Attorneys drop Girardi from case, proceed against his wife and others

By removing Thomas V. Girardi and his defunct firm from a lawsuit originally claiming he embezzled money from other lawyers, a case that was stalled by bankruptcy court will now move forward but focus on Girardi's wife and son-in-law.

Personal injury attorneys Philip Sheldon and Robert Finn worked closely with Girardi to litigate and settle cases under fee sharing agreements. After settlements were reached, Girardi kept the money for himself, according to the original lawsuit filed in Los Angeles County Superior Court by James Spertus of Spertus Landes & Umhofer LLP.

When creditors forced Girardi and his firm into bankruptcy in December, the state court action was stayed. After a bankruptcy judge granted a motion for remand, the case went back to state court, allowing Spertus to file a second amended complaint Wednesday. The amended lawsuit claims Tom Girardi's wife, Erika Girardi, his son-in-law, David Lira and partner Robert Finnerty, aided and abetted Tom Girardi in the embezzlement.

"There are nonbankrupt defendants who are jointly responsible with Tom Girardi and his firm, and we are now free to move forward expeditiously in state court against those defendants," Spertus said Thursday.

A lawyer hired by the bankruptcy trustee has said Girardi Keese loaned Erika Girardi's company at least $20 million. And earlier this week, a U.S. judge in Illinois who is overseeing a lawsuit filed by another law firm that says Girardi embezzled money from a joint litigation agreement rejected Lira's claim that he was not responsible because he was not a partner at the Girardi Keese law firm and had no role over its finances.

The original complaint, filed by Sheldon and Finn in December, included eight causes of action including breach of contract, breach of fiduciary duty, and financial elder abuse. It also claimed divorce papers Erika Girardi, known professionally as Erika Janye, filed last fall were fraudulent.

"To avoid paying plaintiffs the amounts owed, Girardi and his firm 'loaned' millions of dollars to Girardi's wife, and then filed a sham 'divorce' to fraudulently keep the money from plaintiffs and other vulnerable victims," the original complaint read.

The second amended complaint is much slimmer. It includes only two causes of action: aiding and abetting breach of fiduciary duty and financial elder abuse. Sheldon and Finn were both over 65 at the time of the alleged misconduct, according to the lawsuit.

"Erika Jayne knew about the scheme and that victims like plaintiffs were funding her notoriously lavish lifestyle chronicled on 'The Real Housewives of Beverly Hills,' and aided and abetted Girardi's breach of fiduciary duty and has direct liability for participating in and facilitating the conduct," the amended complaint reads. "Lira and Finnerty did not blow the whistle or take any other action to protect plaintiffs because Lira and Finnerty wanted to continue to be paid by Girardi, even though they knew they were being paid with funds that did not belong to their law firm."

Sheldon and Finn were deprived of almost $5 million by the alleged misconduct, according to the amended complaint.

"With this action, plaintiffs are not seeking to recover the funds misappropriated by Girardi or any amounts fraudulently transferred to defendants," the second amended complaint reads. "Rather, plaintiffs are seeking to hold defendants liable for the damages caused by their tortious conduct."

There are numerous lawsuits filed in state courts against Girardi, claiming the suspended lawyer stole millions of dollars. However Sheldon's and Finn's action is likely the first to proceed, unencumbered by Girardi's bankruptcy.

Jayne, Lira and Finnerty have 30 days to respond.