American Federal Bank, FSB v. United States

SunTrust Bank
2004 - 2008

Our commercial litigation team earned a major victory for SunTrust Bank as the US Court of Appeals for the Federal Circuit affirmed in its entirety a US$30.66 million award for expectancy damages and incidental losses in a breach of contract action against the United States. Our team had prevailed in two trials in the US Court of Federal Claims, first winning a judgment of liability after a two-week trial in 2004, then winning the award of damages after a three-week trial in 2006. The government appealed to the Federal Circuit, and--after briefing and oral argument--the Firm won a complete affirmance of the US$30.66 million award plus costs (2008 WL 4425942, Oct. 1, 2008).

SunTrust, as successor to American Federal Bank of Greenville, South Carolina, sued the government for breach of contract arising out of the acquisition of four failing savings and loans. As the S&L crisis worsened throughout the 1980's, the government promised SunTrust's predecessor favorable regulatory treatment if the institution would bring new capital into the thrift industry. SunTrust's predecessor performed, raising more than US$35 million, but the government soon breached the contracts, withdrew the favorable regulatory treatment, and threatened to seize the institution.

At the damages trial, the firm's lawyers presented the testimony of SunTrust's key executives, including the Vice Chairman of SunTrust, SunTrust's Director of Tax Planning, and a top SunTrust financial analyst, as well as the former CEO and COO of SunTrust's predecessor. The Firm's trial team also cross-examined numerous government regulators and expert witnesses. The Court of Federal Claims found that the government breaches caused SunTrust to incur more than US$27 million in expectancy damages, as well as US$3.6 million in incidental losses. The Court issued two decisions on damages: the first is reported as American Federal Bank, FSB v. United States, 72 Fed. Cl. 586 (2006), the second is 74 Fed. Cl. 208 (2006).

Our attorneys previously secured a judgment in favor of SunTrust on liability after a two-week trial, where the Court of Federal Claims held that the government breached its contracts with SunTrust--a case reported as American Federal Bank, FSB v. United States, 62 Fed. Cl. 185 (2004).

The trial team was led by David Bergman, who also argued on appeal, and included partners Howard Cayne and Michael Johnson and staff attorneys Nellie Wigfall and Alexea Juliano.

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