Paule, Camazine & Blumenthal Business Client Wins Vindication from Missouri Supreme Court In Bank Fraud Case Against Lender Bank | Paule, Camazine & Blumenthal, P.C.

By Thomas M. Blumenthal

Joel Bianco and his company, Joel Bianco Kawasaki Plus, Inc., have won an emphatic victory against its Lender Bank who improperly shut it down and then fraudulently induced Joel to post additional collateral by promising to allow a sale of the business to be concluded.

While Joel was negotiating the sale of his dealership in 1997, the Bank commenced a replevin action to repossess all of the vehicles in the dealership. In order to stop the repossession, Joel provided the Bank with a deed on his house, which he had never before used as collateral, a deed on his boat, and $25,000 borrowed from his mother. The Bank in turn promised to stop the repossession and allow the negotiation for the sale to continue, promising to make a substantial effort to resolve the pending issues in the sale. Instead, the Bank continued the repossession while the negotiations were ongoing ( without advising Joel or the manufacturers who maintained a superior interest in the vehicles), refused to negotiate its position, and effectively prevented the business from being sold. Joel lost his business, his house, and his ability to work in the industry.

After a jury trial in which Joel won a $675,000 verdict against the Bank, the Bank appealed, and the case was eventually taken to the Missouri Supreme Court. In a case which emphatically affirms the ability of a borrower to recover against a bank for fraud, the Missouri Supreme Court found that the jury reasonably could have found from the evidence that the Bank¹s conduct was "outrageous" and "ridiculous." It found that the Lender Bank never intended to fulfill its written promises to Joel to make a "substantial effort" to save his business.

The Supreme Court also clarified an area of procedural law when it held that the Bank could not "have its cake and eat it too" by attempting to reverse the jury verdict based upon a legal technicality that the fraud case should have been tried with the replevin case. The Bank waited for over 19 months after the fraud case was filed before raising this defense. The Court found that the Bank slept on its rights and would not be allowed to use the defense as a "stealth defense" to the jury verdict against the Bank. In doing so, the Supreme Court reversed four decisions of the lower courts of appeal in Missouri.

Paule, Camazine & Blumenthal is happy it could obtain such a resounding victory for its client, and that it was able to participate in a case that clarified the state of the law in the process. Tom Blumenthal tried the case in 1999 and handled the appeal from 2000 through the decision handed down on July 23, 2002. Dan Card worked on the appeal of the replevin case, which was also a resounding victory, in 2000.