The U.S. Court of Appeals for the Third Circuit on May 2 ruledthat PNC Bank's excess insurer is not liable to provide coverage for a $102 millionsettlement the bank reached with plaintiffs in an overdraft class action.
In a ruling that affirmed in part, and vacated in part, the districtcourt's ruling, the appellate court denied coverage for the entire settlement amount.The lower court had previously ordered AXISInsurance Co. to pay the $30 million of attorney fees included in thesettlement.
PNC faced six class-action lawsuits over alleged manipulationof overdraft fees and failure to disclose to bank customers that they could optout of the overdraft option on their accounts, The Legal Intelligencer reported. The bank's excess insurers, and Axis Insurance,denied coverage for the $102 million settlement, arguing that the settlement paymentrepresented a refund of the overdraft fees previously paid by customers to the bankfor professional services and, hence, fell within the professional services chargeexception to damages of the policy. The bank, meanwhile, argued that the policyterms were ambiguous and the exception should be constructed to favor coverage.
Houston Casualty had previously been dismissed from the litigation.
PNC Financial ServicesGroup Inc. is the holding company of PNC Bank.