Capital One, National Association vs. Jacob Frydman
Capital One, National Association vs. Jacob Frydman
CV 2231
COMPLAINT
Capital One, National Association, by its attorneys Paul, Hastings, Janofsky & Walker
LLP, hereby files its Complaint, and states as follows:
INTRODUCTION
1.
Plaintiff Capital One, National Association, ("Capital One" or "Bank") brings this action to
recover approximately $370,141.75 owed to it by Jacob Frydman ("Frydman"), under a
credit account agreement and guaranty. Frydman borrowed money and received other
financial accommodations from Capital One, and Frydman promised to pay certain amounts,
; r
forth therein. In addition, in order to induce Capital One to extend or continue to extend credit or
other financial accommodations, Frydman executed a guaranty unconditionally guaranteeing his
obligations to the Bank. Frydman has defaulted on his obligations. Although Capital One
promptly provided Frydman with a Demand Letter notifying him of his default, Frydman has not
paid Capital One the outstanding balance owed. Therefore, Capital One brings this action for
breach of contract, among other claims, in order to recover the debt owed to it by Frydman .
Parties
2.
Plaintiff Capital One is a national bank with its principal place of business located at 1680 Capital
One Drive, McLean, Virginia 22102. Capital One is a successor by merger to North Fork Bank
("North Fork"), which merged with and into Capital One, N.A. on or about August 1, 2007.
3.
On information and belief, Defendant and Interpleader Defendant Jacob Frydman ("Frydman") is
a New York resident, residing at 40 Fulton Street, Floor 6, New York, NY 10038.
This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. 1332
because (i) complete diversity of citizenship exists between the parties; and
(ii) the amount in controversy exceeds $75,000.00 exclusive of interest and costs.
5.
is subject to personal jurisdiction in this District and the events at issue occurred in this venue.
Thus venue is not inconvenient for the parties.
Count 1
(Breach of Contract Under the Restated Elite Agreement and the Elite Guaranty Against
Defendant Frydman)
B.
6.
On or about October 29, 2004, pursuant to a credit account agreement by and between North
Fork and Frydman, Capital One agreed to make available to Frydman a line of credit up to the
aggregate amount of $100,000.00 as evidenced by an Elite Plus Credit Account Agreement,
dated October 29, 2004 (the "Elite Agreement"). The Elite Agreement is attached hereto as
Exhibit 1.
7.
On or about January 9, 2008, defendant Frydman executed the Restated Elite Plus Credit Account
Agreement, (the "Restated Elite Agreement"), by and between North Fork and Frydman, increasing
the maximum credit limit available to Frydman under the Restated Elite Agreement to the
aggregate amount of $450,000.00. By its terms, the Elite Agreement was replaced, superseded,
and modified by the Restated Elite Agreement. A copy of the Restated Elite Agreement is
attached hereto as Exhibit 2.
8.
Under the terms and conditions of the Restated Elite Agreement, Frydman borrowed money and
received other financial accommodations from plaintiff Bank, and
Frydman promised to pay the principal amount plus interest thereon from the date thereof as
provided therein.
9.
Pursuant to the Paragraph "Method of Payment" of the Restated Elite Agreement, Frydman was
1
the then unpaid principal balance at the end of the statement period or $200, whichever is
greater, plus (b) any amount loaned over the credit limit, plus (c) all interest at a rate provided
therein (North Fork's prime rate plus 1.0%), plus (d) late charges and (e) any unpaid prior
minimum payment. Exhibit 2 at 1.
10.
Pursuant to the paragraph "Entire Balance Due/Default" of the Restated Elite Agreement ,
upon an event of default, as prescribed in the Restated Elite Agreement (the "Restated Elite
Agreement Events of Default"), the Bank may declare the entire unpaid balance due and
payable . Exhibit 2 at 2.
11.
Among the other Restated Elite Agreement Events of Default, the Bank may declare the entire
unpaid balance due and payable upon the happening of the (i) failure to
pay any amount required by the Restated Elite Agreement when due, or failure to have sufficient
funds in the demand deposit account to permit automatic debit of any amount due; (ii) failure to
make any other payment to the Bank when due and (iii) the occurrence of default under
any
instrument or agreement, whether direct or contingent, for the payment of money. Exhibit 2 at 2.
12.
Pursuant to the paragraph "Interest Rate" of the Restated Elite Agreement, from and after the
occurrence of an Event of Default, the interest rate payable increases to five percent (5%) over
the then applicable interest rate under the Restated Elite Agreement. Exhibit 2 at 1.
13.
