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PNC Bank, N.A. v. Star Group Communications, Inc.

United States District Court, D. New Jersey

August 24, 2017

PNC BANK, N.A., Plaintiff,

          DUANE MORRIS LLP By: James J. Holman, Esq. Michael S. Zullo, Esq. Sommer L. Ross, Esq. Counsel for Plaintiff

          TARTER KRINSKY & DROGIN LLP By: Linda S. Roth, Esq. Richard C. Schoenstein, Esq. Jonathan Temchin, Esq. Counsel for Defendants Linda Rosanio-Talamo and Jannaro Talamo


          Noel L. Hillman, U.S.D.J.

         The parties' disputes arise out of a series of commercial loan transactions between Plaintiff PNC Bank, and Defendant Star Group Communications, Inc. PNC Bank contends that Star Group defaulted on its obligations, and in its three-count breach of contract complaint, seeks to collect over $8.7 million from Star Group as the Borrower (Count 1), or the individual Defendants, Linda Rosanio-Talamo (Count 2) and Jannaro Talamo (Count 3) (collectively, “the Talamos”), as the Guarantors of the debt at issue.[1]

         The Talamos, in turn, assert eight different counterclaims against PNC Bank, all of which are rooted in the Talamos' theory that PNC,

acting irrationally and capriciously, . . . seized control of the accounts, the personnel, and the operations of Star, and interfered with any and all attempts of Star and the Individual Defendants to obtain financing or to consummate transactions that would have recapitalized Star and paid off the Bank. Thereby, the Bank directly caused the demise of Star, resulting in the shutting down of its operations and subjecting it to involuntary bankruptcy proceedings. . . . As a result, the Individual Defendants lost their 30 year-old company, valued at no less than $30 million, plus another $3 million in personal savings that the Individual Defendants had invested to bridge the gap to closing with the private equity investor.

(Amended Answer ¶ 98, 100) The Amended Answer asserts that “the Bank should be held to account for the $30 million loss to the Individual Defendants and other damages, compensatory as well as punitive, as may be determined by this action.” (Id. ¶ 155)

         Presently before the Court is PNC Bank's Motion to Dismiss the Talamo's counterclaims pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated herein, the Motion will be granted in part and denied in part.


         Linda Rosanio-Talamo was Star's founder and CEO. (Amend. Answer ¶ 108) Jannaro Talamo was Star's Chief Creative Officer, and is Linda's husband. (Id. ¶ 109) As officers of Star, their relationship with PNC Bank began in 2007. (Id. ¶ 110) At that time, PNC Bank allegedly induced Star and the Talamos to move their credit from Bank of America to PNC Bank “predicated on [PNC] Bank's insistence that it could help grow their business.” (Id. ¶ 110)

         According to the Talamos, PNC Bank was “highly motivated” to loan money to Star and “consistently encouraged” Star to utilize the $10 million combined credit line that PNC Bank provided to Star “from the very outset of the relationship.” (Amend. Answer ¶ 111, 113) Allegedly, PNC Bank “never suggested that the combined $10 million credit line was excessive or made any attempt to further limit overall exposure for the Bank.” (Id. ¶ 113)

         To the contrary, the Talamos allege that in 2010, PNC Bank “counseled against” “the possibility of an infusion of equity to reset [Star's] balance sheet, ” instead “convincing” the Talamos “that they should . . . fuel Star's growth with ‘inexpensive' bank debt, ” rather than equity. (Amend. Answer ¶ 115) In doing so, PNC Bank, allegedly, “was acting in its own interest, trying to prolong a financially beneficial relationship whether or not that arrangement was in the best interests of the Individual Defendants or their company.” (Id. ¶ 116)

         Allegedly, in connection with Star taking on more debt, PNC Bank “surreptitiously raised the amounts supposedly guaranteed by [the Talamos] from $2 million to the entire $10 million. Nobody at Star, including in-house counsel, caught the amended guarantees since they were never part of the discussions.” (Amend. Answer ¶ 116)

         Then, “the Great Recession” occurred and Star's financial situation changed. (Amend. Answer ¶ 117) Allegedly,

[i]n 2013 and 2014, the Individual Defendants invested approximately $3 million of their own savings into Star. Under the circumstances, they had become intent upon securing additional capital and retiring any remaining debt with the Bank, which was due to mature in early 2015. The resetting of Star's balance sheet would have been beneficial to the company's long-term financial well-being and that of the Individual Defendants. Accordingly, and against the advice of the Bank, the Individual Defendants began preparing the company for a capital raise and made road show presentations to various private equity sources.


         On November 24, 2014, Star allegedly signed a term sheet for a transaction with Peachtree Capital Corporation and Star Mountain Capital (“SMC”) with the intent that the proceeds of the transaction would be used “to retire the bank debt in full, pay down the company's accounts payable, and have a reserve to fuel growth.” (Amend. Answer ¶ 118)

         According to the Talamos, they told PNC Bank about the Peachtree/SMC transaction-- which was “originally projected to close . . . in the first quarter of 2015” (Amend. Answer ¶ 118)-- and their intent to use the transaction's proceeds “to pay the note that was due as of December 31, 2014, as well as the entire balance of their outstanding loans.” (Id. ¶ 124)

         “In the beginning of 2015, ” - i.e., after at least one of Star's notes had become due - PNC Bank's “attitude” allegedly “changed drastically.” (Amend. Answer ¶ 127) PNC Bank allegedly “demanded that an outside consultant be hired to assess Star's ability to manage cash flow and assist in the closing with Peachtree/SMC.” (Id.) Although Star hired a consultant who PNC Bank allegedly approved, the bank also separately engaged an additional consultant. (Id.) PNC Bank also moved Star from its “regular account team” to the bank's “workout group.” (Amend. Answer ¶ 128)

         By February, 2015, the parties' relationship allegedly deteriorated further. (Amend. Answer ¶ 129) The Talamos allege that in several different ways, PNC Bank was “actively interfering with the day-to-day management of Star” which directly caused “the delay in the closing” of the Peachtree/SMC transaction. (Id.)

         As the situation worsened, PNC Bank allegedly compounded Star's problems. “When Star sought assistance from the Credit Policy Department with respect to temporary cash flow pressures it faced to meet payroll and payables, the Credit Policy Department” allegedly “turned a deaf ear.” (Amend. Answer ¶ 133) The Talamos allege that, “[r]ather than provide assistance, the Bank simply piled on additional cash flow demands when Star could least afford them.” (Id.)

         In May 2015, the Talamos assert that they “realized their only path to closing the Peachtree/SMC deal was buy the Bank out.” (Amend. Answer ¶ 136) Accordingly, the parties allegedly anticipated that Allied Financial Group would buy Star's debt from PNC Bank at “a steep discount.” (Id. ¶ 136)[2]

         However, the Talamos allege that PNC Bank “torpedoed” this transaction as well, by “put[ting] Allied through an onerous and contentious process to close, which led Allied to unreasonably doubt the sufficiency of the accounts receivable that would fund the loan.” (Amend. Answer ¶ 142)

         On the afternoon of June 23, 2015, “Allied pulled out of the transaction entirely.” (Amend. Answer ¶ 144) The next day, PNC Bank allegedly “sent dozens of letters to Star's clients asserting the Bank's purported rights to client receivables.” (Id. ¶ 145)

         On July 1, 2015, “Star announced it had to cease operations.” (Amend. Answer ¶ 147) On August 17, 2015, “three of Star's creditors commenced an involuntary bankruptcy proceeding under Chapter 7.” (Id. ¶ 151)


         When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains ...

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