Spokane-based AmericanWest Bank is seeking to decertify the class-action status granted to a lawsuit filed by a former loan officer who claims the bank breached an employment agreement when it discontinued an incentive-based compensation plan.


The class members are former and current loan officers at AmericanWest who worked under a two-year compensation plan that ended after six months, at the end of 2004. The plan was dumped shortly after the banks management team was replaced, and bank turnaround specialist Robert M. Daugherty became AmericanWests president and CEO.


A hearing is slated for Feb. 16 in Spokane County Superior Court on a motion by the bank to decertify the lawsuit, filed by Dean Bellamy, as a class-action matter. Separate motions for summary judgment filed by respective attorneys for Bellamy and the bank also are to be considered at that hearing.


Kevin Roberts, Bellamys lawyer, contends that Daugherty, by abruptly curtailing a compensation plan that loan officers had been promised would last for two years, was unfairly trying to boost the banks financial performance on the backs of the employees.


We think its a pretty crystal clear issue for the court, Roberts says. He estimates that total damages in the case, if Bellamy prevails and the suit remains a class action, will be at least several million dollars.


However, Stephen R. Matthews, one of two attorneys here representing AmericanWest, says, Its the banks position that it acted appropriately and fairly not only in Mr. Bellamys case, but also with regard to all of the employees that were covered by the incentive program. Were very optimistic that its going to resolve in our favor.


A class-action suit is a type of lawsuit in which the claims of numerous people, all allegedly injured by the same conduct, are decided in one case.


Bellamy joined AmericanWest as a commercial loan officer in July 1997, was a senior vice president there from January 2002 until May 2005, and was named the banks Lender of the Year for 2004, his lawsuit says.


He alleges in the suit, though, that in early 2005, the bank refused to pay wages owed him under the incentive program, which rewarded loan officers for increases in the amount of interest, fees, and insurance income received by AmericanWest. He contends the banks breach of the compensation agreement resulted in him being constructively discharged.


The suit seeks damages for breach of contract, negligent misrepresentation, wrongful discharges, and other alleged improprieties.


The bank denies in court documents that it made any misrepresentations or violated any contract. It claims in responding documents that the language of the 2004 incentive program gave bank officials unlimited discretion over incentives and clearly outlined the banks right to discontinue the program altogether, which Roberts disputes.


The banks response says the 2004 program offered commissions that were substantially higher than similar programs offered by the banks competitors, but at the same time, the penalties it prescribed were too weak to adequately discourage loan officers from writing risky loans.


Bellamy prospered under a 2002 incentive program and the one curtailed in 2004, receiving more than $400,000 in incentives and $546,000 in overall compensation in 2004 alone, but the bank did not prosper, court documents say. They note that AmericanWests deteriorating financial condition led its board to replace the banks management team in September of that year. The bank was in poor financial shape due largely to its more than $24 million in nonperforming loans and $13 million in bad debt expense, together with a fundamentally flawed loan placement and management culture that resulted in significant regulatory criticism , the documents say.


They say that Daugherty determined after taking over the banks top post that the ill-advised incentives built into the 2004 program were a significant cause of the banks large volume of bad loans, in that they rewarded loan officers for placing high-interest and high-feeand therefore inherently riskierloans. That led Daugherty to promptly change the loan officers commission structure.


Roberts contends that such assertions, putting blame on the former management team and loan officers, are a complete red herring, and says Bellamy made the bank a lot of money.


As was reported earlier, Daugherty moved quickly after arriving here to put the ailing bank back on solid financial ground, naming a new executive team, establishing training and marketing programs, and adopting measures aimed at improving the credit quality of its loan portfolio.


AmericanWest Bancorp, the banks parent company, has been in an aggressive expansion mode since late 2005, when regulatory restrictions placed on the bank by the Washington Department of Financial Institutions and the Federal Deposit Insurance Corp. were lifted.


Contact Kim Crompton at (509) 344-1263 or via e-mail at [email protected].