QUEENS, N.Y. (CN) – Two Queens taxi moguls say Capital One strung them along as Uber took hold of the market. After forcing them to default on their loans, now the bank has gone in for the kill with “an all-out litigation attack.”
Tony Georgiton and Basil Messados brought the complaint on Dec. 23 in Queens County Supreme Court, describing a storm of legal activity served up by Capital One in the six weeks prior.
“Capital One actions against plaintiffs are all part of an unethical and unrelenting scheme to harm not only plaintiffs, but plaintiffs’ businesses and staff (office staff, mechanics, etc.) and also the medallion taxicab drivers who rely upon their weekly checks and medical insurance to support themselves and their families,” the complaint states.
Contrasting the alleged bad faith with how the contract began in 2010, Georgiton and Basil describe how it was Capital One that courted them in 2010, eager to become the leading medallion lender in New York City.
“Capital One was so intent on forging its way into the New York City medallion market that it was offering, if not begging, to lend plaintiffs over one hundred million dollars ($100m) based on the value of the medallions alone, without ever evaluating any of plaintiffs’ business or personal financial statements at the time,” the complaint states.
Georgiton and Basil say all that changed in 2014, however, when Capital One switched allegiances to Uber.
“Capital One’s own actions were taken to not only exit the New York City taxi medallion market for perceived greener pastures, but also to bolster its planned new investment in app-based transportation options that, at the time, were just starting to emerge in New York City and which now, a couple years later, are booming industries,” the complaint states.
A leader in Chicago’s medallion industry lobbed similar allegations against Capital One in 2014. Georgiton and Basil note that their lending record prior to dealing with Capital One was unblemished.
Noting that they have never “been late or missed any payments in all their business ventures,” the business owners point to the industry standard of refinancing when a loan agreement has matured and a balloon payment becomes due.
“This same procedure has been followed by all of the lenders with which the plaintiffs work (with the exception of Capital One’s recent bad faith actions, as detailed herein), as it provides Plaintiffs with the liquidity needed to operate a successful business,” the complaint states.
“Indeed, if lenders did not refinance when the loans matured and balloon payments became due, the entire taxicab medallion industry would implode as hundreds of millions of dollars.”
Georgiton and Basil say that 13 two-year interest-only loans they entered into with Capital One matured earlier this year.
They were concerned about Capital One’s partnership with Uber, but a senior vice president at the bank, Paul Dell’Aquilo, gave allegedly gave the men assurances.
“Capital One, through Dell’Aquilo, continued to represent to plaintiffs that it was fully committed to the taxi medallion industry and would stand by its promises and representations to, among other things, renew and refinance all of the loan agreements,” the complaint states.
“Meanwhile, despite these promises and representations, after partnering with Uber, Capital One pulled the plug on its medallion financing, and as the leading lender in the New York City market, immediately caused the value of medallions to plummet, destroyed liquidity, and put plaintiffs and others similarly situated in a position to fail.”
Georgiton and Basil say they could have refinanced with any number of traditional lenders if Capital One had not strung them along. “Ironically, it is Capital One’s own actions that have led to the purported ‘defaults’ under the loan agreements,” the complaint states.
Georgiton and Basil say Capital One refused to refinance the loan agreements but entered into a mutual release agreement with Action Funding LLC, a business they own in part.
“Capital One entered into the Mutual Release to, among other things, avoid claims of fraudulent inducement and other claims by Action Funding and plaintiffs (collectively 70% owners of Action Funding) for its repeated misrepresentations, fraud and bad faith relating to its purported intent to refinance and restructure the loan agreements,” the complaint states.
Just two weeks after striking that early November release, however, Capital One allegedly brought six actions against the plaintiffs “attempting to enforce ‘liabilities, rights, debts, [and] obligations’ it had ‘release[d] and forever discharged.’”
Georgiton and Messados say they have been subpoenaed this month and asked produce documents in the Capital One lawsuits.
The 24-page complaint seeks to vacate the judgments in the underlying loans. Accusing Capital One of fraudulent inducement, the plaintiffs also want punitive damages.
Residents of Long Island City, Georgiton and Messados are well known for opposing Uber. Georgiton, who co-founded Queens Medallion with Messados, claimed in a 2014 New York Post story that somebody at the Taxi and Limousine Commission had leaked cab driver contact info to Uber so it could poach drivers.
Capital One has not returned a request for comment. Through its partnership with Uber, the bank promotes free Uber credits if customers register with a Capital One credit card.
The war between rideshare services and traditional taxi drivers came to a hear this year in New York City where members of the Taxi Workers Alliance staged protests outside Uber’s Queens headquarters. Tempers also have flared between taxi and Uber drivers, in some cases leading to violence.