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Provident Bank v. Antonucci

United States District Court, District of New Jersey

December 12, 2014

THE PROVIDENT BANK, Plaintiff,
v.
MARC ANTONUCCI and ROBERT TARABOCCHIA, Defendants.

OPINION

KEVIN MCNULTY United States District Judge

Plaintiff Provident National Bank ("Provident") brings this action to enforce personal guarantees. The defendants, Marc Antonucci and Robert Tarabocchia, were the sole shareholders of Specialty Flooring Systems, Inc. ("SFS"), a floor contracting business, and Antar Realty, L.L.C. ("Antar"), an entity formed to purchase the property where SFS had its offices. Provident provided two working capital loans totaling $5.5 million to SFS, and a mortgage loan of approximately $1.9 million to Antar. Antonucci and Tarabocchia signed personal guarantees in connection with those loans. In late 2011, SFS and Antar defaulted on the three loans. Provident thereafter filed a complaint in foreclosure in the New Jersey Superior Court Division of Chancery. The Superior Court entered a judgment of foreclosure against SFS and Antar, but Provident has not recovered anything near the amount owed on the loans.

Provident then filed this action to enforce the personal guarantees. Tarabocchia failed to respond to the Complaint and a default judgment was entered against him.[1] Antonucci answered and filed counterclaims asserting several grounds for relief under contract and tort law. Now before the Court is Provident's motion for summary judgment on its breach of contract claims against Antonucci, and on Antonucci's counterclaims. For the reasons set forth below, this Court will grant Provident's motion.

I. BACKGROUND

Provident is a New Jersey chartered stock capital savings bank. SFS, before it was dissolved, was an industrial flooring contractor incorporated in New Jersey. SFS operated out of property in South Plainfield, New Jersey, that was owned by Antar, a New Jersey limited liability company. Antonucci, a Pennsylvania resident, was a shareholder and officer of both SFS and Antar. Antonucci signed guarantees of pa3mient to secure working capital and mortgage loans issued by Provident to SFS and Antar.

The Working Capital Loans to SFS Provident and SFS executed a Loan and Security Agreement (the "LSA") on November 5, 21010. (The Provident Bank's Statement of Material Facts Not in Dispute, Dkt. No. 36-2, ¶15) Under the LSA, Provident agreed to lend $2 million to SFS in two separate tranches of $1 million (collectively, the "Term Loan"), each of which bore a different interest rate. (Id. ¶7) The LSA also provided that Provident would establish a revolving credit facility with a $3 million limit (the "Revolving Credit Loan"). (Id. ¶15) That limit was later raised to $3.5 million for the period from February 28, 2011 to August 31, 2011. (Id. ¶¶19, 21) In exchange for the loans, SFS provided Provident with two notes: (1) a Term Note evidencing its promise to repay the Term Loan by making 60 monthly payments of principal and interest (Id. ¶¶12-13); and (2) a Revolving Credit Note in which it agreed to repay the amount drawn from the credit facility on a monthly basis. (Id. ¶16) To secure those payment obligations, SFS pledged its assets—including inventory, equipment, and accounts receivable— as collateral. In addition, Antonucci executed a Guarantee of Payment in which he personally and unconditionally guaranteed the full payment of SFS's debts. (Id. ¶ 36) Antonucci does not deny that he executed this guarantee in favor of Provident. On November 5, 2010, Provident advanced the required sum of $2 million under the Term Loan. By August 31, 2011, SFS had drawn nearly the full amount of the $3.5 million Revolving Credit Loan.

The Mortgage Loan to Antar There was a loan to Antar as well. Provident and Antar signed a Mortgage and Security Agreement (the "MSA") on November 5, 2010. Under the MSA, Antar would borrow $1, 893, 750 (the "Mortgage Loan") to purchase a property in South Plainfield, New Jersey, to use as an office for SFS. [Id. ¶¶26, 28) Under the Mortgage Note, Antar would make 59 monthly payments of principal and interest over a five-year term. [Id. ¶¶29, 31) Antar granted Provident a security interest in the mortgaged property. Antonucci provided additional security by executing a Guarantee of Payment on the Mortgage Loan. Antonucci does not deny that he executed this personal guarantee in favor of Provident. The Mortgage Loan closed on November 5, 2010, and Provident disbursed the funds to Antar.

