Webster Financial Corp. in Waterbury, Conn., received court approval to settle longstanding litigation over a condominium project in Columbus, Ohio, that had previously resulted in an almost $19 million verdict.
Under the settlement, Webster Bank will pay $10.5 million to Community Building Systems Inc., the developer of the Broadwin condominium conversion project, and some who originally purchased units in the building, according to Securities and Exchange Commission filing on Friday. Webster Bank will also provide a quitclaim deed to the condominium units owned by a Webster affiliate to a designee of Community Building.
In June 2007, Community Building filed the lawsuit over the bank's refusal to continue to fund certain construction draws on the Broadwin development, according to an August 2010 regulatory filing. The project was structured as 24 individual loans to the unit purchasers, with the developer guaranteeing repayment to Webster. Later, some of the unit purchasers and others joined the lawsuit as plaintiffs.
In May 2010, a jury found in favor of the developer and the unit purchasers who remained in the suit, awarding them roughly $18.9 million in compensatory and punitive damages, according to the August 2010 filing. As a result, the company recorded a reserve for the aggregate verdict in the second quarter of 2010 and an additional amount for expenses, according to a May 2011 regulatory filing.
With the settlement, the $18 billion-asset company said that it will record a pretax benefit of about $9.5 million for the quarter ending Dec. 31.