Commerce founder sues his old company

January 15, 2008 6:53:24 PM PST
The founder of Commerce Bancorp has sued his old company claiming he was wrongly forced out last year.

In a lawsuit filed this week in U.S. District Court in Washington, Vernon W. Hill II said his ousting cost him more than $50 million in damages and his wife another $7.5 million.

Bank spokesman David Flaherty did not return a call Tuesday.

Hill founded Commerce in 1973 with one branch. Using a business model taken more from the fast-food industry than banking, Hill, who owns dozens of Philadelphia-area Burger King franchises, oversaw it as it expanded to about 425 locations along the East Coast.

But it was his unconventional way of doing business that ended his career at the bank.

Last June, he was pushed out as part of an agreement with the federal Office of the Controller of the Currency. The regulator was troubled with the bank's double-dealing; a partnership Hill controlled owned the land that many of the banks sat on.

Hill's wife, Shirley Hill, ran InterArch, an architecture and design firm that designed the branches.

He disclosed the side businesses, but it was not until the bank became a major player that regulators found them to be a problem.

In the lawsuit, filed on behalf of Hill, his wife and Interarch, Hill claims the bank has not paid him the roughly $12 million or granted him about $3.5 million in stock options it owes him.

Hill also claims that being pushed out of Commerce made it hard for him to find another job. Eventually, he made his own. He announced in November that he and a former Commerce analyst would start a private investment group, Hill-Townsend Capital, based in Chevy Chase, Md.

The suit also claims Interarch has not been paid nearly $3 million it is owed. Interarch also claims that Commerce violated copyright protections by using Interarch's designs and has undone the business by hiring away some of its key employees.

In October, Commerce announced it was being bought by Toronto-based TD Financial Group in an $8.5 billion cash and stock deal. The sale is to close in February.

The company's stock was trading Tuesday afternoon at $36.45, down 46 cents.