Vedder Price Sued in $3M Legal Malpractice Suit Tied to Soupman Loan
A creditor of the company styled after the "soup Nazi" character on Seinfeld says Vedder Price botched its handling of her case.
By Christine Simmons | July 25, 2018 at 03:01 PM
cash, moneyPhoto Credit: Shutterstock.com
A creditor of the Soupman business that is tied to the “Seinfeld” character has sued her former counsel, Vedder Price, for $3 million, alleging the firm bungled her claim to recoup a loan in the business.
Penny Fern Hart said she retained Chicago-based Vedder Price to recover on a roughly $1 million loan to the Soupman business. The Vedder shareholder on Hart’s matter was Michael Schein.
Soupman sold soups under the Soupman trademark, based on the famous “Soup Nazi” character in the television show “Seinfeld.” Hart was a director in the business, Soup Kitchen International, according to court papers.
In 2007, the business obtained a $1 million loan from Commerce Bank, and guarantors for the loan issued unconditional guarantees totaling $1.02 million. The business failed to pay the loan when it became due in April 2008, according to Hart’s lawsuit, filed Tuesday in the Southern District of New York.
TD Bank, as successor to Commerce, assigned the loan and guarantees to Hart, who then moved to recover on the guarantees in New York state court. After opposing claims from the guarantors, the suit was removed to the Eastern District of New York federal court, where a bankruptcy of the Soupman business was pending.
Over the next four-plus years, Hart said, she paid Vedder Price hundreds of thousands of dollars to litigate her claims and the claims and defenses raised by the guarantors, which the Soupman trustee had taken over, and to press her claim for repayment of the Soupman loan in the Soupman bankruptcy proceeding.
After a mediation in spring 2013, according to her legal malpractice lawsuit, Hart agreed to settle with the bankruptcy trustee, on Vedder’s advice. Among other terms, the settlement entailed Hart withdrawing her claims against guarantors without prejudice; the derivative claims brought by the guarantors and the claims brought by the trustee being dismissed with prejudice; and Hart consenting to the subordination, but not modification or release, of her claims relating to loans to Soupman.
By that point, the outstanding amount due on the loan, together with another loan of roughly $540,000 that Hart had made to Soupman, was over $2 million, according to her malpractice suit.
The Eastern District Bankruptcy Court approved the settlement Feb. 28, 2014. At that point, Hart had roughly 45 days to file her claims against guarantors before the statute of limitations would run. “Despite that,” she claimed, the law firm “did not advise Hart of the impending deadline.”
Hart said she agreed to the terms of the settlement specifically because of Vedder Price’s advice that she would be able to recover against guarantors in a later action against them, filed after the close of the bankruptcy case. “Defendant specifically advised Hart that she would be able to refile such claims at any time,” Hart alleged.
At no point in time did the law firm advise Hart that her claims on the guarantees would become time-barred if not refiled before April 16, 2014, she alleged, arguing Vedder Price was “under the mistaken impression that no statute of limitations applied to the guarantees.”
Vedder Price continued to represent Hart for the Soupman loan and bankruptcy until the bankruptcy terminated by May 2015.
“No reasonable attorney, reviewing the proposed settlement and exercising the degree of skill commonly exercised by an ordinary member of the legal community, could have advised Hart to dismiss her claims against the guarantors without expressly notifying her of the date by which she would need to refile those claims,” her malpractice suit alleges.
Hart said because of Vedder Price’s botched advice, she has suffered at least $3 million in damages. Akiva Cohen of Kamerman, Uncyk, Soniker & Klein is representing Hart in the malpractice suit.
Vedder Price representatives did not immediately return messages seeking comment on the suit.
Christine Simmons writes about the New York legal community and the business of law. Email her at csimmons@alm.com and find her on Twitter @chlsimmons
https://www.law.com/newyorklawjournal/2018/07/25/vedder-price-sued-in-3m-legal-malpractice-suit-tied-to-soupman-loan/
