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Settlement Date: 7/7/16@ Noon

Carlos J. Cuevas, Esq.

1250 Central Park Avenue
Yonkers, New Yorlc 10704
Tel. No. 914.964.7060
Co-Counsel for Ms. Teresa Giudice

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Anthny M. Rainone, Esq.

Brach Eichler, LLC
101 Eisenhower Parkway
Roseland, New Jersey 07068
Tel. No. 973-228-5700
Co-Counsel for Ms. Teresa Giudice

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JUL - 5 2016

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UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW JERSEY
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Chapter 7

In re

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Case No. 09-39032(SLM)

GIUSEPPE GIUDICE and

TERESA GIUDICE,

Debtors.

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DECLARATION OF CARLOS J. CUEVAS,ESQ.IN

OPPOSITION TO APPLICATION TO RETAIN SPECIAL COUNSEL
CARLOS J. CUEVAS,declares under penalty of perjury under the laws of the United
States of America, Judicial Code Section 1746, that the foregoing is true and correct:
INTRODUCTION
1. I am co-counsel for Ms. Teresa Giudice. Unless otherwise stated, I have personal
la~owledge of the facts contained in this Declaration.
2. This Declaration is interposed in opposition to Trustee John Sywilolc's (the
"Trustee") Application to Retain Special Counsel (the "Application").
3. The Application should be denied.
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4. The Application should be denied for various reasons: pursuant to an order of the
New Jersey Superior Court Ms. Giudice is the owner of the claims that comprise

the litigation known as Giudice v. Kridel, Docket No.: MRS-L-1861-15, New

Jersey Superior Court, Morris County (the "Giudice Lawsuit"); and the Trustee's
selection of Siegel & Siegei, P.C. to represent him in the Giudice Lawsuit violates
the business judgment rule.
5. The Giudice Lawsuit is solely Teresa's fight for justice.
6. It is Ms. Giudice who was incarcerated; it is Ms. Giudice that has lost significant
income because of her incarceration; it was Ms. Giudice who was involuntarily
separated from her family for approximately one year; and it is Ms. Giudice's
reputation that has been irreparably damaged because of her incarceration.

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7. In the Giudice Lawsuit there are two claims that are being prosecuted: legal

malpractice and breach of fiduciary duty in connection with his presentation in

this bankruptcy case and a subsequent federal criminal investigation.

8. In the Giudice Lawsuit it is alleged that Mr. Kridel, is a certified criminal attorney
in New Jersey, failed to adequately counsel Ms. Giudice in connection with a
target letter that he received from the United States Attorney that stated Ms.
Giudice was a target of a federal grand jury for mortgage fraud and bankruptcy
fraud (the "Target Letter").
9. It is alleged that Mr. Kridel failed to warn Ms. Giudice of the consequences of the
Target Letter.
10. Instead, Mr. Kridel permitted Ms. Giudice to engage in civil discovery in an
adversary proceeding with the United States Trustee, a division of the United

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States Department of Justice. The same United States Department of Justice that
was simultaneously conducting a criminal investigation of Ms. Giudice for

bankruptcy fraud.
11. Mr. Kridel denied Ms. Giudice "due process of law" because he denied her the
opportunity to defend herself against the pending federal grand jury criminal
investigation and to fight being indicted for either mortgage fraud or bankruptcy
fraud.
12. It is alleged that Mr. Kridel's actions in connection with the Target Letter were
intentional because he desired to conceal his legal malpractice and conflicts of
interest.
13. As set forth in the Affidavit of Merit of A. Ross Pearlson, Esq., Mr. Kridel's

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breaches were consequential because it is more probable than not that Ms.
Giudice could have avoided Ueing indicted or could have avoided Ueing

incarcerated.

14. The Giudice Lawsuit is Teresa's fight for justice because it is alleged that she
was unjustly incarcerated because of Mr. Kridel's legal malpractice and
intentional breaches of fiduciary duty.
15. It must be borne in mind that the Giudice Lawsuit has survived a Motion to
Dismiss, and there is documentary evidence buttressing the allegations in the
Giudice Lawsuit.
16. If the allegations are proven in the Giudice Lawsuit it will be a heinous case of
legal malpractice and breach of fiduciary duty because a debtor's attorney will

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have Ueen responsible for denying his client due process in a federal criminal

investigation in that resulted in a debtor being incarcerated.

17. Ms. Giudice has raised serious allegations concerning not only the Giudice
bankruptcy case, Uut also the federal grand jury investigation of the Giudices.
18. 1V1s. Giudice is entitled to her day in court against Mr. Kridel to sustain her
allegations against Mr. Kridel.
MS. GIUDICE IS THE OWNER OF THE GIUDICE LAWSUIT
19. On July 28, 2015 Ms. Giudice commenced the Giudice Lawsuit against James A.
Kridel, Jr., Esq
20. Mr. Kridel subsequently moved to dismiss the Giudice Lawsuit. One of the
grounds for dismissal of the action was that Ms. Giudice lacked standing to

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prosecute the Giudice Lawsuit because the claims belonged to her closed

bankruptcy estate.

