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FDIC v. MINTZ

December 17, 1996

FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as Receiver for Hometown Bank, Plaintiff,
v.
JEFFREY S. MINTZ, Administrator, c.t.a. FOR THE ESTATE OF STEPHEN J. DOMENICHETTI, ROBERT J. DEVLIN, RAYMOND A. HOOK, DOMENICHETTI, DEVLIN & HOOK, and DOMENICHETTI & HOOK, Defendants.



The opinion of the court was delivered by: POLITAN

 Dear Counsel:

 This matter involves the application of New Jersey's entire controversy doctrine ("the ECD"), a doctrine that to most members of the bar remains an enigma wrapped within a mystery. Defendants in this action, Jeffrey S. Mintz, Administrator c.t.a. for the Estate of Stephen J. Domenichetti, Robert J. Devlin, Raymond A. Hook, Domenichetti, Devlin & Hook, and Domenichetti & Hook (hereinafter "Defendants"), have moved for summary judgment under the ECD, claiming that this action against them is precluded because of two prior actions in which they should have been joined. Oral argument was heard on the motion on October 24, 1996. For the reasons outlined herein, defendants' motion is DENIED.

 FACTUAL DISCUSSION

 In this matter, the defendant lawyers, Robert Devlin and Raymond Hook, and the Estate of Stephen Domenichetti are charged by the Federal Deposit Insurance Corporation ("FDIC"), as successor to Hometown Bank of Edison, New Jersey, with legal malpractice. In particular, the FDIC attributes the losses on several promissory notes to the negligence of the defendants, particularly Stephen Domenichetti, who committed suicide in 1994.

 The FDIC alleges that Domenichetti rendered faulty legal advice to Hometown Bank with respect to what is often referred to in the banking industry as the "one borrower rule." The allegations against Devlin and Hook hinge upon their allegedly negligent supervision of the activities of their partnership with respect to the "one borrower" advice given to the bank in connection with a series of loans. Each series of loans, because they were interrelated in some way, allegedly exceeded the bank's legal lending limits under the loan to one borrower rule.

 These loans can be described as follows: (1) The Covino/Middlesex Cartage/Absolute Realty loans; (2) the Bonanno loans; and (3) the Rieder loans.

 The Covino/Middlesex Cartage/Absolute Realty Loans

 A loan was made to Absolute Realty in June 1989, which was guaranteed by members of the Covino and Dinardi families and by their carting companies (Covino Industrial and Middlesex Carting). Two loans were made in August 1989 to Middlesex Carting and to Covino Industries. Those two loans were guaranteed or endorsed by members of the Dinardi family and other "related" persons and entities.

 Loans were made to J. Carmine Bonanno and to his brother, Frank Bonanno, in September 1989. Each brother guaranteed the loan of the other.

 The Rieder Loans

 The Rieder loans consisted of three loans, two of which were made to Ralph Rieder and his brother-in-law, George Karasik. Each of them guaranteed the obligation of the other. A third loan was made to Al Rieder, Ralph Rieder's father and George Karasik's father-in-law. Apparently, this loan was not guaranteed by anyone.

 In 1992 and 1993, two litigations developed concerning the Al Rieder loan. The first was instituted by Hometown Bank, and the second was instituted by Al Rieder against the FDIC. The two actions were subsequently consolidated and settled prior to trial. The Complaint in the Al Rieder v. FDIC matter alleged that the loan to Al Rieder was made as an accommodation in order to ...


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