Pursuant to the paragraph "Late Charges" of the Restated Elite Agreement, if there are
insufficient funds in the demand deposit account, or a minimum monthly
payment is not paid when due, Frydman will pay a late charges of four percent (4%) of the
payment due plus the applicable overdraft charge. Exhibit 2 at 1.
II
j
i
l
i
l
l
i
1
l
14. In order to induce plaintiff bank from time to time, in its discretion, to
extend or continue credit or other financial accommodations to Frydman, defendant Frydman
executed and delivered to the Bank that certain Guaranty dated July 19, 2004 (the "Elite
Guaranty"), in connection with an Elite Plus Credit Application. The Elite
Guaranty
unconditionally guaranteed the payment obligations of Frydman to plaintiff Bank, including but
not limited to loans, interest, late charge, fees and attorney's fees. A copy of the Elite Guaranty
is attached hereto as Exhibit 3.
15.
On July 29, 2010 , Frydman failed to pay the monthly payment due under
the Restated Elite Agreement, and failed to pay monthly payments due thereafter.
:i
16.
As of July 29, 2010, Frydman has defaulted and remains in default of the
obligation to pay Capital One on all amounts due under the Restated Elite Agreement,
II
but not limited to, all interest and associated commissions, fees, expenses and costs. By letter
l
j
I
I
I
I
including
dated November 22, 2010, plaintiff Bank made a demand for payment on Frydman for the
amounts owing under the Restated Elite Agreement and the Elite Guaranty (the "Elite Demand
Letter"). Pursuant to the Elite Demand Letter, plaintiff Bank declared the entire unpaid balance
of principal and interest, and all other amounts payable under the Restated Elite Agreement
immediately due and payable . A copy of the Elite Demand Letter is attached hereto as Exhibit 4.
!
I
l
C.
17.
To date, Frydman has not paid the outstanding principal balance of the Restated Elite
Agreement.
18.
Frydman has breached the Restated Elite Agreement, for those reasons stated above, including
but not limited to the failure to comply with the obligations under the Restated Elite
Agreement to pay to Capital One the full amount of the unpaid principal in the amount of $370,
141.75 together with interest and all associated commissions, fees, expenses,
and costs, which became due and payable on demand from Capital One. A schedule showing the
calculation of the amounts of principal, interest and late charges due as of March 31, 2011 under
the Restated Elite Agreement is attached hereto as Exhibit 5.
19.
20.
Pursuant to the paragraph "Collection Costs" of the Restated Elite Agreement, Frydman agreed
to pay the Bank's attorney's fees in the event that the Bank retains
counsel with respect to enforcement of the Restated Elite Agreement.
21.
Capital One has incurred and continues to incur costs and expenses, including fees and
disbursements of in-house and outside counsel, to enforce the obligations under the
Agreement.
j
_1,_
Count 2
(Estoppel Against Frydman)
22.
Capital One repeats and realleges each and every allegation as set forth
23.
In entering into the transactions at issue, Capital One relied directly upon
above.
the express representations of Frydman with regard to the Restated Elite Agreement and the Elite
Guaranty (the "Agreements").
24.
Frydman entered into the Agreements with full knowledge of Capital One's reliance upon his
representations therein and, indeed, made such representations to induce Capital One to rely
thereon.
25.
Capital One has been injured as a direct and proximate result of Frydman's failure to
honor the express representations in the Agreements.
26.
Based upon the foregoing, Frydman is now estopped from disputing the representations and
promises in the Agreements.
Count 3
{Uniust Enrichment and Quantum Meruit Against Frydman)
27.
Capital One repeats and realleges each and every allegation as set forth
above.
28.
As a result of Frydman's conduct as set forth above, Frydman has been unjustly enriched.
29.
Capital One is entitled to recovery under the doctrines of quasi-contract, quantum meruit and
unjust enrichment.
WHEREFORE, Plaintiff Capital One respectfully requests that this Court enter
judgment in its favor and against Frydman as follows:
i
j
l
I
;!i
(a)
be determined at trial, including all damages sustained, rights and remedies available as provided
under the Restated Elite Agreement and the Elite Guaranty, costs and expenses incurred in this
action, including attorney's fees, and any other expenses, and all interest on the
Restated Elite Agreement and the Elite Guaranty, and related documents and on all attorney's
fees incurred in enforcing its rights as set forth therein;
(b)
!
i
-
to be determined at trial, including all damages sustained, rights and remedies, reasonable
costs
and expenses incurred in this action, including attorney's fees, and any other expenses;
damages
sustained as a result of the breach, on all commissions, costs, and expenses applicable under the
(c)
be determined at trial, including all damages sustained, rights and remedies, reasonable costs and
expenses incurred in this action, including attorney's fees, and any other expenses;
(d)
and
-I
(e)
Awarding Capital One such other and further relief as the Court
LEGAL_US_E # 92289559.1
10
I
1
"
1
j
RIGHT OF OFFSET:
..
