A St. Louis federal jury has awarded $391 million, including $35.5 million in punitive damages, against PNC Bank following a five-week jury trial.
The plaintiffs were the Special Deputy Receiver (SDR), Jo Ann Howard and Associates, appointed by the Commissioner of the Texas Department of Insurance; the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) on behalf of 28 state guaranty associations, and the state guaranty associations of Missouri, Texas, Illinois, Arkansas, Kansas, Oklahoma, and Kentucky.
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 pre-need funeral trusts.
“This has been a superb team effort with the guaranty associations. We are very pleased with the jury’s award,” said David Mattax, the Commissioner of Insurance for the State of Texas.
Peter Gallanis, president of NOLHGA, said, “We are proud that the guaranty associations have met their obligations to ensure that the consumer losses were covered. The jury’s verdict is the next step in the process.”
Thousands of consumers and multiple funeral homes had entered into contracts with a company known as National Prearranged Services (NPS), which was run by a number of individuals who were indicted and convicted of fraud. NPS sold pre-need funeral contracts initially in Missouri and used two affiliated Texas-based life insurance companies to back the pre-need funeral contracts. In 2008, NPS and the two insurance companies were placed in receivership in Austin, Texas. The SDR and state guaranty association system worked together to ensure that thousands of funerals were paid for. Since 2008, the guaranty associations have paid more than $300 million for in excess of 50,000 funerals in 40 states. The guaranty associations will pay for all covered future funerals, which will be additional millions of dollars.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.