Great Neck business litigation lawyers realize that commercial contracts are about more than simply one party keeping their word.As multiple New York business litigation lawsuits have illustrated, violations and breaches of contracts can be the downfall of a business. That’s why it’s so critical to have a business attorney reviewing the contract even before it’s signed, as well as immediately upon the first hint that there may be a violation or breach.
This is what happened in the case of New York City-based commercial printer, Color-Web Inc., which is suing a subsidiary of their bank, People’s United Financial Inc. The civil suit alleges breach of contract and fraud, and the company, which has been forced to close, is seeking about $14 million in damages.
Color-Web, which was a printing firm and a subsidiary of 1800postcards.com, said that People’s Capital back-tracked on its 2007 promise to provide financial backing in the amount of $4 million for funding of new technology for the firm. This technology included a custom-built printing press. This was an extremely expensive piece of equipment, and one that the company had been counting on to revolutionize its business.
With the promise of funding, the company put $200,000 down on the printing press and proceeded to re-work its entire business model around this new equipment, which was set to be delivered in late 2009.
But then the bank reportedly pulled its financing – in violation of their signed agreement. The equipment was never delivered, and Color-Web’s business began to plummet. Primarily, the company said that the changes it made in anticipation of the new machinery were not quickly reversible. Business suffered greatly as a result.
The lawsuit alleges that the bank did not base this decision on performance issues that Color-Web had, but rather on the economic downturn. However, Color-Web says that banks, as financial institutions, have to be held to higher standard with regard to contracts, especially considering that 1800postcards, the city’s largest commercial printing company, has continued to honor its financial obligations with the bank, despite the financial hits it’s taken since the economy tanked.
The bank’s decision, company owners say, was enough to put the business under and cause more than 100 employees to be out of work.
Making the situation worse, Color-Web had signed on for a 15-year lease contract with a landlord in New York. If the landlord doesn’t release the company from that contract, it could be out even more money. If that happens, attorneys say they plan to increase the amount being requested from the bank for damages.
This case is actually a counter-suit to the original claim, which was filed by the bank in order to recoup the $200,000 deposit. Color-Web has counter-sued, and the case is being heard in the New York State Supreme Court.
The Law Offices of Ira S. Newman provides business litigation representation in Great Neck, New York City, Long Island and throughout the area. Call 516-487-7375 or contact us through the website.
Manhattan printer Colorweb shuts down, By Eilene Zimmerman, Crain’s New York