Court Rejects Roni Mizrahi Group's $12 Million Lawsuit Against Union Bank
A Tel Aviv District Court judge has dismissed a NIS 12 million lawsuit filed by the Roni Mizrahi real estate group against Union Bank. The group had maintained nine checking accounts and ten project loan accounts with the bank. Mizrahi's group claimed that between 2011 and 2014, Union Bank failed to offset deposit amounts against overdrafts in two loan accounts for the Savionei Dania project in Haifa, thereby overcharging them on interest. They also alleged the bank improperly charged interest and fees on loans across all ten loan accounts, totaling NIS 3.3 million in overcharges and an additional NIS 8.7 million in damages due to the inability to use the funds.
Judge Yehoshua Gafman rejected all claims, citing extensive illegal construction by the Mizrahi group at the Haifa project and Mizrahi's conduct with bank officials. He referenced a Supreme Court ruling on the illegal construction, stating it involved thousands of square meters built after plan submission, suggesting an attempt to present authorities with a fait accompli, and continued even after a judicial stop-work order. The judge emphasized that the loan agreement did not cover construction without a permit, and since these deposits were the sole source for settling debts related to guarantees for the illegally built apartments, they could not be offset against overdrafts.
Gafman also found that Mizrahi failed to prove claims of duress or coercion. He noted that Mizrahi was aware of the bank charging higher interest rates than stipulated in loan agreements, as evidenced by testimony detailing repeated disputes over interest rates that were eventually resolved by Mizrahi agreeing to the bank's terms to secure loans. The judge concluded that Mizrahi, an experienced group with professional advisors, did not sign agreements under duress, as they could have sought other banks or liquidated assets. Mizrahi stopped working with Union Bank in 2014 but did not raise these claims until 2019. Union Bank successfully proved its interest rates and fees were legitimate.
Ultimately, only Mizrahi's claims regarding NIS 200,000 in fees remain for determination, with the judge ordering the parties to agree on an expert to review them. The Mizrahi group was ordered to pay NIS 70,000 in legal costs. The group is also set to receive 15% of the amount it sued for in the Neve Yaakov project from the state.
