Pelayo M. Duran & Roderick V. Hannah
Photo by J. Albert Diaz

Paul B. Harrison ended up in South Florida in October 2007, hired by Miami-based Ocean Bank to help make sure the institution complied with a cease-and-desist order from regulators at the Federal Deposit Insurance Corp. The Charlotte, North Carolina man was fired a year later and filed a whistle-blower lawsuit, saying he was forced out as senior vice president and chief appraiser for doing his job as the collapsing housing market hurt the bank’s books. Harrison claimed he was constantly mocked by co-workers for his Southern heritage and was called “Bubba.”

“He was sort of brought in to the bank as a white knight,” said Miami attorney Pelayo M. Duran, who is representing Harrison along with Davie attorney Rod Hannah. Harrison’s job was to go back and revalue nonperforming loans after the housing market peaked, but every time Harrison came back with a lower appraisal, the bank had to make up the difference by putting hundreds of thousands of dollars in loan loss reserves. “The better he did his job, the more money it cost the bank,” Duran said. “So everywhere he turned there was roadblock. He eventually was costing them so much money that they fired him.”

Another lawsuit by Duran’s firm claims the bank, whose parent is in Venezuela, favors employees of Venezuelan descent. Harrison’s claims include reverse discrimination.

During a two-day confidential mediation, the bank was confronted with evidence of “harassment, discrimination and retaliation” and agreed to settle the case for $1 million. Duran’s firm is in line to receive $166,500 for attorney fees and costs. The bank summarized the agreement in a March 2009 letter to the FDIC, saying it “did not believe there was any merit to Harrison’s claims,” but it reached the deal splitting settlement costs between the bank and its insurance carrier. The bank also said it did not believe the settlement constituted a golden parachute but was reached “at a time when it needs to focus its time and resources on other more critical issues.” The agreement itself said the bank denied any liability.

Golden Parachute?

State regulators took no position on the payment. But the FDIC, which must approve it, balked last August, and a federal lawsuit was filed to enforce the mediated settlement. Thomas J. Dujenski, FDIC regional director of supervision and consumer protection in Atlanta, wrote in January, “The FDIC denied the request of Ocean Bank to make a golden parachute payment.” Golden parachutes normally are big-dollar awards to departing executives. The agency considered the amount excessive based on Harrison’s salary and tenure and in relation to the bank’s sagging finances.

A 2009 FDIC summary filed in federal court papers said the settlement would be “a significant charge to the bank’s already battered earnings and sets a dangerous precedent should the bank wish to terminate other employees who have not performed to their expectations.” Ocean Bank, with 21 offices in Miami-Dade and Broward counties, returned to profitability in the first quarter of this year after being hammered by the real estate crisis. The bank, which listed $3.59 billion in assets as of March 31, has lost more than $500 million in the past four years. The bank signed the cease-and-desist order with the FDIC and state banking regulators agreeing to improve its compliance with anti-money laundering laws in March 2007.

Harrison’s attorneys are dumbfounded by the FDIC’s position. “I cant imagine this is a golden parachute,” Duran said. “This is Mr. Harrison settling lawful claims for discrimination and whistle-blowing activity under state and federal whistle-blower statutes.”
Harrison said he had no comment. The same FDIC summary said Harrison was fired for showing a lack of judgment in internal and external communications, using “offensive language to subordinates orally and by email,” showing “harsh and disrespectful
behavior” to co-workers and failing to document performance issues with his employees.

Alternative: Scorched Earth

Hannah said Harrison was blackballed in the banking industry because of his dismissal. The FDIC noted he had never
worked in banking or “a corporate environment” before. “We sometimes wonder if there’s a collusion between Ocean Bank and the FDIC,” Hannah said. “Why is it that the FDIC is going to such great lengths to protect the interest of Ocean Bank on this issue in light of the fact Harrison was originally hired because of the cease-and-desist order that it imposed?”

Ocean Bank asked the FDIC to reconsider its denial in December 2009, saying the alternative would be scorched-earth litigation that would preoccupy senior management and generate more legal fees. Both sides have moved for summary judgment in the case before U.S. District Judge Federico Moreno in Miami. Responses were filed late last month. The judge has not indicated when he would rule. A call to FDIC attorney Dina L. Biblin was referred to the public affairs office, which said the agency does not comment on active litigation.

‘POSITION HAS NOT CHANGED’

The FDIC maintained in court papers filed in April that its decisions are consistent with its regulatory authority and regulations, and its interpretation is reasonable and entitled to deference by the courts. Asked about the dispute, the bank released a statement Monday saying, “Ocean Bank and Mr. Harrison reached a confidential settlement to his claims in order to avoid the disruptions and costs of a lawsuit. The bank’s position has not changed since reaching that settlement.” Susan Nadler Eisenberg, a partner with Akerman Senterfitt in Miami who represents Ocean Bank, declined to comment.

Harrison isn’t the only former Ocean Bank employee represented by Duran and Hannah. Niurka Sanchez, a former private banking officer at Ocean Bank, has sued the company alleging she was fired after

This article originally appeared on the Law.com web site on 9th of June, 2011.

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