Owner of Pennsak sues FNB

By Joe Pinchot
Herald Staff Writer

SHARON, HERMITAGE July 01, 2008 07:15 pm

— A lawsuit initially filed in a New York state court over the disposal of assets of the former Pennsak Inc., Sharon, has been transferred to federal court in Pittsburgh.
Jeffrey Rabiea alleges that First National Bank of Pennsylvania, Hermitage, improperly disposed of equipment he owned, and interfered with the collection of receivables and with obtaining a loan from another bank.
A spokesman for FNB’s law firm, Eckert Seamans Cherin & Mellott, Pittsburgh, said the firm does not comment on pending litigation.
Rabiea, of New Hyde Park, N.Y., initially filed the suit in Nassau County. In February, FNB had it bumped up to the New York eastern district of federal court, and then asked that it be sent to Pittsburgh. A New York federal judge ordered the transfer Saturday, and it was transferred Monday.
FNB asked for the transfer arguing that Rabiea is the only connection the case has to New York.
According to court documents, Rabiea was the sole shareholder, president and director of Pennsak Inc., which made and sold plastic bags; Pennsak Acquisition Corp., which owned Pennsak Inc.; and Midwest Leasing Corp., which owned the equipment used at Pennsak; and he obtained multi-million dollar loans from FNB for each company.
American Realty Inc. held title to the real estate.
In 2004, Rabiea decided to sell the companies and reached agreement with FNB that the outstanding loans would be paid for by the sales, and equipment would be sold and proceeds split after the loan balance reached $350,000, he said in the suit filed Jan. 10.
Pennsak sold the plant and some equipment to Crosstex International Inc., which remains in Sharon.
In 2006, Rabiea learned that FNB had equipment, valued at $700,000 and owned by him, “dismantled, cut up, destroyed and removed” when the loan balance reached $375,000.
“By destroying this equipment, defendant interfered with plaintiff’s ability to conduct business and earn a living,” the suit said.
FNB mistakenly issued a federal 1099 cancellation-of-debt form to Rabiea, and the Internal Revenue Service demanded taxes from Rabiea personally, even though he was no longer a party to the loan. FNB refused to rescind the mistaken form unless Rabiea relinquished all claims.
Rabiea is seeking $4.6 million plus interest and punitive damages.