Lawyer: Toss $12.5M Award Linked to Fax

by Mark Friedman  on Monday, Feb. 11, 2019 12:00 am   3 min read

The lawyer for a New Jersey man ordered to pay $12.5 million for sending an unwanted fax to a Russellville company has asked three judges to turn back time.

Little Rock attorney Tim Cullen acknowledged that his client, Eugene Kalsky of New Jersey, “made a series of terrible decisions” after a lawsuit was filed against him and his company, Gen-Kal Pipe & Steel Corp. of Mount Laurel, New Jersey.

The case began in 2015 when Kalsky faxed an advertisement for his firm to M.S. Wholesale Plumbing Inc. of Russellville. M.S. Wholesale Plumbing filed a lawsuit accusing Gen-Kal of failing to include a specific opt-out notice on fax advertisements in violation of the federal Telephone Consumer Protection Act. James Streett of the Streett Law Firm in Russellville and Joe P. Leniski Jr. of Branstetter Stranch & Jennings of Nashville, Tennessee, represented M.S. Wholesale.

“This starts as an unauthorized practice of law case,” Cullen told a three-judge panel of the Arkansas Court of Appeals in oral arguments Jan. 23. “But then there are a cascade of things that fall behind that.”

Cullen said the “core error” in the case was Pope County Circuit Court Judge Ken Coker Jr. treating a letter Kalsky sent to the Circuit Court as an answer to the lawsuit. Cullen argued that Kalsky’s response shouldn’t have been viewed as an answer for his company because only lawyers can represent businesses in lawsuits, and Kalsky isn’t an attorney.

Nevertheless, as the case continued in Pope County, Kalsky never hired a lawyer nor participated in the lawsuit, resulting in it sailing through to class-action certification and then the multimillion-dollar judgment in 2017.

“We ought to be transported back in time to when the answer was filed,” Cullen told Judges Robert Gladwin, David Glover and Larry Vaught. He wants the judgment against Gen-Kal voided and the case sent back to Pope County Circuit Court.

Cullen added that the judgment against Kalsky personally should be removed because his liability is derivative of Gen-Kal’s liability. As a result of the judgment, Kalsky said, his business has been forced into Chapter 11 bankruptcy and his home in New Jersey was almost sold to satisfy the judgment.

Attorney Brian Brooks of Greenbrier, who argued on behalf of M.S. Wholesale, said the judgment should stand. Brooks said neither Kalsky nor Gen-Kal bothered to participate in the lawsuit until months after the judgment.

“The defendant didn’t do anything until over 100 days after a judgment was entered,” Brooks said. “We have rules for reasons. One of those rules is we’re supposed to show up when we’re sued and at least make a defense.”

Brooks, who said the case is “the strangest” he’s been involved with, said Kalsky’s letter is a red herring. “It doesn’t mean a thing,” he told the judges. Even without Kalsky’s letter, M.S. Wholesale could have gotten summary judgment, which is decided by a judge on the facts of the case before it reaches a jury.

Cullen, however, argued that Coker, the Pope County Circuit judge, should have entered a default judgment, which happens when a defendant doesn’t answer the lawsuit, instead of a summary judgment. Had the case been decided as a default judgment, Gen-Kal would have had more legal options — and time — to appeal the judgment.

Judge Vaught asked Cullen why the defendants should get the benefits of the rules for a default judgment case when, although “they had the opportunity to respond throughout this, they chose to do nothing. … Why should [a defendant] get the benefit of something when he hadn’t done anything?”

“Because our rules provide a distinction between a defaulting defendant and a defendant whose judgment is entered based on the merits,” Cullen said. “The court treats the defaulting defendant differently than one whose judgment is entered on the merits.”

Brooks said that M.S. Wholesale’s filing of the suit was appropriate and the company did everything that was required to bring the defendants to court. “The defendant just says, … ‘I’m not going to play along until there’s a large judgment against me,’” Brooks said.

And then the defendant wants to turn back time, but then it’s too late, he said. And it’s not anyone’s fault but the defendant’s, he said. “The consequences are the things you didn’t challenge are admitted,” Brooks said. “This judgment, as big as it is, ought to be affirmed.”

A ruling from the Court of Appeals is expected in a few weeks.

 

 

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