Court of Appeals Reverses Judgment Entered Against PNC Bank, Successor to Trustee for Preneed Funeral Contract Trusts, and Returns the Case to the Trial Court
The United States Court of Appeals for the Eighth Circuit has reversed a judgment in favor of the Special Deputy Receiver (SDR), the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) on behalf of state insurance guaranty associations, and the guaranty associations of Missouri, Texas, Illinois, Arkansas, Kansas, Oklahoma, and Kentucky. The Circuit Court sent the suit against Defendant PNC Bank back for further proceedings before the lower federal court, ruling that a trust measure of damages should be applied. The panel further stated that the lower court would not necessarily need to retry the entire case, but has discretion to consider the existing trial record and supplement it as the court sees fit. The appellate court rejected PNC's appeal regarding certain affirmative defenses as well as the Plaintiffs' appeal of the trial court's denial of its aiding and abetting cause of action. Plaintiffs have filed a petition for rehearing to the appellate panel, and as a result the clerk has not yet issued its mandate to the trial court. Until the mandate issues, the case remains in the appellate court.
A federal court jury had awarded Plaintiffs $391 million, including $35.5 million in punitive damages, against PNC Bank following a five-week jury trial in March 2015. The trial court made certain post-trial rulings resulting in the final judgment.
The SDR, NOLHGA and the state guaranty associations joined forces to pursue breach of fiduciary duty and negligence claims against PNC, which was the successor to Allegiant Bank and Trust Company, a St. Louis-based bank that had served as a trustee for multiple NPS preneed funeral trusts.
Until such time as a new final judgment is issued, appealled and collected, the SDR cannot estimate the amount that the estates will ultimately distribute to creditors. All amounts recovered will be distributed pursuant to the agreement between the plaintiffs and applicable statutes.