Color-Web, a division of 1800Postcards.com, announced details of ongoing litigation against its bank. Color-Web has sued People’s Capital and Leasing, a unit of People’s United Financial, alleging fraud and breach of contract. The amount of the claim is $13.8 million.
Color-Web alleges that People’s Capital and Leasing reneged on a financial commitment to provide to it almost $4 million in funding for new technology, a state-of-the-art, custom-built printing press, in 2007. The bank provided a $200,000 deposit at that time, the suit alleges. Upon receiving this commitment, Color-Web changed its business operations to accommodate the new technology.
Color-Web contends the bank then pulled the financing as other printing businesses began to suffer financially, in violation of the agreement.
“It is important to note that, in my estimation, the decision to pull back the financing in question was not related to the business performance of Color-Web,” David Moyal, president of Color-Web, explained.
Because the strategic business changes that it made were not quickly reversible, Color-Web believes it experienced material loss as a result of the bank’s decision to pull the financing. Color-Web has had to lay off nearly 100 workers in the New York Metro area since the funding was pulled. The company is currently exploring closing up. The parent company of Color-Web, 1800Postcards.com, is the largest commercial printing company still standing in the New York City area.
“In my view, a bank’s role is to facilitate commerce. When a bank does something that impedes commerce and destroys the value that a business has earned over many years, its role in the marketplace becomes extremely damaging,” said Moyal. “This lawsuit is not just about Color-Web’s claims against a bank. It is in defense of the notion that when institutions prey on small businesses and innovators, the most reliable engines of job creation, they should be held accountable for damages that result.”
He continued, “We arrived at the amount of our claim by estimating what four years of savings on production costs would have totaled, had we been able to use the new technology to grow our business and compete in our highly competitive industry. This is probably not a lot of money to a large institution such as People’s Capital, but their decision to pull our financing was enough to put my business under and everyone who it employed out of work.”
Color-Web’s claim is a counter-claim to a previous lawsuit filed by People’s that sought to recover the initial $200,000 deposit on the printer. The original claim was filed in New York State Supreme Court on September 27, 2011 and the counter-claim was filed on December 9, 2011.
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