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NHSB: If the Suit Fits
Class-action depositor lawsuit seeks to halt conversion plan
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Business New Haven
10/13/2003
By: Michael C. Bingham
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NHSB: If the Suit Fits….
Class-action depositor lawsuit seeks to halt conversion plan
A class-action lawsuit has been filed against the officers and directors of New Haven Savings Bank to halt NHSB’s planned conversion from a mutual savings bank into a publicly traded stock corporation.
The lawsuit was filed September 26 in New Haven Superior Court by a group of depositors led by Joanne Turonis of Guilford.
Lead attorney for the Turonis and the other depositors is former New Haven-area resident Jordan L. Lurie of the Los Angeles law firm of Weiss & Yourman. Local counsel is New Haven attorney Elias A. Alexiades.
(Alexiades represents Business New Haven in unrelated media matters.)
The plaintiffs maintain that NHSB officers and director have breached their fiduciary responsibility to the plaintiffs "and other members of the class" by circumventing the bank’s owners — depositors — in pursuit of the conversion plan.
"By virtue of plaintiff’s deposit in NHSB, and the individual defendants’ positions as directors and/or depositors of the NHSB, and because plaintiff reposed trust and confidence in them, the individual defendants owed to plaintiff a fiduciary duty of the highest good faith, integrity and fair dealing," the lawsuit alleges.
As a result of the defendants’ failure to fulfill that duty, the suit says, "plaintiff was damaged by injury to her property, lost profits, loss of future income" and other damages.
The suit further alleges that in pursuing the conversion plan NHSB officers and directors have violated the Connecticut Unfair Trade Practices Act (CUPTA), and asks the court to require the individual defendants "to turn down any stock options or other aggrandizements" devised under the conversion plan.
Under the plan, filed late last month with the U.S. Securities & Exchange Commission (SEC), top officers and directors would become eligible for lucrative stock awards under a proposed new incentive plan. According to the bank’s SEC filing, it intends to set aside four percent of the proceeds of the initial public stock offering for a "recognition and retention plan" replacing the bank’s current cash incentive program.
The suit asks the court to order the bank to set up a depositors’ committee "to ensure a fair conversion plan and independent input by plaintiff and class in connection with the conversion plan."
It also seeks both compensatory and punitive damages against the defendants, including prejudgment interest "at the maximum rate allowable by law."
The defendants include NHSB Chairman and CEO Peyton R. Patterson as well as members of the bank’s board of directors, including United Illuminating Co. CEO Nathaniel D. Woodson, Yale-New Haven Hospital CEO Joseph A. Zaccagnino, Albertus Magnus College President Julia M. McNamara and others.
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