U.S. Bancorp, Cavner case dismissed

The case, filed by U.S. Bancorp Investments Inc. in 2005, was scheduled to go to trial Dec. 3, but U.S. District Judge Richard Dorr issued an Oct. 12 order dismissing the suit and formally withdrawing sanction motions pending against Cavner and co-defendants Steven Clark, Becky Angus, Devona Breeden and Britney Murray. All four worked for Cavner at U.S. Bank and later took jobs with The Signature Bank, also a defendant.

Neither side would confirm nor deny a settlement had been reached.

Two years running

U.S. Bancorp Investments Inc. filed the suit in U.S. District Court in September 2005, just two days after Cavner joined The Signature Bank – now BancorpSouth. The suit alleged that Cavner violated her confidentiality and nonsolicitation agreements by “improperly attempting to lure away” her former U.S. Bancorp clients.

Specifically, USBI – the investment arm of U.S. Bancorp – accused Cavner of renting two commercial-size copiers and recruiting college students to help copy thousands of confidential client files moved in and out of her office in banker’s boxes.

Attorneys for Cavner and her staff have argued that an alleged “inappropriate relationship” between former USBI executives Melissa Gaustad and Steven Short contributed to a toxic work environment – after Cavner reported it – that prompted the defendants to resign and take jobs at a rival bank.

The defendants also filed motions citing U.S. Bancorp’s 2002 hiring of a former Salomon Smith Barney broker in Washington who copied customer lists for his new employer. When Smith Barney sued U.S. Bancorp, the bank claimed the new broker’s customers would have moved their accounts voluntarily.

Cavner has maintained that her clients willingly transferred their accounts, and her attorneys had petitioned Dorr to allow signed affidavits from those clients into evidence.

Despite Cavner’s claims, a National Association of Securities Dealers arbitration panel ordered her to pay $325,000 in compensatory damages to USBI in October 2006. The panel also ordered co-defendants Clark and Angus to pay $25,000 and $2,000, respectively.

Court records indicate attorneys were still preparing for trial in early September, when a robust stream of court filings ground to a halt. One of the last docket entries was a Sept. 12 order filed by Dorr stating the judge had taken the plaintiff’s sanction motions under advisement and would rule on them after reviewing evidence presented at trial.

Those motions – filed late last year – allege that Cavner and her staff did not return all electronic files taken from USBI and that they “failed to take steps to identify and preserve relevant electronic evidence,” records show. In response to the motions, Dorr appointed technical adviser Mark Johnson in April to oversee a forensic computer investigation.

By early August, attorneys had filed a statement of damages sought by U.S. Bancorp’s banking subsidiary, U.S. Bank National Association, which claimed Cavner’s actions had also resulted in a loss of bank-side business. U.S. Bank estimated damages between $705,000 and $4.9 million, depending on the nature and length of deposits managed by Cavner, according to the statement. The estimates were determined by calculating net interest income on deposit data supplied by the defendants, records show.

“We will ask the jury to assess damages based on this range of assumptions,” the statement read.

On Oct. 10, the court issued a receipt to Cavner for paying the remaining $25,000 of a $51,000 sanction assessed by Dorr in February 2006 for false statements her attorneys made in a December 2005 court hearing.

Cavner’s Kansas City attorney, Charlie German of Rouse Hendricks German May PC, filed a stipulation for joint dismissal of the suit the next day.

No comment

Both sides declined to comment on the suit’s dismissal other than to say that the matter had been resolved to the mutual satisfaction of all parties.

Steve Dale, the senior vice president of media relations for U.S. Bank, would not comment on the bank’s statement of claimed damages or the dollar amount his employer spent litigating the dispute.

Cavner, who was likewise silent about the suit’s termination, read a prepared statement about the future of her business.

“My investment family continues to grow each day,” she said. “And our business expansion has just been remarkable. My focus is on my clients, and I continue to enthusiastically support the betterment of my community.”

In June, Barron’s named Cavner as one of its Top 100 women financial advisers. She placed No. 30 on the 2007 list, with $362 million in assets under management. In 2006, she ranked No. 13 with $300 million in assets under management.

Cavner’s typical account is $500,000, and her typical client’s net worth is $1.5 million, according to research by the magazine. [[In-content Ad]]