21. Attached as Exhibit A is a true copy of the Order dated Apri122, 2016 of the Hon.
Robert Brennan of the Superior Court of New Jersey, Morris County (the
"Order"). The Order denied Mr. Kridel's Motion to Dismiss Ms. Giudice's
causes of action for legal malpractice and breach of fiduciary duty.(Exhibit A).

22. Attached as Exhibit B is a true copy of the Transcript of Hearing dated April 22,
2016 of the Hon. Robert Brennan of the Superior Court of New Jersey, Morris
County.
23. Judge Brennan stated that "virtually all" of the incidents complained of occurred
post petition.(ExhiUit B p. 18).

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24. Ms. Giudice has a state court order declaring that the claims in the Giudice
Lawsuit belong to her.

25. The Order has never been vacated.

26. Under these circumstances, the Trustee lacks a basis to retain counsel to
prosecute the Giudice Lawsuit.
27. Under the principles of federalism this Court should respect the Order.
28. Attached as Exhibit C is a copy of the transcript of the hearing in this bankruptcy
case.
29. Pages 40-41 of the transcript that state:
I am going to order the case be reo}~ened and a Trustee appointed
to the case. I am also going to ask that the parties, in order to
resolve this issue sooner than later, I would suggest I should say,
that the parties bring that issue to a head because I think there is no
sense in the bankruptcy continuing without finding out who, in
fact, owns the cause of action, whether in full or in part, because
make no mistake that my decision is not an indication of what I
believe or know to be the ownership of those causes of action. So
this is not a holding or a finding that the estate is entitled to bring
tl~e cause of action. That matter still needs to be
determined.(Emphasis added).(Exhibit C).

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30. This Court has made it clear that it has not made a ruling concerning the
ownership of the Giudice Lawsuit.
31. Until this Court has ruled that the Giudice bankruptcy estate owns the Giudice
Lawsuit it is premature for the Trustee to retain special counsel to prosecute the
Giudice Lawsuit.
32. It is troubling that the Trustee would file the Application without obtaining a
substantive ruling that 11e has any interest i~1 the Giudice Lawsuit.
33. At this juncture, the Trustee cannot prosecute the Giudice Lawsuit because he
lacks standing.

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34. It is respectfully submitted that the Application should be denied.

THE PROPOSED RETENTION OF SIEGEL & SIEGEL,P.C.

VIOLATES THE BUSINESS JUDGMENT RULE

35. It is respectfully represented that the Application to em}~loy Siegel &Siegel, P.C.
should be denied because the proposed retention does not satisfy the business
judgment rule.
36. The Giudice Lawsuit involves the following legal issues: bankruptcy, federal
criminal law; federal criminal procedure; legal ethics; legal malpractice; and New
Jersey civil procedure.
37. Ms. Giudice has employed two law firms to prosecute the Giudice Lawsuit:
Carlos J. Cuevas, Esq. and Brach Eichler LLC ("Brach Eichler").

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38. I am a graduate of Yale Law School; I am listed as a New Yorlc Super Lawyer; I
have over thirty years of bankruptcy experience; I have taught bankruptcy law at

New York Law School and St. John's University School of Law; I have published
extensively in the area of bankruptcy law; and I have made presentations on
bankru}~tcy law before the .House Judiciary Committee; the National Bankruptcy

Review Commission; the American Bar Association; and New Yorlc State Bar
Association.
39. Brach Eichler is a major New Jersey law firm that has the legal talent and
resources necessary to successfully prosecute the Giudice Lawsuit.
40. Anthony Rainone, Esq. and Brach Eichler have significant experience in litigating
legal malpractice claims.
41. Brach Eichler regularly ap~~ears before the New Jersey Superior Court, Morris
County.
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42. I have been working on this matter since November 2014.
43. The Giudice Complaint is fifty-four pages.

44. I have read boxes of documents and interviewed witnesses.

45. Anthony Rainone, Esq. and I won the Motion to Dismiss the Giudice Lawsuit.
46. Ms. Giudice has already retained expert witnesses who have submitted Affidavits
of Merit in the areas of bankruptcy and federal criminal law.
47. Ms. Giudice has also retained a forensic accountant.
48. Ms. Giudice is committed to funding the Giudice Lawsuit.
49. There are other factors that militate against the granting of the Application.
50. Henry Klingeman, Esq. was Ms. Giudice's criminal attorney in the criminal case.
Mr. Klingeman is an important fact witness in the Giudice Lawsuit. Ms. Giudice

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controls the attorney-client privilege concerning her engagement of Mr.

Klingeman. If the Trustee seeks other counsel to prosecute the Giudice Lawsuit it

is doubtful that she will waive the attorney-client privilege because at this juncture

she does not trust the Trustee.

