Tom Girardi and his wife Erika Jayne during the episode "Horsing Around" of the Bravo television show The Real Housewives of Beverly Hills, which aired on Dec. 15, 2015. Photo: Bravo

Arizona lender Stillwell Madison claims that its dispute with prominent Los Angeles plaintiffs lawyer Thomas Girardi should play out in court rather than arbitration.

Stillwell Madison, represented by counsel at DLA Piper, sued Girardi, his law firm Girard Keese, and his wife, Real Housewives of Beverley Hills cast member Erika Jayne, in Arizona federal court in May claiming that the lender had been fraudulently misled to grant a forbearance of $3,454,804 on a loan of more than $5 million to the law firm. The lender claims Girardi failed to disclose that he and the firm had defaulted on a loan from a separate lender at the time of the forbearance.

Earlier this month, Girardi's lawyer, Robert Baker of Baker, Keener & Nahra in Los Angeles, asked that the case—which he labeled a "publicity stunt"—be dismissed and routed to arbitration, citing an arbitration clause in Stillwell Madison's original loan agreement with the firm.

But in a court filing this week, Stillwell Madison's DLA lawyers contend that the dispute belongs in court. Girardi, they maintain, personally guaranteed the firm's initial loan in an independent agreement that included no arbitration clause and contained language that indicated the lender would pursue "a judgment" if the firm defaulted. The lender's lawyers also contend that Stillwell Madison's fraud claim is based on the forbearance agreement with Girardi, which they also say contains no arbitration agreement. Additionally, the DLA lawyers contend that Baker, Girardi's lawyer, was not admitted to the Arizona bar and had not sought pro hac vice status with the court, rendering Girardi's motion null.

"Notwithstanding defense counsel's unauthorized practice of law, defendants' confused motion fails to present any valid ground requiring the Court to compel arbitration of this action," wrote DLA Piper's Laura Sixkiller, Kate Benveniste and David Onuschak in the Aug. 21 filing.

"Further highlighting out-of-state counsel's lack of familiarity with this Court's Local Rules, defendants might have better understood Stillwell's position had Defendants engaged in a meaningful meet and confer rather than send a perfunctory email asking Stillwell to dismiss the case," they wrote in a footnote.

Phoenix lawyer Patrick McGroder III of Beus Gilbert responded to the DLA filing on Girardi's behalf Aug. 22 maintaining that the dispute belongs in arbitration, pointing to the arbitration clause in the original loan agreement. "The painful exercise of claiming the correspondence regarding payments should invalidate the Loan Agreement's express language is inconsistent with the complaint, inconsistent with case law, and ignores the language of both agreements," McGroder wrote. The Phoenix lawyer added that Baker had been admitted pro hac vice with the Arizona court in prior cases and "in good faith believed he was still admitted by reviewing the Court website as to attorneys admitted before this Court." McGroder offered to refile Girardi's motion while Baker's pro hac vice status is pending, if the court desires.

DLA lawyers on the case didn't respond to email messages seeking comment Friday.

In a letter to the Recorder sent via email by his assistant Friday, Girardi called the lawsuit "unethical, illegal and irresponsible."

"It was their client who demanded mandatory arbitration of any issue," Girardi wrote. "However, by being honest and filing for arbitration, they couldn't get their hit piece against me in the press."

The Arizona lawsuit came as Girardi and the firm faced separate litigation filed in California state court in early 2019 by Mill Valley-based funder Law Finance Group over repayment of more than $15 million in loans. Law Finance Group claimed that Girardi and the firm refused to hand over recovered fees from cases designated for repayment. The California lender, represented by lawyers at Eisner, secured a $6 million judgment against Girardi and the firm in Los Angeles Superior Court last month. Leslie Corwin of Eisner said in an email Friday that Girardi and the firm have made additional payments, but that the judgment "remains outstanding." Neither Girardi nor an outside firm spokesperson immediately responded Friday to questions about the remaining balance in the California dispute.