Ex-Girardi Keese attorneys quizzed on client funds

A federal judge voiced skepticism Tuesday of arguments by two former Girardi Keese attorneys who said they should not be held in contempt over the failure to pay plaintiffs following a settlement because Thomas V. Girardi controlled the firm's funds.

"Does the course of nonpayment give them an obligation of doing more than what they did?" U.S. District Judge Thomas M. Durkin of the Northern District of Illinois said during a hearing.

Durkin entered an order of civil contempt Dec. 14 against Girardi and the Girardi Keese firm and froze his assets. At the end of the hearing, the judge scheduled a hearing Jan. 8 to consider holding two former Girardi Keese attorneys -- David R. Lira, Girardi's son-in-law, and Keith D. Griffin -- in contempt.

Griffin's attorney, Ryan D. Saba of Rosen Saba LLP in Beverly Hills, said in a court filing his client should not be blamed for Girardi's failure to pay the clients.

"Mr. Griffin spent months and months trying to get Mr. Girardi to complete his promises and obligations to the clients and this Court," Saba wrote. "However, holding Mr. Griffin personally responsible for civil contempt is not appropriate based upon the above facts and circumstances."

Attempts by remaining plaintiffs' attorneys and the judge to get settlement money to relatives of passengers on a Boeing Co. plane that crashed in Indonesia may be complicated by a bankruptcy filing Friday in Los Angeles federal court by Girardi's unsecured creditors, including his longtime partner Robert M. Keese.

William F. Savino, a Buffalo, New York-based partner with Woods Oviatt Gilman LLP who represents California Attorney Lending II, which lent Girardi's firm money and has said it is owed $6.25 million in a judgment, told Durkin he expects an interim trustee to take control of Girardi's assets soon.

In the meantime, Durkin was left to grapple with a tangled mess of a case that revolves around Girardi, who rose to fame and fortune as a Los Angeles plaintiffs' lawyer known in recent years as much for his celebrity as for his courtroom successes.

The judge warned an attorney representing Girardi's wife, Erika Jayne -- a star of the Bravo television series, "Real Housewives of Beverly Hills" who has posted listings on social media within the past week touting her clothing for purchase -- not to sell any community property.

"His assets are frozen right now," the judge told Jayne's attorney, Matthew C. Wasserman of Dinsmore & Shohl LLP. "You need to convey that to your client."

Wasserman said he would do so but questioned whether the court had any jurisdiction over her. Jayne, also known as Erika Girardi, filed for divorce last month.

Durkin withdrew a motion to hold Jayne in contempt.

Girardi was absent from Tuesday's virtual proceedings, and attorneys representing him and the firm told Durkin they were having trouble getting his assistance in locating documents requested by plaintiffs or other legal matters.

"I am unable to effectively communicate with my client regarding these issues," Los Angeles attorney Evan A. Jenness, who represents Girardi, told the judge.

Durkin said he wanted Girardi to be a witness at the Jan. 8 hearing "unless there is a competency issue."

Lira and Griffin both argued in court papers they tried to get settlement money to plaintiffs but were stymied by Girardi, who had total control of the firm and repeatedly refused to pay all of the funds

"Although Mr. Lira is Mr. Girardi's son-in-law, he has not spoken to Mr. Girardi since he resigned and left GK on June 13, 2020," Edith R. Matthai, a Los Angeles-based partner with Robie & Matthai, wrote in a Monday filing.

Lira joined an existing Los Angeles firm -- Johnston & Hutchinson LLP. In re: Lion Air Flight JT 601 Crash, 18-CV07686 (N.D. Ill., filed Nov. 19, 2018).

But after Tuesday's hearing, the firm announced Lira had resigned.

Griffin, in a response prepared by Saba, his attorney, recounted a series of emails he sent to Girardi starting in May reminding him to send wire transfers to clients Girardi Keese represented along with Edelson PC.

On Nov. 18, Griffin warned Girardi in an email he had 12 days to pay the balance of the funds, plus interest.

"If they do not receive their funds by Nov. 30th, they have indicated that they are all filing bar complaints and a criminal complaint with the DA's office," Griffin wrote.

"This could not be more serious," he added.

But Girardi still didn't pay the funds owed. Saba said that in the response Griffin referred another plaintiffs' attorney to a different law firm so they could sue Girardi Keese.

Griffin resigned from the firm Dec. 4, according to Saba's response.

The federal bankruptcy case took a twist Monday night when a Los Angeles judge recused herself from the two cases against Girardi and his firm.

U.S. Bankruptcy Judge Sandra R. Klein filed a motion for recusal, citing a broad federal bankruptcy statute saying removal is appropriate if a judge is too closely connected to one of the parties.

The case was reassigned to U.S. Bankruptcy Judge Barry Russell of Los Angeles, a veteran jurist. In re: Thomas Vincent Girardi, 20-BK21020 (C.D. Cal Bankruptcy Ct, filed Dec. 18, 2020); In re: Girardi Keese, 20-BK12022 (C.D. Cal Bankruptcy Ct, filed Dec. 18, 2020).

The filings list $6.5 million in claims by Keese, H. John Abassian, Jill O'Callahan -- the widow of former Girardi Keese attorney James G. O'Callahan -- and three other individuals.

Girardi and his firm face a host of other lawsuits as well, which may end up in the Los Angeles bankruptcy court case.

In their responses to the contempt case in Illinois, Griffin and Lira both characterized themselves only as employees of Girardi and said the firm is an unknown business entity.

"A review of the California Secretary of State website 'business entity search' does not identify Girardi Keese as a corporation, limited liability company, or limited partnership," Saba wrote.

In a lawsuit filed last week in Los Angeles County Superior Court, Keese -- who retired from the firm a decade ago -- claimed he is owed $506,876 because Girardi has stopped making bimonthly payments since Nov. 3 for the continued use of his goodwill and name. Keese v. Girardi, 20OSTCV47715 (LA County Sup. Ct, filed Dec. 14, 2020).