[Ed. Note: This post appeared on our sister site, Lender Liability Lawyer. You can read more stories there about bank fraud and lender liability on our Banking Misconduct blog.]
Currently we are litigating a bad faith, wrongful default claim against 8 banks. These are banks that wrongfully declared a default and thereafter squeezed a successful trucking business for tens of millions in late fees, default interest, consulting fees, legal fees and any other fees they could conjure. Thankfully our client was able to survive and avoid laying off hundreds of workers. Not all businesses are successful when faced with dishonest lenders.
Last year a jury in Missoula, Montana was faced with a similar case. How they reacted to a local bank that falsely setoff funds from an otherwise solvent customer is a story worth repeating.
Kelly Logging Inc. was a family run logging business in Montana. Started in the 1950’s, it once was one of Montana’s largest loggers and employed 50 people. Having lived in the Maine woods for years, I know that tree cutting is dangerous and back breaking work. For 6 decades and two generations, Kelly Logging survived in a tough business… that is, until they became customers of First Interstate Bank.
Like many small businesses, the Kelly family business needed operating capital to help acquire equipment and grow the business. Kelly borrowed from First Interstate Bank. Like most loan documents, the loan from First Interstate gave the bank the right to offset funds from other accounts in the event of default. Somewhere along the way, the bank got nervous and simply took $762,000 from the company’s checking account. They did so, however, even though the note was current and had not yet matured.
First Interstate took the funds in 2009. Having little money to continue in business, the company limped along for a few years before finally closing its doors in 2013. Unlike many businesses, Jerry Kelly, the son of the company’s founder, decided to fight back and file suit against the bank. After a weeklong trial, a 12 citizen jury awarded the company approximately $17 million.
Surprised? We aren’t. Juries around the country are issuing judgments against banks for their pattern and practice of completely disregarding human dignity and the rights of their customers. Rights that are sacrosanct and embedded in the fiber of our democracy.
By the numbers, the jury awarded Kelly Logging $286,550 in compensatory damages and $16.7 million in punitive damages.
Of course the bank appealed, further delaying the ability of the Kelly family to rebuild their business and provide employment to folks in rural Montana. Even after being paid, however, the company may never get back some of its former customers and employees. It took 60 years to great family business and just minutes to tear the business apart.
A story in the Missoulian suggests the bank tried to escape responsibility for its action by filing a “blizzard of paper.” In our experience, banks have deep pockets and can almost always outspend their opponents in the courtroom. Last night I had dinner with a fellow plaintiff’s lawyer. His legal bills in a major case were $300,000. The bank’s bill? Over $2 million!
Despite their ability to outspend most bank fraud victims, the “blizzard of paper” doesn’t work if you can navigate the case to a jury. In fact, it may have hurt First Interstate Bank and resulted in the huge punitive damage award.
As one of the lawyer’s said, “Let this be a reminder of the great leveling that occurs in a court of law when a huge corporation must come to its heels upon the judgment of 12 honest citizens.”
If you have been defrauded by a bank, lender, servicer or fiduciary, give us a call. We sue banks. It’s that simple. We are one of the few law firms specializing in lender liability and bank fraud cases and our fees are incredibly reasonable. Often we can work out alternative fees.
Need more information? Give us a call. There is never a charge for the consultation. For more information, contact attorney Christopher Katers at or by telephone at (414) 777-0778. The author of this post, attorney Brian Mahany, can also be reached at or by telephone at (414) 704-6731 (direct).
MahanyLaw – America’s Lender Liability and Bank Fraud Lawyers