(CN) - "Countless mistakes" by law firm Winstead PC on a $62 million loan workout and foreclosure caused a client big problems, NexBank says in court.
Winstead is the sole defendant to the action filed Feb. 13 in Dallas County District Court, which is rooted in NexBank's loan of $62 million in 2007 to finance a borrower's purchase of two office buildings on a corner of Luna Road and Interstate 635, in Farmers Branch, Texas.
Dallas-based NexBank claims to have retained Winstead when this borrower indicated in late 2008 "that it would be unable to repay the two-year loan that was set to mature in January 2009."
Highland Capital Management, as special servicer for noteholders on the loan, joins NexBank as a plaintiff in the action.
They say chose Winstead because of "its purported specialized expertise and extensive experience with similar complicated loan transactions involving multiple domestic and foreign participants, and agency and special servicing relationships."
Though they paid Winstead "premium fees for premium work," the firm's shoddy performance "resulted in numerous challenges to plaintiffs' efforts to foreclose upon its collateral and collect a deficiency judgment from the guarantor," the complaint alleges.
"Winstead's mistakes also caused plaintiffs to incur millions of dollars in unnecessary legal expenses that could have been avoided if Winstead had simply done its job properly," the complaint alleges. "Ultimately, Winstead's mistakes forced plaintiffs to settle a litigation against the guarantor for a mere fraction of the amount that plaintiffs would have been entitled to receive had Winstead correctly handled the foreclosure."
Winstead general counsel Don Campbell said the firm will retain counsel and "vigorously defend the lawsuit."
"We believe we'll be vindicated because we don't believe our lawyers committed malpractice," Campbell said in an interview.
Reciting a "laundry list" of "egregious and repeated mistakes," Highland and NexBank say they would not expect such errors from a generally competent attorney, let alone the purported loan-workout specialists at Winstead.
"Plaintiffs, and ultimately the noteholders of the loan for whom NexBank acted as agent and Highland acted as special servicer, incurred tens of millions of dollar in damages related to Winstead's negligent conduct," the complaint alleges. "The likelihood of plaintiffs being able to obtain a judgment against the borrower and the guarantor for the $30-million plus deficiency was greatly reduced and plaintiffs incurred and paid millions of dollars in legal fees, including those related to the foreclosure of the property and the litigation of the wrongful foreclosure counterclaim.
"Plaintiffs, on behalf of themselves and the noteholders of the loan, therefore file this suit to recover from Winstead the more than $20 million dollars in damages caused by its professional negligence and negligent misrepresentations," the complaint continues."
Lackey Hershman attorney Deborah Deitsch-Perez filed the complaint for NexBank and Highland.
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