AP Case From Hell - Everybody's Worst Nightmare

[33ayy]

Hi all. Boy, do I have a story. I declared BK in 1992 (!) and had a business debt of 30K which had been in arbitration, and the creditor (private party lender, a wealthy individual) had gotten a judgment. As far as I knew, this 30K debt had been discharged nearly 20 years ago. I have not seen the guy for over 20 years.

Flash forward to last June, when out of the blue I got a bizarre letter from a CA, claiming the were trying to collect a judgment for $130,000!!!!! Turns out the creditor had filed an AP Case. I was not properly served and never knew about it. He got a default judgment and had been renewing the judgment every 10 years with interest--as is possible in California. He had alleged fraud--claiming I lied about assets at the time of the original loan in 1989.

Fortunately, I got a good lawyer and the judge (same judge, about to retire!) agreed that I wasn't properly served. The AP case has now been reopened.

I have made repeated offers to settle, but the guy refuses to respond to my offers. This creditor is an idle rich type of guy with oodles of money to spend, and (apparently) a big grudge. The guy from the CA that I was dealing with said the creditor was "really mad" and he'd "never seen anything like it." He said he thought it was a "personal vendetta that he'd been nursing all these years." Whew! And here I'd forgotten all about it.

The fraud allegations are utterly baseless. I never committed fraud, and can prove it. Problem is, the defense has now cost close to 30K, and will be more by the time I'm done. We thought we could get this dismissed in summary judgment. In discovery it was revealed that (of course) he has no evidence whatsoever. At the lawyers conference with the (new) judge last week, the judge ordered us to mediation, under threat of sanctions. Alas, the money I once had to negotiate a settlement with has now been spent on lawyers.

Question: what is typical and/or standard in AP Cases in terms of reimbursement for attorneys fees? Can I reasonably ask for my fees in the mediation or the trial (after showing my irrefutable proof that no fraud was committed)? Do I have a snowball's chance of recovering fees? How does this type of thing usually work? Does anybody know of any examples of cases where baseless AP fraud cases were dismissed and attorney's fees awarded to the defendant?

Thanks...

[chicagoannie]

Wow. I have NO advice for you, but just...wow. I can't believe this happened after all those years.

[justbroke]

Question: what is typical and/or standard in AP Cases in terms of reimbursement for attorneys fees? Can I reasonably ask for my fees in the mediation or the trial (after showing my irrefutable proof that no fraud was committed)? Do I have a snowball's chance of recovering fees? How does this type of thing usually work? Does anybody know of any examples of cases where baseless AP fraud cases were dismissed and attorney's fees awarded to the defendant?

You can't get attorney fees where the creditor reasonably pursued the debt. However, my thought is -- and it's no legal opinion -- that if this original lawsuit was garbage with improper service, you may be able to recover fees. It's a decision for a judge.

I wouldn't consider a settlement at all if there is no basis of fraud. Why were you even thinking about settling?

[33ayy]

Thanks. I was only thinking about settling first because: 1) I didn't know if the judge would agree to reopen the case after such a long time, and it took a (really) long time to get the old, federally archived documents and find out what was going on; and 2) to avoid the legal mess, anxiety and expense.

In the very beginning I offered 20K, then after the case was reopened I dropped the offer down to 5K.

I mean I did, after all, actually borrow the money those many years ago--so I thought it wouldn't be so unfair if I did pay something.

But this guy is turning out to be really (really) vindictive. Did I say really?

The longer it drags on, the more it costs--that's why I was wondering if I can reasonably expect to get attorney's fees back. If so, that way I could afford to stick it out to trial--where I believe I will prevail.

[chrisdfw]

Generally if the person filing the AP loses they have to pay attorney's fees. The code tries to discourage baseless claims because it interferes with the fresh start.

[33ayy]

Thanks. In my case I have quite a huge bill, since I had to petition to reopen the case after 20 years, and prove that I hadn't been properly served when he was awarded the default. In addition, I had to pay an attorney to challenge the CA's attempts to collect the 130K prior to the stay being reinstated. All-in-all, I'm up to about 30K in legal bills so far.

Do you have any idea how the cost to reopen would be treated in this case? And/or the cost to defend myself against the CA's attempts to collect the (bogus) 130K (100K of which was 20 years of post default "interest")?

I realize this must be pretty unusual.

33

[CoBelle]

I can't offer any help, but just wanted to post that it just seems so unfair. And I have to add, the only people who benefit are the attorneys who always seem to get paid.