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Interstate Net Bank v. Acer Packaging & Supplies

June 13, 2011

INTERSTATE NET BANK, PLAINTIFF,
v.
ACER PACKAGING & SUPPLIES, INC., BECKY DIAZ, ALSO KNOWN AS BECKY DIAZ-PRATA, AND LOUIS PRATA, DEFENDANTS.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

Plaintiff, Interstate Net Bank (or, "Interstate"), brought suit against Defendants, Acer Packaging & Supplies, Incorporated (or, "Acer"), Becky Diaz-Prata, and Louis Prata (collectively, "Defendants"), alleging default on loans. In turn, Defendants filed counterclaims against Interstate. Interstate now moves for judgment on the pleadings against Defendants' counterclaims. Defendants cross-move to stay these proceedings.

For the following reasons, Defendants' Cross-motion to Stay is granted in part, and while the parties comply with the instructions set forth in this Opinion, the Court will stay any further consideration of Interstate's Motion for Judgment on the Pleadings and Defendants' cross-motion.

I. JURISDICTION

This Court exercises subject matter jurisdiction over the underlying action pursuant to 28 U.S.C. § 1332. There is complete diversity between the parties in this case. Plaintiff, Interstate Net Bank, is a state-chartered commercial bank incorporated in the State of New Jersey with its principal place of business in Cherry Hill, New Jersey. Defendant, Acer Packaging & Supplies, is incorporated in the State of New York with its principal place of business in Bronx, New York. Defendant, Becky Diaz-Prata is a citizen of the State of New York. Defendant, Louis Prata, is a citizen of the State of New York. The amount in controversy exceeds $75,000.

II. BACKGROUND

In April 2006, Interstate and Acer entered into a business loan agreement in which Interstate would provide to Acer, a small business, a $250,000 line of credit.*fn1 Securing the line of credit was a lien on Acer's accounts receivable. When crafting and entering into the agreement, Interstate encouraged Acer to forego any independent attorney review and to simply rely upon Interstate's attorney.

In or around July 2008, Acer, consistent with the business loan agreement, requested an advance on its line of credit. Interstate denied the request, vaguely asserting its inability to honor the terms of the loan agreement based on "some undefined authority." (Def.'s Counterclaim at 8, § 15).

In or around January 2010, the parties negotiated an agreement to consolidate Acer's debt owed on the discontinued line of credit with a term loan Interstate had made to Becky Diaz-Prata, Acer's owner. As part of the consolidated loan agreement, Acer would pay down part of the overall debt and, in turn, Interstate would release the lien on Acer's accounts receivable, freeing Acer to secure additional credit. The parties preliminarily agreed to the terms, and upon Interstate's request, Louis Prata, Ms. Diaz-Prata's husband, submitted a written offer to Interstate memorializing the terms of the agreement. However, despite repeated attempts to follow up on the proposed agreement, Prata could not reach anyone at Interstate. Finally, during a meeting in July 2010, an Interstate representative denied that any agreement had ever been discussed or finalized between the parties.

Around that same time, Interstate filed suit in the Superior Court of New Jersey against Acer, Becky Diaz-Prata, and Louis Prata, alleging default on the business loan agreement as well as Diaz-Prata's term loan. Several months later, Defendants removed Interstate's suit from New Jersey Superior Court to this Court.

On September 17, 2010, New Jersey's Department of Banking and Insurance appointed the Federal Deposit Insurance Corporation (or, "FDIC") as a receiver for Interstate. Days later, Defendants answered Interstate's complaint and asserted counterclaims against Interstate, alleging breach of contract, breach of the covenant of good faith and fair dealing, fraudulent misrepresentation, consumer fraud in violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., and slander of title. On November 11, 2010, Defendants filed a claim with the FDIC, asserting the same grounds as those pled in Defendants' counterclaims.

Interstate moves for judgment on the pleadings against Defendants' counterclaims. Defendants oppose Interstate's motion and cross-move to stay these proceedings.

III. DISCUSSION

A. Standard for Judgment on the ...


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