Judge Montgomery Rules by Christopher Menkin
Judge Sally Montgomery CAUSE NO. 04-04187-C The “findings of fact and conclusion of law” regarding testimony from IFC Credit Corporation officers in a case regarding a NorVergence lease with Specialty Optical dba S.O.S. in Dallas, Texas, County Court 3 brought a pleased response for the NorVergence lessee's attorney, in fact, off the record, called it “very creative.” The order was signed at 3pm, CDT, Wednesday, and should be in the records by today. IFC Credit had “no comment” at press time, but certainly will appeal, as it has stated it will do with the judge's ruling in favor of Specialty Optical in the first non-jury trial hearing. As stated in earlier stories, perjury is a very serious charge, especially in the state of Texas as it carries serious jail time. “ORDERED that IFC Credit Corp. (“IFC”) shall send letters to all lessees against which it has made claims under leases or rental agreements acquired form NorVergence and explain to each lessee the precise amount of money that was delivered to NorVergence for the lease, as well as what amount was held back, the basis for such holdback, and the manner in which the holdback was applied in the accounting records of IFC. IFC Credit did not “fund” the entire amount, but paid only a portion, and held back $16,257, which it labeled a “hold back” and did not disclose. In this specific law suit, the “Equipment Rental Agreement” is for 60 months at $543.67 or $32,620.20. After testimony, it is learned that IFC paid NorVergence $11,743 for a $28,000 original invoice figure that yielded lease payments of $32,620.20. The first time IFC Credit Vice President John Estok, Certified Leasing Professional (CLP), admitted to “holdbacks,” that Leasing News can find, was in the Morey Lumber NorVergence case, yet to be heard in court in Texas. Scott Mackenzie, the attorney representing Morey Lumber, supplied the hold back and other information as amicus curiae to the SOS case, and perhaps single handedly brought evidence not only about full disclosures, but perhaps “collusion” between various leasing companies and the NorVergence connection. In the Specialty Optical court testimony CLP Estok said he guesses that IFC Credit has over $2 million in holdbacks. The opposing counsel then questioned whether perjury is involved, specifically on the testimony from Patrick A. Witowski, Executive Vice President of Operations, regarding the full disclosure of what was paid for the $1500 Matrix box and telephone service. The recent ruling also stated: “Such letters shall be sent to the lessees or their counsel, if they have counsel, and shall be sent by certified mail, return receipt requested. Such letters will be sent out no later than 30 days from the date of this Order. No later that 75 days from the date of this Order, IFC will provide copies of each of those letters, along with proof of delivery in the form of signed return receipts or, in the event they are unclaimed, proof that such letters were not claimed by the addressees, to counsel for Specialty Optical.” Judge Montgomery ruled earlier for the NorVergence lessee “.... properly cancelled the Lease with NorVergence. IFC takes nothing on its counterclaim. SOS shall recover court costs and reasonable attorney fees in the amount of $45,000.00 for trial, $30K for appeal, and $15 K for a petition for review to the Supreme Court of Texas, and $15K for responding to any unsuccessful appeal by IFC to the Supreme Court of Texas in the event the petition for discretionary review is granted per the parties stipulation.” In the recent ruling, the Judge also ruled: “It is further ORDERED that IFC shall pay to Specialty Optical, within 30 days from the date of this Order the sum of $13,600.00 as part of the sanctions in this case, which will also reimburse Specialty Optical for the fees it will incur in monitoring the notification of other lessees regarding payment and holdbacks as described above. “It is further ORDERED that IFC shall pay to Specialty Optical, within 30 days from the date of this Order, the further sum of $22,078.25 as reasonable and necessary attorneys' fees incurred in connection with bringing this motion, as well as the sum of $803.92, which represents two times the actual costs incurred by Specialty Optical in connection with this sanctions motion.” Finally the judge concluded, “All other relief requested in Specialty Optical's Motion for Sanctions that is not specifically herein granted, is denied.” In researching Pacer Service Center and other court records, Leasing News discovered more than 100 cases appearing to involve Askounis & Borst representing IFC Credit in actions regarding NorVergence lessees, many transferred out of the state, many settled; Aksounis & Borst writing the affidavits. Certainly the law firm of Askounis & Borst has earned its fair share of what is involved, but what knowledge did they have about these “holdbacks?” IFC Credit Executive Vice-President John Estok, originally estimated the company had 850 NorVergence leases. In the Specialty Optical dba SOS trial before the Honorable Sally L. Montgomery, Dallas, Texas, IFC Credit Corporation Officer John Estok, CLP, divulged that his company has a $100 million asset portfolio with over $14 million in “up to 800” NorVergence leases with 550 in question: “…for the last 18 months, every month out the door is $300,000 in payments to the banks, and every month in the door is $100,000 or so of cash from settlements and customers who are still making their payments. In several depositions, particularly now with Preferred Capital, Brecksville, Ohio in bankruptcy, “holdbacks” were common. How common with other leasing companies holding out with NorVergence lessees? Most likely Judge Sally Montgomery's ruling will be held up in the courts for years, and may even go as far as the United States Supreme Court. One thing for sure, Askounis & Borst, P.C the law firm that wrote the affidavits, has the most knowledge, both “inside” and “outside,” will make a lot of money out of this. Some wag said the attorneys always make out---as long as they have a retainer--- that's my advice. In the meantime time Texas Attorney Gregg Abbott and his staff is looking into this in their state regarding usury and providing full disclosure of information. His office was not going to make any statement until further developments of this specific case, and others are pending. When Leasing News wrote about this in June, 2004, we told readers and NorVergence lessees this was going to go on for a long time, advising all to make a settlement now, avoid the costs, time, and hostilities. Both sides jumped down on throat. In fact, the hard liners on each side still hold a lot of animosity toward Leasing News for our early recommendation (and two editorials) to settle the matter, move on, and get back to producing some good business to both sides. Copy of Judge Montgomery's ruling: |
 |
| 
