Jacobs drops suit against Mercantile

November 13, 1992|By Mark Hyman | Mark Hyman,Staff Writer Staff Writer Jon Morgan contributed to this article.

In a sign that he might be moving to settle his legal dispute with Mercantile-Safe Deposit and Trust Co., Eli S. Jacobs has dropped a 2-month-old lawsuit in which he accused the lender of a "malicious scheme" to block restructuring of his business empire.

In court papers filed in Baltimore Circuit Court yesterday, Mr. Jacobs dropped the suit he filed Sept. 14. Mr. Jacobs retains the right to refile his suit against the bank.

Mercantile's claims against Mr. Jacobs, principal owner of the Baltimore Orioles, remain unchanged. On Aug. 25, the bank filed suit against him, claiming he was late in paying interest on a loan. The bank asked for immediate repayment of a $21.6 million debt.

Both lawsuits had been on hold until Dec. 1 after the court's approval of a request by both sides to push back filing deadlines in the case.

James M. Smith, a lawyer for Mercantile in Baltimore, declined to comment on the suit yesterday. Michael J. Schwarz, Mr. Jacobs' Baltimore lawyer, also declined to speak about the case.

But the circumstances surrounding the case hint that the partiescould be near an out-of-court settlement, said Irving Breitowitz, an associate professor at the University of Maryland Law School who specializes in bankruptcy law.

Mr. Breitowitz, who said he has no direct knowledge of the case, said settlement negotiations "obviously would be a reason he would drop the suit."

Mr. Jacobs "probably needs the cooperation of the bank to engage in his restructuring," said the law professor.

In recent months, Mr. Jacobs has aggressively restructured his business affairs. In July, he told some lenders in a letter that his investments weren't generating enough cash to meet all his bTC obligations. Mr. Jacobs said at the time that he would stop making interest payments on some loans while he restructured his business empire.

In addition to Mercantile, two New York banks have filed suit against Mr. Jacobs this year, seeking repayment of loans. Berkshire Bank is seeking $490,000, and Manufacturers & Traders Trust is seeking $4.75 million.

Last summer, Manufacturers obtained a judgment from the court, ordering Mr. Jacobs to pay $250,000 for one loan. Recently, it obtained a second judgment for $4.5 million, according to a Manufacturers spokesman.

Attorneys on both sides of the Berkshire suit declined to comment on the suit, which is still pending.

In his suit against Mercantile, Mr. Jacobs had charged the bank with interference with his business relationships, abuse of process, breach of contract, breach of fiduciary duty and fraud. Mr. Jacobs asked for $125 million in compensation and penalties.

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