51. Miles Feinstein, Esq. was Mr. Giudice's criminal attorney in the criminal case.
Mr. Feinstein is an important fact witness in the Giudice Lawsuit. Mr. Giudice
controls the attorney-client privilege concerning his engagement of Mr. Feinstein.
If the Trustee seeks other counsel to prosecute the Giudice Lawsuit it is doubtful
that he will waive the attorney-client privilege.
52. How is the Trustee going to obtain tl~e testimony of these important fact
witnesses?

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53. Ms. Giudice is a key fact witness. Ms. Giudice is willing to devote her time and

money to the prosecution of the Giudice Lawsuit only if the litigation is going to

be done correctly. At this juncture, Ms. Giudice lost faith in the Trustee.
54. How can the Trustee maximize the value of the Giudice Lawsuit without Ms.
Giudice's full participation?
55. It is alarming that the Trustee now seeks to reinvent the wheel in the Giudice
Lawsuit.
56. It is alarming that the Trustee now seeks to interpose new counsel in this fachially
and legally complex litigation.
57. If it is not broke: do not fix it.
58. Is the Trustee going to fund the experts necessary to litigate the Giudice Lawsuit?

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59. The failure to properly fund and retain the necessary experts will irreparably
damage the Giudice Lawsuit.

60. The interposition of new counsel who is unfamiliar with the Giudice Lawsuit will
irreparably damage the value of the Giudice Lawsuit.

61. Does the proposed counsel have the bankruptcy experience that is similar to my
bankruptcy background?
62. Does the proposed counsel have the legal malpractice experience that is similar to
Mr. Rainone's legal malpractice background?
63. Does the proposed counsel have the legal talent and resources of Brach Eichler?
64. Put sim}~ly, }proposed special counsel would farm the Giudice Lawsuit, and thus,
harm the value of the Giudice Lawsuit.
65. The Trustee has acted imprudently.

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66. The Trustee fails to appreciate the complexity of the Giudice Lawsuit.

67. The Trustee fails to appreciate the fact and expert witnesses that are necessary to
successfully prosecute the Giudice Lawsuit.

68. The Trustee has embarked on a course of conduct that is injurious to the
remaining creditors and Ms. Uiudice.
69. The Trustee has adopted a strategy that benefits Mr. Kridel and harms the
creditors.
70. The Trustee's actions are a breach of his fiduciary duty.
71. Under these circumstances, the Trustee has failed to satisfy the business judgment
rule, and therefore, the Application should be denied.
CONCLUSION

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72. Ms. Giudice is concerned about the conduct of the Trustee and his counsel.

73. Not only does the Trustee owe a fiduciary duty to the remaining creditors of the
Giudice banlcc-uptcy estate, but also the Trustee owes a fiduciary duty to Ms.

Gidice.
74. Mr. Kopleman appeared ninety minutes late for May 24,2016 hearing.
75. Subsequently, Mr. Kopleman stated that the Trustee declined to participate in a
status conference concerning the Giudice Lawsuit.
76. It is distressing that Mr. Kopleman attempted to avoid discussing the Giudice
Lawsuit with this Court.
77. I doubt that Mr. Kopleman would have written such a letter to Judge Commisa.
78. Mr. Kopleman is a court appointed fiduciary: he is not above the process.

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79. The Trustee filed the Application after this Court specifically stated that the issue
of the ownership of the Giudice Lawsuit should be resolved sooner than later.

80. The Trustee filed the Application knowing that there is a status conference to
discuss the status of the Giudice Lawsuit.
81. At the status conference Ms. Giudice will aslc that the issue of the settlement of
the ownership of the Giudice Lawsuit be sent to a Magistrate Judge in this
Courthouse. The issue of whether there is an enforceable settlement between Ms.
Giudice and the Trustee is governed by New Jersey law, which a Magistrate Judge
is competent to handle. Mediation will avoid further litigation.
82. Ms. Giudice will also Ue filing a motion to approve the settlement that she reached
with the Trustee concerning the Giudice Lawsuit.

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83. The Trustee has embarked on a course that is deleterious to the creditors and Ms.
Giudice.

84. The Trustee has embarked on a course of conduct that is beneficial to Mr. Kridel
because the Trustee's strategy will destroy the value of the Giudice Lawsuit.

85. It is distressing that the Trustee now wants to engage in a zero sum game
concerning the distribution of the proceeds of the Giudice Lawsuit.
86. It is distressing that the Trustee has embarked on a strategy that could delay the
litigation of the Giudice Lawsuit for a year.
87. All of the preceding raise grave questions concerning whether the Trustee is
effectuating his fiduciary duty to the creditors and Ms. Giudice.
88. The Trustee's conduct raises real questions as to whether he should be removed.

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89. In thirty years of bankruptcy }practice I have never seen conduct detrimental to a
bankruptcy estate as exhibited by the Trustee and his counsel.

90. Under these circumstances, the Application should be denied.

Dated: Yonkers, New Yorlc
July 5, 2016

Ca~~los J. Cuevas
Carlos J. Cuevas

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