The $38.5 million jury decision against Mississippi's Trustmark Corp. has set off a firestorm of complaints against the bank and other institutions in the area, according to the plaintiff's lawyer.
Lawrence E. Abernathy 3d, the lawyer, said he has gotten hundreds of telephone calls in the last several days from people with similar complaints against Trustmark and other area banks.
"The magnitude of this thing is staggering," he said. "The phones have literally not stopped ringing."
Last week, a jury awarded the surprisingly large amount to a Mississippi man and his father-in-law, concluding that the bank had wrongly billed them $9,000 in insurance charges on the man's 1988 Nissan Sentra. The charges stemmed from a high-yield insurance product called collateral protection insurance, also known as "forced placing."
Mr. Abernathy has about 20 other lawsuits pending against Trustmark concerning its auto loan financing practices, he said. He has also requested class-action status for the cases, in response to the prospect of an increased caseload.
Trustmark officials would neither confirm nor deny the existence of other lawsuits. The bank is appealing last week's decision.
"The banking industry is buzzing about this development," said Joseph H. Neely, state bank commissioner. "Nothing has changed with the statutes or regulations, but that product is effectively dead in Mississippi."
If any state-level investigation were to be done, it would be instigated by the insurance commissioner, George Dale.
But Mr. Dale, who is under indictment on bribery charges, had approved Trustmark's insurance practices, its rates, and the rates charged by the insurance agency, Ross & Yerger Financial Services.
Mississippi bankers are still in shock from the amount of the award.
It's completely out of reason, and we just hope someone strikes this down and brings in some reality."
"Everybody is stunned by that amount," said Leo W. Seal, Jr., chairman of Hancock Bank in Gulfport. "That's a hell of a lot of money in Mississippi.
The Mississippi Bankers Association is proposing legislation that would protect banks from liability in such cases.
"We want to avoid the situation where a lender makes good efforts but then ends up getting sued," said Mac Deaver, executive director of the association. "We want to make sure that the rules are specified so that, if they are followed, the banks won't be open to liability from the borrower."
Peter Tuz, first vice president at Morgan Keegan Inc. in Memphis, said it's too early to tell what the verdict's long-term effects will be.
"Will more people be tempted to file these cases now against Trustmark and others?" he said. "My answer is: 'Yes.' "
As for Trustmark itself, Mr. Tuz believes it's premature for the Jackson-based institution to take any internal steps, such as setting aside reserves.
The bank will probably let appeals play themselves out, which could take several years, before it lets the case affect its balance sheet, he said.
The trial revealed that Trustmark may have been aware of problems with its auto insurance pricing back in 1991, Mr. Abernathy said.
An internal company memo that was presented as trial evidence said the bank had established a task force to examine the program as early as the spring of 1991, according to Mr. Abernathy. Nothing came of the svrutiny, however, he said.