THE ASSOCIATED PRESS June 10, 2011, 11:47AM ET

http://www.businessweek.com/ap/financialnews/D9NP3P880.htm

The Florida Supreme Court on Thursday rejected court-ordered reimbursements from a foreign bank to a former executive who had been charged with money laundering.

But in a separate corporate indemnity case, the high court ruled ex-board members sued by a condominium association are entitled to seek legal expenses.

The high court ruled a $3.5 million indemnity order against the Banco Industrial de Venezuela was invalid because Florida's indemnity law doesn't cover out-of-state corporations. The unanimous ruling reversed a decision by the Miami-based 3rd District Court of Appeal.

A Miami trial judge originally ordered Banco Industrial subsidiary BIV Investments and Management Inc. to pay nearly $2.9 million for back wages to Esperanza de Saad, who had been suspended without pay after her 1998 arrest, and $1.6 million to her defense lawyer.

A vice president and general manager of BIV in Miami at the time, de Saad was charged in federal court with 10 counts of money laundering and one count of conspiracy to launder money as the result of an undercover sting operation. She had been accused of depositing about $4 million in drug proceeds into BIV accounts.

A jury found her guilty but a judge then ordered her acquitted on all counts. She subsequently pleaded guilty to one count of money structuring in exchange for the government dropping an appeal of her acquittal on the other charges.

Justice Ricky Polston wrote for the high court that the Florida Business Corporation Act allows indemnity only for domestic, not "foreign" corporations. He noted the law defines a foreign corporation as "a corporation for profit incorporated under laws other than the laws of this state."

Polston also rejected de Saad's argument that the bank subjected itself to state law through her employment contract saying it's governed solely by Florida law. The bank, though, is a foreign corporation under Florida law, so it's excluded from the indemnification statute, Polston wrote.

Even if the law did apply, de Saad would not qualify for indemnity because she was prosecuted for her conduct rather than her position with the business, he added.

The Supreme Court also reversed a final summary judgment of $1.06 million to de Saad on a separate breach of contract claim against the bank.

The justices, in a 6-1 opinion, also reversed a ruling by the 4th District Court of Appeal in West Palm Beach that said three former directors of a Pompano Beach timeshare condo association cannot seek reimbursement for their legal expenses.

La Costa Beach Resort Condominium Association Inc., had sued the three for breach of trust for allegedly misappropriating timeshare weeks for their own benefit.

The justices wrote in an unsigned opinion that former directors Donald Wendt, Kenneth Wendt and Clark Warne could seek legal costs from La Costa.

The 4th District had ruled in 2009 that directors or ex-directors did not have a statutory right to legal expenses in such cases. That decision conflicted with a 1st District Court of Appeal ruling on the same issue that the Supreme Court majority endorsed. Supreme Court Justice Peggy Quince dissented, saying she agreed with the 4th District.

The case now returns to the lower courts for a decision on the merits of their claim for legal expenses. A jury had awarded the association $275,000 in damages on its breach of trust claim against the three and the ex-directors $57,000 on their counterclaim that the corporation had breached an implied contract with them. The trial judge then granted the ex-directors' request for a new trial.