A $225 million lawsuit brought against First Security Bank of Utah by the former owners of Tracy Collins Bank and Trust has been dismissed "with prejudice," meaning it can't be brought again.
U.S. Bankruptcy Judge Glen Clark and U.S. District Judge David Sam have entered successive orders approving the terms of a settlement and ordering dismissal of the suit brought by John and Marylin Dahlstrom against First Security.The Dahlstroms have also filed a lawsuit against First RepublicBank of Texas which, along with First Security, had financed the Dahlstrom's purchase of Tracy Collins. That suit is still active.
In their suit against First Security, the Dahlstroms had alleged that First Security had conspired with First RepublicBank to block the sale of Tracy Collins. After the Dahlstrom's filed for bankruptcy and ownership of Tracy Collins reverted to First RepublicBank, First Security was one of the petitioning creditors in the proceedings, which are still pending.
According to a First Security spokesman, under terms of the settlement First Security retained all of the collateral pledged to it by the Dahlstroms and paid nothing to the Dahlstroms for dismissal of the suit.
First Security said it agreed to grant the Dahlstroms additional time to redeem an interest in Marylin Dahlstrom's family ranching company, which also had been pledged to First Security.
The spokesman said the Dahlstroms have also agreed to return to First Security certain fixtures removed from their residence following foreclosure on the property.
"We feel that the terms of the settlement agreement confirm First Security's original contention that the allegations of the Dahlstrom lawsuit were without merit," said the spokesman.
"We believe the bank's vigorous defense of the case led to this settlement. Banks across the nation have been plagued by a wave of lender liability lawsuits designed to extract large settlements, but as First Security has done successfully in the past, we intend to vigorously defend ourselves from such attacks."