TONY PACKO’S LITIGATION

Attorneys suing Horvaths over unpaid legal fees

Wife of former co-owner says lawyers provided poor service

11/10/2013

Robin Horvath

Two attorneys have taken unusual steps to get a former co-owner of Tony Packo’s to pay the legal bills they say are owed in the lengthy court battle over the famed Toledo restaurant chain.

Attorneys Troy Moore and Thomas Matuszak claim their clients, Robin Horvath and his estranged wife, Terrie Horvath, have failed to pay more than $700,000 in legal fees for work the attorneys provided during the last three years, according to court documents.

The lawyers have taken action in Wood County and federal bankruptcy court in Toledo to recoup the money.

A lawsuit filed last month in Wood County Common Pleas Court by Mr. Moore’s law firm demanded payment of $317,838 for legal work related to Mr. Horvath’s unsuccessful attempts to regain control of the iconic eatery.

Three days later, the attorneys filed a petition in U.S. District Court to force the Horvaths into bankruptcy.

Mr. Moore, Mr. Matuszak, and his brother James Matuszak, a Perrysburg accountant, are listed as the only creditors in the filing for the involuntary bankruptcy.

Mr. Moore’s firm, which has offices in Northwood and Toledo, and Mr. Matuszak, who is an assistant Wood County prosecutor, collectively claim unpaid legal expenses of $717,838.

Mr. Horvath, a former co-owner of the 81-year-old restaurant chain made famous nationally in the 1970s by the television series M*A*S*H, has mounted legal challenges to rulings in the court-appointed receivership that was ordered in August, 2010, after the company defaulted on $2.7 million in bank loans.

Tony Packo’s Inc. was sold in February to TP Foods LLC, a local company that runs fast-food franchises.

However, Mr. Horvath has appealed in Ohio 6th District Court of Appeals the court order that paved the way for sale of the business.

On the same day that Mr. Moore filed the complaint in Wood County, he and Mr. Matuszak asked for permission from Judge Gene Zmuda to withdraw from the appellate case involving Mr. Horvath and prepared an order for the judge to sign. However, Judge Zmuda has not granted the request.

Ms. Horvath, who has been separated from Mr. Horvath for more than a year, filed a motion last week in federal court asking to be dismissed from the bankruptcy proceeding.

She also accused the attorneys of misrepresentation, fraud, breach of contract and fiduciary duty, professional negligence, and overcharging for “poorly rendered” services.

Her attorney, Scott Ciolek, said in the filing that the attorneys’ actions are the “epitome of bad faith under any conceivable standard of bad faith.”

Among her claims are that she has taken more than $60,000 out of her own pocket over the last two years to pay legal fees in support of her estranged husband’s quest to regain control of the restaurant business, and that when she told Mr. Moore that she was broke they demanded a mortgage on her Sylvania home to help pay off the debt.

In an affidavit filed with the motion, Ms. Horvath, 55, said she never received the list of fee invoices from Mr. Matuszak or Mr. Moore for services, but did get “threatening emails” from Mr. Matuszak “demanding large sums of money without explanation.” She said Mr. Matuszak told her he would drop her husband as a client if he didn’t get paid.

Ms. Horvath said in her sworn statement she felt as though Mr. Horvath and the attorneys had ganged up and “bullied” her into paying for litigation in which she would not personally benefit.

She said she received an itemized bill for $317,838 from Mr. Moore three days before he filed the lawsuit in Wood County Common Pleas Court and at no time did he or Mr. Matuszak tell her that they were going to file the bankruptcy petition.

Bankruptcy Judge Mary Ann Whipple has scheduled a hearing for Nov. 14 to hear arguments from the attorneys on Ms. Horvath’s motion.

“Ms. Horvath has really been through a lot in these past years. Despite that, she would like to be able to move on with her life and get past all the entanglements with the Packo’s lawsuit,” Mr. Ciolek said.

Mr. Horvath didn’t respond to questions about the lawsuit and involuntary bankruptcy sent to him in emails. He also declined to an interview unless it was recorded.

Susan Martyn, a law professor at the University of Toledo who is an expert on ethics involving the judicial system, said the attorneys had other avenues for getting their money from the Horvaths, including informal arbitration and mediation.

“The minute you filed the lawsuit against your client you are adverse to the client and you have an immediate conflict of interest. You should no longer be representing that client,” said Ms. Martyn, who has written several books on ethics.

Mr. Horvath, 57, filed divorce papers in Lucas County Domestic Relations Court in June to end the couple’s 33-year marriage.

Both Mr. Horvath and his wife said in affidavits in the divorce filing they owed $750,000 to Mr. Moore and Mr. Matuszak.

Last month, Judge Norman Zemmelman, of the domestic relations court, approved an agreement between the couple to equally divide the money they made from the sale of Ms. Horvath’s home in Sylvania.

In the petition for the involuntary bankruptcy, Mr. Matuszak said the Horvaths have failed to pay him $400,000, which is nearly six times his $70,000 annual salary as an assistant Wood County prosecutor.

His brother, James Matuszak, who was recently elected to Perrysburg City Council, listed a $4,037 debt for accounting fees and expenses for litigation involving the Horvaths.

Mr. Matuszak has been employed in the Wood County prosecutor’s office since September, 2011.

Wood County Prosecutor Paul Dobson said he doesn’t have a specific policy on what his staff can do outside the office.

“I have attorneys who have done some outside work. I have had attorneys who have acted as special prosecutors in other counties,” Mr. Dobson said. “When Tom was hired, he gave me full disclosure on the cases he had outstanding and what he felt he could walk away from.

“He understood that as long as he didn’t use county time to deal with his private cases, I had no problem with it.”

When reached by The Blade, Mr. Matuszak said he would not comment about the lawsuit and bankruptcy action. Mr. Moore did not return phone calls.

Contact Mark Reiter at: markreiter@theblade.com or 419-724-6199.