by Amanda Bronstad
law.com
October 10, 2022 at 06:51 PM
https://www.law.com/therecorder/2022/10 ... -millions/
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Tom Girardi, appearing in a video interview called “Schmoozin’ with Forouzan.” Courtesy of Daniel Forouzan
** The vendors are a hodgepodge of businesses including court reporters, scientific experts, landscapers, engineers and radio stations.
** Claimants include KABC-AM Radio Inc., where Tom Girardi hosted a Los Angeles radio show for years, and the Jonathan Club, a downtown Los Angeles private club that he regularly frequented.
** In a Chapter 7 case, vendors, as general unsecured creditors, are
Two years after Girardi Keese collapsed, four wrecked cars ostensibly used in accident lawsuits remain housed at Rest Your Case Evidence Storage in Irwindale, California.
In an Aug. 25 motion, the company’s attorney, Pauline White, said she’d grown “completely frustrated” after failing to identify the owners of the four vehicles, including contacting the Girardi Keese bankruptcy trustee, other attorneys and insurance companies, and checking the registers of actions for all courts. Rest Your Case needed a judge’s permission to sell the cars—a request that was granted on Sept. 28.
“Perhaps the cases or claims associated with these vehicles were settled and no one told my client, so all our effort may have been for nothing,” White wrote in an email to Law.com. “But, we will sleep better knowing we tried to ‘save’ evidence for a client of Girardi Keese, who may otherwise be prejudiced.”
Rest Your Case is among dozens of vendors picking up the pieces of Tom Girardi’s defunct Los Angeles law firm, both held in contempt for stealing $2 million from clients. More than $500 million in claims are pending against the Girardi Keese estate. Girardi, whose wife stars on “The Real Housewives of Beverly Hills,” had an opulent lifestyle, but his firm had only $4.1 million in the bank at the time of its collapse. Bankruptcy trustees have held auctions of items at his law office in downtown Los Angeles and in his home, which together have fetched nearly $1 million. His home, in Pasadena, California, is set to be sold for $7.5 million.
Nearly $15 million in claims come from Girardi Keese’s vendors, which represent a hodgepodge of businesses, many of them small companies in the Southern California area, according to a bankruptcy trustee’s list of claimants filed earlier this year. They include court reporters, scientific experts, landscapers, engineers and radio stations. There are firms that provide office supplies, shred documents or make video presentations for trials.
KABC-AM Radio Inc., where Girardi hosted a Los Angeles radio show for years, has a claim for $163,750. The Jonathan Club, a downtown Los Angeles private club that Girardi regularly frequented, has a $3,633 claim.
Nevada-based Weather Extreme Ltd. provides research on fires, floods and climate change. Steelgate, based in Florida, offers biomedical specimen storage. Some of the claims are fairly large: Integrated Resource Management, a water resources consulting firm, has a claim for $551,300, and marketing and advertising firm CT3Media Inc. has a claim for $333,731.
Some bigger firms, like court reporting agency Veritext and Wells Fargo Vendor Financial Services, which provided leased office equipment, brought their own lawsuits against Girardi Keese for hundreds of thousands of dollars each. KCC Class Action Services, which provides settlement administration, has two claims totaling more than $1.3 million and obtained a $7.5 million judgment after Girardi stopped paying his bills in 2019.
Representatives who filed the claims either did not respond or declined to comment.
‘Back of the Line’
But, when compared to other bankruptcy claimants—such as litigation funders, former clients and other lawyers—vendors might never get repaid. In a Chapter 7 case, vendors, as general unsecured creditors, are “at the back of the line,” said Daniel Bussel, a bankruptcy professor at the University of California, Los Angeles, School of Law.
“Unlike in the Chapter 11 context, where the debtor and other parties may be trying to save an operating business and maintain good trade relations, in the Chapter 7 context, unsecured vendors are usually unable to obtain favorable treatment on their pre-bankruptcy claims unless they delivered goods within 20 days of the Chapter 7 filing,” he said. “Moreover, in some circumstances, unsecured creditors may be forced to turn over payments as ‘preferences’ if received in the 90-day period prior to the bankruptcy filing.”
As for Rest Your Case, the $50,000 owed in transport and storage fees, included in its bankruptcy claim, reflected only some of the costs. The four cars, which had all been in “major accidents,” were taking up storage space that could be used for paying customers.
“I meet many attorneys almost daily when they come for inspections or contact me for storage,” said Dave Galassi, managing member of Rest Your Case, in a declaration attached to the motion. “I have had some success in identifying new counsel for some stored evidence. Likewise, some attorneys have called me to say they are now handling a claim involving a particular piece of evidence Girardi Keese stored. However, as to the four wrecked vehicles listed here, I have been unable to determine if any claim or case is still being pursued, and if pursued which attorney or law firm is handling such claim or case.”
The cars are a 2006 Toyota Corolla, a Kia Sedona, a 2015 MB S550 and a 2017 Volkswagen Jetta. The motion estimated the four abandoned vehicles would generate less than $1,000 when sold as scrap metal. That’s hardly enough, but the proceeds could be used to pay past-due storage fees, Galassi said in his declaration.
That is, if no one claims the cars first.
“The only real ‘value’ these four wrecked vehicles have is either to prove, or disprove, some element of a claim or litigation,” his declaration says. “Since litigation can result in big awards, any attorney or law firm handling cases associated with these vehicles may highly value them.”
