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partnership
at a glance
SunTrust Banks, Inc.
L. Lin Wood (left), and Nicole J. Wade, Powell Goldstein LLP;
Raymond D. Fortin, SunTrust Banks, Inc.
SunTrust Banks, Inc., headquartered
in Atlanta, is one of the nation’s
largest banking organizations,
serving a broad range of consumer,
commercial, corporate and
institutional clients. As of March 31,
2007, SunTrust had total assets
of $186.4 billion and total deposits
of $123.4 billion. The company
operates an extensive branch and
ATM network throughout the
high-growth Southeast and mid-
Atlantic states.
“There were efforts to diversify their
holdings as well, but we needed the consent
of the plaintiffs and they didn’t consent,”
Fortin says. “Over time, it became apparent
to us that they might be more interested in
litigation than anything else. They were very
difficult to deal with.”
“SunTrust hired Powell Goldstein in 2004
after it received a demand letter from
plaintiffs’ counsel,” Wade explains. “After a
thorough assessment, including extensive
witness interviews and document review, we
agreed with the bank that its actions were
proper and it should aggressively defend the
case.” Beating the plaintiffs to the
“SunTrust had nothing to hide,
so we said, ‘Let’s get into
court and get this resolved.’
The plaintiffs were very
surprised by that strategy.”
courthouse, SunTrust filed suit to resign as
trustee in early 2005. Wade continues,
“SunTrust had nothing to hide, so we said,
‘Let’s get into court and get this resolved.’
The plaintiffs were very surprised by that
strategy.”
Indeed. Shaw and Hitz quickly filed a
countersuit, arguing the bank’s failure to
diversify their trusts resulted in their value
declining from $14 million to $6 million.
Claiming they lost $15 million—$8 million
in market value, as well as the value of lost
income and investment opportunities—
the half brothers asked for punitive
damages 10 times the $15 million figure,
plus fees paid to SunTrust, or more than
$165 million.
Building a Defense
SunTrust and Powell Goldstein began the
defense process by sifting through nearly
30,000 pages of documents, many stored on
microfiche and dating back to the original
trust’s opening in 1950. The documents
were placed in an electronic database
accessible to both SunTrust and Powell
Goldstein attorneys.
“We didn’t just hand the case over; we had
regular strategy sessions with a lot of
dialogue and interaction,” Fortin explains.
“I had to assess the goals and sensitivities
of our business people and convey that to
Lin and Nicole. There were other trusts
with Coke stock, so there was a precedent
component to the case.”
In one analysis, the team examined all
potential gains and losses that would have
been realized if SunTrust had diversified
the trusts at any time other than 1998, when
Coke’s stock price peaked. By including
capital gains taxes and other costs, the
analysis revealed the trusts would be worth
millions less.
“We basically re-created everything that
happened from day one,” Wade explains.
“Dozens of depositions were taken,
including those of the plaintiffs and their
advisers, SunTrust management and
management at Coke. Over the time period,
SunTrust unquestionably made the right
decisions for the trust, and the plaintiffs
As SunTrust’s general counsel,
Raymond D. Fortin is responsible for
the company’s legal and regulatory
affairs, and oversees corporate
compliance, regulatory liaison and
federal legislative affairs. He joined
SunTrust in 1989 and also serves as
corporate secretary and a member
of the Management Committee.
Prior to joining SunTrust, he served
for eight years as staff counsel at
the Citizens and Southern Georgia
Corporation. Contact Raymond at
raymond.fortin@suntrust.com.
profited greatly from those decisions. As a
trustee, SunTrust should not have been
held responsible for failing to sell the stock
at the one moment in history when it briefly
reached an all-time high.”
In 2006, Powell Goldstein moved for partial
summary judgment, arguing that because
the plaintiffs signed the new distribution
agreement in 2000, they effectively waived
any claim that the income paid from the
trusts was insufficient.
Further, the firm asked that expert witness
and financial analyst Candace L. Preston,
whom the plaintiffs brought in to assess the
alleged financial damages, be disqualified
because she had no experience in trusts. At
the same time, Wood and Wade persuaded
SunTrust not to introduce any expert witnesses
of its own.
JULY 2007
07