Court dismisses lawsuit against closed Brookfield law firm

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A Waukesha County judge recently dismissed a lawsuit an Oak Creek woman filed against the Brookfield law firm she had worked for.

In January, Jamie Harris sued both her former employer, the Brookfield-based debt collection firm BP Peterman Law Group, and its Irvine, California-based parent company, Plutos Sama LLC, which recently changed its name to LF Runoff 2 LLC and filed for Chapter 11 bankruptcy in California.

Harris also sued the owner of the firm, James Peterman, and Michael Holsen, who was then the managing attorney of the firm but no longer works there.

Among other things, Harris alleged the firm owed her thousands of dollars in fees for bounced checks and wages that were withheld ostensibly for health insurance although the firm had failed to pay premiums, as well as for past medical bills for surgeries that should have been covered by health insurance had the firm paid the premiums.

Harris, represented by Nate Cade of Cade Law Group, had sought a motion for default judgment against Plutos Sama and BP Peterman Law Group.

BP Peterman Law Group had moved for the case to be dismissed. But both lawyers representing the firm withdrew from the case earlier this year, and no one has replaced them.

Holsen and Peterman also separately filed motions to dismiss all the claims against them. Holsen was represented by the attorney Douglas Carroll of Brookfield-based Carroll Law Firm, and Peterman was represented by David Peterson of Reinhart Boerner van Deuren’s Waukesha office.

In a decision and order issued on Tuesday, Judge William Domina granted those motions and denied Harris’ motion for default against Plutos Sama, noting that the court had been given notice of the firm’s bankruptcy as well as that of BP Fisher Law Group, a Maryland law firm also owned by Plutos Sama.

When a business files for a Chapter 11 bankruptcy, that leads to an automatic stay that prevents creditors from taking actions against the business or its property. Even so, under certain circumstances, creditors can ask the bankruptcy court for relief from the stay.

Domina dismissed the actions against Plutos Sama and BP Peterman without prejudice, meaning Harris can bring her claims back to the court. In his decision, Domina wrote that no claim may proceed against Plutos Sama or BP Peterman Law Group until the bankruptcy petition against Plutos Sama is either dismissed or until the federal bankruptcy court in California grants relief from the stay.

BP Peterman shut down in January amid three pending lawsuits, including Harris’ lawsuit.

The firm’s landlord, the Brookfield-based 3MG Future Investments, filed an eviction action on Nov. 5, alleging the firm had not given proper notice that it was terminating its lease for office space. Peterman and Future Investments had reached an agreement approved by the court. But, in February, the landlord that took over, M5 Investments, asked the court to evict BP Peterman from its office because the firm, by Feb. 11, had not vacated the premises as it had agreed to do. The court agreed, and the case is closed.

In a separate lawsuit, Cream City Process, a Milwaukee process-server, alleges that Peterman breached a contract it had for Cream City to serve legal summons and complaints. The case is pending.

A fourth lawsuit was filed on Feb. 21. In that case, the Brookfield-based Spring Bank filed a foreclosure action against BP Peterman Law Group, Plutos Sama, Peterman and Peterman’s wife over a default on a $1 million business loan. Spring Bank alleges that BP Peterman has failed to make payments on the loan, which the Petermans and Plutos Sama had separately guaranteed, according to the complaint. Spring Bank alleges that, by Feb. 21, the defendants owed more than $700,000 in fees from principal on the loan.

The bank is seeking payment of that amount as well as interest until a judgement in the case is reached. It also wants attorneys’ fees and an order granting possession of the business’ property and the right to sell it.

So far, only Peterman and his wife have responded to the allegations. On March 29, they filed an answer denying most of statements made in the complaint, though they did admit to signing a limited guarantee on the loan in 2017. They also asserted certain affirmative defenses, such as that Spring Bank may have failed to mitigate the alleged damages, and reserved the right to plead additional affirmative defenses as the lawsuit proceeds. Follow @erikastrebel