mandatory indemnification under subsection (3). in other words, the mandatory intervention based on the assigned right to attorneys fees and costs in indemnification provided for by subsection (3) may be reached only after the statute, the third district affirmed the trial court, explaining that "de saad was directors, is an ,,internal affair of a corporation and is therefore subject to the law proceedings. as part of their fee agreement, de saad assigned beeler referred to in subsection (1) or subsection (2), or in defense of any claim, issue, or prosecuted for her conduct, not on account of her position. this conduct was not contract expired. and because clarification did not occur until that time, biv did provides that a foreign corporation conducting business under a certificate of not true. a corporate agent cannot be entitled to indemnification when the . she reasonably believed to be in, or not opposed to, the best interests of the reached this conclusion by construing "clarif[y]" to mean that biv simply needed or her in connection therewith. in some circumstances, foreign corporations are subject to regulation under venezuela, c.a., miami agency v. de saad, 21 so. 3d 46 (fla. 3d dca 2009).1 was charged and pled guilty to one count of money structuring on the merits or otherwise. " id. at 49 (quoting 607.0850(1), (3), fla. stat.). employment contract, specifies certain grounds for immediate dismissal or for compensate or terminate her, the third district affirmed the summary judgment on plaintiff, esperanza de saad, and intervenor, joseph beeler, p.a., shall go hence money laundering and one count of conspiracy to launder money cannot satisfy the requirements of section 607.0850, florida statutes. indemnified against expenses actually and reasonably incurred by him on appeal, biv contended that summary judgment in favor of de saad and we agree with biv that the third district erred in its interpretation of the "with the understanding that if the findings against her taking place in u.s. courts section 607.1505(3), florida statutes, then sets out the following important pending for clarification. id. at 50. the third district concluded that the charges ] judgment in favor of de saad and beeler and awarded $1,058,023.82 suspension "[p]ending [c]larification of [c]harges." one of the grounds listed is access to the laundered funds due to her position as a corporate officer, she was supreme court of florida and biv moved for summary judgment on the indemnification claims. certainly, there are circumstances that satisfy subsection (1) but not saad $2,895,096.41 on the indemnification claim and beeler the trial court entered summary judgment on liability in favor of de may 19, 1998, the united states charged de saad with ten counts of her amended complaint seeks statutory indemnification pursuant to with the exception of gender neutrality amendments in 1997. see ch. 89-154, 93, transact business in this state." further, section 607.1505(2), florida statutes, conduct business in florida ("banco"). second, even if the indemnification statute see chatlos found., inc. v. darata, 882 so. 2d 1021, 1023 (fla. 5th dca 2004) fla. stat. as used in the act, " ,,corporation or ,,domestic corporation means a except as otherwise provided by this act is subject to the same duties, such proceeding, including any appeal thereof, if he or she acted in florida, william l. richey and catherine shannon christie of william l. richey, is a party to any proceeding (other than an action by, or in the right of, because the merits of the charges were not clarified until de saad pled guilty to the director, officer, employee, or agent of the corporation or is or was finding that the united states had failed to prove all of the necessary choice-of-law clause simply makes banco subject to the laws of the state of beeler on the indemnification claim was improper because a question remained as clarified by her plea to money structuring. saad and beeler on the statutory indemnification counts. the trial de saad is the former vice-president and general manager of any cross-appeal issues raised by de saad and beeler in the third district 4. additionally, the trial court entered final judgment in favor of de saad believe his or her conduct was unlawful. the termination of any prosecuted ,,by reason of the fact that she was [a] director, officer, employee, or contain no argument or grounds for reversal are deemed abandoned). accordingly, act, banco is not subject to regulation by the act in matters of its organization or dinah stein, mark hicks, and shannon kain of hicks, porter, ebenfeld and stein, of the u.s. attorneys office. instructions for entry of final judgment in favor of biv against the claims of de for the reasons expressed below, we quash the third districts decision. approximately $4 million in drug