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Williams v. Porter Bancorp, Inc.

United States District Court, W.D. Kentucky

August 22, 2014

JONATHAN C. WILLIAMS, et al., PLAINTIFFS/COUNTER-DEFENDANTS
v.
PORTER BANCORP, INC., et al., DEFENDANTS; PBI BANK, INC., DEFENDANT/COUNTER-PLAINTIFF
v.
MITCH TAYLOR, et al., COUNTER-DEFENDANTS

For Jonathan C. Williams, Daniel E. Sexton, Mobile Home Sales of Central Kentucky, LLC, Fayette Aviation, Inc., Star Lite Development, LLC, 3660 Realty, LLC, Food Service of Lexington, Inc., Georgetown Mobile Estates, LLC, Plaintiffs, Counter Defendants, Cross Defendants: Laurence John Zielke, Nancy J. Schook, LEAD ATTORNEYS, The Zielke Law Firm, Louisville, KY.

For Porter Bancorp, Inc., Defendant, Cross Defendant: Douglas Gene Sharp, LEAD ATTORNEY, PBI Bank, Inc., Louisville, KY.

For PBI Bank, Inc., Defendant, ThirdParty Plaintiff, Counter Claimant, ThirdParty Defendant, Counter Defendant: Jasmine L. Hardin, LEAD ATTORNEY, Timothy A. Schenk, PBI Bank, Inc., Louisville, KY.

For American Tax Funding, LLC, ThirdParty Defendant: James D. Ballinger, LEAD ATTORNEY, The Ballinger Law Firm, PLLC, The Ballinger Law Firm, PLLC, Prospect, KY.

For Jamos Fund I, LP, ThirdParty Defendant, Counter Defendant, Cross Defendant : Jessica L. Lantaff, LEAD ATTORNEY, Cincinnati, OH.

For Daniel E. Sexton, Jonathan C. Williams, Mobile Home Sales of Central Kentucky, LLC, Fayette Aviation, Inc., Star Lite Development, LLC, ThirdParty Defendants, Counter Defendants: Laurence John Zielke, Nancy J. Schook, LEAD ATTORNEYS, The Zielke Law Firm, Louisville, KY.

For Rosenbaum & Rosenbaum, PSC, ThirdParty Plaintiff, Cross Defendant: Joseph L. Rosenbaum, LEAD ATTORNEY, Rosenbaum & Rosenbaum PSC, Lexington, KY.

For Star Lite Development, LLC, Daniel E. Sexton, Jonathan C. Williams, Mobile Home Sales of Central Kentucky, LLC, ThirdParty Plaintiffs, Counter Claimants: Laurence John Zielke, Nancy J. Schook, LEAD ATTORNEYS, The Zielke Law Firm, Louisville, KY.

For Andrei Korossy, ThirdParty Defendant, Cross Claimant, Counter Claimant: Farrah W. Ingram, White Peck Carrington, LLP, Mt. Sterling, KY.

Page 677

MEMORANDUM OPINION AND ORDER

John G. Heyburn II, Senior United States District Judge.

Before the Court is Defendant Porter Bancorp, Inc.'s (" Porter Bancorp" ) motion to dismiss Plaintiffs' Complaint pursuant to Rule 12(b)(6). Plaintiffs [1] are customers of PBI Bank, Inc. (" PBI" ), who sued various parties allegedly involved in an illegal tying arrangement, including PBI, Porter Bancorp, and three individuals, Mark Delcotto, Wayne Stefanovich, and Maria Bouvette.[2] Plaintiffs allege (1) breach of contract and breach of the duty of good faith and fair dealing against PBI; (2) negligence against PBI, Porter Bancorp, Delcotto, Stefanovich, and Bouvette; and (3) illegal tying in violation of 12 U.S.C. § 1972 against PBI and Porter Bancorp, as well as punitive damages based upon these claims. Plaintiffs Daniel Sexton and

Page 678

Fayette Aviation only allege an additional cause of action against PBI for improper re-possession and violation of K.R.S. § 355.9-207. The current motion only directly affects claims against Porter Bancorp.

I.

According to Plaintiffs, the facts are these.

On January 30, 2008, Plaintiff Jonathan Williams obtained a loan with PBI for $4.25 million, which was set to mature on June 30, 2008, and secured by real estate owned by Plaintiff Daniel Sexton.

On February 19, PBI, through its Vice President Joseph Tobin, told Williams that PBI had a loan to Brooklyn Pizza guaranteed by Brad and Matt Schooler, and that Brooklyn Pizza was facing a forcible detainer suit and would have to close unless $24,000 in delinquent lease payments were made. PBI also told Williams that if Brooklyn Pizza closed, PBI's loan to it would go unpaid and would have to be written off. PBI told Williams and Sexton that in order for PBI to renew the $4.25 million loan or to make a new loan to pay off the $4.25 million under workable terms, Williams and Sexton must pay the $24,000 owed by Brooklyn Pizza and obtain a 51% ownership in that company, thereby taking over the debt fro Brooklyn Pizza to PBI. Williams and Sexton reluctantly agreed.

After Williams and Sexton began operating Brooklyn Pizza through Plaintiff Food Service of Lexington, Inc., PBI told them that another condition for renewing the $4.25 million loan was to allow a PBI agent to pick up the daily deposits of ...


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