Trust sues investors, including Segal, for defaulting on line of credit

By Kyla Asbury | Dec 7, 2018

MORGANTOWN — A revocable trust is suing Charleston attorney Scott Segal and others after it claims he and several other investors owe on a line of credit issued in 2009. The defendants have filed a motion to dismiss the claims.

PITA LLC and the Milan Puskar Revocable Trust named Scott S. Segal, Leonard P. Harris and Carl Hostler, as executor of the estate of Stanley M. Hostler as defendants in the Monongalia Circuit Court suit obtained by The West Virginia Record.

Segal, Harris and Carl Hostler filed a motion to dismiss in the case, arguing the plaintiffs failed to state a claim upon which relief could be granted.

"The claims herein are nothing more than artfully plead breach of contract claims and rely on the sole allegation that the guarantors never intended to pay the guaranties, which they executed in 2009," the motion states.


The defendants are seeking for Counts I and II to be dismissed and for a more definitive statement. They are requesting for the court to require the plaintiffs to amend their complaint.

Protea Biosciences is a bio-analytic technology company that has its headquarters in Morgantown and was founded in 2001 by scientists and researchers affiliated with West Virginia University (WVU), according to the suit.

Segal, Harris, Stanley Hostler and the late Milan Puskar were significant investors of Protea and served on Protea's Board of Directors at various points over the years.

In 2009, Protea obtained a working capital line of credit from Centra Bank in the amount of $3 million and each of the defendants, along with Protea and Puskar entered into a written guaranty agreement with the bank to personally guarantee repayment of the debt, according to the suit.

The trust claims in November 2017, the bank transferred and assigned the promissory note and the agreement to PITA.

The directors of Protea also negotiated with an investment bank in 2017 with the expectation of a $15 million investment to sustain and grown Protea's interests, according to the suit. But those negotiations ultimately failed.

Protea filed for Chapter 11 bankruptcy on Dec. 1, 2017, and as of that date, PITA was owed $3,048,819.67 under the promissory note. PITA then notified the defendants that the note was in default and that it would enforce its rights under the guarantees they had signed.

PITA and the trust claim the defendants have committed fraud by inducement and breached their contract.

The plaintiffs are seeking compensatory and punitive damages. They are represented by Robert Palumbi and John Berry of Dinsmore & Shohl.

The defendants are represented by Teresa K. Fuchs, Robert O. Lampl and David L. Fuchs of the Law Offices of Robert O. Lampl.

Monongalia Circuit Court case number: 18-C-372 

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Dinsmore & Shohl LLP - Headquarters Monongalia Circuit Court The Segal Law Firm

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