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Bankers and lawyers aren’t the most popular professionals in the eyes of the public. So it probably shouldn’t come as a surprise that federal jurors considering a case pitting the American Association for Justice (formerly the Association of Trial Lawyers of America) against Wachovia Bank couldn’t manage to pick a side last week. On Thursday, Washington, D.C., federal district court judge Royce Lamberth declared a mistrial in the two-year-old suit after jurors struggled through six days of deliberations. AAJ and its lawyers at Susman Godfrey had accused Wachovia of breach of contract and fraud, alleging that the bank improperly changed the terms of a $89.5 million loan for the lawyer group to buy a building for its headquarters in downtown D.C. before the sale was set to close. AAJ alleged in its 2007 amended complaint that it agreed to the loan–and to a material adverse change clause that allowed the bank to back out if market conditions impaired its ability to sell the loan–only after Wachovia assured it that the brewing downturn in the commercial mortgage-backed securities market wouldn’t affect the bank’s commitment. Wachovia, represented by Mayer Brown, denied making assurances about its ability to sell the loan, and argued that it had invoked the material adverse change clause after the CMBS market crashed. AAJ alleged that Wachovia’s “eleventh-hour repudiation” of its loan commitment caused the group “enormous harm” because it left it unable to find comparable financing and jeopardized its bid for the building and its $5 million deposit. (AAJ eventually reached an agreement with another lender.) Susman Godfrey’s Stephen Susman, who delivered opening and closing arguments for AAJ, told us that Wachovia might have settled the case if Judge Lamberth hadn’t decided last month to reject AAJ’s position that damages should be calculated as of the time of the alleged breach–which would have put Wachovia on the hook for as much as $33 million. Instead, the bank faced damages of $6.7 million, based on current market values. Both sides were so worried about their images in the minds of the jurors that before trial they signed a joint stipulation that served as a mutual non-disparagement pact. It stated that “Wachovia¹s counsel shall not make any derogatory remarks generally about trial lawyers, and AAJ¹s counsel shall not make any derogatory remarks generally about banks or Wall Street.” In the end though, the temptation to take a jab at each other’s stereotypes proved too great. According to a transcript of the closing arguments, Wachovia lawyer Mark Ryan of Mayer Brown called the plaintiffs “street fighters” and “bullies” who failed to get an agreement in writing but decided, “we’re going to sue you anyway.” Susman, who told us Ryan’s statement’s violated their agreement, responded, “ “He said all trial lawyers do is sue people. I thought we weren’t going to be calling names at each other. But guess what banks do. And guess what Wachovia is.” Susman said his firm interviewed members of the eight-person jury and found them “split right down the middle.” He said almost all of them disapproved of Wachovia’s loan practices, but they had trouble digesting the notion that the country’s most powerful trial lawyer’s association never bothered to get Wachovia’s assurances about the loan in writing. “It’s a case that obviously creates strong emotions on either side, and there’s a good chance the jury’s gonna look at it as Evil vs. Evil,” Susman told us. “I hope next time we can improve our presentation, which I think we can, and get a better jury.” Mayer Brown’s Ryan told us that the jurors were split five to three in favor of Wachovia, and none offered any criticism of Wachovia that he could recall. “The jury was very uncomfortable with not holding the trial lawyers to the express terms of the contract,” Ryan said. “This was the biggest financial collapse since the Great Depression,” Ryan said. “If this wasn¹t a material adverse change, what is?”

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