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A Yellowstone County District Court jury has decided that First Interstate Bank must pay nearly $2.7 million, plus attorneys’ fees and interest, to a Florida developer for breaching a loan contract.

In 2007, Paul S. Pariser, a New York native who now lives in Florida, obtained a $10 million loan from the Billings bank to build luxury condominiums at Ocean Shores, Wash., a popular resort community.

When the project, called The Villages of Ocean Shores LLC, ran into trouble with harsh weather, construction delays and the financial collapse of the banking industry three years ago, First Interstate seized $2,623,396 from Pariser’s personal account at the bank and used it to guarantee the real estate loans, the defense argued.

Billings attorneys Vern and Cammi Woodward said the bank failed to follow its own contracts. The bank went after Pariser, who was guaranteeing the loan, rather than the limited liability company that borrowed the money.

“They did it backward. They took his money, then they filed a lawsuit and then they made a demand saying they felt insecure on the loan,” Cammi Woodward said.

First Interstate Chief Executive Lyle Knight said he’s not taking an appeal off the table, but wants to explore other options.

“We seldom lose a case like this. This one we obviously did. We have great respect for the jury system,” he said.

Ninety-nine percent of the bank’s contracts work out just fine, Knight said, but he said that in hindsight, “I would do this one differently.”

One condo building at Ocean Shores, of the 15 planned, has been completed, the Woodwards said.

The jury trial before District Judge Ingrid Gustafson began April 4 and ended Wednesday. The jury deliberated for nine hours before ruling 8-4 in Pariser’s favor.

“Obviously, we’re very grateful the jury agreed with us,” Vern Woodward said. “First Interstate Bank is a well-respected, and rightly so, institution. They are very community-minded and have a good staff.”

First Interstate’s attorney, David Charles of the Crowley Fleck law firm, portrayed Pariser as a “very insistent and demanding man” who, when he didn’t get his way with the loan officer, went up the chain of command until he telephoned First Interstate Board Chairman Tom Scott at home to obtain money for a project “a thousand miles from Billings.”

Scott approved a waiver to the bank’s rules to make a loan so far from its home turf and he asked Regional President Keith Cook if he couldn’t help out Pariser, according to court documents.

Pariser started banking with First Interstate in the early 1990s, and he successfully repaid two loan packages for two developments at Big Sky Resort south of Bozeman.

Vern Woodward agreed that his client is a good negotiator, insisting on the lowest interest rates and the best terms.

“This gentleman watches his pennies like you watch your children,” he told the jury in his opening statement.

The bank failed to put in writing that Pariser had to keep his money at First Interstate or require more security for the loan, he said. To argue that any one customer could demand that First Interstate “make a loan it didn’t want to make is just nuts,” he said.

On Oct. 30, 2008, when the banking industry was in free-fall, Pariser met with Cook and other First Interstate officers at the Ocean Shores development.

He asked them to postpone interest payments for three years and loan him several million more to build a club house, which pushed him over his $10 million limit. If those conditions were met, Pariser promised to invest another $1 million of his money, buy two of the condos and give the bank additional collateral of a $300,000 lot and 25 acres of land.

At the meeting, Pariser “rolls a grenade out in the room and pulls the pin,” Charles said in court.

Cook refused the terms, saying the bank no longer felt secure about being repaid and restricted his use of his personal account.

At a follow-up meeting in Billings on Nov. 24, Pariser and Cook again discussed refinancing up to $3 million, but the bank refused to waive a $20 transfer fee on the loan.

“Tempers flared and little was accomplished,” according to court documents.

On March 31, 2009, Pariser wrote three checks to move nearly $2.7 million from his personal First Interstate account to a Washington state bank, plus transferring another $500,000 from the LLC’s account. Then Cook and other bank officials called Pariser wanting to know why he was transferring his funds and telling him his checks wouldn’t be honored. The bank seized his personal account as leverage on the real estate loans, Vern Woodward said.

“This case is about abuse of power, bully tactics, nothing more, nothing less,” he said.

Contact Jan Falstad at or 406-657-1306.