United States District Court, W.D. Kentucky, Paducah Division
MEMORANDUM OPINION AND ORDER
N. Stivers, United States District Judge.
matter comes before the Court on Defendant's Motion to
Strike Plaintiffs' Jury Demand (DN 48), Defendant's
Motion for Summary Judgment (DN 68), and Defendant's
Motion to Exclude Plaintiffs' Expert Witness (DN 83). For
the following reasons, Defendant's Motion for Summary
Judgment is GRANTED, and Defendant's
Motion to Strike Plaintiffs' Jury Demand and
Defendant's Motion to Exclude Plaintiffs' Expert
Witness are DENIED AS MOOT.
2003 and 2010, a series of eleven commercial loans totaling
$11 million were made by Defendant Branch Banking & Trust
Company (“BB&T”) to Plaintiffs KSA
Enterprises, Inc. (“KSA”), and Pain Management
Resources, P.S.C. (“PMR”) (collectively
“Plaintiffs”). (Def.'s Mot. Summ. J. Exs.
4-14, DN 68-5 to 68-15). Dr. Laxmaiah Manchikanti
(“Manchikanti”), Plaintiffs' principal,
entered into the loan agreements on Plaintiffs' behalf.
(Def.'s Mot. Summ. J. Exs. 4-14). Manchikanti and Steve
Hawkins (“Hawkins”), an accountant for
Plaintiffs, served as points of contact with BB&T on all
matters associated with the lending relationship.
(Manchikanti Dep. 37:22-38:14, Aug. 24, 2016, DN 68-3).
During the relevant period, Randle Hendon
(“Hendon”), a loan officer at BB&T's
Paducah branch, served as Plaintiffs' main contact at
BB&T. (Hendon Dep. 33:5-35:13, Aug. 23, 2016, DN 68-16;
Thomas Dep. 16:15-17:3, Oct. 27, 2016, DN 64).
2010, Manchikanti asked Hendon to look into options for
reducing Plaintiffs' interest rates by refinancing or
consolidating Plaintiffs' loans. (Manchikanti Dep.
64:12-15, 67:12-21, 74:13-16; Hawkins Dep. 77:18-22, Aug. 24,
2016, DN 68-15). At some pointed during 2010, Hendon offered
Plaintiffs a potential refinancing option for lowering their
interest rates. (Manchikanti Dep. 68:4-25). Hendon spoke with
a senior credit officer about the refinance request and the
pair ran “through some of the numbers on what [they]
thought [they] might be able to do.” (Hendon Dep.
40:24-42:8). A proposal was developed that included a lower
interest rates for Plaintiffs, if they were willing to pay
some amount equal to roughly half of the interest that would
accrue in the following year. (Manchikanti Dep. 65:22-66:6;
Hawkins Dep. 83:20-84:22). Manchikanti rejected the proposal.
(Manchikanti Dep. 68:14-18; Hawkins Dep. 85:8-17; Hendon Dep.
Manchikanti again inquired into whether BB&T would
consolidate or refinance his loans and on February 1, 2011,
Hendon responded indicating that he thought BB&T
“[would] be able to do something.” (Def.'s
Mot. Summ. J. Ex. 17, at 1, DN 68-18 [hereinafter Emails]).
Hendon stated that he would prepare a package to enable a
regional loan administrator to review the refinance request.
(Emails 1). In a series of e-mails throughout February and
March 2011, Hendon told Plaintiffs that the refinance request
was being prepared for review by BB&T. (Emails 1-5). On
February 14, 2011, Hendon told Hawkins he would be the first
to know when additional information was received about
“what [it would] take” to come up with other
potential refinancing options. (Emails 2). In a follow-up
email later that month, Hendon apologized for the delay and
explained that, because of the size of Plaintiffs' loans,
additional information and more thorough analysis was needed.
March 14, 2011, BB&T completed an internal “Loan
Review Summary” assessing the status of Plaintiffs'
loans and the parties' overall lending relationship.
