PNC Bank 2010 Annual Report Download - page 185
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insufficient funds to cover the transactions.
In the consolidated amended complaint in the MDL Court, the
plaintiffs assert claims for breach of the covenant of good
faith and fair dealing; unconscionability; conversion, unjust
enrichment; and violation of the consumer protection statutes
of Pennsylvania, Illinois and New Jersey. In the Henry case,
the plaintiffs assert the same common law claims and a claim
under the Pennsylvania consumer protection statute. The
action against National City pending in the District of
Columbia adds claims under the Ohio and Michigan consumer
protection statutes and the federal Electronic Funds Transfer
Act. In their complaints, the plaintiffs seek, among other
things, restitution of overdraft fees paid, unspecified actual
and punitive damages, pre-judgment interest, attorneys’ fees,
and declaratory relief finding the overdraft policies to be
unfair and unconscionable.
Fulton Financial
In 2009, Fulton Financial Advisors, N.A. filed lawsuits against
PNC Capital Markets, LLC and NatCity Investments, Inc. in
the Court of Common Pleas of Lancaster County,
Pennsylvania arising out of Fulton’s purchase of auction rate
certificates (ARCs) through PNC and NatCity. Each of the
lawsuits alleges violations of the Pennsylvania Securities Act,
negligent misrepresentation, negligence, breach of fiduciary
duty, common law fraud, and aiding and abetting common law
fraud in connection with the purchase of the ARCs by Fulton.
Specifically, Fulton alleges that, as a result of the decline of
financial markets in 2007 and 2008, the market for ARCs
became illiquid; that PNC and NatCity knew or should have
known of the increasing threat of the ARC market becoming
illiquid; and that PNC and NatCity did not inform Fulton of
this increasing threat, but allowed Fulton to continue to
purchase ARCs, to Fulton’s detriment. In its complaints,
Fulton alleges that it then held ARCs purchased through PNC
for a price of more than $123 million and purchased through
NatCity for a price of more than $175 million. In each
complaint, Fulton seeks, among other things, unspecified
actual and punitive damages, rescission, and interest.
In the case against PNC (Fulton Financial Advisors, N.A. v.
PNC Capital Markets, LLC (CI 09-10838)), PNC filed
preliminary objections to Fulton’s complaint, which were
denied. NatCity removed the case against it to the United
States District Court for the Eastern District of Pennsylvania
(Fulton Financial Advisors, N.A. v. NatCity Investments, Inc.
(No. 5:09-cv-04855)), and filed a motion to dismiss the
complaint, which is pending before the court.
Other Mortgage-Related Litigation
• In October 2010, the Federal Home Loan Bank of
Chicago brought a lawsuit in the Circuit Court of
Cook County, Illinois, against numerous financial
companies, including The PNC Financial Services
Group, Inc., as successor in interest to National City
Corporation, and PNC Investments LLC, as
successor in interest to NatCity Investments, Inc.
(Federal Home Loan Bank of Chicago v. Bank of
America Funding Corp., et al. (Case
No. 10CH45033)). The complaint alleges that the
defendants have liability to the Federal Home Loan
Bank of Chicago in a variety of capacities (in the
case of the National City entities, as underwriters)
under Illinois state securities law and common law in
connection with the alleged purchase of private-label
mortgage-backed securities by the Federal Home
Loan Bank. According to the complaint, the Federal
Home Loan Bank purchased approximately $3.3
billion in mortgage-backed securities in total in
transactions addressed by the complaint,
approximately $345 million of which was allegedly
in transactions involving the National City entities.
The complaint alleges misrepresentations and
omissions in connection with the sales of the
mortgage-backed securities in question. In its
complaint, the Federal Home Loan Bank seeks,
among other things, rescission, unspecified damages,
interest, and attorneys’ fees. In November 2010 the
defendants removed the case to the United States
District Court for the Northern District of Illinois. In
January 2011 the district court remanded the case to
the Circuit Court of Cook County.
• In October 2010, a lawsuit was filed in the U.S.
District Court for the Northern District of Illinois,
against PNC Bank and numerous other financial
institutions, mortgage servicing organizations, law
firms that handle foreclosures in Northern Illinois,
and individuals employed by financial institutions,
mortgage servicers and law firms. As amended in
November 2010, the lawsuit (Stone, et al. v.
Washington Mutual Bank, et al. (Case No. 10 C
6410)) has been brought as a class action on behalf of
all present or former homeowners whose homes are
being or have been the subject of foreclosure suits
involving either securitized mortgages, “bifurcated”
mortgages, or broken chains of title, during the two
years prior to the filing of the complaint. The
plaintiffs allege that defendants conspired to
foreclose illegally on the properties of the named
plaintiffs and the other alleged class members.
Among other things, the plaintiffs allege that the
defendant banks, law firms, and their employees
instituted foreclosure proceedings in the names of
parties who did not actually own the mortgages, and
used false or otherwise defective affidavits to
prosecute the foreclosure actions. The plaintiffs
assert claims under various federal criminal statutes,
a federal civil rights statute, the Fair Debt Collection
Practices Act, RICO, and Illinois common law. In the
amended complaint, the plaintiffs seek, among other
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