Case Title: Donald Wendt, Et Al. v. La Costa Beach Resort Condominium Association, Inc.

Citation: 

Docket Number: SC09-1914

State: florida

Court: Florida Supreme Court

Date: 2011-06-09T00:00:00Z

Document:
Supreme Court of Florida 
 
 
____________ 
 
No. SC09-1914 
____________ 
 
DONALD WENDT, et al,  
Petitioners, 
 
vs. 
 
LA COSTA BEACH RESORT CONDOMINIUM ASSOCIATION, INC., 
Respondent. 
 
[June 9, 2011] 
 
PER CURIAM. 
 
This case is before the Court for review of the decision of the Fourth District 
Court of Appeal in Wendt v. La Costa Beach Resort Condominium Ass’n, 14 So. 
3d 1179 (Fla. 4th DCA 2009).  The Fourth District certified that its decision is in 
direct conflict with the decision of the First District Court of Appeal in Turkey 
Creek Master Owners Ass’n v. Hope, 766 So. 2d 1245 (Fla. 1st DCA 2000).1  At 
issue is whether section 607.0850, Florida Statutes,2 authorizes indemnification of 
                                          
 
1.   We have jurisdiction.  See art. V, § 3(b)(4), Fla. Const. 
 
2.   Because section 607.0850, Florida Statutes, has remained unchanged 
since 1989, with the exception of gender neutrality amendments in 1997, see ch. 
 
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corporate directors in actions brought against the directors by the corporation itself.  
We conclude that section 607.0850 provides for indemnification in cases in which 
a corporation has sued its own director.  Accordingly, we quash the decision of the 
Fourth District in Wendt, which held the contrary. 
I.  BACKGROUND 
Donald Wendt, Kenneth Wendt, and Clarke Warne were directors of La 
Costa Beach Club Resort Condominium Association, Inc. (La Costa), a timeshare 
condominium in Pompano Beach.3  In July 2003, La Costa brought a suit against 
these directors for breach of fiduciary duty.  After the verdict, the directors moved 
for a new trial and brought a separate indemnification action, pursuant to section 
607.0850, against La Costa for expenses incurred in defending La Costa’s suit.  
The trial court dismissed the directors’ indemnification action with prejudice on 
various grounds. 
On appeal of the dismissal of the indemnification action, the Fourth District 
affirmed the trial court, holding that   
[t]he directors cannot state an action for indemnification under 
the circumstances of this case.  “Indemnity is a right which inures to 
one who discharges a duty owed by him, but which, as between 
                                                                                                                                        
89-154, § 93, Laws of Fla.; ch. 97-102, § 30, Laws of Fla., the year has been 
omitted. 
 
3.  For an extensive factual and procedural background, see La Costa Beach 
Club Resort Condominium Ass’n v. Carioti, 37 So. 3d 303, 305 (Fla. 4th DCA 
2010), and Wendt, 14 So. 3d 1179. 
 
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himself and another, should have been discharged by the other and is 
allowable only where the whole fault is in the one against whom 
indemnity is sought.”  Houdaille Indus., Inc. v. Edwards, 374 So. 2d 
490, 492-93 (Fla. 1979). . . .   
Here, the directors have not alleged that they have discharged a 
duty which [La Costa] should have discharged, that they have been 
left open to liability due to [La Costa]’s wrongful acts, or that they 
have been held vicariously liable to a third person and seek recovery 
from the association whose action caused the damage.  Rather, the 
directors, wholly ignoring the definition of “indemnity,” have sought 
to transform the remaining language in bylaws article XII and section 
607.0850 into a vehicle for recovering their attorney’s fees and costs 
if they become the prevailing party in [La Costa]’s suit for breach of 
fiduciary duty.  The trial court correctly dismissed the directors’ 
attempt to engraft that interpretation upon the bylaws and the statute. 
 
Wendt, 14 So. 3d at 1181-82 (emphasis omitted).  The Fourth District therefore 
held that, because there is no statutory right to indemnification in actions between 
a corporation and its own directors, the directors did not state a cause of action.  At 
the same time, the Fourth District certified conflict with the decision of the First 
District in Turkey Creek, 766 So. 2d at 1247, which stated that section 607.0850 
provides for indemnification in cases in which a corporation has sued its own 
agent.   
II.  ANALYSIS 
 
 
Indemnity is generally defined as the “duty to make good any loss, damage, 
or liability incurred by another” or “[t]he right of an injured party to claim 
reimbursement for its loss, damage, or liability from a person who has such a 
duty.”  Black’s Law Dictionary 837 (9th ed. 2009).  Section 607.0850, Florida 
 
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Statutes, is Florida’s corporate indemnification statute, setting forth the conditions 
under which corporate directors, officers, employees, and agents are entitled to 
indemnification.  “A corporation shall have power to indemnify any person, who 
was or is a party to any proceeding by or in the right of the corporation to procure a 
judgment in its favor by reason of the fact that the person is or was a director, 
officer, employee, or agent of the corporation or is or was serving at the request of 
the corporation as a director, officer, employee, or agent of another [entity] . . . .”  
§ 607.0850(2), Fla. Stat.; cf. § 607.0850(1), Fla. Stat. (“A corporation shall have 
power to indemnify any person who was or is a party to any proceeding (other than 
an action by, or in the right of, the corporation), by reason of the fact that he or she 
is or was a director, officer, employee, or agent of the corporation or is or was 
serving at the request of the corporation as a director, officer, employee, or agent 
of another [entity] . . . .”).  The plain language of section 607.0850 does not 
prevent indemnification of directors when the underlying proceeding is between 
the corporation and its directors. 
The district courts applying section 607.0850 have routinely held that the 
statute provides for indemnification when the underlying lawsuit is between the 
corporation and its director, officer, employee, or agent.  See O’Brien v. Precision 
Response Corp., 942 So. 2d 1030 (Fla. 4th DCA 2006) (holding that a corporate 
officer successfully defending claims brought against him by the corporation is 
 
