Seattle Family Sues Bank Seeking $231 Million

A wealthy Seattle family that lost much of its fortune in the economic downturn is fighting to recover nearly a quarter billion dollars in a legal battle with KeyBank.

In U.S. District Court in Seattle, the Bingham family, heirs to the Fisher fortune, is demanding more than $231 million in direct and consequential damages from Ohio-based KeyBank.

The suit alleges the bank failed to meet its fiduciary duty in managing funds for the family and engaged in “grossly imprudent gambling with the defendants’ assets.”

The Binghams and KeyBank are arguing in federal court over whether the two sides had reached a binding settlement on loans made with the bank.

In a hearing this week, Judge Ricardo S. Martinez gave KeyBank until Sept. 30 and the Binghams until Oct. 8 to flesh out their arguments about whether a settlement was reached.

The legal fight began with a KeyBank complaint that was met with counterclaims from the Bingham family.

Stakes are high. If KeyBank prevails, the Binghams would owe the bank $14 million and would not be able to pursue their claim for $231 million. But if the judge rules that a settlement was not reached, the Binghams can continue pressing their claim that KeyBank mishandled the family money and unfairly “swept” $83 million away from the family account during the financial crisis, which caused the family to default on other loans with other lenders. KeyBank is a unit of KeyCorp, which is publicly traded.

The Binghams’ counterclaim makes the KeyBank lawsuit one of the largest yet filed in the Seattle region involving real estate investors and lenders, who are trying to staunch losses suffered in the commercial real estate market crash.

If the Binghams are successful, the hundreds of millions of dollars they might collect would substantially restore a fortune lost in a series of real estate deals orchestrated through Bellevue-based Centurion Financial Group that failed when the market collapsed. Centurion’s principal owners are Thomas Hazelrigg III, who is a longtime business associate of bankrupt Seattle developer Michael Mastro Sr., and Scott Switzer.