SFS and Antar Default on the Loans

Beginning on December 1, 2010, Antar was required to make monthly payments under the Mortgage Note. SFS was also required to make monthly payments to Provident under the Term Note and the Revolving Credit Note. [Id. ¶¶12-13, 16, 31) By late 2011, however, SFS and Antar were short on cash. In November 2011, SFS stopped making monthly payments on the Term Loan and --the Revolving Credit Loan. (Id. ¶ 13, 23). In December 2011, Antar stopped making monthly payments on the Mortgage Loan. (Id. Tf33) As a result of these defaults, Provident was authorized to accelerate all three loans and demand payment in full plus accrued interest. (See Dkt. No. 36-5, attachments "B, " "C, " and "G") In 2012, SFS went out of business. (Deposition of Marc Atonucci, Dkt. No. 36-8, at 73) In May 2012, Provident sold certain assets SFS had pledged as collateral for the Term Loan and Revolving Credit Loan at public auction for $90, 000. (Dkt. No. 41-1, at 6)

Alleged Oral Agreements with Provident

Antonucci does not deny signing the guarantees, but alleges that the amount owed by SFS and Antar—and thus by himself as guarantor—was reduced as part of an oral agreement with Provident. Antonucci claims that sometime in September of 2011, before the defaults occurred, he met with Mark Jones, a Provident vice president, to discuss the possibility of a workout. (Dkt. No. 36-8, at 13) At this meeting, says Antonucci, he and Jones made an oral agreement whereby Provident "forgave...the mortgage payments" for an unspecified time "to give [SFS and Antar] some cash flow and continue operations." (Id. at 15). In the event of a default on the Mortgage Loan, Provident allegedly agreed to accept the proceeds from the sale of the mortgaged property. Antonucci was to conduct that sale in lieu of foreclosure. (Id.). Finally, Provident allegedly orally agreed to waive Antonucci's liability under the personal guarantee if there was a shortfall between the sale price and the amount of the Mortgage Loan. (Id.; see also Antonucci's Answer with Affirmative Defenses and Counterclaims, Dkt. No. 5, at 9, ¶ 13) Antonucci admits that this alleged agreement was never reduced to writing.

Foreclosure Action On October 5, 2012, Provident filed a complaint in foreclosure in the Chancery Division of the New Jersey Superior Court, Middlesex County, naming SFS, Antar, Antonucci, and Tarabocchia. (Id. ¶156). On May 28, 2013, the Superior Court found that SFS and Antar were in default and granted judgment in favor of Provident. (Id. T[58) That court entered a judgment of foreclosure against SFS and Antar, which ordered the following:

[T]he Plaintiff The Provident Bank is entitled to have the sum $7, 775, 941.11, together with lawful interest from March 8, 2013, until the same be paid and satisfied, together with costs of this action to be taxed, including a counsel fee of $7, 500.00, raised and paid in the first place out of the Mortgaged Property and Collateral described in the complaint in foreclosure.

The amount of the judgment includes both SFS's liability under the Term Note and Revolving Credit Note, and Antar's liability under the Mortgage Note. (See id. at Ex. 10) Neither SFS nor Antar has satisfied the judgment.

This Action

On November 16, 2012, having received no payments from SFS or Antar in satisfaction of the judgment of the Chancery Division, [2] Provident commenced this federal court action to enforce Atonucci's personal guarantees. Count 1 of Provident's complaint alleges that Atonucci breached his Guarantee of Payment of the Term Note and Revolving Credit Note; Count 2 alleges that he breached his Guarantee of Payment of the Mortgage Note. (PI. Compl., Dkt. No. 1, ¶¶ 32-42).[3]The complaint ...


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