EXCLUSIVE: Attorney James Kridel Responds To Teresa Giudice’s Newly Filed NJ Legal Malpractice Action

Less than one week ago, All About the Tea reported that “The Real Housewives of New Jersey,” star Teresa Giudice, had discontinued — without prejudice — her New York lawsuit against her former bankruptcy attorney, James A. Kridel, Jr. 

Now the imprisoned cookbook author alleges attorney, James A. Kridel Jr. committed legal malpractice during his handling of Teresa’s bankruptcy filing in 2009. The Bravolebrity renewed a lawsuit against Mr. Kridel by filing the suit in Superior Court in Morristown, N.J.

RELATED: EXCLUSIVE: Teresa Giudice Discontinues Legal Malpractice Suit Against Attorney James Kridel

The 43-year-old’s malpractice lawyer, Carlos Cuevas, has filed a complaint on Teresa’s behalf against Mr. Kridel alleging legal malpractice, breach of contract and breach of fiduciary duty.  On Oct. 2, 2014, Teresa was sentenced to 15-months in prison after she and her husband, Joe Giudice, pleaded guilty to charges of bank, mail, wire and bankruptcy fraud. 

On July 28, Cuevas filed a 53-page complaint in Morris County, New Jersey, Superior Court. He reportedly filed the lawsuit on Teresa’s behalf “to vindicate [her] legal rights, her good name and reputation,” he says in the complaint. But in what terms may one couch Teresa’s character and reputation if she admitted to a judge that she committed crimes and took full responsibility for those illegal acts? The distance between perception and reality grows larger. Read on.

Teresa Giudice had originally sued Kridel in Manhattan Supreme Court in December for malpractice she alleges led to her criminal conviction in 2014 for bankruptcy fraud and conspiracy to commit mail fraud. Teresa failed to file income taxes (10 years worth), which occurred many years before James Kridel and his colleagues knew her. Teresa falsifying W2’s for mortgages — that had nothing to do with her bankruptcy.

I had the opportunity to talk exclusively with Mr. Kridel for this brand-new All About the Tea blog on Sunday, August 2. Below Mr. Kridel responds to the claims and allegations lodged against him, and together we parse through the legal issues involved in this newly filed New Jersey lawsuit, which has not been served upon Mr. Kridel. 

Standing

Could Teresa’s lawsuit get tossed? One of the immediately noticeable problems with plaintiff’s suit is this issue of standing, meaning the capacity of a party (Teresa) to bring suit in court. Since standing is necessary to establish jurisdiction, courts will undertake the issue even if not raised by either of the parties.  Standing potentially belongs to the trustee, and not Teresa.  It is perhaps the trustee who can bring a malpractice claim, and the likelihood of that happening is not impressive.

Bankruptcy. It’s an interesting beast. The events giving rise to the legal malpractice claim are rooted in pre-bankruptcy advice and culminated in the filing of the petition. The proceeds of the legal malpractice claim may be property of the estate, not the debtor (Teresa).

Under New Jersey law, a malpractice action, which was based on alleged pleading errors committed which caused harm to the estate, some Bankruptcy Courts have found to be estate property.  Under Title 11 of the United States Code (the “Bankruptcy Code”), the filing of a voluntary petition in bankruptcy court commences a bankruptcy proceeding and creates an estate. 11 U.S.C. § 541(a). The estate is comprised of all legal or equitable interests of the debtor in property as of the commencement of the case and any interest in property that the estate acquires after the commencement of the case.

Accordingly, with limited exceptions, the estate encompasses everything that the debtor owns upon filing a petition, as well as any derivative rights, such as property interests the estate acquires after the case commences. See, e.g., United States v. Whiting Pools, Inc., 462 U.S. 198, 203-05 (1983).  In other words, because the Teresa Giudice v. James Kridel action belonged to the estate, including the claims that could have been but were not asserted, a malpractice suit in connection with those omitted claims likewise belongs to the estate and the estate’s creditors.

Here, Teresa Giudice’s bankruptcy estate is arguably the true injured party. It owned the claims in the bankruptcy action and, if the allegations in the newly filed lawsuit are true, it is the estate that deserves to be made whole. Remember, the U.S. Trustee’s Office worked on this case and were privy to Mr. Kridel’s legal assistance of the matter.  Therefore since the estate acquired the Teresa Giudice v. James Kridel action after the commencement of the case, the lawsuit constitutes estate property under § 541(a)(7) of the Bankruptcy Code. 

Based on the fact that Mr. Kridel avers he was thorough and worked with the trustee, what do you think the chances are that the trustee will sue Mr. Kridel on behalf of an admitted criminal for legal malpractice?  If the judiciary finds Teresa Giudice does not have standing to sue, her claims would be dismissed immediately.  Game over.  If she does have standing, then she has to face New Jersey’s frivolous lawsuit statute.

Frivolous Lawsuit

“One advantage New Jersey has in this particular instance is the frivolous lawsuit statute that will require Teresa’s counsel to pay fees and costs should the judiciary decide this is indeed a frivolous case,” remarked Mr. Kridel. 

One of the most frequently asked questions lawyers get is “if I sue, can I get the other side to pay my attorneys fees?” The possibility of fee shifting is ubiquitous when one is involved in a litigation matter.  The “American Rule,” as opposed to the “English Rule,” is that parties bear their own counsel fees except in the few situations specifically permitted by Statute or by the U.S. Supreme Court.  By signing and filing a pleading or motion an attorney certifies to the best of his or her knowledge that there is some basis for the matter being presented. The “Frivolous Lawsuit Statute” (N.J.S.A. 2A:15-59.1) permits an award of attorneys fees and costs if it is determined that a complaint, counterclaim, cross-claim or defense of a non-prevailing party was frivolous.

