Trustee details ‘mess’ of Girardi Keese cases

Cleaning up the wreckage of Girardi Keese isn't easy, a trustee handling the firm's estate told a Los Angeles bankruptcy judge Tuesday.

Elissa D. Miller of SulmeyerKupetz, who is handling the firm's Chapter 7 bankruptcy, said during a hearing she and other attorneys and assistants, most working part time, are trying daily to transfer 9,000 case files to new firms. Miller said she talks to victims daily and tries to notify clients they need to find new counsel if no one wants the matter.

She also is contacting victims who say famed plaintiffs' lawyer Thomas V. Girardi stole money they got in settlements.

"I take this case very seriously, very personally," Miller told U.S. Bankruptcy Judge Barry Russell during a debate over how to handle the claims of several creditors, including one of Girardi's former clients who was badly burned in the 2010 San Bruno gas explosion and is owed more than $11 million.

The law firm was a disorganized mess, she said, because there was no centralized system for tracking cases.

"We have picked up files off people's desks," Miller told the judge Tuesday. "I got an email today from the daughter of a client whose case settled in 2002 and never got his money."

Miller responded to a push by Craig G. Margulies, an Encino-based partner with Margulies Faith LLP who represents Joseph Ruigomez and his family, to get as much of the $11.7 million they are owed now.

"If there's a way that some of the money can go to the Ruigomez family, they need it for medical procedures," Margulies said.

Miller said she was sympathetic to the plight of the family but said she cannot start disbursing money yet because her duty is to all of the creditors.

Russell agreed with her, granting the trustee's motion to use cash collateral to fund the ongoing bankruptcy operations.

Earlier in the day, an Illinois judge ruled that one former Girardi Keese attorney can avoid a deposition sought by a law firm that sued him, Girardi and others seeking to hold them responsible for withholding funds from ex-clients who died in a plane crash.

U.S. District Judge Matthew F. Kennelly of Chicago on Tuesday denied a motion by Edelson PC to take attorney Keith D. Griffin's deposition, concluding it was unnecessary. But the Illinois judge postponed a decision on the Edelson firm's bid to depose Girardi's son-in-law, former Girardi Keese attorney David R. Lira, after blasting his attorney's arguments during the hearing.

Kennelly was critical of one of the arguments made by Lira's attorney, Edith R. Matthai of Robie & Matthai, that the lawsuit should be stayed due to Girardi Keese's involuntary bankruptcy.

"Girardi Keese is not a necessary party to this case," Kennelly told Matthai. "That's a loser."

Matthai argued Edelson's attorney, Alexander G. Tievsky, would learn little by asking Lira if he knew his conduct was unlawful. Lira's answer would be no, she told the judge.

Kennelly said depositions don't consist of yes or no answers and sounded annoyed with Matthai. "Am I supposed to laugh at this point? It's not like I was born yesterday morning," the judge said. He postponed a decision on Edelson's request for a deposition of Lira. Edelson PC v. Girardi et al., 20-CV07115 (N.D. Ill., filed Dec. 2, 2020).

In Los Angeles, Russell concluded he did not need to rule on claims from Girardi's ex-wife, Karen, and estranged wife, Erika.

The latter, best known for her role as a star of "The Real Housewives of Beverly Hills" television show, objected to the payment of any settlement to the Ruigomez family before she received a homestead exemption for the couple's home.

Peter J. Mastan, an attorney with Dinsmore & Shohl LLP who represents Erika Girardi, said he was reserving his client's rights.

Russell is handling bankruptcy proceedings involving the firm and Girardi personally. In re: Thomas Vincent Girardi, 20-BK21020 (C.D. Bankruptcy Ct., filed Dec. 18, 2020); In re: Girardi Keese, 20-BK21022 (C.D. Bankruptcy Ct., filed Dec. 18, 2020).

The Girardi house in Pasadena has been put on the market in the bankruptcy.