Sheehan & Associates, P.L.C.

Oakland County bank executives face discrimination suit

Business planning, employment law, commercial litigation -- these are the general areas of business law we'll be discussing here each week. Whether you're choosing what sort of company you want to create, or drafting a business agreement, or handling an employment law dispute, it is important to have legal professionals on your side.

To get the ball rolling, let us consider a cautionary tale of litigation. In terms of employment law, business owners may find themselves in a dispute with employees over allegations of misconduct. But in one recent case in Oakland County, an allegation of discrimination came from two customers.

Lotus Bancorp Inc. was founded six years ago by members of the Indian business community. Lotus Bancorp is the holding company for Lotus Bank, and the majority of the bank's board members are reportedly Indian, as are most of the people who have invested in the bank.

However, three senior officers, the bank and the holding company are being sued for alleged discrimination against two Indian customers.

An article in Crain's Detroit Business quotes some derogatory comments that were apparently exchanged between the bank's president and chief financial officer. The comments were about Indians in general.

The two plaintiffs took out a $1.5 million mortgage in 2008 for a motel, but the plaintiffs ran into money troubles in 2010. The lawsuit claims that the bank agreed to a loan forbearance, but the bank's upper management apparently later withdrew that offer, again using derogatory statements about Indians.

A judge recently ruled that the customers' discrimination suit could go forward, but a class action suit was previously ruled out. Representatives of the bank claim that, although the executives' comments were "reprehensible," they did not affect how the defendants handled the loan agreement.

While the circumstances of this lawsuit may seem extreme to other Michigan business owners, the reality is that the possibility of business litigation can arise unexpectedly -- especially without proper legal guidance.

Each week we'll be discussing news items that may be of interest to businesses and financial institutions in Michigan, so check back often.

Source: Crain's Detroit Business, "Judge rules discrimination lawsuit against Lotus Bank can proceed," Tom Henderson, Aug. 21, 2013

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