Huntington National Bank 2011 Annual Report Download - page 218

converted plaintiffs’ property through various means in connection with the equipment leasing scheme and
alleges that the Bank aided and abetted Cyberco in committing the alleged fraud and conversion. The complaint
further alleges that the Bank’s actions entitle one of the plaintiffs to recover $1.9 million from the Bank as a form
of unjust enrichment. In addition, plaintiffs claimed direct damages of approximately $32.0 million and
additional consequential damages in excess of $20.0 million. On July 1, 2010, the District Court issued an
Opinion and Order adopting in full a federal magistrate’s recommendation for summary judgment in favor of the
Bank on all claims except the unjust enrichment claim, and a partial summary judgment was entered on July 1,
2010. The Bank requested an opportunity to file a motion for summary judgment on the remaining unjust
enrichment claim against it. A motion for reconsideration filed by the plaintiffs regarding the partial summary
judgment was denied. Subsequently, in connection with a pre-motion conference, the District Court, in lieu of
allowing the Bank to file a summary judgment motion, ordered the case to be tried in April 2012, in a one day
bench trial, and entered a scheduling order governing all pretrial conduct. On February 6, 2012, the District Court
dismissed the remaining count for unjust enrichment following a finding by the bankruptcy court that the plaintiff
must pursue its rights, if any, with respect to that count in a bankruptcy court.
The Bank is also involved with the Chapter 7 bankruptcy proceedings of both Cyberco, filed on
December 9, 2004, and Teleservices, filed on January 21, 2005. The Cyberco bankruptcy trustee commenced an
adversary proceeding against the Bank on December 8, 2006, seeking over $70.0 million he alleges was
transferred to the Bank. The Bank responded with a motion to dismiss and all but the preference claims were
dismissed on January 29, 2008. The Cyberco bankruptcy trustee alleges preferential transfers in the amount of
approximately $1.2 million. The Bankruptcy Court ordered the case to be tried in July 2012, and entered a
pretrial order governing all pretrial conduct. The Bank has filed a motion for summary judgment based on the
Cyberco trustee seeking recovery in connection with the same alleged transfers as the Teleservices trustee in the
case described below. This motion is currently pending.
The Teleservices bankruptcy trustee filed an adversary proceeding against the Bank on January 19, 2007,
seeking to avoid and recover alleged transfers that occurred in two ways: (1) checks made payable to the Bank to
be applied to Cyberco’s indebtedness to the Bank, and (2) deposits into Cyberco’s bank accounts with the Bank.
A trial was held as to only the Bank’s defenses in the 2010 fourth quarter. Subsequently, the trustee filed a
summary judgment motion on her affirmative case, alleging the fraudulent transfers to the Bank totaled
approximately $73.0 million and seeking judgment in that amount (which includes the $1.2 million alleged to be
preferential transfers by the Cyberco bankruptcy trustee). On March 17, 2011, the Bankruptcy Court issued an
Opinion determining the alleged transfers made to the Bank were not received in good faith from the time period
of April 30, 2004, through November 2004, and that the Bank had failed to show a lack of knowledge of the
avoidability of the alleged transfers from September 2003, through April 30, 2004. The trustee then filed an
amended motion for summary judgment on her affirmative case and a hearing was held on July 1, 2011. The
motion is currently pending. In accordance with the Bankruptcy Court’s scheduling order, the Bank filed a
motion for summary judgment on September 16, 2011, and a motion to add El Camino and the Cyberco trustee
as necessary parties. These motions remain pending. If summary judgment does not enter for either party, the
case is scheduled for trial in April 2012.
In the pending bankruptcy cases of Cyberco and Teleservices, the Bank moved to substantively consolidate
the two bankruptcy estates, principally on the ground that Teleservices was the alter ego and a mere
instrumentality of Cyberco at all times. On July 2, 2010, the Bankruptcy Court issued an Opinion denying the
Bank’s motions for substantive consolidation of the two bankruptcy estates. The Bank has appealed this ruling
and the appeal is pending.
On January 17, 2012, the Company was named a defendant in a putative class action filed on behalf of all
88 counties in Ohio against MERSCORP, Inc. and numerous other financial institutions that participate in the
mortgage electronic registration system (MERS). The complaint alleges that recording of mortgages and
assignments thereof is mandatory under Ohio law and seeks a declaratory judgment that the defendants are
required to record every mortgage and assignment on real property located in Ohio and pay the attendant
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