PBI Bank, a subsidiary of Porter Bancorp, lost a jury verdict that requires the financial institution to pay compensatory damages of $1.5 million and $5.5 million in punitive damages to a real estate developer.
However, Doug Sharp, corporate counsel representing PBI Bank, said the Louisville, Ky.-based financial institution has filed an objection to this court ruling claiming a number of issues in this case had errors.
The case stemmed from a settlement in which PBI Bank agreed to release J. Scott Hagan and his company, Signature Point, from obligations of more than $26 million in debt regarding a development project where about 700 apartments and condominiums were supposed to be built in Louisville.
According to PBI, Hagan was granted a right of first refusal to repurchase a tract of land within the project once he signed over the deed in exchange for forgiving the loan. Meanwhile, a third-party made an offer to buy the same tract of land from PBI. When Hagan declined to exercise his right of first refusal, PBI sold the tract to the third-party.
But Hagan claimed in the lawsuit that PBI used confidential information about Hagan’s finances to organize a deal with another developer at a higher price without informing him of this transaction.
In the lawsuit, Hagan claimed that PBI had knowledge of the third party before he deeded the property to the bank. The plaintiffs asserted claims of fraud, breach of fiduciary duty, breach of the duty of good faith and fair dealing, tortuous interference with prospective business advantage and conspiracy to commit fraud, negligence, and conspiracy against PBI Bank.
Sharp said PBI is going to ask the judge to not enter a judgment in this case due to findings that are “negligent and contrary to Kentucky law.”
Through the first quarter of 2013, Porter Bancorp had $1.1 billion in assets. The bank is expected to announce its second quarter earnings later this week.
