Comerica Inc. said it has paid $400,000 to settle a three-and-a-half- year-old lawsuit that alleged one of its former loan officers led a small Michigan construction company into bankruptcy.

In making the settlement with the company's trustee in U.S. Bankruptcy Court in Detroit last month, Comerica said it was not admitting liability.

The plaintiff, Sardo Corp. of Novi, Mich., was a former business loan customer of Comerica's which had sought $7 million alleging breach of fiduciary duty. Comerica denied all allegations in the complaint.

"It is a settlement of a disputed claim in order to avoid delay, uncertainty, and additional litigation expenses," Comerica said in a written statement.

In return, Comerica drops its $800,000 in claims as a creditor to Sardo in bankruptcy court, with the exception of $200,000. In the settlement, trustee Paul Borock said it was likely the $200,000 would be recovered.

The cost of settling the suit would be immaterial to earnings at $36 billion-asset Comerica, the company said.

With the settlement, Detroit-based Comerica hopes to close the book on a suit first filed by Sardo in Wayne County Circuit Court in December 1993. Sardo, a concrete-pouring company, accused Comerica of breach of covenant of good faith and fair dealing, breach of fiduciary obligation, fraud, and racketeering.

The Sardo complaint stemmed from its relationship in the mid- to late 1980s with David Provost, a former commercial lender with Comerica, who is now president of Bank of Bloomfield Hills, Mich.

Comerica called in a $1 million loan in 1991, citing a deteriorating collateral base at Sardo. The company said the call forced it into bankruptcy.

Sardo claimed that Mr. Provost, who left Comerica in 1989, influenced the firm to increase its credit line continually. The company claimed that Mr. Provost had became active in managing Sardo, overseeing accounting, encouraging equipment purchases, and influencing hiring and firing. Mr. Provost, who was not sued as a result of the timing of the lawsuit and Michigan's three-year statute of limitations, has declined to comment on the case, but denied allegations in an affidavit. Sardo officials claimed they even paid Mr. Provost consulting fees.

The suit was eventually moved to U.S. federal court in Detroit, and in August of last year U.S. District Court Judge John Feikens dismissed all but the breach of fiduciary duty charge against Comerica.

The $7 million sum Sardo was seeking was said to represent the loss of potential earnings and the cost of dissolving the company.

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