BTG Files $13M Lawsuit Against Personal Injury Lawyers Who Failed to Repay Debts
The Business Trial Group (“BTG”) has filed a lawsuit on behalf of a litigation funding company to recover at least $13.1 million from two personal injury law firms, their owners, and one of the owner’s spouses.
The BTG represents KrunchCash, LLC, a Florida company with its principal place of business in Palm Beach County, Florida. KrunchCash entered into various funding agreements with attorneys Perry A. Resnick and Jonathan S. Resnick, their law firms, and Diane N. Resnick, Jonathan’s wife and Perry’s mother.
These funding agreements provided, among other things, cash advances for certain cases in Jonathan’s and Perry’s firms’ caseload inventory, and extra funding to serve Jonathan’s DC-based firm‘s personal injury clients and manage its caseload appropriately. The lawsuit alleges that as of filing, the total accelerated amount owed from these funding agreements is $9.129 million.
In addition to the various funding agreements, KrunchCash also advanced funding to Jonathan’s firms and Perry’s firm to cover shortfalls in their general operations. The lawsuit alleges that the firms have an unpaid payroll balance of $2.740 million.
KrunchCash, LLC asserts that on June 20, 2019, the Resnicks breached their various agreements by defaulting on their repayment obligations, converting all case proceeds for their own benefit, and shutting KrunchCash out of the businesses entirely.
Perry and Jonathan both signed Guaranty Agreements obligating themselves jointly and severally for the other’s debts to KrunchCash. “In other words, both Perry and Jonathan, individually, are on the hook for the $13.1 million owed,” according to the Complaint filed on July 22, 2019.
The Plaintiff’s lawsuit was filed by BTG attorney Evan H. Frederick.
Resnicks Enter Guaranty Agreements to Avoid Loan Sharks
The Complaint explains that during a late-March 2019 meeting with Jonathan, KrunchCash learned that Jonathan and Perry’s firms had breached their respective funding agreements by entering into additional third-party loans to the firms, without KrunchCash’s knowledge or consent.
Specifically, according to the Complaint, Jonathan admitted that the Resnicks encumbered their firms with approximately $800,000 in additional third party loans from loan sharks, merchant cash advances, and others, and that Jonathan was skimming money from KrunchCash’s daily funding advances meant to pay the Resnicks’ marketing firm.
“During this late-March 2019 weekend meeting, Jonathan begged Plaintiff for financial help, especially to pay off two loan sharks, among others, that had threatened him and his family with bodily harm if repayment was not received immediately,” the Complaint states.
To protect the Resnicks from bodily harm and to protect KrunchCash’s investment in their firms, KrunchCash immediately provided the Resnicks $160,000 to pay off the loan sharks and merchant cash advances.
Then, instead of exercising its contractual right to terminate the various Funding Agreements because of these breaches, KrunchCash required additional consideration in exchange for continuing to fund the law firms under their respective funding agreements. To that end, Jonathan and Perry both executed separate Guaranty and Security Agreements with KrunchCash, whereby Perry also agreed to be responsible for Jonathan’s contractual payment obligations to KrunchCash, and vice versa.
Resnicks Transferred Their Businesses to Avoid Repayment
The Resnicks allegedly preemptively shut down the operations for both law firms and funneled their business, clients, some of the employees, and assets to fellow Maryland personal injury law firm(s) and/or attorneys that Jonathan owns, controls, or has contractual relationships with.
According to the Complaint, Perry and Jonathan fraudulently transferred their law firms’ phone number, office location, business operations, assets, and clients to another entity – named as “John Doe Defendants” in the complaint.
The John Doe Defendants are Maryland law firm(s) and/or attorneys that now operate Perry and Jonathan’s firms, including representing their clients and collecting the settlement proceeds – portions of which are owed to KrunchCash.
According to the Complaint, the John Doe Defendants are believed to include the Law Office of Louis J. Glick, which is a Maryland law firm operating out of the same Maryland office location as Jonathan’s firms. In addition, Jonathan also now works at the Law Office of Louis J. Glick, and his firms’ main office phone number – 410-484-9600 – now rings into the Law Office of Louis J. Glick.
The lawsuit alleges that in June 2019, Perry took a leave of absence from his firm for health reasons and, in July 2019, ultimately closed the firm’s office indefinitely.
KrunchCash claims that by making these transfers, Perry and Jonathan’s firms not only breached their respective funding agreements, but also deprived KrunchCash of its rights to receive repayment from case proceeds or pursue claims for unpaid case proceeds against their firms. According to the Complaint, all profits from the Defendants’ law firms are, upon information and belief, now under the John Doe Defendants’ umbrella.
How Contingency-Fee Business Litigation Can Help
When a borrower has breached a contract and failed to repay a debt, a lawsuit is sometimes the only way to definitively resolve the issue.
If you are owed money that has not been repaid in full, it may be necessary to file a breach of contract lawsuit. To learn more about how to recover your loan, contact a Business Trial Group attorney today for no-obligation legal review.
The Business Trial Group works on a contingency-fee model rather than charging by the hour. As a result, our clients do not have to worry about the financial burdens that lawsuits often bring. And if we do not successfully resolve a case with a settlement or verdict, our clients pay nothing.