Gregory Novak, left, and Tracy Druce, right. April 17, 2012. (Photo by Diego M. Radzinschi)
Citibank is attempting to recoup more than $3.2 million from the defunct intellectual property boutique Novak Druce Connolly Bove + Quigg, according to a lawsuit filed Tuesday in federal district court in Washington, D.C.
The bank demands that former name partners Gregory Novak and Tracy Druce, now with Polsinelli in Houston, repay what remains of a $10 million loan the firm co-founders allegedly first underwrote in 2013.
Citibank’s $3.2 million figure doesn’t include interest or fees related to loan enforcement, though the bank claims Novak and Druce owe those too.
At the time Novak Druce got the loan, Novak was the firm’s managing partner and Druce was a member of its executive committee. They reupped the Citibank loan in 2014, then again in 2015, even after Novak Druce defaulted on some terms, the suit says.
The bulk of the IP firm’s partnership, including Novak and Druce, joined Polsinelli in February last year, after their firm lost several partners, closed some of its offices and was accused of not compensating partners. At the time, mass lateral acquisition looked similar to a merger, though the Novak Druce partnership dissolved.
Citibank claims that when the partnership dissolved, the loan went into default under the terms of the loan agreement, and Novak Druce owed back any outstanding money immediately. At the time, the firm owed $9.25 million plus interest to Citibank, though it paid back some of that as it wound down client accounts, the complaint says.
Other money troubles for Novak Druce materialized earlier this year in a different federal court. BMO Harris Bank sued the defunct firm in Illinois, claiming it failed to pay off $566,390 it owed on a Diners Club commercial credit card. The suit was transferred to Texas federal court in Texas.
Neither Novak nor Druce could be reached Tuesday for comment.
Citibank is represented by Sidley Austin partners Frank Volpe, Richard Fries and Andrew Hart. They declined to comment.