(Def.'s Mot. Summ. J. Ex. 1, DN 68-2 [hereinafter Loan
Review Summary]). As part of the Loan Review Summary,
BB&T prepared a “Global Financial Analysis”
assessing the overall financial status and performance of
Plaintiffs' and Manchikanti's various other
companies, as well as that of Manchikanti and his wife,
individually. (Loan Review Summary 6-7). In the Global
Financial Analysis, BB&T expressed concern about
Plaintiffs' financial status because of identified
weaknesses in Manchikanti's businesses. (Loan Review
Summary 6-7). As a result of these concerns, the Loan Review
Summary recommended a downgrade of Plaintiffs' lending
relationship to a “risk grade 7.” (Loan Review
one or more loans has a “total business exposure”
of over $1 million and receives a risk grade of 7 or higher,
it is classified internally as a “problem loan”
and placed on a watch list. (Thomas Dep. 56:5-7; Thomas Decl.
4-5, DN 65). Under the terms of BB&T's Problem Loan
Management Policy, “[d]ue to the high level of risk,
[BB&T's] exposure strategy for Watch List clients
[was] either “decrease” or “out.”
(Def.'s Mot. Summ. J. Ex. 20, at 5, DN 67). Still, Mark
Thomas, BB&T's Rule 30(b)(6) deponent, testified that
a classification as a problem loan did not foreclose the
possibility that BB&T would refinance Plaintiffs'
existing loans. (Thomas Dep. 90:22-93:16, 95:14-96:4;
Def.'s Mot. Summ. J. Ex. 18, ¶¶ 6-8, DN 68-19).
According to Thomas, if BB&T determines that a refinance
is appropriate in view of the attendant risk and exposure it
can do so even if a loan has been classified as a problem or
watch list loan. (Thomas Dep. 92:2-4, 93:8-94:22; Thomas
Decl. ¶¶ 6-8). Further, BB&T's policies
contemplate the idea of modifying a risk grade 7 loan, as the
policy requires “co-approval by the appropriate Credit
Officer, Loan Administrator and/or Special Assets
Officer” to modify loans in this category. (Def.'s
Mot. Summ. J. Ex. 19, at 9-10, DN 66).
the Loan Review Summary was released BB&T's credit
officer, Warren Takacs (“Takacs”), notified
Hendon that he had completed his review of Plaintiffs'
relationship package. (Pls.' Resp. Def.'s Mot. Summ.
J. Ex. 1, at 8, DN 75). Takacs sent comments which he
directed Hendon to use during conversations with Plaintiffs
prior to the Problem Loan Administration Asset Manager's
involvement. (Pls.' Resp. Def.'s Mot. Summ. J. Ex. 1,
at 8). Takacs stated “[i]t's not the most enjoyable
part of our roles to see a client's financial stress
issues result in classified loans for us, but to provide good
client service and adhere our values we have to call it like
we see it and help Dr. M to help himself out of harm's
way.” (Pls.' Resp. Def.'s Mot. Summ. J. Ex. 1,
at 8). Comments included in a “Commercial Loan Review
Risk Summary” apparently prepared by Takacs in late
March 2011, indicated that BB&T should “provide the
financial counsel that [Plaintiffs'] non-core businesses
and their debts should be reduced or liquidated before the
problem grows larger.” (Pls.' Resp. Def.'s Mot.
Summ. J. Ex. 1, at 9).
March 30, 2011, Hendon met with Hawkins and provided him with
a portion of the Loan Review Summary. (Pls.' Resp.
Def.'s Mot. Summ. J. Ex. 1, at 8). Hendon asked Hawkins
for more information regarding Plaintiffs' and
Manchikanti's finances, and Hawkins requested time to
obtain this information. (Emails 6). Later, Hawkins informed
BB&T by letter that the Manchikantis' 2010 personal
tax returns would not be available until sometime in June and
that their personal financial statement would not be
completed until sometime before the end of July 2011.
(Def.'s Mot. Summ. J. Ex. 21, at 3, DN 68-22 [hereinafter
Hawkins Letter]). Hawkins's letter stated:
We have to be able to substantiate ongoing cash flow
sufficient to meet the needs of the various Dr. M. owned
companies, as well as Dr. M. personal debt and living
expenses. Currently, we have too many unanswered questions to
provide a sufficient level of comfort that Dr. M can sustain
what is already outstanding. Of primary concern currently is
the [fast-food restaurants'] performance.
