A federal bankruptcy judge has halted attempts by two attorneys to take any assets of Terrie Horvath to help pay the legal costs of her estranged husband’s lengthy court battle over the Tony Packo’s restaurant chain.
Judge Mary Ann Whipple this week dismissed a petition for Chapter 7 involuntary bankruptcy against Ms. Horvath filed in October by attorneys Troy Moore and Thomas A. Matuszak in U.S. Bankruptcy Court in Toledo.
In filings seeking to force Ms. Horvath and Robin Horvath into bankruptcy, the attorneys, as creditors, claim they are owed more than $700,000 in legal fees for work provided during the last three years in representing Mr. Horvath in his attempts to gain control of Tony Packo’s.
Mr. Horvath has not filed a motion asking to be dismissed from the bankruptcy petition.
Mr. Horvath, a grandson of restaurant founder Tony Packo and 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, filed for divorce in Lucas County Domestic Court from Terrie, his wife of 33 years, in June.
In her ruling Monday, Judge Whipple raised concerns about the complicated legal issues in four separate state courts involving the couple and the potential liabilities that Ms. Horvath would face if she remains in the Chapter 7 bankruptcy petition.
She also said the attorneys can continue to pursue collection efforts and protect their monetary interests through a lawsuit they filed in Wood County Common Pleas Court.
“The court finds that this bankruptcy case will not serve the purpose of efficiency or judicial economy, but instead will complicate matters further, and as another court has aptly said, merely shellac this case with another layer of administrative effort and expense,” she said. “To sum up, the court finds the interests of all parties will be better served if it abstains from exercising jurisdiction and if this case is dismissed.”
Mr. Moore, Mr. Matuszak, and his brother, James Matuszak, a Perrysburg accountant, are listed as the only creditors in the filing for bankruptcy. Collectively, they are claiming unpaid legal and related expenses of $717,838.
On Oct. 4 — three days before filing the bankruptcy petition — the Horvaths were sued by Mr. Moore’s law firm in Wood County Common Pleas Court for legal debts. The law firm claims it is owed $317,838 for legal work.
The fees, the firm claims, were for representing Mr. Horvath in his 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.
Mr. Matuszak, who is an assistant Wood County prosecutor, declined to comment. Mr. Moore could not be reached for comment.
According to court filings, Ms. Horvath, 55, was employed part time at a women’s clothing store, making $8.30 an hour, but had to quit because of nonwork related injuries she suffered that made her unable to work. She said she had used more than $65,000 of her personal savings to pay the lawyers and she didn’t receive a bill from Mr. Troy’s law firm until Oct. 1, just three days before she was sued in Wood County Common Pleas Court.
In a hearing on Dec. 9 in bankruptcy court, she testified that she and her husband agreed to split the $250,000 from the sale last summer of their marital home, and she used her share of the money to buy a new home.
Ms. Horvath said Wednesday that she and her estranged husband are still being represented by Mr. Moore and Mr. Matuszak in the case that is pending in the 6th District Court of Appeals.
“They are representing us in appellate court,” she said. “They have no right to sue their clients.”
Contact Mark Reiter at: firstname.lastname@example.org or 419-724-6199.