proceeds into biv accounts. on biv investments and management, inc. (collectively referred to as "biv"), seek an employment contract with de saad, which stipulates the following: "this summary judgment on the breach of contract claims. . . . on the - 9 - if filed, determined. indemnification for attorneys fees incurred in her defense of the while acting in her capacity as the vice-president of biv. de saad the money laundering charges and claims past wages based on breach was applicable to the foreign bank, or its florida subsidiary, biv investments and indemnify its agents for legal expenses under certain conditions: agent of the corporation and was acquitted because she was ,,successful on the granting summary judgment in favor of de saad and beeler on the breach of the corporation), by reason of the fact that he or she is or was a defense of any claim, issue, or matter therein, he or she shall be agent but the agent is not necessarily entitled to indemnification. the reverse is statute are not satisfied. breach of contract claims, the trial court entered final summary has been successful on the merits or otherwise in defense of any proceeding internal affairs. corporate indemnification is one such matter of internal affairs. to de saad exclusively.[4 the following facts are set forth in the third districts decision: trust, or other enterprise against liability incurred in connection with esperanza de saad, et al., gave biv the right to suspend de saad until the merits of the pending charges were on december 1, 1997, de saad entered into an employment contract with stat. ("to the extent that a director, officer, employee, or agent of a corporation corporation is powerless to indemnify her. therefore, the requirements of was unlawful. or to the employee/employer relationship governed hereby." however, this fees. specifically, the trial court stated that biv "takes nothing by this action and other than the laws of this state." 607.01401(12), fla. stat. contract shall be governed solely and exclusively by the laws of the state of - 8 - agent must be indemnified: subsection (1) are not met. de saad did not "act[] in good faith and in a manner . . de saad then filed the present state court action against biv. (emphasis added.) subsection (3) lists the types of expenses for which such an section 607.0850(1), florida statutes, provides that a corporation may a foreign corporation with a valid certificate of authority has the same best interests of the corporation or, with respect to any criminal action presumption that the person did not act in good faith and in a manner florida; h. eugene lindsey, iii of katz barron, squitero, and faust, miami, the breach of contract claim. id. government dropped the appeal. de saad then sought from biv her [june 9, 2011] contract claim. biv did not terminate de saad as allowed by the employment hartson, llp, washington, d.c., new international dictionary unabridged 415 (1981). in this case, biv was not without day." because biv failed to raise any specific issues regarding this ruling or proceeding, had reasonable cause to believe that his or her conduct to whether the statutory requirements of indemnification were satisfied. id. at 48. financial institution in the united states without the prior express written consent saad would not be entitled to statutory indemnification because she cannot satisfy banco, 21 so. 3d at 47-48 (footnotes omitted). for petitioner read together, subsections (1) and (3) set out the relevant framework for 1507, 1527 (9th cir. 1985))). accordingly, pursuant to section 607.1505(3), banco the trial courts acquittal. seven months after her acquittal, de saad and beeler on the statutory indemnification claim was improper because floridas for respondents the final judgment on its counterclaim. see philip j. padovano, florida appellate (dade county) good faith and in a manner he or she reasonably believed to be in, or reasonably incurred by him or her in connection therewith.") (emphasis added). authority has rights and obligations substantially similar to those of a florida banco [industrial de venezuela]s miami agency, biv. as part of an employment contract, the plain meaning of "clarify" is "to make clear" and "to free practice 8:10 (2011 ed.). bivs mention of the counterclaim in its initial briefs permissive and mandatory indemnification of corporate agents. subsection (1) biv. section e.2 of the personnel manual, which is incorporated into the corporation for profit, which is not a foreign corporation, incorporated under or could such transactions constitute "act[ing] in good faith." id. not breach the contract by keeping de saad on unpaid suspension. polston, j. i. background banco industrial de venezuela, c.a., miami agency, and its subsidiary, carol a. licko, richard c. lorenzo, mark r. cheskin, and brian l. lerner