Western Alliance Bancorporation said Wednesday that it won an initial courtroom battle in a dispute that revolves around $1.2 billion in deposits at a failed bank.
The lawsuit focuses on a noncompete clause in the employment contract of a key bank manager who worked at First National Bank of Nevada before federal regulators closed the institution in July.
Mutual of Omaha Bank, which purchased First National’s deposits, wants to prevent Craig Huntington from working for a bank subsidiary of Western Alliance.
U.S. District Judge Philip Pro on Monday denied issuing a temporary restraining order against Craig Huntington’s employment at Western Alliance’s Torrey Pines Bank of San Diego.
Huntington was president of First National Bank’s Community Association Banc division, which provided financial services to homeowner associations around the country. The homeowner associations kept $1.2 billion in deposits at First National.
Huntington had disagreements with Mutual of Omaha and left the bank, according to court papers.
The legal dispute arose when Huntington accepted employment at Torrey Pines Bank of San Diego, a Western Alliance subsidiary and affiliate of Western Alliance’s Bank of Nevada.
Mutual of Omaha Bank contended that Huntington should be barred from working for a competitor for one year as provided under a noncompete clause.
Two days after Pro’s Monday decision, Western Alliance said it appointed Huntington president of Torrey Pines Bank’s new Alliance Association Financial Services, which will offer deposit and other financial services to homeowner associations.
“With our infrastructure and Craig’s depth of expertise, we are in a unique position to deliver a superior offer to homeowner associtions in our markets as well as capture new opportunities nationwide,” Robert Sarver, chairman and chief executive of Western Alliance, said in a statement.
Western Alliance devised a program to provide additional federal deposit insurance for homeowner associations. The Alliance Association says it can split homeowner association deposits among Western Alliance’s five subsidiary banks to provide five times the usual maximum federal deposit insurance.
“Mutual of Omaha Bank intends to continue its efforts to protect its legitimate interests,” spokesman Jim Nolan said in an e-mail.
The federal lawsuit is pending.
Contact reporter John G. Edwards at firstname.lastname@example.org or 702-383-0420.