...
income therefrom and exercise all voting and other
rights with respect thereto; (b) the Bank shall not be
obligated to demand payment-o( protest, or take any
steps to preserve any rights in such Collateral Security,
all of which remain your obligation; (c) the Bank may
sell any or all Collateral Security without notice to you
(except where required by law, in which case S days
notice by ordinary mail shall be deemed reasonable
notice) at public or private sale at such price and upon
such tenns as it deem.1 advisable; (d) the Bank shall
have the right to bid and purchase at any such sale; (e)
the proceeds of any such sale shall first be applied to
the costs, expenses, and attorney fees in connection with
the sale, and the remainder to the Liabilities in such
manner as the Bank shall determine; (f) you and any
guarantor and any other obligor shall remain liable for
any deficiency; (g) the Bank need not liquidate
Collateral Security before seeking payment from you or
any guarantor or any other obligor on the liabilities;
(h) the Bank .is authorized to take possession of the
Collateral Security and may enter any premises where
such Collateral Security is located and remove same,
(i) you will assemble the Collateral Security and make
it available to the Bank at such place and time as the
Bank may designate; (j) the Bank may notify any
account debtor to make payments to
''PERIODIC REVIEW:
The Bank will review your handling of the Loan
Account and your credit on a periodic basis. You must
supply all financial statements and tax returns requested
by the Bank. Based upon the review, the Bank may
decrease or tenninate the Loan Account and this
Agreement.
MISCELLANEOUS:
(a) You agree that a microfilm or other photographic copy
of an instrument or docmnent used in connection with
the Elite Credit Account will establish the amount you
owe; (b) you permit the Bank to order a credit report or
consumer report and to receive, obtain, and exchange
credit information on you and any guarantor. The will
tell you upon request whether or not a consumer report
was reported, and, if so, the name and address of the
consumer reporting agency; (c) you agree that the
Bank may accept late or partial payments, as well as
payments that are marked "paid in full" or contain
other restrictive endorsements, without losing any
rights under thi Agreement; (d) you agree not to draw
on the Loan Account except by use of Elite Credit
Account drafts provided by
the Bank; (e) you agree to pay for copies and other
Elite Credit Account and check related services
accor to the Bank's schedule of fees, as amended
from time to time; (f) you agree that this Agreement
shall
be the
governed
the Yorlc without regard to its
laws of
State by
of New
Banx
the Bank.
CANCELLATION:
Either you or the Bank may cancel this Agreement at
any
time by giving written notice to the other. Even if the
Agreement is canceled, you must still pay the Bank
what you owe. In the event of cancellation, you may
no longer write drafts against the Loan Account. If no
Event of Default has occurred or occurs, you may pay
the
due amount
hereunder by making thirty-six monthly payments
each
amount.
COLLECTION COSTS:
If you do not pay the Bank what you owe and the
Bank sends the matter to an attomey for collection,
then you agree to pay a reasonable attorney's fee up to
20% of the
amount
owed, plus court costs and disbursements,
court, or
otherwise.
regardless of whether an action is commenced and, if
so,
whether in the trial court, appellate court, bankruptcy
Agreement
andofhave
read it and fully
understand it;the
(p) if
any provision
this Agreement
is unenforceable,
OTHER PROVISIONS :
ecaplusunsec.doc 9/01
ll
I
I
..
NORTH FORK BANK
RESTATED ELITE PLUS CREDIT ACCOUNT AGREEMENT
Date: 1/9/08
DEFINITIONS:
The words ''you" and "your" mean each and all persons
who submitted the application for the account and who
are bound by this Elite Credit Account Agreement The
word "the Bank" means North Fork Bank its
successors and assigns. The word "Agreement" means
this Elite Credit Account Ar,rnent. The word "Loan
Account" means the Elite Credit Loan Account
established pursuant to the tenns of this Agreement.
MAXIMUM CREDIT:
Your credit limit is shown above and will be shown on
each monthly statement which the Bank will send you.
You are not permitted to exceed your credit limit. The
Bank may change your credit limit up or down at any
time by giving notice in writing to you. If you write a
draft which would cause the unpaid principal balance
in your Loan Account to exceed your credit fimit, the
Bank may either refuse to honor your draft or may
honor your draft and make you a loan in excess of
your credit limit. Any such loan together with interest
must be repaid immediately upon demand of the Bank.
