EXCLUSIVE: ‘RHONJ’ James Kridel Responds To Teresa Giudice’s Handshake Deal To Settle With Creditors
According to ancient lore, the handshake is thought to have originated as a sign of peace by demonstrating that the hand holds no weapon. Presumably displaying empty hands meant a basic level of trust existed and that neither participant to the handshake would stab the other. A chilling thought considering the wheeling and dealing that allegedly took place as of late with Real Housewives of New Jersey’s Teresa Giudice (JOO’-dys).
Teresa’s lawyers, Anthony Rainone and Carlos Cuevas, recently met with trustee John Sywilok and made a handshake deal, setting the terms of her creditors’ cut of potential legal malpractice suit winnings. Her lawyers are trying to make any deal appear advantageous so that Sywilok pursues the legal malpractice suit against Teresa’s former bankruptcy lawyer, James Kridel. Vicki Hyman of NJ.com first reported on the handshake deal.
Did Teresa’s lawyers make a legally enforceable contract with the trustee for her bankruptcy case to share any profits against James Kridel with her creditors?
The answer is probably no. A promise to make a promise usually equates to nothing. Courts could enforce a promise if it is made as part of a bargained exchange for another promise or for the performance of forbearance of an act. However…
“My attorneys sent a letter to John Sywilok and said that we believe her lawyers have an impermissible and unwaivable conflict of interest because they are trying to make a deal where they want to come in and represent Teresa and get money for Teresa but the problem is they cannot represent Teresa and the creditors. Her lawyers cannot counsel both parties,” James Kridel indicated to me in a phone conversation. He continued, “These attorneys have taken the position that the claims should be prosecuted for her personal benefit. That’s directly against the interest of her estate’s creditors.”
Think about it this way: If they have to settle and decrease the share of profits, whose side will they pick to split the proceeds, e.g., Teresa or the creditors?
Moreover this isn’t her deal to be making. She doesn’t own the asset of the malpractice suit. Her lawyers just want control of the case and are essentially telling the trustee,
“Look, you need our client to testify in order to have any chance of success, and once she does, you can get the benefits of the prize.”
Teresa’s current position that the proceeds of the malpractice suit would be collected by the trustee to satisfy her creditors is directly contrary to her earlier position that the malpractice claim accrued post-petition and that the trustee could not touch it. Teresa had consistently argued that the proceeds of the malpractice action belonged to her and were not property of the bankruptcy estate. Remember, she previously tried to block the reopening of the bankruptcy.
“The claims should be dismissed on their merits and they are utterly absurd. If you come to the bankruptcy court and lie, cheat, and commit crimes, you should not benefit from the very conduct that brought you there. Bankruptcy is intended for honest debtors,” Kridel explained.
There is no question that the so-called events giving rise to the legal malpractice claim are rooted in pre-bankruptcy advice and culminated in the filing of the petition and plan under Chapter 7. Thus, the proceeds of the legal malpractice claim is property of the estate and not Teresa’s property hence her lawyers’ attempt to make a deal to deliver the profits from the legal malpractice claim to her creditors is a foregone conclusion. Her lawyers aren’t doing the creditors any favors.
READ: ‘RHONJ’ James Kridel Responds To Teresa Giudice’s Bankruptcy Case Reopening [EXCLUSIVE]
Once an asset is deemed to belong to the bankruptcy estate, the asset may no longer be controlled by the debtor. What does Teresa despise most? Losing control of a situation. It is clear that the trustee has exclusive authority to prosecute this type of cause of action belonging to the estate and to disseminate proceeds as he sees fit. Chapter 7 debtors lose standing to maintain civil suits. Indeed, when the trustee brings a cause of action, only the trustee is allowed to do so, in order to maximize the recovery for all creditors. See e.g. BRS Associates, L.P. v. Dansker, 246 B.R. 755, 772 (S.D.N.Y. 2000).
Where a potential malpractice plaintiff files bankruptcy, any state law restrictions on the assignment of legal malpractice claims are trumped by federal bankruptcy laws, which place the bankruptcy trustee in the shoes of the debtor. 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. Because the claims are property of the bankruptcy estate, the trustee is the real party in interest with exclusive standing to assert them.
James Kridel informed me that currently there is NOTHING pending before the court. There are no motions. Her lawyers cannot make side deals. The carrot her lawyers could be dangling is Teresa’s testimony. They could be telling the trustee, “If you don’t play ball with us, we’ll tell her not to testify and then you get nothing for the creditors.” Do you think she is negotiating for her participation in the process? If the trustee wants to collect any proceeds from the malpractice suit, they need her to testify.
READ: Court Dismisses Teresa Giudice’s Malpractice Lawsuit Against Attorney James Kridel [EXCLUSIVE]
Does Teresa do anything that isn’t in her own self-interest? Maybe she’ll only cooperate if she gets something out of it. If the trustee elects not to work with her lawyers, maybe she won’t “remember” anything when called to testify about the “facts” surrounding the legal malpractice claim.
Grab your gavel, join the conversation, and tell us what you think about this supposed handshake deal between Teresa’s lawyers and John Sywilok.
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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.