In order to find a case frivolous, the case, pleading or defense must have been commenced or continued in bad faith, solely for the purpose of harassment, delay or malicious injury or the losing party should have known that their claim or defense was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law.

This particular New Jersey complaint may violate the New Jersey frivolous litigation law. A New Jersey court may impose penalties for the filing of frivolous papers or pleadings, including monetary penalties, legal fees and court costs. 

The reality for this reality TV star is that she admitted to falsifying documents such as mortgage applications and tax returns that she completed years before Mr. Kridel even met her and which were used against her in the prosecution.  Anything Teresa went to jail for occurred well before the bankruptcy filing.

In the Limelight

The New Jersey lawsuit is critical of Mr. Kridel for appearing purportedly twice on the “Real Housewives of New Jersey,” which aired on the Bravo cable television network. However, Mr. Kridel maintains that he appeared only once, not twice, on the popular Bravo series.  Besides, an attorney does not take on criminal attributes of his or her client.  Is it arrogant or ignorant to charge in a complaint that Mr. Kridel – based solely on his television appearance – sought fame?

Mr. Kridel’s appearances were filmed at his law office however the only thing Mr. Kridel did was take a decision rendered by the late Hon. Judge Morris Stern (U.S. Bankruptcy Judge) and read its contents. In the library shot, according to Mr. Kridel, he had a decision to share with Teresa and Joe that could simultaneously be found on the PACER service. A judge wrote an opinion and in that interview on TV Teresa asked Mr. Kridel what happened. “There was no breach of confidentiality. It’s a decision in the public domain. It wasn’t secretive or sealed,” stated Mr. Kridel.

Mr. Kridel was clear and unequivocal that there was no attempt to gain eminence from his representation of Teresa Giudice. “I was asked questions and I said I can’t discuss that because it is privileged.  Teresa wanted the shot done for purposes of her storyline and reputation on TV.”  Filming of the scene in Mr. Kridel’s office was done to accommodate Teresa and not the other way around. Mr. Kridel fervently rejects the notion that he wanted to air on national television the scene you saw. He was not interested in promoting himself above protecting Teresa, as the lawsuit alleges without a shred of proof.

“I didn’t contact Bravo. I was concerned with the negative aspects. She was having trouble with her credibility and reputation. It [RHONJ] was never intended to promote me but rather help her,” clarified Mr. Kridel.

Mr. Kridel has had no shortage of media requests. He represents a wide variety of clients, including high-profile ones.  Nevertheless, have you seen him on “Entertainment Tonight” or Nancy Grace’s HLN show? “I was just doing my job to be polite to the media generally. I don’t like to say no comment because no comment is a comment.” 

Remember, too, that if Mr. Kridel is guilty of courting the media spotlight for reading the contents of a legal decision on television, what does that say about those on Teresa’s side who have admittedly given quotes and explanations to PEOPLE and other media outlets with regard to this case?

Bankruptcy

“What was I going to analyze? They have no assets other than personal belongings.  If they owned huge businesses and we needed forensics then fine but they represented that they had nothing,” notes Mr. Kridel.

Mr. Kridel continued, “Attorneys and appraisers try their best but there’s no science to appraisals.” Items are worth only what someone will pay for them. The critical question for Mr. Kridel to examine became whether Teresa would be better off with or without the debt. “Bankruptcy provides a fresh start for people who are honest with the court,” illuminated Mr. Kridel.

There is no disputing the fact that Teresa Giudice concealed her assets. “For a moment I thought about probation … but I think a period of confinement is absolutely necessary in this case,” the Hon. Judge Esther Salas told Teresa. “I don’t honestly believe that you understand or respect the law … In the eyes of the law, it doesn’t matter who you are. There are consequences to pay.”  The judge’s opinion is unambiguous. “Teresa Giudice accepts full responsibility during sentencing.  Now she is saying she accepts full responsibility but Jim did it,” mentions Mr. Kridel.

Some posters wonder whether it is the practice of a bankruptcy attorney to verify tax records.  The reality is, obtaining audited statements will cost about $40,000 to $50,000. Banks do not get audited statements. If you go to a bank and get a loan, they ask for permission to request an income tax return.  It would be highly unusual to get a request to verify tax returns. Usually there is just a copy. According to Mr. Kridel, you can call the IRS to get a transcript but they do not provide the return. You have to file a specific form. “If what is being suggested becomes the practice, the cost of bankruptcy will increase dramatically,” articulated Mr. Kridel, who has been practicing law for over forty years.

I urge posters to view this case through non-rose-colored glasses: The facts haven’t changed in the six years since Mr. Kridel represented Teresa. Teresa never implicated Mr. Kridel in legal malpractice prior to December 2014.  “It was not a complicated bankruptcy,” commented Mr. Kridel. “The only assets they had were personal belongings [cars, clothes], which the trustee and I went over with an appraiser.”  When Teresa pled guilty, she admitted to lying and concealing assets. She took full responsibility for her wrongdoing. 

Mr. Kridel concluded our discussion yesterday with the following statement: “We’ve attempted to be gentlemen and ladies. We do not practice in the street. We practice in a court of law. I can go to bed and look in the mirror and know I did the right thing.”  Grab your gavel, join the conversation, and tell us what you think about the legal malpractice matter now after reading Mr. Kridel’s responses to the newly filed New Jersey lawsuit.

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