During a recent appearance on Access Hollywood Teresa Giudice allegedly stormed out of her TV interview after a question concerning hubby Joe Giudice’s, potential deportation.
“I’m not going to address it. It’s nobody’s business. It’s a legal matter…” lectured the Real Housewives of New Jersey cast member.
Unfortunately, Teresa has made legal matters the world’s business by discussing them on her reality show and offering up “fan favorite” attorney James J. Leonard to discuss legal points on-air. Teresa is going to have to address many law and order-type items in the coming weeks. Suing her former attorney, James Kridel, set the wheels in motion for more exposure – and not the good, puffy public relations kind.
Michael S. Kopelman, the lawyer who represents the Chapter 7 Trustee, John W. Sywilok, in the newly reopened Chapter 7 case, says that on June 2, 2016, a Rule 2004 subpoena was served on Teresa by certified mail and by first class mail with courtesy copies to her lawyers, Carlos J. Cuevas, Anthony M. Rainone, and James J. Leonard.
On June 14, 2016, an Amended Rule 2004 Subpoena and amended schedule of documents was served on Teresa with courtesy copies going to her attorneys. The Trustee wants Teresa held in contempt and asks that the court impose a fine of $1,000.00 per day from July 13, 2016 payable to John Sywilok Trustee until there is compliance.
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The Trustee’s motion to hold Teresa in contempt for failure to comply with a subpoena is dated July 13, 2016. Teresa, by initiating legal proceedings against James Kridel, has opened the door to having to answer more questions and provide additional documentation surrounding her financial status. The Bankruptcy Court and the Trustee can poke and prod her all they like.
What is a Rule 2004 Subpoena? Rule 2004 of the Federal Rules of Bankruptcy Procedure is one of the most important discovery tools available to a party in a bankruptcy case. It authorizes the court to order a deposition-type examination of the debtor or any other person and to compel the production of documents. The scope of the subpoena involves the examination of the debtor relating to the acts, property, and financial condition of the debtor, or to any matter that may affect the administration of the debtor’s estate.
A Rule 2004 investigation legitimately may be used for “discovering assets, examining transactions, and determining whether wrongdoing has occurred.” There are few limits on the types of discovery that are permissible in a Rule 2004 examination. Discovery under Rule 2004 is not objectionable merely because it is a “fishing expedition.” Nevertheless, the case law shows that the examination must be used for a legitimate purpose and cannot be used to harass.
The subpoena requests that the following documents are produced by July 13, 2016:
1. Copy of employment contracts entered into in the last 3 years.
2. Copy of Federal and State Tax Returns for both Teresa Giudice and Giuseppe Giudice for the past 3 years.
3. Copy of bank statements of Teresa Giudice and Giuseppe Giudice, individually or jointly from January 2015 to present.
As you can see from the “Schedule of Documents,” the Giudices must similarly produce any and all documents referring or relating to any loans, gifts, and/or other transfers or remunerations given by the debtor to or for the benefit of a third party; listing of all vehicles owned by the debtor; monthly credit card statements from September 2011 through September 2015; any and all documents available on the alleged claim against James Kridel, Esq.; and proof that $400,000 in criminal restitution has been paid.
Are these requests too broad in scope? Keep in mind that Rule 2004 is a powerful tool for gaining information about a debtor’s operations that may lead to the discovery of potentially valuable claims. It permits extensive inquiry. Failure to provide discovery under Rule 2004 is grounds for a finding of civil contempt.
Contempt of court refers to actions that either defy a court’s authority or obstruct the ability of the court to perform its function. Civil contempt sanctions can seek to move an underlying proceeding along, which seems to be the case here. A judge generally can issue a civil contempt charge when he or she feels that a party has disobeyed an order or has disrupted a proceeding. Judges have discretion to issue an order that forces behavior such as making a witness testify or having a witness produce documents.
Civil contempt sanctions, which in this case could be $1,000.00 per day from July 13, 2016, typically end when the party in contempt (Teresa) complies with the court order, or when the underlying case is resolved. Bottom line: Teresa has to produce the documents requested in the subpoena and appear for a deposition on July 20, 2016 unless she can prove that the subpoena was defective.
Civil contempt sanctions are coercive and can be avoided through simple compliance. The Trustee wants answers, which may come when Teresa is ordered to comply with his document demand. Moreover, he hopes to acquire further information about the legal malpractice lawsuit and her financial situation when she appears (hopefully) for the deposition hearing scheduled for July 20, 2016.
A hearing date on the contempt matter is set for August 16, 2016 at 10:00 a.m.
“Debtor and her three attorneys have know about her duty to respond to the subpoena since early June, 2016,” explained Kopelman in his July 13, 2016 motion.
Kopelman clarifies that no motion to quash the subpoena has been made and Teresa did not produce the documents demanded. A motion to quash is generally the chief way to avoid a subpoena. The documents necessary to file a motion to quash include memorandum of law, supporting affidavits, a proposed order, and proof of service.
“[I]t is anticipated that Teresa Giudice will not appear for her examination scheduled for July 20, 2016 at 10:00 a.m. … and if she does fail to appear that she be fined an additional $1,000.00 per day payable to John W. Sywilok, Trustee until there is compliance,” asserts Kopelman.
Remember, the Superior Court of New Jersey did not find that Teresa is the owner of the claims in the malpractice suit against James Kridel. Back on April 22, 2016 Judge Robert J. Brennan granted Kridel’s motion to dismiss. Teresa lost the Trustee’s motion to reopen the bankruptcy case. The Bankruptcy Court has exclusive jurisdiction to decide whether or not the malpractice lawsuit is property of the estate and whether to proceed with that case. Teresa is not in the driver’s seat anymore.
It is Teresa’s duty to cooperate with the Trustee; specifically with respect to the Trustee’s amended Rule 2004 Subpoena calling for the production of documents and her testimony on July 20, 2016. The Trustee has attempted to obtain financial information from the Giudices and information regarding the legal malpractice claim but alas, Kopelman claims there has been “egregious non-compliance.”
Is Teresa acting in complete disregard of her duty to cooperate with the Trustee? Grab your gavel, join the conversation, and tell us what you think about the latest legal developments involving Teresa Giudice. Should she be held in contempt for failure to produce documents by July 13, 2016 related to her bankruptcy case?
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.