Lender Liability: Avoiding Claims and Other Risks in 2017 and Beyond
Suits against lending institutions have proliferated of late, based on a variety of liability theories. Prime examples are the well-publicized predatory lending litigations against Bank of America, Citigroup and Wells Fargo, alleging minorities were targeted for risky, high-interest loans doomed for default. However, commercial lenders can also face legal actions when seeking to enforce their rights against business entities, such as claims of breach of contract or of fiduciary duty; inequitable or fraudulent conduct; and violations of federal or state law. Regardless of the theory of liability, the stakes for lenders can be very high, and developing and implementing sound business practices can go a long way to reduce the risk of adverse judgments.
In this LIVE Webcast, a panel of thought leaders and practitioners assembled by The Knowledge Group will give an overview of the latest trends in lender liability litigation and offer insights into developing strategic practices to help mitigate the risk of legal challenges.
Key topics include:
- Lender Liability Theories
- Key Cases
- Contractual Protections
- Risk Avoidance and Mitigation
- Best Practices
Paul B. Kerlin, Shareholder
Greenberg Traurig, LLP
What Is a “Lender Liability” Claim?
Types of Claims:
- Breach of contract/oral contract or oral modification/bad faith
- Breach of fiduciary duty/partnership
- Bankruptcy and bankruptcy-related claims
- Lien challenge
- Fraudulent conveyance
- Equitable subordination
Natan Hamerman, Special Counsel
Kramer Levin Naftalis & Frankel LLP
How To Protect Against Lender Liability Claims
Key Contractual Provisions:
- No oral modification
- No waiver
- Specific merger and integration clauses
- Damages waiver/limitation of liability clauses
- No consequential damages or no damages whatsoever
- Specific performance/declaratory relief as sole remedy
- No defenses to enforcement
- No partnership
- Bankruptcy-remote related provisions
- S.A.R.E. (for real estate loans)
- Operating agreement limitations
- Independent director
- Bad-boy guaranty
John D. North, Partner
Greenbaum Rowe Smith & Davis LLP
Litigation: Lender Liability Theories, Defense and Counterclaims
- Claims Arising from Loan Origination
- Claims arising from loan administration
- Claims arising post-default
Dennis P. Rawlinson, Firm Chair, Partner
Miller Nash Graham & Dunn LLP
Best Practices to Avoid Lender Liability Claims
- Avoid Lender Promises to "Work it Out"
- Confirm Discussions in Writing
- Give Adequate Notice and Avoid Sudden Actions
- Avoid Exercising Control of Borrower's Business
- Be Professional - Communications Will Be Used Against You
- Seek Legal Advice Early and Often
- Reservation of rights letters and default notices
- Pre-negotiation agreement
- Discussions not final until memorialized in writing
- No defenses to enforcement
- Acknowledgment of default
- Acknowledgment of full force and effect
- Releases (past and future)
- Document retention
- Email etiquette
- External communications
- Internal communications
Who Should Attend:
- Attorneys in Banking and Finance
- Class Action Litigators
- In-house Counsel
- General Counsel
- Financial Services Firms
- Bank and Financial Institution Executives
- Chief Financial Officer
- Other interested and related professionals
Natan Hamerman is an experienced litigator and trial lawyer who represents financial institutions and developers in a comprehensive range of real estate and bankruptcy disputes.
Mr. Hamerman recently represented hard-money lender Gamma Real Estate and certain of its affiliates in a trial in Bankruptcy Court in which Gamma successfully defended itself against a host of lender liability-style claims, and was able to enforce its $147 million loan agreement. The case was tried to conclusion within four months of its filing.
Mr. Hamerman directly advises lenders’ in-house counsel and business personnel on strategy and implementation of comprehensive plans to maximize recovery of troubled real estate loans.
He litigates foreclosure actions, and actions to enforce guarantees, pledge agreements and other security instruments.
He advises clients involved in acquisitions of distressed loans in so-called “loan-to-own” situations.
