A Miami businessman won a $6 million jury award in a case against U.S. Bank and its equipment finance arm after the jury ruled they acted in bad faith upon pushing the man into involuntary bankruptcy.
Maury Rosenberg and his lawyers say U.S. Bank is using involuntary bankruptcy as a collection tool, which federal law prohibits. They argued the bank’s refusal to relent and settle the dispute, even after bankruptcy petitions were tossed out and the bank lost two appeals, has destroyed Rosenberg, according to the Minneapolis Star-Tribune.
“I will never get my life back. These collection techniques are better related to the mob than to the fifth- or sixth-largest bank in the country," Rosenberg said in an interview with the newspaper.
U.S. Bank officials say they've done nothing wrong. The bank plans to file post-trial motions and is evaluating a possible appeal, according to spokesperson Tom Joyce. Meanwhile, the lender is pursuing Rosenberg for breach of contract in U.S. District Court in Pennsylvania, claiming he still owes $4.9 million on a personal guaranty.
“Rosenberg is a savvy and experienced businessperson who signed a personal guaranty - a guaranty on which he has yet to pay a penny on,” Joyce tells the Star-Tribune. “We are confident we will be successful in our efforts to enforce his personal guaranty.”
Its equipment finance group has had only one other client wind up in involuntary bankruptcy since 2006.
Rosenberg’s company, National Medical Imaging, owned and operated 23 outpatient centers equipped with diagnostic equipment, with annual sales as high as $72 million. It leased equipment from DVI Financial Services Inc. Lyon Financial Services Inc., an equipment finance company now based in Marshall, Minn., that is part of U.S. Bank’s equipment finance operation, became the servicer of the leases.
Rosenberg’s leasing debt was put in several special-purpose entities, most of which were called some variation of “DVI,” and securitized, or resold to investors on the secondary market. Lyon serviced the debt. U.S. Bank, as trustee, took the payments and paid investors.
In 2008, Rosenberg approached U.S. Bank and Lyon to restructure his debt. Rosenberg was trying to steer his company in other directions since new federal regulations were set to cut insurance reimbursements, the newspaper reports. But U.S. Bank wouldn’t meet with him or talk while he was current on his payments, he said, so he stopped payments to get the talks going.
U.S. Bank said he defaulted, and Lyon Financial and the DVI entities filed involuntary Chapter 7 bankruptcy petitions against Rosenberg, National Medical Imaging and its holding company. Lyon had filed such petitions against Rosenberg’s company once before in 2005, but at that time the parties settled and Rosenberg’s debt was written down.