Stephen Galvin v. First & People's Bank and Trust Company

CourtCourt of Appeals of Kentucky
DecidedAugust 29, 2025
Docket2024-CA-0235
StatusPublished

This text of Stephen Galvin v. First & People's Bank and Trust Company (Stephen Galvin v. First & People's Bank and Trust Company) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stephen Galvin v. First & People's Bank and Trust Company, (Ky. Ct. App. 2025).

Opinion

RENDERED: AUGUST 29, 2025; 10:00 A.M. TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals NO. 2024-CA-0235-MR

STEPHEN GALVIN APPELLANT

APPEAL FROM GREENUP CIRCUIT COURT v. HONORABLE BRIAN C. MCCLOUD, JUDGE ACTION NO. 23-CI-00342

FIRST & PEOPLE’S BANK AND TRUST COMPANY; AMERICAN FIDUCIARY SERVICES, LLC; GEORGIA’S OWN CREDIT UNION; AND MICHAEL HILL APPELLEES

OPINION REVERSING

** ** ** ** **

BEFORE: LAMBERT, MCNEILL, AND TAYLOR, JUDGES.

TAYLOR, JUDGE: Stephen Galvin, President and Chief Executive Officer of

U.S. Credit, Inc. (USCI), appeals from orders entered on January 25, 2024, and

February 8, 2024, by the Greenup Circuit Court finding him in contempt for failure

to appear at a show cause hearing. As a sanction, the circuit court ordered Galvin to pay attorney fees and costs to the other parties to the action, including an

appointed receiver, within five days of the court’s order, and an additional $50,000

per day sanction for each day thereafter that he failed to pay the fees awarded. In

total, Galvin was ordered to pay $457,001.84, plus the additional daily sanction.1

For the reasons stated herein, we reverse the circuit court’s orders.

FACTUAL AND PROCEDURAL BACKGROUND

In August 2020, First & People’s Bank and Trust Company (the

Bank), located in Russell, Kentucky, entered into a contract with USCI. USCI is a

Florida-incorporated entity with physical locations in both Florida and

Massachusetts. The agreement of the parties amounted to a market lending

platform whereby USCI agreed to manage, facilitate, and service loan programs for

loans that were funded by the Bank. The Bank agreed to fund approximately

$5,000,000 per week in loans. A third party, Georgia’s Own Credit Union (Credit

Union), agreed to purchase loans funded by the Bank for two of the loan programs.

The Bank contends that, in 2022, it stopped receiving payments from USCI and

loans that were supposed to be sold were staying on the Bank’s books, contrary to

the contract. The record before us contains numerous email communications

between officials from the Bank and Galvin that demonstrate the Bank was trying

1 As of the date of this Opinion, the total sanctions that Stephen Galvin has been ordered to pay exceeds $27,000,000.

-2- to ascertain the location of the funds owed by USCI. As noted, Galvin is the

President and CEO of USCI. Dissatisfied with the information provided by

Galvin, in August 2023, the Bank filed the underlying lawsuit against USCI to

collect the funds allegedly owed. Galvin was not named a party to this action. The

Bank filed a concurrent motion for a temporary restraining order to prevent further

dissipation of funds, which was granted by the circuit court after an ex parte

hearing.

Based on the record before this Court, the Bank and USCI were

attempting to negotiate a settlement in the early stages of the litigation. However,

on December 7, 2023, the Bank filed a motion to appoint a receiver.2 The motion

was initially heard by the circuit court on December 14, 2023.3 At the hearing, the

Bank insisted that USCI had not provided sufficient documentation to show USCI

was in possession of the funds owed. For example, a spreadsheet generated and

provided by Galvin allegedly showed that USCI was still taking in money for the

loans, but not distributing it to the Bank. The court ordered that USCI had 24

hours to produce a bank account or escrow statement that proved they possessed

the funds owed to the Bank. If USCI failed to produce the information, the court

2 The First & People’s Bank and Trust Company (the Bank) also filed an amended complaint which joined Georgia’s Own Credit Union as a defendant on December 7, 2023. 3 The Bank had also filed a motion for default judgment and for sanctions against U.S. Credit, Inc. (USCI) for violation of the temporary restraining order.

-3- ordered that it would conduct a full evidentiary hearing on the Bank’s motion to

appoint a receiver. USCI failed to produce the information.

The circuit court conducted an evidentiary hearing for the

appointment of a receiver on December 18, 2023. Robert Sorrell, Vice President

of the Bank, testified that USCI owed the Bank $10,000,000 - $12,000,000 at the

end of 2022, and that USCI had repeatedly refused to provide an accounting of the

funds. The evidence introduced at the hearing indicated that Galvin was the

primary point of contact between the Bank and USCI. Christin Hewitt, the Chief

Financial Officer for the Credit Union, testified that USCI owed her organization

approximately $5,300,000 and the amount was growing monthly. The proposed

receiver, Geoffrey Winkler, from Portland Oregon, also testified as to his

qualifications. USCI put on no proof at the hearing. While local counsel was

present for USCI at the receivership hearing, neither Galvin nor any other

representative for USCI was present. On December 19, 2023, the court entered an

order appointing Winkler and his company, American Fiduciary Services, LLC, as

receiver. USCI immediately filed an appeal of the December 19 order in this Court

on December 21, 2023. See U.S. Credit, Inc. v. First & People’s Bank and Trust

Company, No. 2023-CA-1499-MR.4 However, not only did USCI file an appeal,

on December 26, 2023, USCI filed a separate action in Massachusetts in an attempt

4 This appeal is currently being held in abeyance pending USCI bankruptcy proceedings.

-4- to persuade a Massachusetts state court to enjoin the Kentucky receivership order.

The complaint filed in Massachusetts was verified by Galvin.5

On December 29, 2023, the Bank and the Credit Union filed a joint

motion for USCI to show cause why it should not be held in contempt for refusing

to comply with the receivership order and for “subverting” the circuit court’s order

appointing the receiver.6 The gist of this motion looked to the lawsuit filed by

USCI against the Bank in Massachusetts on December 26, 2023. The motion was

not served on Galvin individually. USCI and the Bank filed briefs and a hearing

was held on January 4, 2024, to set a show cause hearing.

During the January 4, 2024, hearing, counsel for the Bank, Robert E.

Maclin, III, announced they were present to schedule a “show cause hearing why

U.S. Credit should not be held in contempt.” Video Record (VR), January 4, 2024,

1:21:29. Galvin was not present at the January 4 hearing but counsel for USCI was

in attendance. Counsel for the Credit Union also participated at the hearing.

5 The current status of the Massachusetts case is unclear. The record before us indicates it was removed to federal court, but whether the case is still pending is unknown. 6 The motion was styled, “Plaintiff, First & People’s Bank and Trust Company’s and Defendant, Georgia’s Own Credit Union’s Motion for Defendant, U.S. Credit, Inc. to Show Cause Why it Should Not be Held in Contempt of This Court for Attempting to Subvert the Receivership Order of This Court Entered on December 19, 2023 by Filing an Action in the Commonwealth of Massachusetts Seeking to Declare the Court’s Receivership Order Void and Injunctive Relief.” Record at 447. The caption of the motion makes no reference to Stephen Galvin, although the text includes his name as Chief Executive Officer, requesting that he should also appear to show cause why he should not be held in contempt.

-5- During this eleven-minute hearing, no direct reference was made to Galvin,

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