UPDATE; Saturday, 28th March, 2020. Two months after oral arguments, this case is pending, but that’s not too surprising given the current situation with the world and the coronavirus. We’re still monitoring and will update when there’s movement on the case.
We’re tracking this legal malpractice case at the Fifth Circuit COA in Dallas (State Court) about a botched $62m commercial foreclosure shortly after the financial crisis and whether the ‘expert witness’ is going to be a defining decision in this matter.
Oral arguments audio enclosed, which we’ve listened to and it appears the Bank has the stronger argument in law, whereas Winstead’s attorney from VE was waffling about matters outwith the appeal. Anyways, it’s docketed here and we’ll update y’all.
The articles below that give some history to the case, the one standout is the appointment by NexBank of a former Winstead PC attorney and partner. Nothing like insider information when in contentious litigation.
NexBank SSB, v. Winstead, PC
Highland Capital lawsuit alleges Winstead botched $62M loan workout
Originally Published: Feb 18, 2015
Heavyweight Dallas-based investment management firm Highland Capital Management LP has sued powerhouse Winstead PC claiming the law firm made “countless mistakes and misrepresentations” in a $62 million commercial real estate deal.
The malpractice suit against Dallas-based Winstead was filed Friday, Feb. 13, in Texas state court by NexBank SSB and Highland Capital. The bank and private investment group claim the law firm negligently managed a loan modification and foreclosure on property purchased by a real estate company, resulting in more than $20 million in losses for NexBank and Highland Capital.
Don Campbell, general counsel for Winstead and a shareholder at the firm, denied the allegations in the lawsuit.
“We will hire counsel and we will vigorously defend (against the claims),” Campbell said. “We believe we will be vindicated because our lawyers did not commit malpractice.”
He declined to comment on specifics of the allegations or defenses.
“Legal malpractice claims have become a more frequent phenomenon in recent years, but it is unusual for us to be sued for malpractice,” Campbell said.
Winstead is the fourth largest law firm in North Texas, with 156 lawyers in Dallas and 340 attorneys overall, according to Dallas Business Journal rankings.
More than 100 of Winstead’s lawyers are primarily involved in real estate related deals, including finance, and the firm specializes in complicated loan transactions, Kevin Sullivan, Winstead managing partner, told the Dallas Business Journal in an interview in the Jan. 23 print edition and available online.
The list of real estate projects that Winstead guided include the George W. Bush Presidential Center in Dallas, the new Dallas Cowboys Headquarters in Frisco, KPMG Plaza at Hall Arts and the Old Parkland West Campus.
The $62 million lawsuit against Winstead involves two office buildings northwest of Luna Road and Interstate 635 in Farmers Branch. FRE Real Estate, a subsidiary of Dallas-based Transcontinental Realty Investors Inc. (NYSE:TCI), bought the buildings in 2007 using a two-year, $62 million interest-only loan from NexBank. Highland Capital was the special servicer of the loan, according to the suit.
In late 2008, FRE indicated that it would be unable to repay the two-year loan set to mature in January 2009, according to the lawsuit. In anticipation of the default, NexBank and Highland Capital retained Winstead at attorney rates as high as $620 per hour, the suit says.
“Rates of this magnitude are commanded only by specialists in complex foreclosures,” the NexBank/Highland lawsuit says. “Garden variety foreclosure specialists charge much less.”
Despite paying a premium, Winstead identified but failed to properly address several legal issues and “failed to provide adequate advice” to remedy those issues, the suit says. Winstead’s alleged negligence led to years of expensive, contested litigation, according to the suit.
The Nexbank/Highland lawsuit comes on the heels of another malpractice suit against Winstead filed by the National Center for Policy Analysis in November. In that suit, the Dallas-based libertarian think tank sued Winstead and Winstead chairman emeritus Mike Baggett, claiming legal malpractice and breach of fiduciary duty surrounding the departure of the NCPA’s former CEO almost caused the 30-year-old organization to crumble.
The suit sought more than $1 million in damages. Campbell said today that it was settled, and the terms are confidential.
“The only thing I can say about the NCPA lawsuit is it was resolved shortly after it was filed,” he said. “We were pleased with the resolution.”
Highland Capital, meanwhile, is also suing Credit Suisse AG in an unrelated deal alleging the Zurich-based bank steered it into a refinancing of a real estate deal that cost it more than $250 million when the borrowers defaulted. In that suit, Highland alleges that Credit Suisse used a “grossly inflated appraisal” to boost its own fees, Bloomberg said.
DALLAS, Dec. 23, 2014 /PRNewswire/ — NexBank Capital, Inc., a fully-integrated financial services company, has announced that Brice Tarzwell and Kenneth Hanks have been elected to its Board of Directors, effective immediately.
“We are pleased to add two directors that bring additional depth to our board. Their combined experience and perspectives from both the private and public sectors will be invaluable as we strengthen our position as a leading regional financial services company and plan for the next phase of growth,” said John Holt, President and Chief Executive Officer of NexBank Capital, Inc.
Mr. Tarzwell currently serves as the Chief Legal Officer of Par Petroleum. Prior to this, he served as a partner at Bracewell & Giuliani LLP and Winstead PC.
Mr. Tarzwell brings 30 years of experience in corporate and securities matters, public and private offerings, federal and state compliance issues, and corporate governance. His directorship experience spans over 15 years with organizations including SMU’s Center on Communities and Education, and Uplift Education. Mr. Tarzwell holds a B.S. in political science from Arizona State University and a J.D. from the University of Oklahoma College of Law.
Most recently, Mr. Hanks served as the Chief Financial Officer of NexBank Capital, Inc., and NexBank SSB. Prior to this, he served as the Chief Financial Officer of SWS Group, Inc. Mr. Hanks has over 30 years of banking and financial services experience. He currently serves as a Board Member and Audit Committee Chair to Peerless Manufacturing Company. Mr. Hanks holds a B.B.A in finance and an M.B.A. with a concentration in accounting from the University of Texas at Austin. He is a Certified Public Accountant in the State of Texas.
About NexBank Capital, Inc.
NexBank Capital, Inc. is a fully-integrated financial services organization that includes a commercial and investment bank. As a leading regional financial services provider, the group delivers commercial banking, mortgage banking, investment banking and corporate advisory services to large corporations, real estate investors, middle-market companies, small businesses and banks, as well as some of the largest institutional clients in the capital markets.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nexbank-capital-inc-announces-additions-to-its-board-of-directors-300013702.html