WASHINGTON — A federal appeals court on Friday overturned a judgment under which Penthouse magazine publisher Bob Guccione won $129 million from Dominion Federal Savings & Loan, wiping out a decision that had threatened to force the McLean, Va.--based thrift out of business.
The original judgment, handed down last year in a suit brought by Penthouse International Ltd., exceeded Dominion's net worth. Had it been upheld, it might have forced regulators to step in and compel a sale of the institution.
The appellate court's decision "was a big win for Dominion and one we were totally entitled to," said the thrift's president, Richard S. Lawton. Penthouse officials could not be reached for comment.
The Penthouse lawsuit charged Dominion with backing out of a financing agreement to build a casino in Atlantic City, N.J. A lower court last year awarded a total of $136 million to Penthouse and another plaintiff, Queen City Savings & Loan, after finding Dominion had not acted in good faith.
The case had been widely watched, not just for its impact on Dominion but also because suits against lenders by borrowers on failed projects are becoming increasingly common. The banking industry has beaten back many of these, but the Penthouse verdict had caused considerable alarm.