Jefferson Parish business blames bank for financial hardship

By Andrea Dearden | Aug 19, 2010

Mobile-One Auto Sound, Inc. is suing a lender it says ruined the company's credit and forced the closure of several stores.

Mobile-One accuses Whitney National Bank of a breach of contract in a petition filed Aug. 12 in Orleans Parish District Court. Also named in the suit are Whitney National senior vice president Gary Lorio, vice president Harlan Bush and vice president Bill Jolly.

Mobile-One claims it had a long-standing business relationship with Whitney National that began in December 1997, when the two companies executed the first of many financial agreements. Court records show the original loan agreement was amended and renewed in 2000, 2004, 2005. Annual promissory notes were also executed.

In August 2005, Mobile-One executed a renewal note for a $2 million line of credit. The line was renewed in 2006 and re-payment was later extended to May 2008. The agreement included a formula used to calculate Mobile-One's ability to borrow - a formula the business argues was readily accepted by all involved parties for more than 11 years.

Despite meeting all requirements of the loan agreement, Mobile-One says Whitney National Bank executives lowered the company's credit limit to $1.5 million, without warning or explanation. Mobile-One says that reduction made it difficult to pay employees or vendors and buy new inventory. The company argues the reduced credit caused a "snowball effect" that forced the closure of numerous stores in 2009, including an AT&T store in Metairie and a Mobile-One store in Slidell.

Mobile-One executives say they met to discuss the issue with Whitney representatives in July 2009 and were told they needed to make a $150,000 payment before the reduced note could be extended.

According to the petition, there was no further communication between the two parties until Aug. 13, 2009 when Jolly told Mobile-One that $600,000 had been swept from the company's operating account, without notice, to pay down the line of credit.

Mobile-One claims that under the executed loan agreement, Whitney National was obligated to provide written notice of any default and give Mobile-One at least 15 days to respond.

In addition to sweeping Mobile-One's operating account, Whitney National also allegedly closed the bank account Mobile-One used for payroll. Mobile-One argues Whitney had no right to take this action that they claim negatively impacted their business.

Had they been given some warning, Mobile-One executives say they could have avoided most of the financial loss and the damage to the company's reputation.

Mobile-One is seeking damages caused by a breach of contract, along with court costs and attorney fees.

Mobile-One requests a jury trial.

Attorneys S.C. Garcia III, Joseph F. Bishop and Christine I. McKinnon of Garcia & Bishop are representing the company.

Orleans Parish District Court Case No. 10-8305

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