An Arizona-based litigation funder that sued Tom Girardi last year claiming that he used loan funds designated for his law firm to fund a "lavish lifestyle" has agreed to pursue its claims in arbitration.

Lawyers at DLA Piper filed court papers Thursday indicating that their client, Stillwell Madison, had agreed to stay fraud claims against the prominent plaintiffs lawyer, his firm and his wife, while the lender pursues its contract claims concerning a $3,454,804 loan forbearance agreement through expedited arbitration proceedings with JAMS.

Stillwell Madison filed suit in Arizona federal court last year claiming that Girardi failed to disclose that he and the firm had defaulted on a loan from a separate lender at the time of the forbearance. Girardi's lawyers asked to dismiss the case, calling it a "publicity stunt" aimed at capitalizing on media attention surrounding his wife Erika Jayne's role on the reality television show "The Real Housewives of Beverly Hills." They also claimed the dispute was subject to arbitration.

U.S. District Judge Steven Logan of the District of Arizona last month denied Girardi's motion to compel arbitration or dismiss the suit last month on technical grounds. Logan found that Girardi's initial lawyers on the motion to dismiss—Phillip A. Baker and Robert C. Baker at the Los Angeles law firm Baker, Keener & Nahra—hadn't applied for pro hac vice status at the time they filed the motion. The judge also found that Phoenix lawyer Patrick McGroder III of Beus Gilbert McGroder, who had also made filings on Girardi's behalf, wasn't authorized to appear in the case.

Since Logan's ruling, Girardi's lawyers have filed a second motion to compel arbitration in the case, something that the lender's lawyers at DLA Piper claim was done without conferring with them. Still, the lender's lawyers, who indicated that their client has already had one unsuccessful mediation session with the Girardi defendants, noted that it makes sense to move forward with the case in arbitration rather than federal court.

"Setting aside defendants' cavalier attention to this court's rules, and even though Stillwell maintains the substantive arguments raised in opposition to the first motion to compel are equally valid and support denial of the second motion to compel, for reasons related to economy of party and judicial resources, Stillwell consents to arbitrate the claims asserted herein," wrote the lender's DLA lawyers.

DLA Piper's Laura Sixkiller and Kate Benveniste didn't respond to messages seeking comment Friday. Although prior filings from the lender had referred to Girardi's wife by name, Thursday's filing referred to her as "Jane Doe Girardi" in the case caption.

Girardi didn't immediately respond to a request for comment Friday.

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