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Lender Liability and Banking Litigation

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Edward F. Mannino


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“Recommended...This volume explores traditional theories of lender liability along with a whole spate of new statutory and common law theories in a straightforward, well-researched and heavily annotated manner. That it remains so readable is a credit to the author.”
-The Philadelphia Bar Association Retainer

This essential book shows you how to litigate lender liability suits and, when possible, prevent them from ever being filed. Lender Liability and Banking Litigation analyzes theories of liability and provides in-depth discussion of: RICO; planning, budgeting and monitoring litigation from the perspective of inside counsel; discovery, privilege and class action questions; practical aspects of trying a case; alternative dispute resolution; minimizing lender liability through documentation and administrative techniques; lawsuits against directors and officers of financial institutions; CERCLA; and lender liability and the failed bank.

The book features numerous sample litigation documents, including: counterclaims and answers by borrowers and lenders; voir dire questions and jury instructions; interrogatories; special verdicts; and a comprehensive loan agreement litigation checklist.

Book #00611; looseleaf, one volume, 1,208 pages; published in 1989, updated as needed; no additional charge for updates during your subscription. Looseleaf print subscribers receive supplements. The online edition is updated automatically. ISBN: 978-1-58852-050-0


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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 1208
  • ISBN: 978-1-58852-050-0
  • Pub#/SKU#: 611
  • Volume(s): 1

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  • Edward F. Mannino
Edward F. Mannino is Chairman of the Mannino Law Firm in Plymouth Meeting, Pennsylvania.

For over forty years, Mr. Mannino has litigated cases for banks across the country, including cases in California, Connecticut, Florida, New Jersey, Ohio, Pennsylvania, Texas and the Virgin Islands. Two of his more notable victories include a $7.5 million judgment in favor of the FSLIC against the president of a failed savings and loan association, and a directed verdict for a bank in one of the first civil RICO cases ever tried. His successful defense of a tobacco company in a 1988 products liability jury trial was chosen as one of the five most significant defense verdicts nationally in the ABA Journal.

Mr. Mannino graduated with high honors from the University of Pennsylvania and its law school, and was elected to Phi Beta Kappa, the Order of the Coif and the American Law Institute. A former officer of the University of Pennsylvania Law Review and a former editor of Litigation, he is an editor of The Practical Litigator, an editorial advisor to Commercial Lending Litigation News and the author of numerous articles. Mr. Mannino has also served as a member of the council of the ABA Litigation Section, as chair of the ABA Special RICO Coordinating Committee, and as a member of the Appellate Court Rules Advisory Committee of the Supreme Court of Pennsylvania.


CHAPTER 1
Structuring the Lending Relationship: Documentation Issues

§ 1.01 General Introduction
§ 1.02 Processing of Loan Applications
§ 1.03 Commitments
[1] Oral Promises to Lend
[2] Written Commitments
§ 1.04 Structuring the Loan Agreement
[1] Introduction: A Note on the Limits of Documentation
[2] Defining the Parties’Monetary Rights and Obligations
[3] Dispute Resolution Provisions

CHAPTER 2
Loan Administration and Workout of Troubled Credits

§ 2.01 Generally
§ 2.02 Controlling the Borrower’s Business
[1] The Control Issue
[2] Specific Practices
§ 2.03 Obtaining Additional Security or Enhancing Collateral
[1] Generally
[2] Claims by Borrowers
[3] Control and Related Issues
§ 2.04 Termination of Credit
[1] Generally
[2] Notice to Borrower
[3] Nonpayment Defaults
[4] Waiver and Estoppel Considerations
[5] Foreclosure
§ 2.05 Bankruptcy Issues
[1] Advantages and Disadvantages of the Bankruptcy Forum for the Lender
[2] Specific Bankruptcy Issues

CHAPTER 3
Fraud, Breach of Fiduciary Duty and Negligent Misrepresentation

§ 3.01 Introduction
§ 3.02 Fraud
[1] Introduction
[2] Elements of Liability
[3] Burden of Proof Requirements
§ 3.03 Breach of Fiduciary Duty
[1] Introduction
[2] Fiduciary Disclosure Requirements
[3] Fiduciary Standards Other Than Disclosure
§ 3.04 Negligent Misrepresentation
[1] Introduction
[2] Elements of Liability
[3] Limitations on Damage Recoveries
§ 3.05 Strategies to Avoid Liability

