EXCLUSIVE: James Kridel Responds To Claims About Teresa Giudice's Bravo Salary & How That Affects Malpractice Suit

Bringing Home The Bacon?

There has been much made in the press recently about Teresa’s salary and potential book deal, and how the non-reporting of those items in her bankruptcy case may affect the lawsuit against her former bankruptcy attorney, James Kridel.

CLICK: Exclusive – Teresa Giudice’s Malpractice Suit Bombshell—Bankruptcy Attorney Speaks Out! Read Legal Motions

In the course of a bankruptcy preparation, the bankruptcy lawyer will require of his client to complete forms. The client must provide her attorney with all of the information that will go on the forms, such as individual income, expenses, assets, and debts. The lawyer prepares the forms based on the information the client provides.

It is the client who must present to the bankruptcy lawyer bank statements; bills from creditors; real estate and vehicle purchases/leases; student loans; bills/receipts for purchases; canceled checks; tax returns; promissory notes; any lawsuits with which one has been served; and legal records. People know more about their personal belongings and finances than lawyers do.

In speaking with James Kridel, he emphasized to me that there was income Teresa never told him about when he prepared the bankruptcy petition.

“All I knew was that she had a job with Bravo but Teresa said to me her income is not consistent. They could have dropped her from the series and therefore it was my understanding from Teresa that at the time of filing the petition she didn’t know what she would be making. She didn’t tell us she would get money from the book deal. We didn’t know about her personal appearance fees because she never told us. She said a lot of things on TV that she didn’t say to me about finances and income. Cars were in everyone’s names. I had no idea how they handled their cars.”

Some media reports claim Teresa’s company, TG Fabulicious, LLC, had total deposits of over $190,000. Kridel counters,

“TG Fabulicious is not a company. There were two LLCs that came up in the bankruptcy. The first time I had ever heard of them is well after bankruptcy started. These LLCs were not really businesses. They were just checking accounts. The IRS says it is not a valid corporation if it doesn’t transact any business.”

The report that Teresa was in negotiation of a book publishing deal that would net $250,000 struck Mr. Kridel as odd and incorrect. “My argument was that in the deposition of [co-writer] Heather Maclean, Heather said Teresa never really had a book deal until she got the money.”

Under Oath

On December 23, 2009, Teresa testified at a Federal Rule Bankruptcy Procedure 341 meeting of the creditors. On April 23, 2010, she testified at an examination pursuant to Federal Rule of Bankruptcy Procedure 2004. It was Teresa who testified falsely about her financial circumstances. Teresa signed her bankruptcy schedules listing her assets under penalty of perjury, representing that they were true and accurate.

“Teresa gave me false tax returns. She came in and said her husband was not working at the time. Documents came in bits and pieces and you find out later what she tells you is incorrect so that’s what the amendment procedure is for. Amendments are a tool for when the client fails to communicate. That’s not malpractice,” defends Kridel.

“At some point we stopped filing amendments because it was obvious she wasn’t going to get a discharge. New lies were being discovered each day,” reveals Kridel. “A Special Agent of the IRS called me. The new tax returns Teresa filed didn’t even show income.”

Kridel and the Trustee, John W. Sywilok, even went to Teresa’s Towaco, New Jersey house and saw t-shirts left over from an Internet business.

“She convinced us that was a non-issue and that she wasn’t doing anything with that Internet business.”

Bear in mind, the Trustee is the party seeking the asset of the malpractice action. Who is the Trustee more likely to believe? “The Trustee was starting to doubt everything about Teresa. When we saw the kind of information coming back, we started to see that she was not a person to be trusted. She never explained the false tax returns,” remarks Kridel.

“Teresa was taking deductions for well over $200,000 a year for dresses, which I believe is outrageous. Most people reading that would not appreciate it,” observes Kridel. If that item was audited, could she justify it?

Legal Malpractice Defined

“I didn’t make material errors. We can only process information that is provided to us,” explains James Kridel. The law intimates it is not malpractice for an attorney to fail to discover income or a potential book deal during the preparation of a bankruptcy petition. In exchange for having her debts “discharged” or wiped out, she was required to list on her bankruptcy papers everything owned and all debts. Kridel maintains that he did not try to cover up his client’s income nor did he have knowledge about Teresa’s assets that he failed to put forward in good faith in the filing of the petition.

Generally, a malpractice claim is based upon the failure of an attorney to exercise the degree of care and diligence that a lawyer would commonly exercise. As more and more courts are confirming, proving a mistake by a lawyer is not enough to prevail on a legal malpractice claim. The plaintiff must prove the traditional elements of negligence: duty, breach, causation, and damages.

If a legal malpractice case arises from prior litigation – such as a bankruptcy proceeding, a plaintiff must prove that, but for the attorney’s breach of his duty, the plaintiff would have prevailed in the underlying case. But alleged negligence is not a cause of the injury if the injury would have occurred even without the defendant’s conduct. Would Teresa have been indicted, convicted, and sentenced to prison regardless of the actions taken by James Kridel and his firm? Remember, the crimes for which she was sentenced were committed years before James Kridel ever came onto the scene.

Kridel wonders why, if his law firm did such a shoddy job of her bankruptcy case, she hired him for other matters and sought his legal advice.

“She hired us for other matters after the bankruptcy. She hated us but then she hired us to do other things and constantly call me up for advice.”

Thorn In Side

Teresa’s counsel will attempt to oppose the motion to reopen the bankruptcy case because if the Trustee’s motion is granted, Teresa cannot proceed with her legal malpractice claim. Federal law provides that when a legal malpractice cause of action has accrued to a debtor as of the commencement of the bankruptcy case it becomes part of the debtor’s bankruptcy estate.

“Plant a tree pre-petition, that’s where the roots are. If she alleges that the roots were done pre-petition by saying I let her sign this thing, Teresa doesn’t have standing to assert a malpractice case because the claims could be traced directly to pre-petition conduct,” notes Kridel.

Because the claims are property of the bankruptcy estate, the Trustee is the real party in interest with exclusive standing to assert them, not Teresa. The Real Housewives of New Jersey star may never get her day in court against Kridel.

Any post-petition failure of an attorney does not result in a new claim. The cause of action for alleged legal malpractice is an asset of the bankruptcy estate. The case law is clear that the bankrupt’s estate includes not only claims that had accrued and were ripe at the time the petition was filed, but also those claims that accrued post-petition that are sufficiently rooted in the pre-bankruptcy past.

James Kridel concluded our discussion yesterday with this thought: “When people get their legal rights they aren’t too happy about them.”

I urge you to grab your gavel, join the conversation, and tell us what you think about Kridel’s reflections on the case.

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Stacy Slotnick, Esq.

Stacy Slotnick, Esq. holds a J.D., cum laude, from Touro Law Center and a B.A., summa cum laude, from the University of Massachusetts Amherst. She performs a broad range of duties as an entertainment lawyer, including drafting and negotiating contracts; addressing and litigating trademark, copyright, and other IP issues; and directing the strategy and implementation of public relations, blogging, and social media campaigns.