PNC Bank 2009 Annual Report Download - page 163

fiduciary duties. The various complaints seek, among other
remedies, an accounting, imposition of a constructive trust,
unspecified damages, rescission, costs of suit, and attorneys’
fees.
In addition, the plaintiffs in one of the pending derivative
lawsuits against the National City directors in the Cuyahoga
County Court of Common Pleas referred to above have moved
to amend their complaint to add merger-related claims,
including claims that National City’s directors agreed to sell
National City in order to extinguish their own personal
liability in derivative litigation pending against them. PNC is
not named as a defendant in the proposed amended complaint.
In December 2008, the Ohio state court denied the plaintiffs’
motion to lift the stay and to conduct expedited discovery in
support of the proposed amended complaint. Upon final
approval of the settlement described below, the merger-related
claims will be resolved and plaintiffs have agreed that they
will seek to dismiss the derivative action without prejudice,
subject to approval of the Ohio court.
The parties to the Delaware lawsuit and to certain of the Ohio
state court lawsuits entered into a stipulation of settlement in
February 2009 to resolve the Delaware lawsuit, one of the
Ohio state court lawsuits and the acquisition-related claim
proposed to be filed in a derivative lawsuit pending in Ohio
state court. In February 2009, the Court of Chancery
preliminarily approved a class of all persons who were
National City common stockholders during the period from
the close of business on October 23, 2008 through (and
including) December 31, 2008. In July 2009, the Court of
Chancery approved the settlement. In addition, in connection
with the settlement, the Court of Chancery awarded attorneys’
fees and expenses to plaintiffs’ counsel to be paid by PNC. In
September 2009, objectors to the settlement filed appeals of
the approval to the Delaware Supreme Court. In addition, the
plaintiffs have cross-appealed the size of the award of
attorneys’ fees and costs. The Delaware Supreme Court has
scheduled oral argument on the appeals and the cross-appeal
for April 2010. Upon final approval, the settlement would
resolve and release all claims in all actions that were or could
have been brought challenging any aspect of the merger, the
merger agreement, and any disclosure made in connection
therewith.
Adelphia
Some of our subsidiaries are defendants (or have potential
contractual contribution obligations to other defendants) in
several pending lawsuits brought during late 2002 and 2003
arising out of the bankruptcy of Adelphia Communications
Corporation and its subsidiaries.
One of the lawsuits was brought on Adelphia’s behalf by the
unsecured creditors’ committee and equity committee in
Adelphia’s consolidated bankruptcy proceeding and was
removed to the United States District Court for the Southern
District of New York by order dated February 9, 2006.
Pursuant to Adelphia’s plan of reorganization, this lawsuit is
being prosecuted by a contingent value vehicle, known as the
Adelphia Recovery Trust. In October 2007, the Adelphia
Recovery Trust filed an amended complaint in this lawsuit,
adding defendants and making additional allegations.
In June 2008, the district court granted in part defendants’
motion to dismiss. The court dismissed the principal
bankruptcy law claims that had not previously been dismissed
by the Bankruptcy Court, including claims alleging voidable
preference payments, fraudulent transfers, and equitable
disallowance. The effect of this ruling is to dismiss from this
lawsuit all claims against most of the defendants, but leave
pending claims against PNC and other original members of
Adelphia loan syndicates and then-affiliated investment banks.
In December 2008, the court granted a motion made on behalf
of a number of defendants to enter final judgment on the
dismissed claims to permit immediate appellate review of the
issues resolved by the district court in June 2008 and by the
bankruptcy court prior to the filing of the amended complaint.
The appeal on these issues to the United States Court of
Appeals for the Second Circuit is pending. The district court
has scheduled the case for trial on the remaining claims in
September 2010.
The other pending lawsuits were brought by holders of debt or
equity securities of Adelphia and have been consolidated for
pretrial purposes in the United States District Court for the
Southern District of New York.
The pending lawsuits arise out of lending and investment
banking activities engaged in by PNC subsidiaries and many
other financial services companies. Collectively, with respect
to some or all of the defendants, the lawsuits allege federal
law claims (including violations of federal securities and
banking laws), violations of common law duties, aiding and
abetting such violations, voidable preference payments, and
fraudulent transfers, among other matters. The lawsuits seek
monetary damages (including in some cases punitive or treble
damages), interest, attorneys’ fees and other expenses, and a
return of the alleged voidable preference and fraudulent
transfer payments, among other remedies.
CBNV Mortgage Litigation
Between 2001 and 2003, on behalf of either individual
plaintiffs or a class of plaintiffs, several separate actions were
filed in state and federal courts against Community Bank of
Northern Virginia (CBNV) and other defendants challenging
the validity of second mortgage loans the defendants made to
the plaintiffs. CBNV was merged into one of Mercantile’s
banks prior to Mercantile’s acquisition by PNC. These cases
were either filed in, or removed to, the United States District
Court for the Western District of Pennsylvania.
In August 2006, a proposed settlement agreement covering an
action in which the plaintiffs and class members have second
mortgages that were assigned to Residential Finance
Corporation (RFC) was submitted to the district court for its
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