CHAPTER 4
RICO

§ 4.01 An Analysis of the Statute
[1] Legislative History and Purpose
[2] Key Statutory Terms
[3] Section 1962
[4] Special Provisions
[5] Federal and State Court Jurisdiction Under RICO
[6] State RICO Statutes
§ 4.02 RICO Actions Involving Banks and Bank Officers
[1] In General
[2] Actions by Borrowers
[3] Actions by Third Parties
[4] Actions by Governmental Agencies
[5] Banks as RICO Plaintiffs
§ 4.03 The Elements of RICO Liability
[1] In General
[2] ’Person’ and ’Enterprise‘
[3] ’Pattern‘ of Racketeering Activity
[4] ’Conduct‘of an ’Enterprise‘Through a ’Pattern of Racketeering Activity‘
[5] Injury to Business or Property
§ 4.04 Affirmative Defenses to RICO Actions
[1] In General
[2] Failure to Plead Fraud With Particularity
[3] Statute of Limitations
[4] Release, Waiver and Estoppel
[5] Arbitration Clauses
[6] Miscellaneous Affirmative Defenses
[7] Special Defenses for Mail and Wire Fraud Claims
§ 4.05 Discovery Issues
[1] In General
[2] Seeking Discovery from the Plaintiff
[3] Seeking Discovery From the Defendant
§ 4.06 Class Actions
[1] In General
[2] Use of Class Actions in RICO Cases
§ 4.07 Trying a RICO Case
[1] Dealing With the ’Racketeer‘ Issue
[2] Relationship of RICO Claims to Other Counts of Complaint
[3] Trebling Issue
[4] Jury Instructions

CHAPTER 5
Duress, Bad Faith, the Interference Torts and Other Bases of Liability

§ 5.01 Introduction
§ 5.02 Duress
[1] Scope of the Duress Doctrine
[2] Application of Tort Cause of Action to Lenders
§ 5.02A Unconscionability
[1] Scope of Unconscionability Doctrine
[2] Application of Unconscionability Doctrine to Lenders
§ 5.03 Bad Faith
[1] Introduction
[2] Application of Bad Faith Doctrine to Override Specific Contractual Provision
[3] Contractual Bad Faith
[4] Bad Faith Tort
[5] Strategies to Avoid Bad Faith Liability
§ 5.04  The Interference Torts
[1] Interference with Contract
[2] Interference with Prospective Economic Relations
§ 5.05 Invasion of Privacy, Infliction of Emotional Distress, and Defamation
§ 5.06 Unreasonable Debt Collection Under Common Law
§ 5.07 Wrongful Foreclosure

CHAPTER 6
Control Liability

§ 6.01 Introduction
§ 6.02 The Instrumentality Doctrine
[1] Elements of Liability
[2] Nature of Control Required
[3] Application of Doctrine to Banks
§ 6.03 Equitable Subordination
[1] Origins and Outline of Doctrine
[2] Relationship to Instrumentality Doctrine
[3] Elements of Liability Generally
[4] Elements of Liability as Applied to Bank Creditors
[5] Application of Doctrine to Banks
§ 6.03A Debt Recharacterization
§ 6.04 Controlling Person Liability Under the Federal Securities Laws
[1] Elements of Liability
[2] Application of the Control Doctrine to Banks and Other Lenders
§ 6.05 Liability Under CERCLA
[1] Introduction
[2] An Overview of CERCLA
[3] Control Liability
[4] Liability Arising Out of Foreclosure
[5] Liability of Bank Fiduciaries
[6] Affirmative Defenses Available to a Lender Under CERCLA
[7] EPA CERCLA Lender Liability Rule
[8] Asset Conservation, Lender Liability and Deposit Insurance Protection Act of 1996
§ 6.06 Liability for Unpaid Federal Withholding Taxes
[1] Introduction
[2] Lender Liability Based Upon Direct Payment of Wages
[3] Lender Liability Based Upon Knowledge of a Borrower’s Inability to Pay Withholding Taxes
[4] Lender Liability Based Upon Willful Evasion of Taxes by a Responsible Person
§ 6.07 Strategies to Avoid Control Liabilities
[1] Generally
[2] Additional Steps to Avoid Liability for Environmental Hazards

CHAPTER 7
Aiding and Abetting Liability

§ 7.01 Overview
[1] The Elements of Aiding and Abetting Liability
[2] Aiding and Abetting Distinguished from Conspiracy
[3] Aiding and Abetting Distinguished from Control
§ 7.02 Aiding and Abetting Cases Involving Banks
§ 7.03 The Knowledge Requirement
[1] Generally
[2] Evidentiary Considerations
[3] Relationship to Substantial Assistance Requirement
[4] Factors for Imposing Liability on Banks
§ 7.04 The Substantial Assistance Requirement
[1] Generally
[2] The Proximate Cause Requirement
[3] Silence or Inaction as Substantial Assistance
[4] Evidentiary Considerations
[5] Factors for Imposing Liability on Banks
§ 7.05 Avoiding Aiding and Abetting Liability

