services & industries that add up

Financial Transactions Litigation

Poyner Spruill has a long history representing the banking and financial services industries in North Carolina.  We have represented many of the major North Carolina banks for years on both business and litigation matters.  Our familiarity with the business side of the financial services industry gives us an important advantage as we litigate issues that are of concern to our financial services clients. We frequently work with members of our banking, credit and financial services team to provide the most effective and cost-efficient representation to our clients on litigation matters. We represent several major North Carolina based commercial banks with multi-state operations, as well as a wide variety of other financial service companies.  We handle almost all types of litigation for these financial services clients.  Some representative types of work are listed below:

Mortgage Fraud

With the collapse of the real estate market in 2008, claims of mortgage fraud, both real and imagined, have become a major issue for financial institutions. Many buyers who bought when the market was red hot now own real estate that is worth substantially less than they owe. Rather than admit that they simply bet wrong on the market, many buyers seek to blame others involved in the transactions: developers, brokers, appraisers and lenders. Frequently, these suits arise in the context of major resort developments that have either stalled or imploded, leaving the buyers without even buildable lots. These claims typically arise as defenses in foreclosures and deficiency actions, or as affirmative claims brought by large groups of buyers as a class or mass action. We have successfully defended major financial institutions that have found themselves in the middle of these suits. 

Another unfortunate by-product of the overheated real estate market was the ability of unscrupulous individuals, often including rogue bank employees, to scam millions from lenders by submitting fraudulent loan applications from straw buyers to purchase properties at vastly inflated prices. The "buyers" quickly defaulted, leaving the banks substantially under secured, while the conspirators made off with handfuls of cash that was essentially stolen from the banks. The ease with which conspirators were able to pull of this scheme is evidenced by the scheme’s pervasiveness and by the substantial losses suffered by financial institutions nationwide. We have extensive experience representing financial institutions seeking recovery of such losses. 

Lender Liability 

When deals go bad or times get hard, unhappy borrowers often look around for someone to blame.  All too frequently they seek to blame lenders, because, as John Dillinger famously said in response to the question why he robbed banks, “that’s where the money is.”  Whether the claim is asserted against the lender in the first instance or as a counterclaim in response to an action to collect an unpaid loan, the complaints range from failure to make a loan to recklessly continuing to lend, and everything in between.  The claimed damages allegedly suffered by the aggrieved borrower are often staggering, and frequently exceed by several orders of magnitude the amount of the original loan.  All too often, these cases pit the word of an unhappy customer against the word of a lending officer (frequently a former employee).  We may not have seen all of these, but we have seen and litigated a lot of them.  We regularly represent banking and other financial institutions who are sued on lender liability claims, including breach of fiduciary duty, fraud, negligent misrepresentation, anti-tying violations and unfair and deceptive trade practices.

UCC Litigation

The dishonest bookkeeper is one of the greatest sources of UCC litigation.  In this recurring fact pattern, the clever (or occasionally not so clever) bookkeeper of a bank customer figures out a way to pad his or her salary by forging signatures on checks, writing checks to dummy entities, keeping double sets of books, etc.  Usually the customer trusts the bookkeeper so much that the bookkeeper also gets to review the bank statement every month, so the fraud goes undetected for years.  When the customer finally discovers hundreds of thousands of dollars of losses (or more), the customer suddenly blames the bank for not detecting the criminal activity of the customer’s employee and sues the bank. The issues of who is responsible for check fraud, forged endorsements and forged signatures, presentment, negotiation and transfer warranties and other issues are typically resolved by Article 3 and 4 of the Uniform Commercial Code.  Liability frequently depends on how quickly the customer has caught the problem and notified the bank, or whether the bank should have been on notice of a problem.  We have litigated many of these types of claims.

We have also litigated more exotic UCC issues, such as the interpretation of language in Article 5 letters of credit regarding whether a U.S. bank “confirmed” or otherwise agreed to be liable for a deferred payment letter of credit issued by an Iraqi bank before the first Gulf War.

Consumer Regulatory Suits

Although not all consumer regulatory cases are class actions, consumer regulatory class actions can pose significant threats to financial institutions, both in terms of the potential damages if plaintiffs succeed in having a class certified and prevailing on their claims, and in terms of just dealing with the magnitude of a large consumer case.  We have represented a variety of financial intuitions ranging from large commercial banks to automobile dealers in consumer class actions and in cases involving the Consumer Leasing Act, Fair Credit Reporting Act and the Equal Credit Opportunity Act, among others.

Trust/Breach of Fiduciary Duties

We have represented both propounders and the caveators in will caveat cases, beneficiaries and trustees in actions to modify or terminate irrevocable trusts, and corporate trustees in fiduciary claims made against them.  In addition, we have represented the trust department of a major bank in several cases where the bank served as trustee under a bond issue. We have also represented corporate trustees in their resignation as fiduciary, executors in obtaining declaratory judgments concerning the terms of wills, and corporate executors and trustees in Tax Court and Federal District Court litigation on tax issues. We also regularly represent corporate executors of estates in administrative hearings before the IRS.

Securities Litigation/Arbitration

We have significant experience representing brokers and broker-dealers in securities arbitrations involving customer complaints relating to alleged wrongful activities in their accounts.  We have also represented broker-dealers in employment arbitrations related to departing employee issues.

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