Pub. 10 2020 Issue 1

16 www.azbankers.org hour, two days before the loan matures, leaving the borrower in the lurch without replacement financing. • Don't mislead the borrower about the bank's intentions to pursue a receivership or a trustee's sale. If that will continue to be a risk for the borrower, always remind the borrower of that risk. • Refuse to accept performance from a borrower or guarantor pursuant to an agreement that has not been fully memorialized and signed by parties as you may bind the bank under the part performance exception to the Statute of Frauds, even before your loan committee has approved or rejected the proposal. For instance, if you are inclined to accept a loan modification fee from a borrower leaving for a rural vacation with no access to email or the internet, set up an escrow and avoid bank accep- tance of the funds until the negotiation and execution of all of the loan modification documents. • If forced to proceed with litigation, carefully consider with bank counsel how best to proceed to vindicate the rights and remedies of the bank, without any borrower or guarantor thinking the bank is trying to be punitive, which may lead to litigation that is more contentious than necessary to achieve the bank's goals. Is it absolutely necessary to pursue, without notice to the borrower, receivership or a pre-judgment writ of garnishment to seize the borrower's deposit accounts? Have you considered who you are collecting from at least as much as the bank's legal rights and remedies? Conclusion At the end of the day, banks can limit their risk, avoid litigation and prevail against frivolous defenses and counterclaims, but there will always be some small percentage of customers who will seek to take advantage of alleged promises that are unenforceable under the Statute of Frauds, a collection of telephonic statements taken out of context and used to pursue a fraud claim, or other state- ments made by phone, in person or by email during negotiations to inflict claims, defenses, and resulting attorneys' fees and costs upon the bank in an attempt to extract a favorable, discounted settlement from the bank. w Rick Herold is a partner at Spencer Fane LLP in the firm's Phoenix office. He has significant mediation, arbitration, and trial experience in financial services litigation for banks and other creditors. His represen - tative matters demonstrate a practical and tailored approach to dispute resolution, leading to early mediated resolutions, targeted summary judgment efforts to resolve federal and state court cases early and avoid trial, and successful jury trial results. CALENDAR OF EVENTS MARCH 2020 Monday, March 23-25, 2020 GR Summit Washington, D.C. APRIL 2020 Thursday, April 23, 2020 Annual Tucson Board of Directors Reception Tucson JUNE 2020 Thursday, June 11-13, 2020 Annual Convention Enchantment, Sedona AUGUST 2020 Thursday, August 20, 2020 Congressional Roundtable Phoenix OCTOBER 2020 Tuesday, October 6, 2020 Fraud and Security Seminar National Bank of Arizona DECEMBER 2020 Thursday, December 3, 2020 Holiday Party Lon’s Continued from Page 15