Opinion ID: 2716864
Heading Depth: 5
Heading Rank: 2

Heading: The Testimony of Lawrence LaBonte

Text: American Steel called Lawrence LaBonte as an adverse witness. Mr. LaBonte testified to the details of the loan agreement in a manner largely consistent with Mr. Vallone’s testimony. Mr. LaBonte acknowledged that he signed the loan agreement “[b]oth individually and as a member of [N.E.] Development.” He confirmed that, at the closing on January 8, 2010, $275,000 of the $325,000 loan amount was provided by American Steel. Moreover, in his testimony, he confirmed that a $50,000 fee was due at the closing to be divided between American Steel and Mr. Garies; he added that the loan agreement provided that at the closing he owed American Steel $325,000 plus “16 percent” interest. It was Mr. LaBonte’s further testimony that he had not made any of the payments owed to American Steel pursuant to the loan agreement. 8 Mr. Garies testified that, as of the time of the hearing, he had not received his $20,000 fee. -4- 2. Lawrence LaBonte & N.E. Development’s Witnesses i. The Testimony of James M. Roche James Roche testified that he was a “[s]elf-employed commercial finance specialist and a turnaround company consultant.” His testimony focused on commercial loan commitment fees in general as well as the specific commitment fee at issue in the instant case. He testified that a commitment fee is generally money that is “paid at the closing,” not money that is paid at a later time. He stated that a commitment fee “is basically a lender committing that they have the funds available, and by executing that commitment document, you would either pay the commitment fee with the execution of the document or you would pay it at the closing of the loan;” he added that commitment fees are “typically” a “percentage of the loan” and that “industry standards” would call for a commitment fee which was “half to one percent of the total amount financed.” It was his testimony that, in his experience, a $50,000 commitment fee on a $275,000 loan was “[u]nreasonable.” He further stated that he had “[n]ever” seen “a situation where the commitment fee was paid at the time the loan was supposed to be paid off[.]” ii. The Testimony of Eric Greene Mr. Greene, the “managing member” of American Steel, was the last witness to testify at the hearing. According to his testimony, his loan to N.E. Development was the first loan that he had made to anyone other than a member of his family; he stated: “Prior to this, prior to me being asked to lend Mr. Labonte [sic] some money, I have never lent any money in my life other than family.” He testified that, because N.E. Development “couldn’t afford to pay” the $50,000 commitment fee at the time of closing, he “allowed” it to be paid at the maturity date. When asked what he “expected to be paid back” at the maturity date, he testified as follows: “I expected to get back after 30 days $325,000, which included [Mr. LaBonte’s] commitment to his mortgage broker [(Mr. -5- Garies)], which he couldn’t afford to pay at the closing; and it included the commitment fee which I had extended him, the 30 days with interest. That was his design. And, plus one month’s interest based upon 16 percent per    annual amount, which -- which would’ve been $329,000, $4,000 interest approximately at the time when the note was due. That’s what we expected back.” It was Mr. Greene’s testimony that the commitment fee was “going to reimburse [his] costs to make the loan.”