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statutorily entitled to seek indemnification for attorneys fees under section 
607.0850); Turkey Creek, 766 So. 2d at 1247 (“However, [section 607.0850] also 
provides for indemnification in a case such as this one where a corporation has 
sued its own agent.”); Nat’l Portland Cement Co. v. Goudie, 718 So. 2d 274 (Fla. 
2d DCA 1998) (affirming an indemnification award under section 607.0850 to a 
corporate officer who successfully sued his former corporation for wrongful 
termination and defended against the corporation’s counterclaim for tortious 
conduct); Myakka Valley Ranches Improvement Ass’n v. Bieschke, 610 So. 2d 3 
(Fla. 2d DCA 1992) (trial court did not abuse its discretion awarding fees and costs 
under the predecessor to section 607.0850 to former directors for their underlying 
suit to review an association’s corporate books); Alternative Dev., Inc. v. St. Lucie 
Club & Apartment Homes Condo. Ass’n, 608 So. 2d 822 (Fla. 4th DCA 1992) 
(when officers had prevailed in claims brought against them by their corporation, 
remanding cause to trial court for determination of whether the standards of 
conduct in section 607.0850(7) precluded indemnification).4   
Furthermore, throughout section 607.0850, the Legislature sets forth various 
restrictions on when indemnification is proper.  See § 607.0850(1)-(9), Fla. Stat.  
                                          
 
4.  Although the Fourth District in Wendt attempts to distinguish its prior 
decision in O’Brien and does not acknowledge its prior decision in Alternative 
Development, both previous cases correctly presume that section 607.0850 allows 
a corporate officer who has been sued by his corporation to seek indemnification 
from the corporation.     
 
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For example, the person seeking indemnification must have “acted in good faith 
and in a manner he or she reasonably believed to be in, or not opposed to, the best 
interests of the corporation and, with respect to any criminal action or proceeding, 
had no reasonable cause to believe his or her conduct was unlawful,” and 
mandatory indemnification under the statute occurs only “[t]o the extent that a 
director, officer, employee, or agent of a corporation has been successful on the 
merits or otherwise.”  § 607.0850(1), (3), Fla. Stat.; see also § 607.0850(7)(a)-(d), 
Fla. Stat. (prohibiting indemnification under various specific circumstances).  But 
none of these enumerated restrictions on indemnification excludes all lawsuits 
between a corporation and its director.  Therefore, the Fourth District’s reasoning 
and conclusion in Wendt are at odds with the plain language of the statute. 
III.  CONCLUSION 
 
For the reasons addressed above, we hold that section 607.0850 authorizes 
corporate directors to seek indemnification from the corporation for actions 
brought against the directors by the corporation itself.  Accordingly, we quash the 
decision of the Fourth District below and approve the reasoning of the First District 
in Turkey Creek on the conflict issue.  We remand for further proceedings 
consistent with this opinion without prejudice to the directors seeking to amend 
their complaint for indemnficiation.  We do not reach the other issues not 
 
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previously addressed by the Fourth District below, and we expressly do not reach 
the merits of whether indemnification is applicable under the facts of this case.   
It is so ordered.  
CANADY, C.J., and LEWIS, POLSTON, LABARGA, and PERRY, JJ., concur. 
QUINCE, J ., dissents with an opinion. 
PARIENTE, J., recused. 
 
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
 
QUINCE, J., dissenting. 
 
 
I respectfully dissent because like the Fourth District Court of Appeal, I find 
that indemnification is required only where one party discharges an obligation that 
should have been discharged by the other party to the action.  As the district court 
put it: 
Here, the directors have not alleged that they have discharged a 
duty which the association should have discharged, that they have 
been left open to liability due to the association’s wrongful acts, or 
that they have been held vicariously liable to a third person and seek 
recovery from the association whose action caused the damage.  
Rather, the directors, wholly ignoring the definition of “indemnify,” 
have sought to transform the remaining language in bylaws article XII 
and section 607.0850 into a vehicle for recovering their attorney’s 
fees and costs if they become the prevailing party in the association’s 
suit for breach of fiduciary duty.  The trial court correctly dismissed 
the directors’ attempt to engraft that interpretation upon the bylaws 
and the statute. 
 
 
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See Wendt v. La Costa Beach Resort Condominium, 14 So. 3d 1179, 1181-
82 (Fla 4th DCA 2009); accord Houdaille Indus., Inc. v. Edwards, 374 So. 
2d 490 (Fla. 1979). 
 
 
Application for Review of the Decision of the District Court of Appeal - Certified 
Direct Conflict of Decisions 
 
 
Fourth District - Case No. 4D08-2482 
 
 
(Broward County) 
 
Keith T. Grumer and Rowena Debbie Reich of Grumer and Macaluso, P.A., Fort 
Lauderdale, Florida 
 
 
for Petitioners 
 
Michael W. Moskowitz and Scott M. Zaslav of Moskowitz, Mandell, Salim and 
Simowitz, P.A., Fort Lauderdale, Florida, 
 
 
for Respondents