Jacobs drops challenge to bank suit

November 24, 1992|By Mark Hyman | Mark Hyman,Staff Writer

Eli S. Jacobs has dropped his challenge to a lawsuit brought by Mercantile-Safe Deposit & Trust Co. in its attempt to collect a $21.6 million debt from the Orioles owner.

In papers filed in Baltimore Circuit Court yesterday, Mr. Jacobs waived his objections to the bank's demand that he repay the delinquent loan.

That effectively moves the dispute between Mr. Jacobs and the Baltimore bank out of the courts and into private negotiations. Baltimore Circuit Judge Joseph H.H. Kaplan agreed yesterday to cancel a scheduled deposition of Mr. Jacobs on Dec. 2 by Mercantile lawyers and a Dec. 7 court hearing.

Mr. Jacobs, who zealously guards information about his business dealings, could head off further disclosures about his finances if he reaches a settlement with Mercantile by Dec. 1.

On that date, three New York banks -- Citibank N.A., Morgan Guaranty Trust Co. and Chemical Bank -- and the Orioles are due to answer court requests for information about Mr. Jacobs' business holdings. His assets in those banks have been frozen by a court order, which also blocked payments to him from the baseball team.

James M. Smith, a lawyer for Mercantile, declined to comment. Michael J. Schwarz, Mr. Jacobs' lawyer, also declined to comment.

But lawyers who specialize in such disputes said the most recentfilings might indicate a negotiated settlement is near or has been reached.

"He wouldn't drop his objections unless there was a settlement. People don't do it. It's a big card to play," said James Vidmar, a bankruptcy attorney at Linowes and Blocher in Silver Spring.

Mr. Vidmar said the dispute could be settled in one of a number of ways.

"The bank typically looks at how collectible the loan is and works from there," the lawyer said. "They could agree to take a certain amount[of money] over time, but offer discounts for paying more quickly."

Yesterday's court filings marked the second time in two weeks that Mr. Jacobs has taken a conciliatory step in his legal tangle with Mercantile.

On Nov. 12, Mr. Jacobs dropped a lawsuit in which he charged that the lender had undertaken a "malicious scheme" to disrupt a restructuring of his business empire. He'd accused the bank of interference in his business relationships, abuse of process, breach of contract, breach of fiduciary duty and fraud.

The suit asked for compensation and penalties of at least $125 million.

The legal disputes between the bank and Mr. Jacobs began in August when Mercantile sued the Orioles owner, seeking repayment of a $21.3 million loan and $300,000 in accrued interest.

Mr. Jacobs has been aggressively restructuring his financial empire in recent months. The Mercantile suit came a month after the New York financier told some lenders that he was not able to make interest payments on his debts and asked for their cooperation.

In the past year, at least two other banks have sued Mr. Jacobs over unpaid loans.

Last year, Mr. Jacobs said he was considering offers for the Orioles.

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