Griffin v. ARX Holding Corporation
208 So. 3d 164
| Fla. Dist. Ct. App. | 2016Background
- Griffin, a former CFO, had a prior felony extortion conviction and told ARX CEO Auer about it; he expected a regulator waiver would allow him to serve as ARX CFO.
- ARX (a holding company with insurance subsidiaries) hired Griffin in 2009 as VP/CFO; his duties involved the insurance business and the Board approved a $215,000 bonus payable March 1, 2010.
- Griffin incurred an immediate $182,000 tax liability by making an 83(b) election and signed a promissory note in favor of ARX to cover the tax, which ARX later enforced.
- Florida Office of Insurance Regulation (FOIR) refused to grant the waiver Griffin needed under 18 U.S.C. §1033(e)(2); ARX's board learned of the regulatory bar and ARX terminated Griffin without paying the bonus.
- Griffin sued for unpaid compensation (the approved bonus); ARX counterclaimed on the promissory note. Trial court granted summary judgment for ARX on the compensation claim and a jury found for ARX on the note. Griffin appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Griffin could enforce his employment contract/collect the $215,000 bonus | Griffin: Contract was valid; ARX breached implied covenant of good faith by withholding bonus | ARX: Employment was illegal/unenforceable because Griffin, a felon, lacked required regulatory consent and thus contract void as against public policy | Court: Contract void ab initio for illegality; summary judgment for ARX affirmed |
| Whether federal/state law automatically barred Griffin from serving as an officer in the insurance business | Griffin: Federal/state law did not automatically prohibit him; waiver process meant employment could be legal | ARX: 18 U.S.C. §1033(e) and Fla. statutes barred felons from such roles absent a regulator’s written consent; Griffin had no waiver | Court: Griffin was statutorily disqualified without a waiver and thus unlawful to serve as officer |
| Whether Griffin’s failure to obtain a waiver could be cured after-the-fact or permit enforcement of the contract | Griffin: Subsequent regulatory steps or exemptions could validate contract | ARX: Post-hoc curing does not save a contract that was illegal when made | Court: Post-hoc possibilities did not cure illegality; absence of waiver rendered contract unenforceable |
| Validity and enforcement of ARX’s counterclaim on the promissory note | Griffin: (challenged) | ARX: Note was enforceable and demandable | Court: Jury verdict and judgment for ARX on the note upheld; Griffin owes the amount found by jury |
Key Cases Cited
- Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998) (distinguishing void vs. voidable contracts for public policy analysis)
- Alliance Metals, Inc. of Atlanta v. Hinely Indus., Inc., 222 F.3d 895 (11th Cir. 2000) (contract unenforceable when its purpose conflicts with law or public policy)
- Beamer v. Netco, Inc., 411 F. Supp. 2d 882 (S.D. Ohio 2005) (employment contract void where employee’s felony disqualified him under §1033)
- Umbel v. Foodtrader.com, Inc., 820 So. 2d 372 (Fla. 3d DCA 2002) (contract violating securities law unenforceable despite possible later compliance)
- Gamble v. Mills, 483 So. 2d 826 (Fla. 4th DCA 1986) (employment contract void when statutory certification is required and absent)
- Local No. 234 v. Henley & Beckwith, 66 So. 2d 818 (Fla. 1953) (agreement illegal and void if performance would violate statute)