CHAPTER 8
The Bank as Litigant

§ 8.01 Introduction
§ 8.02 Recurring Legal Issues
[1] Discovery of Examination Reports
[2] Admissibility of Oral Modifications to Written Contracts
[3] Waiver of Fraud Claims
[4] Attorney-Client Privilege and the Corporation
§ 8.03 Banks and Class Actions
[1] Class Action Discovery and Evidentiary Hearings
[2] Theories for Striking Class Actions
[3] Class Action Settlements
[4] Class Action Fairness Act of 2005
§ 8.04 Banks on Trial
[1] Trial Preparation and Jury Selection
[2] Opening Statement
[3] Trial Strategies
[4] Closing Argument
[5] Special Interrogatories to the Jury

CHAPTER 9
Litigation and Loss Prevention Management

§ 9.01 Generally
§ 9.02 Litigation Planning and Monitoring
[1] Retention of Outside Counsel
[2] The Litigation Case Management Process
[3] Monitoring Litigation
§ 9.03 Loss Prevention Techniques
[1] Bank Training Mechanisms
[2] Bank Policy Manuals and Forms

CHAPTER 10
Strategies to Avoid Litigation

§ 10.01 Introduction
§ 10.02 Documentation
[1] Preparation of Credit and Other Internal Memoranda
[2] Contacts With Borrowers
[3] Credit Reviews
[4] Forms
[5] Loan Documentation
[6] Personnel Files
§ 10.03 Lending and Loan Administration
[1] Generally
[2] Control Factors
[3] Fiduciary Factors
[4] Termination of Credit
[5] Threats
[6] Release of Claims

CHAPTER 11
Litigation Against Directors and Officers of Financial Institutions

§ 11.01 Introduction
[1] Duties of Directors and Officers
[2] The Business Judgment Rule
[3] Other Limitations on Director Liability
§ 11.02 Special Duties of Financial Institution Directors and Officers
[1] Federal Law
[2] State Law
[3] Specialized Guides and Policy Statements
§ 11.03 Case Law on Financial Institution Director and Officer Liability
[1] Mismanagement Cases
[2] Negligent Supervision
[3] Loyalty Cases
§ 11.04 Statutory Liabilities
[1] Key Statutory Provisions
[2] RICO
[3] FIRREA
§ 11.05 Defenses to Liability
[1] Delegation and the Right to Rely
[2] Regulatory Negligence
[3] Preemption

CHAPTER 12
Lender Liability and The Failed Bank

§ 12.01 Introduction
§ 12.02 The D’Oench, Duhme Doctrine and 12 U.S.C. § 1823(e)
[1] D’Oench, Duhme
[2] Section 1823(e) of the Federal Deposit Insurance Act
§ 12.03 Scope of the D’Oench, Duhme Doctrine and Section 1823(e) of the Federal Deposit Insurance Act
[1] Availability of Defenses
[2] Foreclosed Defenses
[3] Surviving Defenses
§ 12.04 Federal Holder in Due Course Doctrine
[1] Scope of the Federal Holder in Due Course Doctrine
[2] Foreclosed Defenses
[3] Surviving Defenses

CHAPTER 13
Loan Participation Litigation

§ 13.01 Introduction
§ 13.02 Loan Origination and Underwriting
§ 13.03 Loan Administration
[1] Nature of Relationship Between Lead or Agent Bank and Participants
[2] Powers of Lead or Agent Bank in Loan Administration
§ 13.04 Strategies for Loan Participants
[1] Loan Origination and Underwriting
[2] Loan Administration

CHAPTER 14
Liability Under Other Federal Statutes

§ 14.01 Equal Credit Opportunity Act
[1] Generally
[2] Statutory Provisions
[3] Procedures in Actions Against Creditors; Burden of Proof
§ 14.02 Fair Labor Standards Act
[1] Generally
[2] Application of FLSA to Lenders
§ 14.03 Bank Secrecy Act
[1] Generally
[2] Civil and Criminal Liability Under the BSA
§ 14.04 Truth in Lending Act
[1] Generally
[2] Required Disclosures and Right to Rescind
[3] Civil Liability Under TILA
[4] Criminal Liability Under TILA
§ 14.05 Right to Financial Privacy Act
[1] Generally
[2] Remedies Under RFPA

APPENDICES
Index