Financial Institution Litigation
Duane Morris has an extensive trial practice. The Financial Institution Litigation Section focuses on litigation involving banking and financial transactions and other financial institution business matters.
Range of Services
In an increasingly global economy, we have represented a variety of domestic and foreign financial institutions. In addition, as avenues of competition develop among the banking, insurance and securities industries, we bring our capabilities in all of these industries to bear in our representation of financial institutions in litigation matters.
Our lawyers handle complex litigation matters for banks and other financial institutions and deal with a broad array of lending-related and other financial business disputes. With a focus on representation of lenders and other secured creditors, the Section has litigated matters involving the enforceability of guarantees, the effectiveness of confession of judgment clauses, the appropriateness of contractual interest rates, the enforceability of "deemed insecure" clauses, the requirements for the replevin of collateral, issues relating to letters of credit and governmental entities such as the FDIC and foreign guarantee funds. We have also litigated a variety of business disputes in the banking, insurance and securities industries.
Lawyers from the Section also have litigated problem real estate loans. We have represented lenders in foreclosure actions, have obtained the appointment of receivers to manage troubled real estate projects and have brought suit against developers personally, where appropriate, in order to enforce the terms of the loans at issue.
In addition, the Section's attorneys defend lawsuits brought against financial institutions. The majority of these claims involve allegations of lender liability for breaches of various alleged duties and responsibilities. We have represented clients, however, who have been sued for a broad variety of allegedly negligent and/or fraudulent lending practices.
The group's members have litigated in the state and/or federal trial courts in Pennsylvania, New York, New Jersey, Delaware, the Virgin Islands, Connecticut, Illinois, Texas and California. In addition, the Section has a significant appellate practice. At any given time, the group is engaged in seeking preliminary injunctions, receiverships, foreclosures, replevin and other expedited relief available under court rules.
Our Work as Litigators—Representative Trial Matters
A sampling of matters that we have concluded or are currently handling includes the following:
Saastopankkien Keskus-Osake-Pankki (Skopbank) v. Great Cruz Bay Development Company, Inc. and Hyatt Corp.
We represented both Skopbank, a Finnish bank, and the Finnish Government Guarantee Fund, the Finnish equivalent of the RTC and FDIC in the United States, in a foreclosure sale of a major resort hotel and condominium project on the island of St. John, U.S.V.I., involving more than $200 million of outstanding debt. We then commenced litigation against Hyatt Corp. This case focused on complex issues of agency and hospitality law, tortuous interference, as well as attempts to apply provisions of the Bank Holding Company Act to a foreign bank. The Third Circuit upheld our clients' right to terminate Hyatt as manager and take possession of the bank's property. 166 F.R.D. 321 (D.V.I.), aff'd 95 F.3d 291 (3d Cir. 1996). We also litigated certain issues under the Foreign Sovereign Immunities Act and issues relating to statutory and common law aspects of the D'Oench, Duhme doctrine. In a series of significant decisions, the court imposed sanctions on Hyatt Corp. and ordered Hyatt to divulge attorney-client communications and other attorney work product materials. On the day prior to trial, the case was settled on confidential terms highly favorable to our clients.
Bank of New England, N.A. v. Washington Bridge Associates, L.P. et al.
In a foreclosure action initiated in the Superior Court of New Jersey, Chancery Division, Gloucester County, we represented Bank of New England, N.A. (BNE) with respect to a $9 million claim arising out of a loan that BNE made to finance the development of a 340-unit condominium project. We were successful in obtaining the appointment of a receiver to manage the premises pending the litigation. After BNE was taken over by the FDIC, we removed the action to federal court and stayed the prosecution of all counterclaims. We also sued the developers in a separate action brought in federal court based upon guarantees that they executed. In that litigation, we obtained a judgment against the guarantors for approximately $10 million.
Bank of New England v. Triad Realty Partners; Bank of New England v. Triad Development Company
On behalf of BNE, we confessed judgment in two actions against borrowers to seek recovery of approximately $5 million that BNE had loaned to finance an apartment complex and a shopping center. Brought in the United States District Court for the Eastern District of Pennsylvania, the actions sought to enforce the terms of confession of judgment clauses in the applicable loan documents. We also confessed judgment in two actions brought in the same court to seek recovery from the guarantors of the debt. After filing suit, we successfully completed real estate workouts that resulted in the lender obtaining deeds in lieu of foreclosure to the premises, as well as an assignment of all of the borrowers' contracts and leases.
