Hogan Lovells Wins Appeal for Client Banco Industrial de Venezuela (BIV)
15 June 2011
MIAMI, 15 June 2011 – Hogan Lovells won a significant appeal for Banco Industrial de Venezuela (BIV), clarifying how Florida corporate law applies to non-Florida corporations and issuing a major decision on corporate indemnification.
In 1998, Esperanza de Saad, an executive with BIV, was suspended without pay due to money laundering charges. A Miami trial judge ordered Banco Industrial subsidiary BIV Investments and Management Inc. to pay close to $7 million to both de Saad and to her defense lawyer.
A Miami-based 3rd District Court of Appeal held in two separate appeals in this case that foreign corporations doing business in Florida are subject to Florida's indemnification law, that de Saad met the statutory standard for mandatory indemnification, and that BIV had breached its employment contract with de Saad by suspending her without pay and ultimately terminating her contract.
On 9 June 2011, the Florida Supreme Court reversed on all grounds. It vacated the entire judgment against BIV on multiple grounds. It held that Florida corporate law relating to a corporation's "internal affairs," which includes corporate indemnification law, does not apply to non-Florida corporations. It also addressed the standard for mandatory indemnification, in a matter of first impression, and held that de Saad did not meet the standard; and it reversed the finding that BIV had breached its contract with de Saad by suspending her and ultimately terminating her over the money laundering charges. In addition to vacating the lower court's judgment—valued at over US $10 million—in its entirety, the Florida Supreme Court ordered judgment in favor of BIV.
According to Jessica Ellsworth, partner in the Washington office of Hogan Lovells, “This is a landmark ruling in Florida corporate law. The Court addressed, for the first time, the Florida law requirements for mandatory indemnification of a corporate officer, and after explaining those requirements, held that they were not met for a former vice-president and general manager of BIV who was prosecuted for her role in a money-laundering sting operation and ultimately pled guilty to a single felony structuring charge.”
Carol Licko and Jessica Ellsworth, partners in Hogan Lovells' Miami and Washington D.C. offices, respectively, led the team representing BIV on appeal. Mark Cheskin and Richard Lorenzo, partners in Hogan Lovells Miami office, led the trial team and provided valuable support throughout the proceedings.
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