Fireworks may have ceased after the Fourth of July holiday but new legal documentation in Giudice v. Kridel has some highly explosive qualities. The Real Housewives of New Jersey, returning July 10, is a hotbed of epic legal discussion. Fasten your seatbelts, reality TV fans, because you are in for a wild ride.
On July 5, 2016 Carlos J. Cuevas, co-counsel to Teresa Giudice, filed an Opposition To Application To Retain Special Counsel. In this document, Cuevas stated, “The Giudice Lawsuit is solely Teresa’s fight for justice.” He maintains, “The Trustee’s selection of Siegel & Siegel, P.C. to represent him in the Giudice Lawsuit violates the business judgment rule.” Cuevas continued, “The Trustee has adopted a strategy that benefits Mr. Kridel and harms the creditors.”
Several days prior, on June 30, 2016, John W. Sywilok (Trustee), made an application for retention of special counsel in the legal malpractice suit against James Kridel. He sought permission from the court to have Michael D. Siegel from Siegel & Siegel, P.C. serve in said capacity. “Michael D. Siegel has a J.D. from the University of Chicago Law. He is admitted in the state of New Jersey and has expertise regarding allegations of the complaint in Giudice v. Kridel and litigating the same.”
Why would Cuevas et al. resist the appointment of special counsel in the malpractice suit? As I alluded to in an earlier blog, if her current lawyers – Carlos J. Cuevas and Anthony M. Rainone – cannot represent her in this suit, their agreement with Teresa (be it monetary or PR exposure) may not yield any quantifiable returns.
Carlos Cuevas asserts that if John Sywilok seeks other counsel to prosecute the Giudice Lawsuit “it is doubtful that she will waive the attorney-client privilege because at this juncture she does not trust the Trustee.” With regard to which attorneys would refuse to talk, Cuevas is referring to Henry Klingeman (Teresa’s criminal attorney) and Miles Feinstein (Joe Giudice’s criminal attorney). Why would Teresa’s trust – or lack thereof – matter when Klingeman and Feinstein are on the witness stand? They must tell the truth regardless of whether they like or have confidence in the person examining them.
Her lawyers are establishing that Teresa may withhold her testimony and assert the attorney-client privilege, which would have the effect of the criminal lawyers involved with the Giudices being unable to testify about their representation, and then the trustee has no evidence against James Kridel. That theory may have previously been speculative but we now know that to be the case. “How is the Trustee going to obtain the testimony of these important fact witnesses?” Cuevas seems to be telling the court that Teresa and her counsel are not going to cooperate unless the Trustee retains Rainone and him as special counsel.
Cuevas demands, “How can the Trustee maximize the value of the Giudice Lawsuit without Ms. Giudice’s full participation?” We are led to believe that Teresa is holding testimony for ransom. Her counsel asserts that only they can fund the experts necessary to litigate the Giudice Lawsuit and provide the court with their client’s full participation. What do you make of that?
“Ms. Giudice has lost faith in the Trustee,” Cuevas argued. Why is that? What evidence does Teresa have that the Trustee or special counsel will not be fair? Remember, the Trustee is concerned with maximizing the monetary value of all assets of the estate to help repay her creditors. The Trustee’s focus is on the creditors, not necessarily getting Teresa the largest cut of the action. That probably worries and troubles her to no end.
The Sum Of All Parts
The fact that Michael S. Kopelman (attorney for John W. Sywilok) or the Trustee elected not to make a deal with Cuevas or Rainone during the détente (so-called handshake agreement) probably means Kopelman and the Trustee did not have faith in the abilities or motivations of Teresa’s counsel to protect the creditors. Cuevas and Rainone could have been appointed as special counsel to represent the claims against Kridel but alas, they were passed over. “What a blow to Teresa,” James Kridel told me.
Everything about the law is intricate. This case is no different from the truckloads of malpractice suits that have come before the court, save perhaps for the moxie of this debtor. Yet Cuevas emphasizes in objecting to the appointment of Michael Siegel, “The Trustee fails to appreciate the complexity of the Giudice Lawsuit. The Trustee fails to appreciate the fact and expert witnesses that are necessary to successfully prosecute the Giudice Lawsuit.”
The aforementioned are fighting words, and denigrate the integrity of the Trustee, a member of the bar. Lawyers who go after another’s honor and intelligence arguably do so because the legal and factual issues attendant to their case provide no sanctuary.
May 24, 2016 Hearing
On May 24, 2016, counsel for the Trustee Michael S. Kopelman testified before United States Bankruptcy Judge Stacey L. Meisel that the legal malpractice suit, to the extent that it has merit and produces a recovery “should not go strictly to the Debtor.” The law says that the cause of action (legal malpractice) will be property of the estate if it has sufficient roots in the debtor’s pre-bankruptcy activities.
During the hearing in which Judge Meisel ordered the bankruptcy case to be reopened and a Trustee appointed, we now know that Teresa’s counsel (Carlos Cuevas) admitted some of the malpractice occurred pre-petition. “There was some pre-petition malpractice,” announced Cuevas (see page 16). On page 39, Judge Meisel made clear “everybody agrees that there was pre-petition conduct that led up to it.”
There have been numerous statements made by Teresa’s camp as to what has been repaid. While Cuevas argued, “Ms. Giudice has reached agreements with the IRS, Treasury Department…there is a settlement with Alliance Laundry…” Judge Meisel replied, “Well, the priority claims have not been paid. They simply have been settled with payment plans…So they are not paid.”
The court stressed, “So I am looking at the settlements as they have been negotiated and they are on a payment plan. They have not been paid.” The court is concerned about Teresa’s creditors. “I know you say they are fine,” Judge Meisel states, “but when I look at your own chart and when I look at the judgment report there are creditors that exist on this date for Ms. Giudice. They may have payment plans but they are not paid.”
Cuevas replied, “Ms. Giudice has acted responsibly…It was always her intent to pay her bills. The real damage occurred when she was taken away from her children, incarcerated for a year, had to give up her career, was labeled a felon, was subjected to public ridicule and the emotional strain that it put on her, Your Honor.”
In his opposition papers dated July 5, 2016, Cuevas cites, “Ms. Giudice has lost significant income because of her incarceration; it was Ms. Giudice who was involuntarily separated from her family; and it is Ms. Giudice’s reputation that has been irreparably damaged.”
Teresa willingly pled guilty in court to federal fraud charges that triggered her imprisonment. Is it an effective strategy to label her a victim and call her a responsible individual? In what way did the real damage occur during her imprisonment? Didn’t she admit to committing various crimes before she went to jail?
James Kridel was particularly displeased about an exchange at the May 24, 2016 hearing in which Carlos Cuevas claimed “Ms. Giudice had retained Judge Lyons as her bankruptcy counselor to raise these issues and Judge Lyons …” Perhaps Cuevas represented to a federal judge that another judge served as Teresa’s legal counsel, which was not the case. The court interjected, stating that Mr. Lyons is a retired judge. Consider this morsel from James Kridel:
“Judge Lyons is a retired bankruptcy judge and I had recently appeared before him in a case and prevailed. Judge Lyons cannot represent someone in a criminal matter. Citing Judge Lyons as an attorney to Teresa before the court is wrong. Judge Lyons would be livid.”
Grab your gavel, join the conversation, and let us know what you think about the appointment of special counsel and the claims made by Teresa’s counsel.