A financial institution which loans money to law firms is, according to the Western District of New York Judge Richard J. Arcara, within its rights to call in a loan of $250,000 which was taken out by attorney Michael J. Melkersen, plus $22,420 in outstanding interest, and $3,923 in late payments.
Melkerson took out the loan from a company that usually finances litigation proceedings, and used it to fund his poker playing. He argued that neither his card-playing nor other personal uses of the line of credit he received from the company was proscribed in the promissory note or personal guaranty for the money he signed in 2005.
Melkerson explained in an email to the company, Counsel Financial, in 2007, that he had been successful playing poker “for many years, and therefore my activity in that regard was always done with an expectation of a profit and improving my personal financial situation.”
He added “I was not aware that I could not take personal draws from the Counsel line in a reasonable amount, nor was I aware that there were any restrictions on how I used my partnership draws or otherwise spent my personal funds.”
Philip B. Abramowitz said that Mr Melkersen misunderstood the purpose of the loan. “his view was that playing poker was business. Well, the money was for business, not for him to play poker with.”
Consel Finanial started court proceedings, and Judge Arcara ruled that the company were entitled to call on the loan, and that they had not breached his loan agreement by deciding not to renew the loan.
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