PNC Bank 2014 Annual Report Download - page 223

Agreement) will then be apportioned under the MasterCard
Settlement and Judgment Sharing Agreement among
MasterCard and PNC and the other financial institution
defendants that are parties to this agreement. The
responsibility for the Visa portion (or any Visa-related
liability not subject to the Omnibus Agreement) will be
apportioned under the pre-existing indemnification
responsibilities and judgment and loss sharing agreements.
CBNV Mortgage Litigation
Between 2001 and 2003, on behalf of either individual
plaintiffs or proposed classes of plaintiffs, several separate
lawsuits were filed in state and federal courts against
Community Bank of Northern Virginia (CBNV), a PNC Bank
predecessor, and other defendants asserting claims arising
from second mortgage loans made to the plaintiffs. The state
lawsuits were removed to federal court and, with the lawsuits
that had been filed in federal court, were consolidated for pre-
trial proceedings in a multidistrict litigation (MDL)
proceeding in the United States District Court for the Western
District of Pennsylvania under the caption In re: Community
Bank of Northern Virginia Lending Practices Litigation (No.
03-0425 (W.D. Pa.), MDL No. 1674). In January 2008, the
Pennsylvania district court issued an order sending back to the
General Court of Justice, Superior Court Division, for Wake
County, North Carolina the claims of two proposed class
members. These claims are asserted in a case originally filed
in 2001 and captioned Bumpers, et al. v. Community Bank of
Northern Virginia (01-CVS-011342).
MDL Proceedings in Pennsylvania. 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 (“RFC”)) as defendants. (In December 2013,
the Chapter 11 bankruptcy proceeding involving the RFC was
completed with the company being liquidated and claims
against the company being resolved, including, through a
settlement between the plaintiffs and RFC approved in
November 2013, the claims in these lawsuits.) 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), the Truth in Lending Act (TILA), as amended
by the Home Ownership and Equity Protection Act (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 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. In June 2013, the court granted in part and denied in
part the motion, dismissing the claims of any plaintiff whose
loan did not originate or was not assigned to CBNV, narrowing
the scope of the RESPA claim, and dismissing several of the
named plaintiffs for lack of standing. The court also dismissed
the claims against the other lender defendant on jurisdictional
grounds. The limitation of the potential class to CBNV
borrowers reduces its size to approximately 22,500 from the
50,000 members alleged in the amended complaint. Also in
June 2013, the plaintiffs filed a motion for class certification,
which was granted in July 2013. In August 2013, we filed a
motion seeking leave to appeal the granting of the motion for
class certification. The court granted the motion in October
2013, and our appeal is pending.
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 judgment on the plaintiffs’ claim that they paid a
loan discount fee but were not provided a loan discount. It
reversed the judgment on the plaintiffs’ claim that they were
overcharged for settlement services and remanded that claim
for trial. The court also held that, in light of the Pennsylvania
district court’s injunction against class proceedings having
been vacated in September 2010, the trial court may on
remand consider the issue of class certification. In August
2012, the North Carolina Supreme Court granted our petition
for discretionary review of the decision of the North Carolina
Court of Appeals. The appeal was argued in January 2013. In
August 2013, the North Carolina Supreme Court reversed the
decision of the Court of Appeals and remanded the case to the
Superior Court for further proceedings. In September 2013,
The PNC Financial Services Group, Inc. – Form 10-K 205