A lawyer who says he's spent the last five years suing banks is now representing a client in a class-action lawsuit against Norwalk, Conn.-based Gateway Finanical Corp.
The suit seeks a temporary injunction to stop the bank company's merger with Shawmut National Corp.
Robert Ziegler, a Plainville, Conn., lawyer, said he filed suit on behalf of his client, Richard DeSoto, a former developer in Danbury, Conn. Mr. DeSoto owns 10 shares of Gateway stock and has had commercial properties foreclosed on by its bank subsidiary. Other of his properties now are subject to foreclosure.
Review of Problem Loans
The lawsuit calls for Gateway to reexamine its handling of problem loans, Mr. Ziegler said. Some borrowers were given more leniency than others on debt repayment, he said, adding that Mr. DeSoto had been victimized by the bank's irregular workout procedures.
But Gateway officials responded that their bank's system for dealing with problem loans was reviewed in 1992 by an outside law firm, Schatz & Schatz of Hartford, Conn., at the bank's request.
"We feel comfortable that the board [of directors] has acted properly in fulfilling its duties to look into this type of thing and take actions," said Frank Estes, senior vice president and corporate secretary of Gateway Bank.
But Mr. Ziegler, who said he had sued "just about every bank in this area and then some," disagreed that Gateway had sufficiently investigated its handling of loan problems.
"I want to get [Gateway's] management out of there," he said in an interview Thursday. "What I don't want to see is any member of the board who is guilty of mismanagement to benefit from the merger."
Mr. Ziegler filed a similar suit against Bank of Boston in 1990. That suit was settled the same year, and under an agreement with Bank of Boston, he refused to reveal its outcome.
No hearing date has been set for the suit on behalf of Mr. DeSoto, which was filed Wednesday in Danbury Superior Court.
Shawmut said it saw little to fear. "We don't believe that this will have any effect on our ability to consummate the transaction of Gateway," said Brent Di Giorgio, a spokesman. Mr. Di Giorgio said the $152 million merger is scheduled to close this month.
Gateway disclosed the suit Tuesday at its annual meeting, where shareholders approved the Shawmut deal.