Banks Face New Jersey Debtor Lawsuit for Alleged Breach of Fiduciary Duty and Lender Liability
June 08, 2022, US Bankruptcy Court for the District of New Jersey – Sussex Randolph Buildings, L.P. (“Debtor”) brings a lawsuit against Defendants, Valley National Bank (“Valley”) and Oritani Bank (“Oritani”) seeking damages, injunctive relief and other relief while alleging breach of fiduciary duty, breach of contract, negligence, lender liability and misappropriation and conversion of funds.
In 1992, Debtor, as landlord, and Burrini’s Olde World Market, Inc. (“Burrini”), as a tenant, entered into a lease for Debtor’s property at 1204 Sussex Turnpike, Randolph, Morris County, New Jersey. The Debtor’s interest in this property secured a mortgage loan made by Oritani Bank to the Debtor in the principal amount of $1,800,000 in 2008. The term sheet executed between Debtor and Oritani required that Burrini would pay its rent for the property directly into an account at Oritani and that Oritani would apply these rents to the satisfaction of the mortgage loan taken by the Debtor.
The term sheet also allegedly provided that to the extent that when Oritani receives an amount in excess of the amount needed to pay Debtor’s loan repayment installment in any given month, the excess sums were to be paid by Oritani to Debtor. Debtor claims that it suffered damages directly and proximately from Oritani’s failure to release to Debtor the excess funds to which Debtor was allegedly entitled. Debtor alleges that Oritani’s failure constitutes ‘breach of contract’ and ‘breach of fiduciary duty’, ‘misappropriation’ and ‘conversion’ of funds.
In 2019, Oritani Bank was merged into Valley National Bank. In 2020, Burrini stopped paying rent. The Debtor argues that Valley did nothing to collect the unpaid rents from Burrini for a period of nearly 20 months. The Debtor alleges this inaction on the part of Valley as a ‘breach of duty’ under the term sheet and ‘negligence’.
The Debtor requests the Court to enjoin Valley from collecting the rents from Burrini. The Debtor also seeks compensatory and punitive damages on several counts alleged by it in its complaint.
Sussex Randolph Buildings, L.P. v. Valley National Bank (In re Sussex Randolph Buildings, L.P.), A.P. No. 22-1148, US Bankruptcy Court for the District of New Jersey.
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