PROMISE TO PAY:
You promise to pay to the order of the Bank all
amounts owed under thls Agreement, plus interest,
collection costs, (including, without limiting attorney fees
permitted under this agreement) and all other amounts
due. Payment will be made as set forth in this
Agreement.
I1
PERIODIC STATEMENT:
Each month the Bank will send you a statement on your
Elite Credit Account.
This statement will list all
transactions that you made_ in the Loan Account during the
previous month. It will show what you have borrowed,
what you have repaid, items credited and debited and what
you owe (new balance). It will also show interest rate
changes. This statement shall be deemed to be accurate
.
-l
METHOD OF PAYMENT:
The "minimum monthly payment" (as defined herein)
will be debited from your demand deposit account with
the Banlc when due. You agree to have sufficient funds
in your demand deposit account to permit such debits
without creating an overdraft. Your "mimum monthly
payment" is equal to the sum of (a) 1/60 of the unpaid
principal balance as of the end of the- statement period
or $200, whichever is greater, plus (b) any amount
loaned over your credit limit, plus (c) all interest due as
computed below, plus (d) all late charges, plus (e) any
unpaid prior minimum payment. Notwithstanding the
foregoing, you may pay the entire amount owed (plus
interest to the date of payment) in full at any time.
lI
i
1
l
l
l
'
RIGHT OF OFFSET:
Upon the occurrence of an Event of Default, the Bank
may take any amount yau have on deposit with it or
any affiliate of the Bank and apPlY it toward the
amount due without limiting the foregoing, the Bank:
may excerise any and all rights of offset it may have
pursuant to statute and common law.
SECURITY INTEREST:
A$ collateral security for all of your obligations and
COVENANTS/R.EPRESENTATIONS/W ARRANTIES
You hereby covenant, represent, and warrant as
follows (which representations and warranties are true
as of the date hereof and shall be true on the date of
any draft against the Loan Account): (a) upon request
you will furnish the Banlc a copy of your personal
financial statement, as well as the personal financial
statements of the guarantors, all in fonn and substance
acceptable to the Bank; (b) upon request, you will
furnish the Bank with copies of the signed tu returns
(with schedules) filed by
you or any of your guarantors for the past three (3) years
2
PERIODIC REVIEW:
The Bank will review your handling of the Loan
Account and your credit on a periodic basis. You must
supply all financial statements and tax. returns requested
by the Bank. Based upon the review, the Bank may
decrease or terminate the Loan Account and this
Agreement.
MISCELLANEOUS:
(a) You agree that a microfilm or other photographic
copy of an mstrument or document used in connection
with the Elite Credit Account will establish the amowit
you owe; (b) you permit the Bank to order a credit report
or consumer report and to receive, obtain, and exchange
credit information .on yo'u and any guarantor. The Bank
will tell you upon request whether or not a consumer
report was reported, and, if so, the name and address of
the consumer reporting agency; (c) you agree that the
Bank may accept late or partial payments, as well as
payments that are marked "paid in full" or contain other
restrictive endorsements, without losing any rights
under this Agreement; (d) you agree not to draw on the
Loan Account except by use of Elite Credit Account
drafts provided by the Bank; (e) you agree to pay for
copies and other Ellte
Credit Account and_ ck related services accordin to the
Bank's schedule of fees, as amended from time to tune; (f)
you agree that this Agreement shall be governed by
the laws of the State of New York without re,ard to
its conflicts of laws rules; (g) you consent to the
Jurisdiction of the Court of the State of New York and
venue in Suffolk
County, New York; (h) you and the Bank waive the
right to trial by Jury; (i) you waive demand.
presentment, and protest; (j) you waive all defenses,
rights to setoff and the right to impose any
countcrclalms in any election brought by the. Bank
(although you may assert such claims in a separate
lawsuit); (k) you a
that this Agreement
represents the entire understaniling between you and
the Bank and may not be modified or tenninated orally
and that all waivers by the Bank must be in writing; (I)
the Bank has made no representations, warranties, or
agreement except ii.s set forth herein; (m) you may not
assign or transfer your rights under this Agreement; (n)
if this .Apment applies to more than one of you, notice
to one will be considered notice to all of you; (o) you
agree
that you have received the fully completed copy of this
Agreement and have read it and fully understand it; (p)
if any provision of this Agreement is unenforceable, the
remainder shall remain in full force and effect.
