SunTrust 2010 Annual Report Download - page 199

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
SunTrust Mortgage, Inc. v United Guaranty Residential Insurance Company of North Carolina
STM filed a suit in the Eastern District of Virginia in July of 2009 against United Guaranty Residential Insurance Company
of North Carolina (“UGRIC”) seeking payment involving denied mortgage insurance claims regarding second lien
mortgages. STM’s claims are in two counts. One count involves a common reason for denial of claims by UGRIC for a
group of loans. The other count involves a group of loans with individualized reasons for the claim denials asserted by
UGRIC. The two counts filed by STM have been bifurcated for trial purposes. UGRIC has counterclaimed for declaratory
relief involving interpretation of the insurance policy involving certain caps on the amount of claims covered and whether
ongoing premium obligations exist after any caps are met. The parties filed cross motions for summary judgment which all
were denied. There is a trial date of May 2, 2011 for the first of the bifurcated claims.
In Re SunTrust Banks, Inc. ERISA Litigation
This is a consolidated putative class action case filed in the U.S. District Court for the Northern District of Georgia by
participants in the SunTrust Banks, Inc. 401(k) Plan (“Plan”) concerning the performance of certain investment options
available under the Plan. In particular, the consolidated complaint alleges that the Company’s publicly traded stock was an
imprudent investment option that should not have been offered by the Plan because of the Company’s alleged exposure to
losses related to subprime mortgages. The complaint names the Company, members of the Board, the Company’s Benefits
Plan Committee, and other members of the Company’s management as defendants, and contends that these defendants
breached their fiduciary duties under ERISA, as amended by offering the Company’s common stock as an investment option
in the Plan. The complaint does not quantify the alleged damages that the Plaintiffs seek. On December 10, 2009, the
Company and the other defendants moved to dismiss the complaint in its entirety. On October 26, 2010, the Court granted
the Company’s motion to dismiss regarding the Plaintiffs’ investment claims but denied its motion to dismiss regarding
disclosure claims. Both parties have appealed this order to the Eleventh Circuit Court of Appeals.
Krinsk v. SunTrust Bank
This is a lender liability action in which the borrower claims that the Company has taken actions in violation of her home
equity line of credit agreement and in violation of the Truth in Lending Act (“TILA”). Plaintiff filed this action in the U.S.
District Court for the Middle District of Florida as a putative class action, and is currently attempting to have the class
certified. The Court dismissed portions of Plaintiff’s first complaint, and she subsequently filed an amended complaint
asserting breach of contract, breach of implied covenant of good faith and fair dealing, and violation of TILA. Plaintiff has
filed a motion for class certification. The Company filed its answer to the complaint, has opposed class certification, and has
filed a motion to compel arbitration. The Court denied the motion to compel arbitration and this decision is on appeal to the
Eleventh Circuit Court of Appeals. The case has been stayed pending the resolution of this appeal.
Lehman Brothers Holdings, Inc. Litigation
Beginning in October 2008, STRH, along with other underwriters and individuals, were named as defendants in several
putative class action complaints filed in the U.S. District Court for the Southern District of New York and state and federal
courts in Arkansas, California, Texas and Washington. Plaintiffs allege violations of Sections 11 and 12 of the Securities Act
of 1933 for allegedly false and misleading disclosures in connection with various debt and preferred stock offerings of
Lehman Brothers Holdings, Inc. and seek unspecified damages. All cases have now been transferred for coordination to the
multi-district litigation captioned In re Lehman Brothers Equity/Debt Securities Litigation pending in the U.S. District Court
for the Southern District of New York.
SunTrust Securities Class Action Litigation
Beginning in May 2009, the Company, STRH, SunTrust Capital IX and officers and directors of the Company and others
were named in three putative class actions arising out of the offer and sale of approximately $690 million of SunTrust Capital
IX 7.875% Trust Preferred Securities (“TRUPs”) of SunTrust Banks, Inc. The complaints alleged, among other things, that
the relevant registration statement and accompanying prospectus misrepresented or omitted material facts regarding the
Company’s allowance for loan and lease loss reserves, the Company’s capital position and its internal risk controls. Plaintiffs
seek to recover alleged losses in connection with their investment in the TRUPs or to rescind their purchases of the TRUPs.
These cases were consolidated under the caption Belmont Holdings Corp., et al., v. SunTrust Banks, Inc., et al., in the U.S.
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