The foreclosure-countersuit between Metropolitan National Bank of Little Rock and Fayetteville developer Tom Terminella is spreading into the local banking community.
Lenders are watching the case and Terminella’s damage claim of $50 million against MNB for its possible precedent in lender liability. (Area homebuilder Travis Kershner has declared bankruptcy with debt of more than $10 million, and included in his filing a potential claim of lender liability. Troubled ANB Financial NA held $9 million of Kershner’s loans.)
So far, The Bank of Fayetteville and First State Bank of Lonoke have received subpoenas in the Terminella suit.
Citing confidentiality and the broad nature of the request, BOF has moved to quash a subpoena from Terminella’s side requesting all documents related to any loans “directly or indirectly” associated with current MNB employees Larry Olson and Susan Slinkard, who both formerly worked for BOF and originated the Terminella loans.
In response to Terminella’s claim his other banking relationships have been damaged by MNB’s May 30, 2007, foreclosure on two loans totaling more than $14 million, the bank subpoenaed all First State Bank documents related to Terminella.
FSB has agreed to release the pertinent materials and MNB has agreed to reimburse the bank its estimated costs of $3,000 to collect and copy the documents, which will be put under protective order.
There’s no question Terminella’s side has played hardball against MNB to this point with pointed accusations ranging from incompetence to outright malfeasance.
He has gone as far as to question the medical condition of Slinkard, who was pregnant at the time she was excused from her Oct. 31 deposition because of discomfort during a particularly heated exchange between Terminella attorney Jim Penick and MNB attorney Charles Trantham.
A Jan. 9 filing by MNB indicates Slinkard wasn’t faking. Originally scheduled for delivery in February, she gave birth prematurely on Dec. 27, one day after she was served another subpoena by Terminella’s side while at work.
Recent filings show MNB is starting to take the fight back in kind.
In a request for admissions by Terminella, a motion that usually precedes a deposition, MNB attached a series of workout plans offered by the bank dated March 1, 2007 and letters dated March 21 and April 3 which state Terminella had not responded to either.
The April 3 letter informed Terminella that a $500,000 CD put up as collateral would be liquidated and advised him legal counsel had been assigned to the matter.
Negotiations then resumed through April with several offers and counteroffers, culminating in a May 24 foreclosure abeyance agreement tendered by MNB that would have required a lump sum payment of $540,000 among other terms related to maturity and interest carry payments by Terminella amounting to $40,000 per month.
The loans would have remained in default status because the interest carry was half of his total obligation and the maturity had been accelerated, according to MNB’s offer.
Terminella didn’t sign the agreement, spurring a disappointed e-mail from Olson dated May 30, the day MNB filed its foreclosure action.
“To find out through your attorneys that you all have decided to renege on the plan is very discouraging,” Olson wrote to Terminella. “After I tried in good faith to ‘go the extra mile’ for you in achieving the workout plan that you requested, I personally take this turn of events as an offensive slap in the face.
“I can only assume by your current position that perhaps you were not working with as much good faith as was I.”