A Dallas-based lender and its general partner will have to pay about $6.7 million to an Ohio auto dealership after a judge recently found the foreclosure of that company violated loan agreements.
Meir Benit, an 89-year-old former obstetrician who came to the United States after fleeing persecution in Iraq, and his son Ron Benit filed suit in May 2021 against PrimaLend Capital Partners, its general partner LNCMJ Management, individual defendants Arturo Aguilar and Gregory Miki Moreno and their company, alleging breach of contract, violations of the Texas Business and Commerce Code, conversion and unjust enrichment.
After a seven-day bench trial in May, Dallas County District Judge Monica Purdy rejected counterclaims lodged by PrimaLend seeking more than $1 million and determined the Benits were owed about $4.2 million in principal, which when combined with interest and attorney fees should result in a roughly $6.7 million final judgment.
PrimaLend issued a statement to The Lawbook on Thursday that it “respectfully disagrees” with Judge Purdy’s ruling.
“PrimaLend intends to appeal the judgment and is confident it will be vindicated on appeal,” the statement reads.
Judge Purdy also declined to find liability on the part of individual defendants Aguilar and Moreno, who bought the assets at the foreclosure.
Brian P. Shaw of Carrington Coleman Sloman & Blumenthal, who was lead counsel for the Benits, filed a proposed final judgment with the court July 12 and told The Lawbook he anticipates it will be signed within a week.
“It sounds cheesy but we really helped this family, and we knew we were right since it happened, since 2018,” he said. “But it took a long time to vindicate them … and our clients had the fortitude to hang in there and stick with it.”
According to court documents, Meir Benit had loaned his other son, Tahl Benit, a total of $3 million in 2015 for his auto dealership company. When that financing wasn’t enough to get the business on solid ground, Tahl Benit sought and received a loan from PrimaLend in November 2016.
The agreement required that, in the event of a default, PrimaLend had to first give Tahl Benit written notice via a demand letter, and if that wasn’t successful then PrimaLend was required to exhaust “its security rights and interests with respect to all collateral, other than equity interests.”
But instead, the Benits alleged, the defendants went to the auto dealership when Tahl Benit was out of town, changed the locks, foreclosed on the business and sold it.
“There is no ambiguity,” the lawsuit alleged. “Upon default, PrimaLend was required to pursue all of Tahl’s businesses’ assets prior to seeking collection through Tahl’s pledge of the equity interests.”
Those interests, according to the lawsuit, included $6.5 million in accounts receivable assets, which would have satisfied the $2.9 million owed to PrimaLend.
“But in something out of the Godfather movie, PrimaLend did the exact opposite and took over Tahl’s businesses by purporting to sell Tahl’s equity interests and installing its two handpicked co-conspirators from Dallas — Aguilar and Moreno and their company Ohio Fund — as the new officers of the business,” the suit reads. “It was a business coup d’état, a strongarm and illegal maneuver that benefitted PrimaLend significantly but had catastrophic consequences for the Benits.”
Those catastrophic consequences for the family included causing a rift between Tahl and his father, Meir, that led to them not speaking to each other for years. The human cost was not lost on Shaw.
“This tore this family apart,” he told The Lawbook. “It’s a commercial case but ultimately, this is a people story. And we made one small step in helping to put this family back together. … [T]hey’re talking again.”
A message seeking comments from counsel for the buyer defendants was not immediately returned Thursday.
Tahl Benit assigned his claims in the case to his father and brother, according to court documents.
PrimaLend filed counterclaims in January, telling the court of Tahl Benit’s “extensive criminal history” and incarceration for crimes of “moral turpitude” that it alleged prevented it from finding a buyer for the underlying assets. PrimaLend also detailed criminal charges that were filed against Meir Benit in 2017 stemming from his prescribing certain drugs that ultimately led to him surrendering his medical license in 2019.
The lender brought claims against the Benits for fraudulent transfer, breach of guaranty, breach of contract and conspiracy.
“Ultimately, PrimaLend was unable to locate anyone willing to buy the collateral only, without the equity interests, because Tahl Benit’s greed, dishonesty, mismanagement, fraud, and interference rendered the collateral unmarketable,” PrimaLend alleged. “In fact, Tahl Benit’s greed, dishonesty, mismanagement, fraud, and interference severely devalued the collateral and threatened to turn the retail installment contracts into liability for any holder of those contracts.”
At trial, Shaw presented Judge Purdy with an audio recording from PrimaLend’s CEO saying he knew PrimaLend could sell the auto dealership’s nonequity collateral and be made whole.
“We also had testimony from their chief compliance officer that they knew about this provision before foreclosing and decided they didn’t need to comply with it,” Shaw said.
Shaw characterized PrimaLend’s strategy in the case as one that would “malign and trash the family,” bringing up Tahl’s struggle with drug addiction and related criminal charges.
“I think they saw the family as an easy mark. Who’s going to believe a felon and drug addict? I told the judge in closing this was the first time I’ve been involved in a trial that would have been faster as a jury trial than a bench trial — there was so much that wouldn’t be admissible to a jury,” Shaw said. “Our tactic was: Bring it in, because the judge is going to see through it.”
Shaw said he employed a “rope-a-dope” strategy and gave his clients credit for trusting that it would be successful to allow that testimony and evidence without rebutting it.
“They bit — hook, line and sinker — it was amazing the efforts that they went through to do a character assassination,” he said of PrimaLend’s counsel. “It was hard for my client to sit there and listen… but the judge gave us every single thing I asked for.”
The Benits are also represented by Dan Bennett of Bennett Law Group in Ohio.
PrimaLend is represented by Jacob Sparks of Nelson Mullins and Scott Seifert, Lauren Patton and Kimberly Kerns of Spencer Fane.
The buyer defendants are represented by Jared Eisenberg, Andrés Correra and Holly Stubbs of Lynn Pinker Hurst & Schwegmann. The case number is DC-21-06229.