of based upon these provisions, bivs board of directors convened and domestic corporation of like character. her right to seek indemnification for attorneys fees and costs under biv also urges this court to reverse the final summary judgment in favor of ____________ ] after a lengthy breach the employment contract by keeping de saad on unpaid suspension. state." therefore, although banco is a foreign corporation that operates under a charges did not occur until de saad pled guilty to money structuring, biv did not - 13 - moreover, even if floridas indemnification statute applied to biv, de saad not opposed to, the best interests of the corporation and, with respect p.a., miami, florida, william l. petros of petros and elegant, coral gables, past wages pursuant to her contract of employment and also sought ("indemnification of corporate directors, like the fiduciary obligations of corporate a corporate officer. see 607.0850(1), fla. stat. although de saad may have had to any criminal action or proceeding, had no reasonable cause to - 3 - of her employment contract with biv. beeler filed a complaint in ] the monetary transactions made through the corporation could not be "reasonably subsection (1) must be met before an agent seeking indemnification can obtain acquittal on the money laundering and conspiracy charges.[3 certificate of authority authorizes the foreign corporation to which it is issued to this act. specifically, section 607.1505(1), florida statutes, provides that "[a] a corporation shall have power to indemnify any person who was or petitioners, conflict of decisions required by her position as a corporate officer and was, in fact, contrary to hogan and hartson, llp, miami, florida, and jessica l. ellsworth of hogan and de saad and beeler on the breach of contract claim, including the $1,058,023.82 third district - case no. 3d08-1713 of the state of incorporation." (quoting davis & cox v. summa corp., 751 f.2d - 11 - restrictions, penalties, and liabilities as florida corporations subject to the entire (the mind or understanding) of confusion, doubt or uncertainty." websters third money laundering and conspiracy charges. biv denied both claims. $1,636,168.13. following the bench trial, both sides moved for granted in favor of de saad and beeler. 2. section 607.0850, florida statutes, has remained unchanged since 1989 which regulates the structure and activity of florida corporations. see 607.0101, (emphasis added.) elements of the alleged crimes. the united states filed an appeal of - 2 - - 5 - against de saad were clarified by either the united states filing of a superseding to the extent that a director, officer, employee, or agent of a florida, specifically those of dade county, florida . . . . therefore, it is agreed and beeler on bivs counterclaim for damages for expenses, costs, and attorneys contract but instead suspended her without pay, relying on a provision in the ____________ chapter 607, florida statutes, is the florida business corporation act, regarding bivs counterclaim are moot. but no greater rights and has the same but no greater privileges as, and - 6 - is not subject to floridas indemnification provision, section 607.0850. corporate policy. florida. and under the laws of florida described above, banco is a foreign banco industrial de venezuela c.a., miami agency, et al., iv. conclusion award to de saad against biv. we do so because de saads employment contract saad and beeler on the breach of contract claim was improper. indictment against de saad or by bivs own internal audit after de saads 3. in connection with her guilty plea, de saad was fined $50,000, sentenced subsection (1), she also was not entitled to indemnification under subsection (3). to the third district and this court in a footnote is insufficient. see shere v. state, internal affairs of a foreign corporation authorized to transact business in this saad and beeler in accordance with this opinion. accordingly, because de saad was not eligible for indemnification under industrial de venezuela, c.a., miami agency, a venezuelan bank authorized to 1. we have jurisdiction. see art. v, 3(b)(3), fla. const. indemnification statute is not applicable to foreign corporations, such as banco retained the services of attorney beeler to represent her in the criminal but even if the prosecution were interpreted to be "by reason of the fact" ii. indemnification however, de saad continued to maintain her innocence about all of her conduct informant, de saad was alleged to have facilitated the deposit of indictment. id. because biv kept de saad on unpaid suspension rather than serving at the request of the corporation as a director, officer, internal audit after the indictment. banco, 21 so. 3d at 50. the third district respondents. - 7 -


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