(Hawkins Letter 3).
thereafter contacted Hendon on May 10, 2011, to check on the
status of the “credit review/request.” (Emails
7). Hendon responded that he would let Hawkins know when he
received any further information. (Emails 7-8). Hawkins
followed up in June and again asked about the status of the
“credit/refi review.” (Emails 10). Hendon
answered that he had experienced some technical problems with
his email and apologized for the lengthy review process.
(Emails 10-11). On June 30, 2011, Hendon emailed Manchikanti
to apologize that he had not been able to prepare a financing
proposal for another unrelated transaction involving the
purchase of a fast-food restaurant in Louisville. (Emails
12). Hendon said the loan review seemed to be taking too long
and would be “pushing even harder” to move things
forward now that BB&T had added another regional loan
specialist. (Emails 12).
reached out to Kim Patterson, a portfolio manager at
BB&T, to discuss the status of Manchikanti's loan
review. (Emails 13-16). Melanie Ranburger, another portfolio
manager, reminded Hendon that BB&T was still waiting to
receive Manchikanti's personal tax returns before it
could proceed with the loan review. (Emails 17). On August 2,
2011, BB&T again requested Plaintiffs' 2010 financial
documentation to assess the loans. (Emails 18).
September of 2011, Ajamu Stoner (“Stoner”), a
“problem loan administrator” with BB&T, met
with Manchikanti to discuss the loans. (Emails 20-21). Stoner
explained BB&T's concerns about the loans and
revealed to Manchikanti that the loans were classified as
“problem loans.” (Manchikanti Dep. 195:5-13,
122:12-19). Manchikanti decided in early October 2011 to
refinance Plaintiffs' loans with another lender.
(Manchikanti Dep. 127:24-128:5). In July 2012, Plaintiffs
refinanced most of their loans with Community Financial
Services Bank (“CFSB”). (Manchikanti Dep.
129:21-22). At that time, CFSB had hired Hendon, who worked
directly with Manchikanti to refinance his loans at CFSB, and
Hendon still has an ongoing business relationship with
Manchikanti at CFSB. (Manchikanti Dep. 129:23-130:25).
brought this action initially asserting claims of breach of
contract, fraud, negligent misrepresentation, fraud in the
inducement, unjust enrichment, and punitive damages. (Compl.,
DN 1). On September 23, 2015, this Court issued an Order
dismissing Plaintiffs' claims for breach of contract,
fraud in the inducement, and negligent misrepresentation, as
well as narrowing Plaintiffs' claims for fraud and unjust
enrichment. (Mem. Op. & Order 15, DN 13). BB&T now
moves for summary judgment of Plaintiffs' remaining
claims. (Def.'s Mot. Summ. J., DN 68). Thus, this matter
is ripe for adjudication.
Court has subject matter jurisdiction over this action under
28 U.S.C. § 1332 as there is complete diversity between
the parties and the amount in controversy exceeds the sum of
STANDARD OF REVIEW
ruling on a motion for summary judgment, the Court must
determine whether there is any genuine issue of material fact
that would preclude entry of judgment for the moving party as
a matter of law. See Fed. R. Civ. P. 56(a). The
moving party bears the initial burden of stating the basis
for the motion and identifying evidence in the record that
demonstrates an absence of a genuine issue of material fact.
See Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). If the moving party satisfies its burden, the
non-moving party must then produce specific evidence proving
the existence of a genuine issue of fact for trial. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
the Court must view the evidence in the light most favorable
to the non-moving party, the non-moving party must do more
than merely show the existence of some “metaphysical
doubt as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986) (citation omitted). Rather, the non-moving party must
present specific facts proving that a genuine factual issue
exists by “citing to particular parts of the materials
in the record” or by “showing that the materials
cited do not establish the absence . . . of a genuine
dispute.” Fed.R.Civ.P. 56(c)(1). “The mere
existence of a scintilla of evidence in support of the
[non-moving party's] position will be insufficient; there
must be evidence on which the jury could reasonably find for
the [non-moving party].” Anderson, 477 U.S. at