A Kentucky jury has awarded $7 million to a developer who claimed that Porter Bancorp (PBIB) committed fraud when it backed out of planned loan sale.
Porter, a $1.1 billion-asset company in Louisville, Ky., will appeal the judgment, it said in a statement. The judgment includes $5.5 million in punitive damages and $1.5 million in compensatory damages.
John Taylor, Porter's president, and Hagan's lawyer, Laurence Zielke, did not return calls seeking comment.
Scott Hagan, a developer, claimed that he had reached an agreement with Porter to buy a tract of property that secured real estate loan. Hagan had been developing a multifamily residential facility on the site. The two sides disagreed over whether Porter gave Hagan a right of first refusal to repurchase the lot.
Porter used confidential data obtained from Hagan to find another buyer, Hagan argued in court. Hagan's lawsuit, filed in Jefferson County Circuit Court in Kentucky, alleged fraud, breach of fiduciary duty and other violations.
The judgment is the latest slug of bad news for Porter, which lost $33 million last year. The company still owes $35 million to the Treasury Department as part of the Troubled Asset Relief Program. Porter, which stopped paying Tarp dividends in late 2011, owes the Treasury $3 million in accrued, unpaid dividends.
Porter also continues to operate under a consent order from state and federal regulators that requires the company to improve capital ratios. Porter hired Sandler O'Neill in January to help find ways to recapitalize its bank.