European American Bank v. VMS Realty Investment, Ltd., VMS Realty Partners, and BSP Funding Corporations
In this matter, we sought a preliminary injunction in the United States District Court for the Southern District of New York on behalf of European American Bank (EAB) to require the defendants to provide additional collateral immediately to adequately secure two letters of credit issued by EAB in the amount of $37 million. In response to EAB's request for injunctive relief, the defendants alleged a number of lender liability defenses. Within two months of the filing of the injunction, judgment was entered in favor of our client in the amount of $37 million.
European American Bank v. David S. Solomon and Jean W. Solomon
Duane Morris represented EAB in a suit involving a $75 million loan made to a developer of two office towers in Manhattan. Our lawyers filed a motion for summary judgment in lieu of a complaint in the Supreme Court of the State of New York, County of Nassau, after the developer missed payments on the unsecured loan. Approximately eight months after initiating the action, we were successful in obtaining summary judgment for the full amount of the loan plus interest.
First Fidelity Bank, N.A. v. Anthony Levatino et al.
On behalf of First Fidelity Bank, N.A., we brought actions against the guarantors of a $235,000 loan to J. Trading Company, a produce importer, in the Superior Court of New Jersey, Chancery Division, Camden County and in the United States District Courts for the Eastern District of Pennsylvania and the District of New Jersey. After filing suit, we were successful in settling the actions for an immediate payment to the bank for the full amount of the loan plus $50,000 in interest.
The First National Bank of Boston v. South Atlantic Products Corporation and Flight Levels
This case dealt with a temporary restraining order that we filed in the United States District Court for the Eastern District of Pennsylvania, seeking to impound a jet and an airplane owned by one of the defendants as collateral for our client's loan. A restraining order was issued and a motion for summary judgment was ultimately granted in favor of our client by the trial court, after successful defense against lender liability claims asserted by defendants. The defendants appealed the matter to the United States Court of Appeals for the Third Circuit and our client won on appeal. Judgment was entered in our client's favor for the principal amount of the loan plus interest, attorneys' fees and costs. The Third Circuit's decision is one of a few cases allowing post-judgment interest to be imposed at the contract rate rather than the rate specified in the federal interest statute.
American Express Travel Related Services Company, Inc. v. Visa USA, Inc. et al.
Duane Morris was lead trial counsel for Washington Mutual and Providian in massive antitrust case filed by American Express against Visa, MasterCard, and various banks with respect to network rules relating to issuance of credit cards; achieved resolution that client found favorable.
Letters of Credit
In an action relating to a letter of credit issued in connection with certain guaranties, we obtained an order enjoining payment of a draw on a $3.5 million letter of credit based on an allegedly fraudulent presentation of documents. Following entry of that order and negotiations among the several parties with interests in the underlying transaction, we were able to negotiate a resolution of the dispute which ended with a payment of funds to our clients, instead of placing further of their funds at risk as contemplated in the opposing party's attempt to draw on the letter of credit. The overall settlement resolved the claims of various parties relating to the Philadelphia office tower and retail space that was the subject of the dispute.
We represented a major regional bank in unsuccessful attempts by another banking institution to hold it liable for apparently fraudulent checks drawn on an account at a branch office of our client. We represented our client in connection with certain bankruptcy proceedings and discovery, and we were successful in achieving a result in which no litigation was commenced against our client.
We represented a major securities industry firm based in New York in arbitrations before the Chicago Board Options Exchange and the Philadelphia Stock Exchange and injunction proceedings in federal court relating to trades cleared by our client contemporaneously with the 1987 market crash and the lease of certain exchange seats. We obtained awards in the full amount sought against the company executing the trades as well as partial awards against the principal officer of the company.
In a dispute regarding a reinsurance treaty, we represented a major insurance company based in Philadelphia in an action against an agency, an offshore reinsurer and certain affiliates involving RICO claims and claims seeking to impose liability for reinsurance obligations on the reinsurer's affiliates by piercing the corporate veil. Following certain discovery and motions, we were able to obtain a favorable settlement for our client.
Our Work as Advisers
In addition to our trial work, Section members are routinely involved in workouts, providing advice on potential exposure if litigation is instituted and ensuring that a trial strategy is in place if a workout fails. We also counsel clients with respect to certain of their business practices which might result in claims against them. We pride ourselves not only on the results of our trial work, but also on the number of matters in which our advice prevents clients from being sued or having to institute claims.
Staffing of Cases
The trial lawyers in our group work closely with attorneys from the Business Reorganization and Financial Restructuring Group of our firm. In trial work involving real estate issues, our real estate attorneys often provide assistance. We have found that this team approach maximizes both the quality and efficiency of the service provided to our clients.