EM3’s Masel Prevails in High-Stakes Commercial Banking Litigation
Gary Masel, a partner and commercial litigator at EM3, recently obtained an unprecedented victory on behalf of a major banking client in a multimillion-dollar dispute.
A commercial borrower defaulted on multiple loans with indebtedness totaling nearly $4 million. Mr. Masel filed a lawsuit against the borrower and the guarantors, seeking control of the bank’s collateral which included ocean front real estate, as well as, five large yachts.
The defendants retained a high-profile attorney with substantial experience in the industry who responded by filing an answer with dozens of affirmative defenses to the complaint. In an apparent effort to intimidate the client and delay the litigation, Defense counsel also filed a seven-count counterclaim against the bank. Fortunately, the Defendants’ tactics were ineffective against Mr. Masel’s almost two decades of litigation and trial experience.
Mr. Masel formulated and discussed his strategy with the client. He then moved swiftly attempting to gain access to the collateral which Defense counsel opposed or hindered in multiple ways. In response, Mr. Masel methodically plowed forward obtaining orders to compel and smaller sanction orders as he laid the groundwork for his litigation strategy. After building up the record demonstrating the Defendants’ intentional delay tactics, Mr. Masel took a more aggressive approach in an attempt to resolve the action and reduce the client’s exposure to high legal expenses brought on by the Defendants’ questionable litigation tactics.
Although many attorneys would have just kept “reacting” to Defense counsel’s delay tactics, ultimately allowing the litigation to continue for years, Mr. Masel utilized his experience and legal writing skills to move for the coup de grace. Applying the facts of the case and procedural posture to the seminal sanctions related case law, Mr. Masel moved to strike the defendants’ answer to the complaint, all their affirmative defenses and counterclaim as remedy for the Defendants’ continuous refusal to comply with court’s previous, smaller orders. Understanding the magnitude of this relief, Mr. Masel tenaciously researched, not only supportive case law, but other cases that may have involved the same Defendants and their counsel (as the burden was very high for the relief sought). During his investigation, Mr. Masel discovered that the Defendants had numerous sanction orders granted against them in other cases by both state and federal courts. More importantly, the sanctions were for similar conduct and delay tactics. Mr. Masel incorporated these findings into his motion and demonstrated that the defendants’ conduct in this case was their modus operandi in all litigation, so they would continue to delay unless the Court stopped them.
The judge agreed with Mr. Masel, finding that he had met the high burden for severe sanctions, and based on the arguments and evidence presented, the Court issued an extensive nine-page order that granted all of the relief requested. The defendants’ pleadings, all their affirmative defenses and counterclaim were struck with prejudice.
This stunning outcome set off a chain reaction of events: not only did this stop the accrual of significant litigation fees for the client, but it encouraged the interest of potential investors who saw an opportunity to purchase the subject loans with little to no litigation expenses, as the Defendants were now subject to default. The bank was able to quickly sell the loans for a full payoff which meant it no longer had any risk for extensive litigation expenses, including potential appellate costs and bankruptcy related proceedings.
This case emphasizes the importance of focusing on the client’s best interests first and diligently attacking a case from all different angles and methods — here, formulating a litigation strategy and executing it goal by goal, allowed Mr. Masel to shut down the litigation as quickly as possible — rather than allowing opposing counsel to control the direction and speed of the case which is often adverse to the client’s position.
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