Teresa Giudice bankruptcy settlement talks break down, lawyers charge 'bad faith'

Settlement talks broke down this week between lawyers for "Real Housewives of New Jersey" star Teresa Giudice and the bankruptcy attorney she is suing for legal malpractice, according to a letter filed with the U.S. Bankruptcy Court in Newark.

In the letter to Judge Stacey Meisel, who must approve any settlement, Giudice's lawyers are slamming James Kridel, the Clifton attorney who represented her in the bankruptcy proceeding that helped lead to Giudice's year-long prison stint for bankruptcy fraud. Giudice's lawyers accuse Kridel of "bad faith litigation" and a "scorched earth defense."

They argue that his stonewalling is an attempt to run up Giudice's legal fees and to exhaust Kridel's own malpractice insurance policy before a settlement is reached or the case can come to trial.

"The insurance coverage is finite," write Carlos Cuevas, who is representing Giudice with Anthony Rainone, in the letter.

Cuevas has requested a status conference with Meisel, who must approve of any settlement because a portion of settlement proceedings would go toward any of Giudice's remaining creditors. He is hoping that Meisel's input would push the case toward a resolution.

"Listening to a judge's viewpoint on a case can have a sobering impact," Cuevas tells NJ.com, "especially when the judge has to make a final determination on an issue."

This is the latest twist in a convoluted case that dates back to 2009, to just after the dawn of Bravo's "Real Housewives of New Jersey" franchise. Giudice and her husband Joe, who is currently serving his own 41-month federal prison term for bankruptcy fraud and conspiracy to commit wire and mail fraud, filed for bankruptcy through Kridel in October 2009, saying they owed millions to mortgage lenders, credit card companies, lawyers, contractors and others.

But John Sywilok, the trustee representing the couple's creditors, alleged that the Giudices hid assets and income in their bankruptcy filing, and in 2011, the couple withdrew their bankruptcy claim.

Two years later, the couple was indicted on 39 counts of fraud (later increased to 41). Some counts pertained to the bankruptcy and other counts involved what prosecutors alleged was a long-running scheme to use fake financial documents to get mortgages and construction loans.

The Giudices eventually pleaded guilty to several counts of fraud each. While Teresa Giudice was serving her prison sentence in 2015, her lawyers filed the legal malpractice claim against Kridel, saying the "inaccurate" filing and his alleged failure to notify the couple that federal prosecutors were investigating them led to Teresa Giudice's incarceration.

Kridel has called the claim "absurd" and has pointed out that the wire and mail fraud conspiracy element of the case predated the bankruptcy and his work with the couple.

Though the legal malpractice case was filed in Superior Court in Morristown, the case took a detour to U.S. Bankruptcy Court in Newark last year when Sywilok, the bankruptcy trustee, argued that any award from the lawsuit should go to Giudices' creditors. Giudice's attorneys and Sywilok eventually hammered out a settlement in which they would split any hypothetical award from the Kridel lawsuit.

Kridel's attorneys argued against the settlement and later appealed Meisel's approval of it, but was denied.

In any case, the bulk of Giudice's debts from her bankruptcy case have since been resolved, although the couple does still owe money to the IRS and the New Jersey Department of Revenue and are on a payment plan.

Kridel's lawyer Carl M. Perri had no comment on Cuevas' recent allegations.

Vicki Hyman may be reached at vhyman@njadvancemedia.com. Follow her on Twitter @vickihy or like her on Facebook

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