By Kevin Eigelbach – Reporter, Louisville Business First
Jul 19, 2013, 12:24pm EDT
Attorneys for PBI Bank and its holding company, Porter Bancorp Inc. (NASDAQ: PBIB), plan to ask that a $7 million verdict by a Jefferson Circuit Court jury against the bank be set aside.
Doug Sharp, special counsel to the president of PBI Bank, said in an interview that the bank’s attorneys plan to file an objection in writing, probably on Monday, “setting forth what we believe are the errors (made in the verdict) and our defenses.”
The jury on Tuesday night awarded $7 million in damages against PBI Bank, $5.5 million of which were punitive damages.
The case involves developer J. Scott Hagan and his former plan to build Signature Point, a complex 414 apartments and 299 condominiums on 90 acres off English Station Road, near Christian Academy of Louisville.
PBI lent Hagan more than $25 million to build the project, which was the largest loan in the PBI portfolio of loans at the time, said Larry Zielke, who is representing Hagan in the case.
The project went awry during the last recession, when the local condo market “hit the skids,” Zielke said. “You couldn’t give them away.”
PBI management asked Hagan to deed the property to PBI in exchange for forgiving the loan, Zielke said, and Hagan agreed if he could keep the 30 acres planned for apartments. While they were negotiating, Zielke said, the bank arranged to sell the apartment property to a third party, without telling Hagan.
Hagan eventually deeded all the property back to the bank, and the bank sold the apartment property for $3.7 million.
Hagan’s claim, Zielke said, was that by not telling him about the third-party offer for the property, the bank denied Hagan a business opportunity and failed its fiduciary duty to him.
Zielke said he plans to ask the court on Monday to enter a judgment in the case based on the jury’s verdict. But Sharp said PBI will ask the judge not to enter the judgment.
The judge’s options would include modifying the verdict or not entering it altogether, Sharp said.
He declined to say what errors the bank thinks were made, or what defenses the bank might use.
If the judge does enter a judgment, he said, the bank would have 30 days to appeal to the Kentucky Court of Appeals. But the trial judge “has the first opportunity to reverse what we think is error,” he added.