CANCELLATION:
Either you or the Bank may cancel this Agreement at
any time by giving written notice to the other. Even if
the Agreement is canceled, lou must still pay the Bank
what you owe. In the event o cancellation, you may no
longer write drafts against the Loan Account. If no
Event of Default has occurred or occurs, you may pay
the amount due hereunder by making thirty-six monthly
payments each consisting of l/36th of the principal
balance outstanding at the time of cancellation plus
interest at the rate of the Bank's Prime Rate plus 2 1/2%
per IUlllWD, adjusted as and when the Bank's Prime
Rate changes on the unpaid balance. The monthly
payments may not be equal in amount.
COLLECfiON COSTS:
If you do not pay the Bank what you owe and the
Bank sends the matter to an attorney for collection,
then you agree to pay a reasonable attorney's fee up to
20% of the amount owed, plus court , costs and
disbursements, regardless of whether an action is
commenced and, if so, whether in the trial court,
appellate court, bankruptcy court, or otherwise.
. DELAY INENFORCEMENT/WAIVER:
The Bank does not give up any of its rights by not
enforcing them right away. The Bank may enforce or
waive any right with respect to you or any guarantor
without waiving it as to any other party or guarantor .
The Bank need not give anyone notice of any waiver,
delay or release. Your obligations and those of any
guarantors are not affected by the Bank's release of
any party or guarantor, releasing any security or
collateral, or extending or modifying any obligation
hereunder.
ot
$100,000.00, u signed by the Borrower.
CHANGES:
JACOB FRYDMAN
JACOB FRYDMANl/9noos
759022881 NOTICE
OF DEFAULT
Dear Mr. Frydman:
The above captioned loan, dated January 9, 2008 in the original amount
of $450,000.00, is past due for the July 29, 2010 payment, and all subsequent
monthly payments thereafter. As a result of your failure to make timely
payments, you are in default under the terms of your Restated Elite Plus Credit
Account Agreement and all other agreements, instruments and documents, at
any time executed and delivered in connection therewith, each as amended,
restated, supplemented or otherwise modified from time to time are
collectively referred to as the "Loan Documents".
Accordingly, the Bank hereby elects to declare the entire principal balance of
$345,689.92, plus interest in the current amount of $6,426.17, together with
late fees in the current amom1t of $2,196.06, immediately due and payable.
The Bank is entitled to default interest pursuant to the terms of your Restated Elite. Plus Credit
Account Agreement.
Any payments received after this date will not reinstate the loan, which will
remain due and payable. Partial payment of the amount due may, at the
Bank's sole discretion, be accepted and applied to the amounts due pursuant
to the terms of the Loan Documents. If so accepted, however, such partial
payment shall be without waiver of or prejudice to any rights or remedies
available to the Bank pertaining to the Loan. 'This matter will be turned over to
the Bank's attorneys to take whatever legal action is necessary to recover the
monies owing to the Bank
You may contact the undersigned to obtain final payoff amounts. Please direct
payment by bank or certified check and all notices:
Capital One, N.A.
Attn: Marcy McLoone
All rights and remedies accorded the Bank under the Promissory Note, the other Loan Documents
and
by applicable law are hereby expressly reserved and may be enforced or exercised at any time and from time to
time. Any delay or forbearance by the Bank in the enforcement or pursuit of any rights and remedies
accorded to it under the Term Loan Note the other Loan Documents or by applicable law shall not constitute
a waiver thereof, nor shall it be a bar to the exercise of such rights or remedies at a later date.
Nothing in this letter, any other correspondence or any oral communications between the Bank and
the Borrower or any guarantor should be construed to be a waiver, modification or release of any breach,
default or event of default, whether now existing or hereafter arising, or of any of the Bank's rights and
remedies under the Term Loan Note, the other Loan Documents and at law.
Sincerely,
Marcy Mcloone
Vice President
Capital One Bank
Jacob Frydman
Loan Number
From
To
Davs
Interest Rate
6129/2010
7/30/2010
8/29/2010
917/2010
9/29/2010
7/30/2010
8/29/2010
917/2010
9/29/2010
3/31/2011
31
4.25%
9.25%
9.25%
9.25%
9.25%
30
9
22
183
Principal Balance
355,827 .13
355,827 .13
355,827 .13
345,689.92
345,689 .92
Principal Balance:
Interest Balance:
Less payment on 917/10
345,689 .92
23,076 .65
22,255 .77
Late Fees:
Total:
2,196 .06
370.141.75
Interest Accrued
1,302.23
2,742.83
822 .85
1,954.11
16,254.63
Principal Payment
10,137.21
Interest Payment
820.88
Payment Date
917/2010