USAlliance FCU Awarded $3.75 Million In NY Supreme Court Judgment Against Prime Time Holdings

RYE, N.Y. – In a decision marking the end of what was the oldest lawsuit on the docket of the Commercial Division of the Westchester County Supreme Court, USAlliance FCU was awarded $3.75 million by the Court and was absolved of all charges of wrongdoing relating to the involuntary bankruptcy of Prime Time Holdings, LLC, a Connecticut-based leasing company. The decision and verdict were issued by the court on May 13. The case goes back to 1998 when Prime Time, a Connecticut-based auto leasing company, filed a $100 million suit against the credit union and its board of directors for breach of contract, malicious prosecution, and various other business torts. The credit union filed a counter claim for breach of contract and fraud. The trial on the case lasted four weeks during which time testimony was provided that according to USAlliance, “told the tale of a used car leasing program that began in 1996 and ended two years later amidst mounting evidence of embezzlement and fraud.” Faced with Prime Time’s $1.2 million failure to fund an investment security account, USAlliance discontinued its optional investment in leases issued by Prime Time. Within weeks, the company laid off its staff, stopped servicing USAlliance’s portfolio, and sued the credit union. When Prime Time refused to turn over more than $200,000 of collected lease payments and blocked USAlliance’s access to car titles and critical accounting information, USAlliance joined with other Prime Time creditors to force the company into involuntary bankruptcy in November 1998. The jury found that USAlliance and its board brought the bankruptcy without malice and awarded the CU $3.75 million for damages it suffered as a result of Prime Time breaching the lease-management contract. USAlliance attorney Mitchell Pollack said the “victory clearly supports our belief that the Prime Time suit was without merit. We’re gratified the jury saw through Prime Time’s ploy and recognized the impact that Prime Time’s improper activities had on the credit union.” According to a USAlliance release, the Court’s judgment supports the CU’s position in another lawsuit concerning Prime Time that is currently pending in the Federal District Court for the Southern District of New York. That complaint, filed by USAlliance against CUMIS Insurance Society, seeks reimbursement for a loss covered under its indemnity Bond Policy, which provides coverage for losses resulting from employee or director dishonesty and lack of faithful performance. In 1998, USAlliance learned that a long-time senior employee overseeing the Prime Time leasing program had intentionally failed to disclose to USAlliance management and its board serious operational and financial problems, and had illegal activities within Prime Time. The credit union further revealed that the employee had a hidden personal financial stake in the company. In its complaint against CUMIS, USAlliance assets the company breached its insurance contract for employee dishonesty and lack of faithful performance. The suit also seeks recovery for bad faith insurance practices and violation of New York General Business Law. – [email protected]