Louisville-based Eclipse Bank has sued a former officer, asserting that in statements to Insider Louisville he breached his contract, interfered with business relations and violated the Kentucky Trade Secrets Act.
The former officer’s attorney has asked that the complaint be dismissed because of First Amendment protections, the bank’s contradictory conclusions and because the institution has failed “to state a single claim upon which relief may be granted.”
A hearing in the case is scheduled for 10 a.m. Oct. 20.
In the suit, filed in Jefferson Circuit Court by Louisville attorney J. Gregory Joyner, Eclipse Bank asserts that its former Vice President and Chief Credit Officer Mark Clemons, after leaving the institution on Aug. 2, made statements to Insider “in a blatant, obvious and tortious attempt to disparage the bank and create the false illusion that the bank is in poor financial health and is in danger of failing.”
Insider had reported on Aug. 9 that while Eclipse Bank President Andrew Pyles in a letter to shareholders painted a rosy picture of the bank’s financial health, data from government sources and comments from a former officer who had recently left the bank told a somewhat different story.
Among other things, the former officer, whom Insider did not name, told Insider that he left in part because the bank’s more liberal credit underwriting policies and its focus on out-of-area loans and out-of-area deposit accumulation changed the bank’s risk profile, which he was unwilling to support.
Eclipse said in court filings that it “has reason to believe” that Clemons is the vice president and chief credit officer cited in Insider’s story, and asserted that, with his comments, he violated sections of the Eclipse Bank Team Member Handbook, including that “the unauthorized use or release of confidential information during or after employment with the bank is a breach of this Code of Conduct.”
As a result of Clemons’ actions, the suit claims, Eclipse “has suffered immediate and irreparable injury and will continue to suffer harm. … Eclipse stands to lose numerous bank customers, accounts, depositors, transactions, income and revenue. … In addition, Eclipse has suffered, and will continue to suffer, injury to its reputation and good will.”
Eclipse asserts further that Clemons’ comments “constitute a breach of fiduciary duty” and a violation of the confidentiality agreement and that he disclosed privileged information “with malice and for the obvious and express purpose of providing support and credence to the false, misleading and defamatory articles recently published by Insider Louisville.”
In addition, Eclipse said, Clemons’ conduct “constitutes an actual or threatened misappropriation of trade secrets, business models and goals of the bank in violation of the Kentucky Trade Secrets Act.
The bank asked that the court order Clemons to cease making further statements about Eclipse and that he pay attorney fees, damages for the loss of revenue and profits that Eclipse would have earned and punitive damages.
In a response to the suit, Clemons’ attorney, F. Todd Lewis, of Louisville-based Pasic & Lewis, wrote that before addressing the bank’s claims, it was important to note an individual’s right to free expression under the First Amendment to the U.S. Constitution, especially when “a plaintiff seeks to use the power of the courts to silence speech on matters of public concern.”
Unless the bank can provide clear and convincing evidence of actual malice, Lewis wrote that Clemons’ alleged activities would be protected speech under the First Amendment.
As for the merits of the bank’s claims, Lewis said that, essentially, there aren’t any.
“Each of the bank’s claims fail on their face, even taken in a light favorable to the bank,” he wrote.
Lewis wrote that:
- Clemons did not breach a contract because no valid contract exists nor has ever existed. “A mere ‘certificate of understanding’ signed by an employee which otherwise states that employee may be terminated at will does not constitute a contract.” In addition, the “confidentiality agreement” mentioned in the suit specifically states that it creates no contractual obligations.
- The breach of fiduciary duty claim, “premised upon (Clemons’) alleged statements, is contradicted by the voluminous assertions that the alleged statements were, in fact, false; and fails because it does not allege the existence … of a fiduciary duty covering the situation presented.”
- The Trade Secrets Act claim fails on its face “because it is contradicted by the adamant assertion that everything (Clemons) allegedly said was false; and also because nothing alleged in the complaint constitutes a ‘trade secret.’”
And, Lewis wrote, “Every claim made in the complaint requires proof of actual damages, and none have even been alleged.”
“Finally,” Lewis wrote, “there is the simple fact that this cause of action … fails on its face, because the complaint contradicts itself: (The bank) has made abundant allegations that Clemons’ various statements are false, but then claims that all of its allegations are premised upon (Clemons) allegedly revealing private information.
“Ordinary logic tells us this is simply an impossibility — one cannot be making false statements, but also have the statements be constituted of confidential information. … How can anyone have breached the … alleged contract by making false statements?”
“Each and every cause of action fails for having omitted at least one (and sometimes several) essential elements,” Lewis wrote.
“The complaint calls for the contradictory conclusion that (Clemons) both spoke falsely and in a defamatory manner against the bank; but also that everything he allegedly said was private and confidential information of the bank, protected by various tort claims,” the attorney wrote. “This is so contradictory as to simply fail to state a claim on its face.
“To quote a famous old Kentucky case,” Lewis wrote, “ ‘that dog won’t hunt.’ ”
Lewis told Insider via email that neither he nor his client wished to make any comments beyond the court filings. Leaders of Eclipse Bank could not be reached.