legal malpractice claims based on attorney’s alleged negligent advice and conduct on behalf of clients accruing before bankruptcy filing became property of bankruptcy estate and could not be pursued by clients on their own behalf
How later courts described this case
- legal malpractice claims based on attorney’s alleged negligent advice and conduct on behalf of clients accruing before bankruptcy filing became property of bankruptcy estate and could not be pursued by clients on their own behalf
- “Whether a trustee in bankruptcy succeeds to property of the debtor in a chapter 7 bankruptcy under 11 U.S.C. section 541(a)(1) turns on whether the debtor has a legal or equitable interest in the property under applicable state law at the time the bankruptcy petition is filed.”
- also holding that claims of malpractice relating to other transactions that caused injury before the bankruptcy petition was filed belonged to the estate
Written by the judges who cited it.
The opinion
HARRIS, Justice
(dissenting).
My difference with the majority is a small one. The majority holds that nearly all of plaintiffs’ malpractice claim belongs to the bankruptcy estate. I think it all does.
All legal services which gave rise to the malpractice claim, all advice on the form and nature of the petition, the drafting and signing of it, were completed prior to the filing of the bankruptcy petition. The majority salvages one part of the claim against one of the defendants by stating that the economic consequences of the challenged advice impacted after the filing of the petition in bankruptcy. I disagree on both factual and legal grounds.
The majority states that the economic consequences of the alleged malpractice occurred after the filing of the bankruptcy petition. But even accepting plaintiffs’ legal theory they arose no later than with the filing.
Unlike the majority I think there is merit in Ford’s argument based on 11 U.S.C. section 541 (a)(1) which states that a bankruptcy estate comprises “all legal or equitable interest in the debtor in property as o/the commencement of the case.” (Emphasis added.) The majority dismisses the wording of the statute, stating it is not “designed to defeat property interests which ... vest in debtors after they have attained post filing ‘fresh start’ status.” (Emphasis added.)
I think the line drawn by congress is significant because it indicates when congress believed the interests of the bankrupt stopped being assigned to the bankruptcy estate under 11 U.S.C. section 541 (a)(1). The term “as of” suggests to me that congress was aware that claims be *141 longed in the bankruptcy estate unless they arose after the filing of the petition.
I would affirm.
McGIVERIN, C.J., joins this dissent.