Natan Hamerman is an experienced litigator and trial lawyer who represents financial institutions and developers in a comprehensive range of …
Mr. North focuses his practice in litigation, with an emphasis on trial practice. He has tried jury and non-jury cases in state and federal courts, including over 75 jury cases to verdict. He is certified by the Supreme Court of New Jersey as a Civil Trial Attorney. Mr. North’s practice concentrates in commercial and banking litigation, particularly in matters involving negotiable instruments and financial fraud. Mr. North has represented banks in class actions alleging claims under New Jersey and federal consumer legislation. A significant portion of Mr. North’s practice is devoted to the defense of catastrophic injury and other high exposure cases in the areas of negligence, public entity liability, construction, and professional liability, including the defense of attorneys, accountants and insurance brokers. He also maintains a personal injury practice limited to the representation of plaintiffs in medical malpractice and other cases involving significant injuries and complex liability issues. Mr. North is the author of the evidence treatise A Trial Lawyer’s Strategic Guide to the New Jersey Rules of Evidence, and is the only New Jersey lawyer selected as a principal author of Business and Commercial Litigation in Federal Courts, contributing the chapter in the treatise devoted to Medical Malpractice.
Mr. North focuses his practice in litigation, with an emphasis on trial practice. He has tried jury and non-jury cases …
Dennis P. Rawlinson concentrates his practice on commercial and "Bet-the-Company" litigation. He has handled more than 150 trials and arbitrations, including more than 50 trials to verdict on a wide range of commercial subjects, including lender liability claims. Recent cases include the largest recovery in the 140-year history of the law firm plus corporate governance relief arising from two federal cases in the Western District of Oklahoma. Denny has had multimillion-dollar recoveries in construction and design, good faith and fair dealing, fraud, and a number of other commercial cases.
Denny is a "Top List" Super Lawyer for Business Litigation for the state of Oregon, including being recognized on multiple occasions as one of Oregon's Top 10 Lawyers. Denny has been recognized by a number of professional organizations for his commercial trial litigation skills. Denny is a frequent writer and speaker on commercial trial topics.
Dennis P. Rawlinson concentrates his practice on commercial and "Bet-the-Company" litigation. He has handled more than 150 trials and arbitrations, …
Paul B. Kerlin is a Greenberg Traurig shareholder in the Houston office. His areas of concentration include commercial and residential lender liability claims, breach of contract and false advertising and defamation. He also represents clients in mass torts and products liability matters. Paul has served as lead counsel for a national bank defending lender liability claims and prosecuting deficiency actions throughout Texas in federal and state court with a loan portfolio of over 900,000 mortgages. Representative cases include defense of holder of notes for wrongful foreclosure, improperly obtained and unconscionable lender-placed insurance, breach of fiduciary duty claims against loan servicer and violations of the Fair Credit Reporting Act (FCRA) 15 U.S.C. § 1681 et seq., claims premised on erroneous reporting by mortgage servicer.
Paul B. Kerlin is a Greenberg Traurig shareholder in the Houston office. His areas of concentration include commercial and residential …
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About Kramer Levin Naftalis & Frankel LLP
Kramer Levin Naftalis & Frankel LLP is a premier, full-service law firm with offices in New York, Silicon Valley and Paris. Firm lawyers are leading practitioners in their respective fields, including, in particular, the fields of real-estate, bankruptcy and litigation.
About Greenbaum Rowe Smith & Davis LLP
Greenbaum, Rowe, Smith & Davis is a multi-practice law firm serving local, regional and national clients. As one of New Jersey’s leading law firms, the firm brings diverse and comprehensive expertise to the representation of both businesses and individuals. For over 100 years, the firm has earned the trust and loyalty of clients by providing sophisticated, creative and cost-effective representation through collaborative teamwork, proactive legal strategies, attention to detail and relationship-oriented service.
About Miller Nash Graham & Dunn LLP
Miller Nash Graham & Dunn LLP is a Pacific Northwest law firm with two of the largest offices in the two leading cities in the Pacific Northwest, Seattle and Portland. The firm has more than a 140-year proud history specializing in trial work and representation of financial institutions. The firm additionally provides a full array of business and public legal services.
About Greenberg Traurig, LLP
Greenberg Traurig, LLP (GTLaw) has more than 2,000 attorneys in 38 offices in the United States, Latin America, Europe, Asia and the Middle East and is celebrating its 50th anniversary. A single entity worldwide, GTLaw has been recognized for its philanthropic giving, was named the second largest firm in the U.S. by Law360 in 2016, and among the Top 20 on the 2016 Am Law Global 100. Web: www.gtlaw.com Twitter: @GT_Law.