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July 19, 2013
17:54 EDTPBIBPorter Bancorp announces unfavorable jury verdict, plans appeal
On July 16, a jury in Louisville, Kentucky returned a verdict against PBI Bank, the banking subsidiary of Porter Bancorp, awarding the plaintiffs compensatory damages of $1.515M and punitive damages of $5.5M The case arose from a settlement in which PBI Bank agreed to release the plaintiffs and guarantors from obligations of more than $26M related to a real estate project in Louisville. The plaintiffs were granted a right of first refusal to repurchase a tract of land within the project. In exchange, the plaintiffs conveyed the real estate securing the loans to PBI Bank. A third-party made an offer to purchase the tract of land. After plaintiffs declined to exercise their right of first refusal, PBI Bank sold the tract to the third-party. Plaintiffs alleged that the Bank had knowledge of the third-party before the conveyance of the land by the Plaintiffs to the Bank. 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. After conferring with its legal advisors, PBI Bank believes the findings and damages are excessive and contrary to the law, and that it has meritorious grounds to seek reconsideration of the verdict and to appeal. PBI Bank intends to file motions to reduce or overturn the award and otherwise for reconsideration of the case.
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