$250,000 Business Loan to Poker-Playing Lawyer Can Be Called, Court Says

Law.com ^ | 3-3-09 | Joel Stashenko

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A Buffalo, N.Y.-area financial institution that loans money to law firms to finance litigation was within its rights when it decided not to gamble on an attorney who used money he borrowed to play poker, a federal judge has ruled.

Western District of New York Judge Richard J. Arcara ruled in Counsel Financial Services v. Melkersen Law, 08- cv-0156A(Sr), that Counsel Financial Services could call in just under $250,000 in outstanding principal on attorney Michael J. Melkersen's loan, plus $22,420 in outstanding interest and $3,923 in late payments.

Melkersen argued that neither his card-playing, nor other personal uses of the revolving line of credit he received from Counsel Financial, was proscribed in the promissory note or personal guaranty for the money he signed in 2005.

As Melkersen explained in an October 2007 e-mail to Counsel Financial, 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.

"I was not aware that I could not take personal draws from the Counsel line [of credit] 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," Melkersen maintained in the e-mail.

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“I was not aware that I could not take personal draws from the Counsel line [of credit] 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,” Melkersen maintained in the e-mail.

“I’m sorry, Sir. I did not know the rules.”

Eric Cartmann nailed it with the “White Man’s Defense”.