Byline: Teena Hammond

LOS ANGELES — A suit filed by Emma Rose/Rik Inc., a women’s apparel firm here, seeking $12 million in damages from factor Congress Talcott Corp. is scheduled to go to nonjury trial in Los Angeles Superior on Sept. 15.
The suit charges the New York-based factoring firm, which financed Emma Rose/Rik’s receivables from 1993 to 1996, with breach of contract, breach of good faith and fraud. The trial is expected to last two to three weeks, said Steve Goldberg, attorney for Emma Rose/Rik.
New York-based Congress Talcott has filed a countersuit in Los Angeles Superior Court, suing Emma Rose/Rik for $500,000, alleging breach of contract and other complaints, according to Ben Seigel, attorney for Congress Talcott.
Congress Talcott is a factoring company and, from 1993 to 1996, financed Emma Rose/Rik’s receivables. Emma Rose/Rik operates three Rix boutiques — in Los Angeles, West Hampton, N.Y., and in SoHo, New York. It also wholesales private label merchandise and clothing under the Emma Rose, Rix and Maverix labels to Bloomingdale’s, Neiman Marcus, Nordstrom and Fred Segal, according to court papers. Richard Guido is the president of Emma Rose/Rik.
In June 1996, Congress Talcott stopped providing financing to the company after two audits, according to the suit, which also names Louis J. Sulpizio, vice president of Congress Talcott, as a defendant.
According to Congress Talcott’s countersuit, on about April 1, 1996, Emma Rose/Rik breached the factoring agreement in several ways, including accepting financing for merchandise that was never sold or delivered.
Emma Rose attorney Goldberg, however, contended, “The case is about whether a factor is arbitrarily able to cut off financing to a client without notice. We think this case is important not just to Emma Rose and Congress but to how factors do business in the industry.”
In the suit, Emma Rose/Rik contends Congress Talcott’s refusal to fund its receivables hurt business and that Emma Rose/Rik began to have trouble paying suppliers and manufacturers. Emma Rose/Rik was unable to obtain a new factor to provide financing because Congress Talcott put a lien on future receivables, the same collateral the firm would have used to acquire a new factor, the suit says.
Emma Rose/Rik is seeking punitive and compensatory damages of at least $12 million, Goldberg said.

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