4D07-4437-Floridian Community Bank, Inc. and Joanne P. Gaines v. State of Florida, Office of Financial Regulation, Division of Financial Institutions and 4D07-4639- Floridian Community Bank, Inc. and

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Laws-info.com » Cases » Florida » Fourth District Court of Appeal » 2008 » 4D07-4437-Floridian Community Bank, Inc. and Joanne P. Gaines v. State of Florida, Office of Financial Regulation, Division of Financial Institutions and 4D07-4639- Floridian Community Bank, Inc. and

State: Florida

Court: Florida Southern District Court

Docket No: 4D07-4437.op

Case Date: 09/10/2008

Plaintiff: 4D07-4437-Floridian Community Bank, Inc. and Joanne P. Gaines

Defendant: State of Florida, Office of Financial Regulation, Division of Financial Institutions and 4D07-4639-

Preview:DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
July Term 2008

FLORIDIAN COMMUNITY BANK, INC. and JOANNE P. GAINES, Appellants, v. STATE OF FLORIDA, OFFICE OF FINANCIAL REGULATION, DIVISION OF FINANCIAL INSTITUTIONS, Appellee. No. 4D07-4437 FLORIDIAN COMMUNITY BANK, INC. and JOANNE P. GAINES, Appellants, v. STATE OF FLORIDA, OFFICE OF FINANCIAL REGULATION, DIVISION OF FINANCIAL INSTITUTIONS, Appellee. No. 4D07-4639 [ September 10, 2008 ] HAZOURI, J. These two cases concern the resolution of a single legal issue: whether the Office of Financial Regulation (hereinafter "OFR") may enforce a condition originally placed o n an application for the organization of a new Florida chartered bank, even though the bank has been open for general commercial banking business for more than five years. The cases were consolidated for oral argument and will be jointly disposed of in this opinion. On October 28, 2000, Joanne P. Gaines and sixteen others, as the proposed board of directors, applied to the Department of Banking and Finance, currently the OFR, to organize a new Florida chartered bank with the name "Floridian Community Bank." Gaines was included in the application as a proposed executive officer and director.

OFR conducted an examination of the application and concluded that Gaines was not qualified to be a director or executive officer of Floridian. Floridian submitted a revised application removing Gaines as a director and executive officer, along with other directors OFR would not approve, but retained Gaines as a non-executive "Director of Marketing." On February 21, 2 0 0 2 , OFR approved Floridian's amended application to open a new state chartered bank with a number of conditions. Included in these conditions is the following condition, known as "Condition 8": That the proposed Director of Marketing, Joanne P. Gaines, will not serve as an executive officer or director of the proposed bank. On March 15, 2002, a Final Order adopting the approval letter was issued. On April 1, 2002, a Corrected Final Order, correcting a typographical error, was issued. Floridian opened for general commercial banking business on March 10, 2003. On July 24, 2006, Gaines filed a Petition for Formal Administrative Hearing Pursuant to Section 120.57, Florida Statutes (2007), to challenge the applicability of Condition 8. OFR denied the petition on August 8, 2006, based o n substantial noncompliance with the requirements of section 120.569(2), Florida Statutes (2007), and Florida Administrative Code Rule 28-106.201, and issued a Final Order making certain Findings of Fact and Conclusions of Law but granted leave to file an amended petition. On July 16, 2007, Floridian and Gaines filed a petition with OFR requesting a declaratory statement that Condition 8 in the February 21, 2002 Notice of Intent no longer applies to Floridian or Gaines. Floridian also filed with OFR its Notice of Proposal to Appoint Joanne P. Gaines to its Board of Directors and Request for Notice of Non-Disapproval or Alternatively Request for Modification of Charter Approval Order. On October 11, 2007, OFR issued a Declaratory Statement notifying Gaines and Floridian that Condition 8 is still in effect. On October 30, 2007, Floridian and Gaines filed a Petition for Formal Administrative Hearing, requesting an administrative hearing to challenge the Declaratory Statement issued by the OFR on October 11
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and to allow Gaines to become a director or executive officer of Floridian. On November 7, 2007, Floridian and Gaines (hereinafter "appellants"), filed a Notice of Appeal regarding the October 11, 2007, Declaratory Statement. On November 15, 2007, the OFR issued its Final Order Denying the October 30th Petition. This Final Order of Denial was appealed by appellants on November 21, 2007. On February 19, 2008, the OFR issued a Notice of Intent to Deny the Modification Petition. On March 10, 2 0 0 8 , appellants filed a Petition for Formal Administrative Hearing Pursuant to Section 120.57, Florida Statutes (2007), which is currently pending. Appellants argue that once a bank has been chartered for more than two years, the OFR loses its authority over the appointment of any individual to become a board member or executive officer of the bank. Therefore, the OFR did not have authority to prohibit Gaines from being employed as a board member or executive officer two years after Floridian's opening. Th e basis for appellants' argument is section 655.0385(1)(a)-(d), which states: (1) Each state financial institution shall notify the office of the proposed appointment of any individual to the board of directors or the appointment or employment of any individual as an executive officer or equivalent position at least 60 days before such appointment or employment becomes effective, if the state financial institution: (a) Has been chartered for less than 2 years; (b) Has undergone a change in control or conversion within the preceding 2 years. Th e office may exempt a financial institution from this paragraph if it operates in a safe and sound manner; (c) Is not in compliance with the minimum capital requirements applicable to such financial institution; or (d) Is otherwise operating in a n unsafe and unsound condition, as determined by the office, on the basis of such financial institution's most recent report of condition or report of examination.

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