Former Villanova businessman wins another legal round against U.S. Bank

Posted: March 18, 2013

Thousands of U.S. entrepreneurs lost their businesses to the plunging economy and nervous lenders during the madness of the financial crisis.

Former Villanova resident Maury Rosenberg was among them, but Rosenberg fought back against U.S. Bank affiliates and won court decisions in Philadelphia and Miami, where he lives in a downtown condo bought for $2.7 million in 2005.

A Miami jury found this month in a $6.1 million verdict that U.S. Bank entities acted in bad faith in 2008 when they filed for involuntary bankruptcy against Rosenberg's Philadelphia medical imaging company.

Six federal court rulings, which tell a fascinating tale of lenders getting tangled in their own complicated financial machinery, went against U.S. Bank before last week's award.

Rosenberg, 66, said in an interview Thursday that "the finding of bad faith was vindication that what they did was totally improper."

Despite the string of losses, U.S Bank, of Minneapolis, is not giving up.

Officials said Thursday that the bank would argue in posttrial motions that the $5 million in punitive damages was too high.

It will also pursue claims against Rosenberg in U.S. District Court for the Eastern District of Pennsylvania, arguing that Rosenberg remains liable under a 2005 restructuring agreement - stemming from a previous attempt by U.S. Bank to put National Medical Imaging in bankruptcy - that reduced Rosenberg's debt to $15 million from $24 million. The bank said Rosenberg himself guaranteed up to $7.6 million of debt.

"Rosenberg is a savvy and experienced business person who signed a personal guaranty - a guaranty on which he has yet to pay a penny," bank spokesman Tom Joyce said.

U.S. Bank's history with Rosenberg dates to about 2000, when Rosenberg started leasing magnetic resonance imaging machines to expand National Medical Imaging.

At its peak, the company had 23 locations, $70 million in billings, and 150 full-time employees.

Those leases, along with those of similar companies, were bundled into securities, much like home mortgages, by the defunct DVI Inc. in Jamison, to be sold to investors.

One unit of U.S. Bank was the trustee for those bundles of leases, dealing with investors, and another unit became the servicer, collecting payments from National Medical and other borrowers, after DVI's bankruptcy.

The bundles of securities are made possible by legal structures called "special purpose entities," with names such as DVI Receivables XIV.

This is where U.S. Bank made a strategic error, according to federal judges.

After using its servicer, Lyon Financial Services Inc., to sue National Medical in late 2003 for default in Bucks County Court, U.S. Bank switched and used the special purpose entities to file the 2008 involuntary bankruptcy petitions against two National Medical companies and Rosenberg himself.

Judge A. Jay Cristol, of the U.S. Bankruptcy Court for the Southern District of Florida, dismissed the case against Rosenberg in 2009 because the special purpose entities were the wrong vehicle for the involuntary petitions.

U.S. Bank appealed that decision all the way to the U.S. Court of Appeals for the 11th Circuit and lost.

U.S. Bank said the finding was based primarily on technical legal issues. "We relied on the advice of both a third-party consulting firm and outside legal counsel in approving the filing of the bankruptcy petition," Joyce said.

The three-week jury trial in Miami was based on a countersuit by Rosenberg, alleging that U.S. Bank acted in bad faith when it filed the involuntary petitions.

Rosenberg's lawyer during the jury trial, Yale Galanter, who spent his childhood in Northeast Philadelphia and graduated from Cherry Hill High School West, said the award was the largest ever in such a case.

"We tried the case and we hammered them," said Galanter, a criminal defense lawyer whose clients have included O.J. Simpson and other celebrities.

Rosenberg called the saga "emotionally devastating" and said "70 to 80 percent of our wealth is gone" because the bankruptcy caused other loans to go into default.

Contact Harold Brubaker at 215-854-4651 or

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