The courtroom where the bankruptcy case was heard.
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Sponsor Our ArticlesCouncil Member Manny Peláez and his law firm are held liable for unpaid property damage appraisal reports in a San Antonio bankruptcy case. Despite a judgment of $10,900, Peláez expressed satisfaction with the outcome, noting it reflects only a fraction of what was initially claimed. The case highlights the complexities of contractual agreements and Peláez’s obligation under Texas law. Legal costs are expected to accumulate as the situation unfolds, raising concerns about how this will impact the council member’s political future.
In a surprising turn of events, Council Member Manny Peláez and his law firm, Peláez-Prada LLC, have been held liable in the U.S. Bankruptcy Court located in San Antonio. The ruling, delivered by the esteemed U.S. Bankruptcy Judge Ronald B. King, revolves around a dispute over unpaid property damage appraisal reports.
The crux of the issue lies in an unresolved payment of $10,900 to BVF Fund II LLC. This sum stems from allegations claiming that Peláez and his firm did not fulfill their financial obligations regarding insurance claims after BVF filed for bankruptcy protection back in 2021. The complaint was spearheaded by Michael Colvard, who serves as the bankruptcy trustee and took legal action against Peláez and his firm in 2023, asserting they owed a whopping $198,500 for the appraisal reports.
Despite the judgment, Peláez seems to take the ruling in stride. He expressed a sense of satisfaction, noting that the required payment represents only 6% of the total amount originally claimed by the trustee. Interestingly, the council member had previously proposed a settlement of $8,000 for the specific BVF reports that had been utilized in actual cases, highlighting how negotiations can sometimes lead to unexpected twists in the courtroom.
The back-and-forth regarding payment is further complicated by the contractual agreements between Peláez-Prada and BVF. According to the trustee’s lawsuit, Peláez-Prada had initially committed to paying between $1,500 and $2,000 for each report, depending on how quickly the settlements were processed. However, Judge King pointed out that the interactions between BVF and Peláez were indeed “very unusual” and described the contract language as challenging to decipher.
Adding another layer to the case, the judge noted that the contract could not be transferred to another party, yet it was assigned to Peláez’s other law firm, Flores & Peláez-Prada PLLC, which operates under the name Stormlex Law Group. However, King firmly stated that the mere assignment of the contract does not absolve Peláez or his firm of liability under Texas law.
It was clarified by Judge King that Peláez and Peláez-Prada are only liable for those reports they accepted and that held real value. Attempts by Peláez to shift some of the responsibility to his other firm, Stormlex, which was not included in the lawsuit, did not find favor with the judge. King dismissed any reports that were either not accepted or were considered worthless, further simplifying the scope of liability.
On top of the $10,900 judgment, Peláez and his firm are also liable for the attorney fees incurred by the trustee, which adds yet another financial burden resulting from this legal debacle. It certainly raises eyebrows about how the council member will navigate these challenges moving forward.
For context, BVF Fund II LLC was established in 2016 primarily to finance appraisals for storm damage repairs to homes and commercial properties. The company’s intention was to assist with the often cumbersome insurance claim process, so it’s no surprise that this legal tussle has drawn significant attention.
As events unfold, many will be keeping a close eye on how Peláez manages to respond to this decision and how it impacts his ongoing role in public service.
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