On August 30, 2021, the legal saga of National Prearranged Services came to a rather anticlimactic conclusion. In a relatively short decision, the Eighth Circuit Court of Appeals affirmed Judge Richard Webber’s July 2019 judgment that awarded $102,135,393.07 damages against PNC Bank, a successor to the NPS preneed trusts. The final damages award is a far cry from the original judgment of $490 million awarded by a jury in May 2015. The hopes of funeral directors were quickly dashed when PNC Bank successfully appealed the 2015 judgment and was granted a new trial. Confined to breach of trust claims against PNC Bank (and not tort claims), the trial court found Allegiant Bank guilty of several fiduciary breaches. Without the tort claims, the trial court was limited as to what damages could be awarded, and the award was reduced by $390 million. Funeral homes hoping to share in the original damages award will be disappointed.
For preneed fiduciaries, the Eighth Circuit’s decision affirmed all of the trial court’s findings regarding Allegiant’s breaches of trustee duties. The trial court’s findings of facts covered 305 pages, and we summarized some of those fiduciary breaches in three posts made in August 2019. Paramount among those duties was the due diligence required for “know your client”. The trial court also faulted Allegiant for its failure to maintain or supervise consumer level deposit records. The appeals decision affirms that the days of treating the preneed trust as custodian in nature are long gone