Miami-Dade County Judge Rules in Favor of Bank, Against former Officers/Directors
On January 3rd, 2024, the South Florida Business Journal ruled in favor of a financial institution in a shareholder dispute involving a conflict with its former officers and directors. Notably, the officers and directors in question were all shareholders in the company. U.S. Century Bank—the Miami-Dade County based community bank—prevailed in its motion to dismiss. In this article, our Miami shareholder litigation lawyer discusses the case and stakes in more detail.
The Complaint: Former Executives Alleged Dilution of their Shares
Three former directors and shareholders of U.S. Century Bank—Joel Benes, John McClure, and Daniel Valdes—filed a lawsuit against the company related to its 2021 initial public offering (IPO). Specifically, they argued that the bank allowed preferred shareholders to swap their non-voting preferred stock for voting common stock. They contend that such an arrangement was not permitted under the bank’s internal rules, including its article of incorporation. The three former executives argue that the swap reduced their share value and voting power and, in effect, improperly favored larger, outside investors. A shareholder lawsuit seeking $750,000 in total damages was violated on the grounds of breach of fiduciary duty.
Miami-Dade County Court Judge Ruling: Case Dismissed
Upon review, the judge in Miami-Dade County dismissed the lawsuit—ruling in favor of U.S. Century Bank. A motion to dismiss was submitted by the defendant (the bank). The court determined that the plaintiffs failed to submit sufficient allegations to support their claim of a breach of fiduciary duty. The current Chief Financial Officer (CFO) of U.S. Century Bank told the South Florida Business Journal that the decision from the court is welcome and that it “confirms our position that the case lacked merit.” The bank consistently asserted that it followed the proper protocols to protect the rights of all shareholders during its initial public offering.
Shareholder Litigation is Complex
It is never easy to navigate a shareholder dispute. These are notoriously complex, highly technical cases. Indeed, shareholder litigation generally involves fact-driven conflicts that are focused on detailed financial structures and regulations governing corporations. In many cases, they delve into the nuances of corporate law—including the rights and responsibilities of various shareholders and the fiduciary duties of corporate officers and corporate directors.
The outcome of shareholder litigation not only affects the interests of the shareholders that brought the claim, it can significantly impact a company’s operations, financial health, and even its reputation. The stakes are high and a proactive approach is a must for all parties. A top-tier shareholder law attorney in Florida can review your case, answer legal questions, and help you take the next steps to deal with a shareholder dispute.
Contact Miami Shareholder Litigation Attorney Today
At Pike & Lustig, LLP, our Miami commercial litigation attorney has the skills and experience to take on the full range of shareholder cases. Have questions about your rights or your options? Our legal team can help. Contact us today to set up your confidential consultation. With a legal office in Miami, we provide shareholder representation throughout Southeastern Florida.