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WYATT UPDATE - Kentucky Supreme Court Upholds Forbearance Agreement

WYATT UPDATE - Kentucky Supreme Court Upholds Forbearance Agreement

On February 15, the Kentucky Supreme Court declined to review the Court of Appeals’ decision in favor of BB&T in Larry E. Thompson, et al. v. Branch Banking and Trust Company (No. 2009-CA-001427).  The Court of Appeals’ decision is now final and reverses a $10 million jury verdict.

In Thompson, a borrower alleged fraud against BB&T based on oral representations allegedly made to him that were inconsistent with the loan documents.  The jury returned a verdict in the borrower’s favor, including $9 million in punitive damages.  In its 54-page opinion, the Court of Appeals set aside the jury verdict.  It held that the trial court should have entered judgment in BB&T's favor.  The borrower had executed a forbearance agreement that, among other things, released any and all claims against BB&T.  The borrower argued, in part, that he was not bound by the release because he did not read the forbearance agreement.  The Court of Appeals rejected Thompson's argument, however, concluding that his failure to read the document, prior to executing it, was “fatal” to his fraud claims against BB&T.  

This decision confirms that a well drafted forbearance agreement should continue to be a valuable tool in helping to protect a financial institution from liability when a borrower has a reasonable opportunity to read the loan documents.

Wyatt attorneys Virginia Snell and Jean Bird represented BB&T in its appeal of the jury verdict.  

Click here for additional coverage on the story in Louisville's Courier-Journal.