Judgment Entered in Favor of Mayflower Transit Against M & T Bank for $1.6 Million

Rockville, MD: December 6, 2004 – The Circuit Court for Montgomery County, Maryland entered judgment in favor of Mayflower Transit, LLC ("Mayflower') against Manufacturers & Traders Trust Company f/k/a Allfirst Bank ("M & T Bank') in the amount of $1,656,295.00 for violating the Maryland Uniform Fiduciaries Act. The judgment followed a two-week trial on liability which occurred in July and September of 2003, and three days of trial on damages in May of 2004.

Mayflower was represented by Jeffrey M. Schwaber and Alexia Kent Bourgerie, principals in the firm of Stein, Sperling, Bennett, De Jong, Driscoll & Greenfeig, P.C. located in Rockville, Maryland. M & T Bank was represented by William Hallam of the firm of Gebhartdt and Smith, L.L.P. located in Baltimore, Maryland.

In response to the ruling, Jeff Schwaber commented, "We are delighted that after a full and fair trial of all the evidence in this case, justice prevailed and Mayflower's rights were finally vindicated.'

Among the claims on which Mayflower prevailed against M & T Bank is the violation of the Maryland Uniform Fiduciaries Act, § 15-208. The Maryland Uniform Fiduciaries Act is a statute designed to protect banks from liability in many circumstances. However, the Maryland Uniform Fiduciaries Act does not shield banks from liability for taking certain wrongful actions with actual knowledge of the wrongful action or with knowledge of facts such that its wrongful action amounts to bad faith. The Court found precisely both in this case: that M & T took Mayflower's money with knowledge it was Mayflower's money, and that certain advice M & T Bank gave to its borrower and M & T Bank's failure to communicate was "motivated by self-interest, a marker of ‘bad faith.''

The case arose from a relationship that one of Mayflower's agents in Maryland had with M & T Bank, both as an account holder and as a borrower. The Mayflower agent had a confidential account with a federal government agency which required the federal government to submit its payments for interstate moves directly to the Mayflower agent. The millions of dollars paid by the federal government to the Mayflower agent for interstate moves belonged to Mayflower, as Mayflower already had distributed to its agents their respective commissions. M & T Bank received the payments electronically into the Mayflower agent's account at M & T Bank. The Mayflower agent began to have serious financial problems and owed M & T Bank millions of dollars. Between July of 2000 and June of 2001, after M & T Bank knew that Mayflower's money was in the account, M & T Bank proceeded to take more than $3 million for loan payments. During this same time period, more than $1.6 million of Mayflower's money which was paid into the account never reached Mayflower. The court ordered M&T Bank to pay to Mayflower this amount.

M & T Bank not only defended Mayflower's claims, but pursued its own claims against Mayflower for taking funds at a time when the bank was a secured creditor of Mayflower's agent. In the end, each and every one of the claims against Mayflower failed.

Jeffrey M. Schwaber and Alexia Kent Bourgerie are principals at Stein, Sperling, Bennett, De Jong, Driscoll & Greenfeig, P.C. Both concentrate in complex commercial litigation, with an emphasis in business, employment and technology. For more information on this case, please contact Mr. Schwaber or Ms. Bourgerie at (301) 340-2020.

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