PNC Bank 2011 Annual Report Download - page 201

In October 2011, the plaintiffs filed a joint consolidated
amended class action complaint covering all of the class
action lawsuits pending in this proceeding. The amended
complaint names CBNV, another bank, and purchasers of
loans originated by CBNV and the other bank (including the
Residential Funding Company, LLC) as defendants. The
principal allegations in the amended complaint are that a
group of persons and entities collectively characterized as the
“Shumway/Bapst Organization” referred prospective second
residential mortgage loan borrowers to CBNV and the other
bank, that CBNV and the other bank charged these borrowers
improper title and loan fees at loan closings, that the
disclosures provided to the borrowers at loan closings were
inaccurate, and that CBNV and the other bank paid some of
the loan fees to the Shumway/Bapst Organization as purported
“kickbacks” for the referrals. The amended complaint asserts
claims for violations of the Real Estate Settlement Procedures
Act (RESPA), TILA, as amended by HOEPA, and the
Racketeer Influenced and Corrupt Organizations Act (RICO).
The amended complaint seeks to certify a class of all
borrowers who obtained a second residential non-purchase
money mortgage loan, secured by their principal dwelling,
from either CBNV or the other defendant bank, the terms of
which made the loan subject to HOEPA. The plaintiffs allege
that there are approximately 50,000 members of this class.
They seek, among other things, unspecified damages
(including treble damages under RICO and RESPA),
rescission of loans, declaratory and injunctive relief, interest,
and attorneys’ fees. In November 2011 the defendants filed a
motion to dismiss the amended complaint. The court has not
yet ruled on this motion.
North Carolina Proceedings. The plaintiffs in Bumpers make
similar allegations to those included in the amended complaint
in the MDL proceedings. Following the remand to North
Carolina state court, the plaintiffs in Bumpers sought to
represent a class of North Carolina borrowers in state court
proceedings in North Carolina. The plaintiffs claim that this
class consists of approximately 650 borrowers. The district
court in Pennsylvania handling the MDL proceedings enjoined
class proceedings in Bumpers in March 2008. In April 2008, the
North Carolina superior court granted the Bumpers plaintiffs’
motion for summary judgment on their individual claims and
awarded them approximately $11,000 each plus interest. CBNV
appealed the grant of the motion for summary judgment. In
September 2011, the North Carolina Court of Appeals affirmed
in part and reversed in part the granting of the plaintiffs’ motion
for summary judgment. The court affirmed the plaintiffs’
judgment on their claim that they paid a loan discount fee but
were not provided a loan discount. It reversed the plaintiffs’
judgment on their claim that they were overcharged for
settlement services and remanded that claim for trial. The court
also held that, on remand, the trial court may consider the issue
of class certification. Thereafter, we petitioned the North
Carolina Supreme Court for discretionary review of the decision
of the North Carolina Court of Appeals and for a stay of
proceedings pending the decision on this petition and, if
granted, the decision on the appeal. The North Carolina
Supreme Court thereafter granted a temporary stay and, in
October 2011, denied the plaintiffs’ motion to dissolve the stay.
Overdraft Litigation
Beginning in October 2009, PNC Bank and National City
Bank have been named in six lawsuits brought as class actions
relating to the manner in which they charged overdraft fees on
ATM and debit transactions to customers. Three lawsuits
naming PNC Bank and one naming National City Bank, along
with similar lawsuits against numerous other banks, have been
consolidated for pre-trial proceedings in the United States
District Court for the Southern District of Florida (the “MDL
Court”) under the caption In re Checking Account Overdraft
Litigation (MDL No. 2036, Case No. 1:09-MD-02036-JLK ).
The first of these cases (Casayuran, et al. v. PNC Bank,
National Association (Case No. 10-cv-20496-JLK)) was
originally filed against PNC Bank in October 2009 in the
United States District Court for the District of New Jersey,
and an amended complaint was filed in June 2010 in the MDL
Court. The other cases that have been consolidated were filed
in June 2010 in the United States District Court for the
Southern District of Florida (Cowen, et al. v. PNC Bank,
National Association (Case No. 10-CV-21869-JLK),
Hernandez, et al. v. PNC Bank, National Association (Case
No. 10-CV-21868-JLK), and Matos v. National City Bank
(Case No. 10-cv-21771-JLK). A consolidated amended
complaint was filed in December 2010 that consolidated all of
the claims in these four MDL Court cases. It seeks to certify
multi-state classes of customers for the common law claims
described below (covering all states in which PNC and
National City had retail branch operations during the class
period), and subclasses of PNC Bank customers with accounts
in Pennsylvania and New Jersey branches and of National
City Bank customers with accounts in Illinois branches, with
each subclass being asserted for purposes of claims under
those states’ consumer protection statutes. No class periods
are stated in any of the complaints, other than for the
applicable statutes of limitations, which vary by state and
claim. Our motion to dismiss the consolidated amended
complaint was denied in March 2011.
In December 2011, the plaintiffs in the MDL Court moved for
class certification. In light of the Trombley settlement
described below, the National City plaintiffs did not move for
class certification on behalf of National City customers. As to
PNC, the plaintiffs moved for class certification in accordance
with their consolidated amended complaint, except that they
are not seeking a class as to the conversion claims. The court
has not yet ruled on this motion. The MDL Court has
scheduled trial for January 2013 for the cases that will be tried
in that court.
In December 2010, an additional lawsuit (Henry v. PNC Bank,
National Association (No. GD-10-022974)) was filed in the
Court of Common Pleas of Allegheny County, Pennsylvania
192 The PNC Financial Services Group, Inc. – Form 10-K