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Comerica Lawsuit Against Bombardier Gets Dismissed Yet Again

Zacks Equity Research

Per a Reuters article, Comerica’s CMA lawsuit against Bombardier Inc, under which it sought about $10.1 million was dismissed in Manhattan Court. The lawsuit was filed in January 2016, after the Canadian aircraft maker was unable to find buyers for four planes with expired leases.

The lawsuit was previously dismissed by a U.S. District Judge in July 2017, on grounds that Comerica was unable to show that the planes had been returned to the lessor.

Per the article, the latest dismissal was with prejudice, under which Comerica will not be able to file an amended complaint.

Brief Recap

The complaint was filed in the U.S. District Court in Manhattan by a unit of Comerica — Comerica Leasing Corp. The unit stood as beneficiary for the party that bought the planes from Bombardier and then leased them for 16.5 years.

Per the lender, Bombardier had vouched to pay minimum residual values for the concerned jets and promised to make up for any shortfalls, in case no buyers were found or it received only low bids within 90 days after the leases expired.

But after failing to find buyers during the 90-day period, Bombardier breached its contractual obligations by failing to make required payments to Comerica.

Legal Encounter of Other Banks

Recently, HSBC Holdings HSBC was relieved partially as the General Court, Europe's second highest in conjunction with European Commission, agreed to revoke 33.6 million euros ($36.9 million) fine due to inadequate reasoning.

Also, Bank of America BAC came under investigation by the Consumer Financial Protection Bureau to find out if it opened unauthorized customer accounts to meet sales goals back in 2014.

Finally, three entities of Raymond James RJF collectively agreed to pay $15 million for wrongfully charging advisory fees on inactive retail client accounts and for charging extra commissions for brokerage customer investments in unit investment trusts.

Our Take

Comerica’s focus on revenue enhancing initiatives, which is likely to drive operational efficiency, is encouraging. Further, the company is expected to benefit from a strong capital position and loan growth in the near term. However, escalating expenses on technological developments remain a concern.

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