The plaintiff in a 7-year-old legal malpractice suit has petitioned for a writ of mandamus to wrest control from a U.S. Bankruptcy Court judge who is hearing the case a second time after previously recusing himself.
Zudi Karagjozi, once a successful homebuilder, filed the petition in federal court on April 22 seeking recusal of U.S. Bankruptcy Judge Michael Kaplan from a malpractice suit against attorney David Bruck and his firm Greenbaum, Rowe, Smith & Davis.
Kaplan took himself off the malpractice case in 2012 after Bruck and Greenbaum Rowe had it removed from state court to bankruptcy court. But when the malpractice case landed in front of Kaplan a second time in 2016, he did not abide by his 2012 recusal.
The petition says a writ of mandamus is warranted because Kaplan has a conflict of interest in his relationship with Bruck and a personal bias against Karagjozi. The petition cites a continuing legal education seminar where Kaplan and Bruck spoke at length about the Chapter 11 bankruptcy of Karagjozi's company, Kara Homes.
The 2008 seminar, held while the Kara Homes bankruptcy was still pending, was called "Coping with the Distressed Real Estate Market: What It Means to Each Shareholder." According to a transcript of the seminar, Kaplan and Bruck suggested that Bruck feared Karagjozi would become violent. After Bruck said at the CLE seminar that meetings of the Kara Homes board had become "acrimonious" and "uncomfortable," prompting him to conduct the meetings by phone, Kaplan asked "Was that because you were afraid of physical violence?" Bruck responded, "no comment."
Also during the seminar, Bruck sought to turn Kaplan against Karagjozi by stating the interests of the debtor company and the interests of its chief executive "may not always be the same," Karagjozi said in the petition. Bruck said at the seminar that "you don't always go home with the party who brought you to the dance," which Karagjozi said in his petition was an attempt to telegraph Bruck's defenses in the malpractice case.
Karagjozi, who had been the sole owner of Kara Homes and the only member of its board, lost ownership of the company when its board of directors was expanded under the bankruptcy plan. He claimed in the malpractice case that Bruck failed to advise him that he was representing the interests of Kara Homes, at the expense of the potentially contrary interests of Karagjozi.
The malpractice case later landed back in state court until October 2016 when Bruck and Greenbaum Rowe again sought to remove it to bankruptcy court. That action, titled as a motion to reopen the case, was filed shortly after the state court judge agreed to allow evidence concerning the continuing legal education seminar into evidence, and just as a jury trial was scheduled to begin. After the case was returned to Kaplan, Karagjozi moved to remand the case to state court but Kaplan denied that motion in December 2016.
Karagjozi states in his petition that Kaplan abused his discretion by taking control of the malpractice case, that there is no alternative avenue for him to obtain relief, and he will suffer irreparable harm if Kaplan's orders are not vacated. As such, Karagjozi said he meets the standard for obtaining a writ of mandamus set by the U.S. Supreme Court in United States v. Wright. The mandamus petition is assigned to U.S. District Judge Robert Kugler.
Bruck and Greenbaum Rowe filed a motion on April 5 to dismiss the malpractice suit. On Thursday, they moved to intervene in the mandamus petition.
Shalom Stone of Stone Conroy in Florham Park, who represents Bruck and Greenbaum Rowe along with Justin Walder of Pashman Stein Walder Hayden in Hackensack, said the mandamus petition "has no merit, no basis in fact, no basis in law."
Karagjozi is represented by Bruce Duke of Tabernacle Legal Group in Medford. He could not be reached on Wednesday. A message left at Kaplan's chambers was not returned.