Church Joint Venture, L.P. v. Blasingame (In re Blasingame), 597 B.R. 614

Earl and Margaret Blasingame filed Chapter 7 on August 15, 2008; attorneys Martin Grusin and Tommy Fullen (the Malpractice Defendants) provided pre- and post-petition advice and filed the petition.
The Trustee obtained summary judgment denying the Debtors’ discharges in a related adversary proceeding; after further proceedings the discharge was again denied following trial.
Church Joint Venture (CJV) received derivative standing to sue for malpractice on behalf of the estate and later sought a declaratory ruling that the malpractice claim was estate property.
CJV and the Debtors alleged malpractice based on pre- and post-petition conduct that resulted in the denial of discharge; CJV moved for summary judgment that the claim arose pre-petition and belonged to the estate.
The bankruptcy court held the malpractice cause of action arose post-petition (no pre-petition injury alleged) and awarded judgment to the Debtors; CJV appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the malpractice claim is property of the bankruptcy estate under §541	CJV: look to pre-petition conduct; denial of discharge is rooted in pre-petition malpractice so claim arose pre-petition and is estate property	Debtors: injury (denial of discharge) occurred post-petition; no pre-petition cause of action, so claim is personal to debtors	The claim arose post-petition (no pre-petition injury); it is not estate property; summary judgment for Debtors affirmed
Whether the claim can be split into pre- and post-petition causes of action	CJV: court should recognize separate pre-petition and post-petition causes of action	Debtors: complaint alleges single injury (denial of discharge) tied to post-petition injury	Court: complaint does not plead a cognizable pre-petition injury; splitting is not warranted

Butner v. United States, 440 U.S. 48 (1979) (state law defines property interests)
Tyler v. DH Capital Mgmt., Inc., 736 F.3d 455 (6th Cir. 2013) (bankruptcy law, not state law, determines when property becomes estate property)
Underhill v. Huntington Nat’l Bank (In re Underhill), [citation="579 F. App'x 480"] (6th Cir. 2014) (a claim is estate property only if a pre-petition injury occurred)
In re Terwilliger’s Catering Plus, Inc., 911 F.2d 1168 (6th Cir. 1990) (federal law governs when a property interest becomes estate property)
In re Witko, 374 F.3d 1040 (11th Cir. 2004) (legal-malpractice claim belonged to debtor where no pre-petition harm was suffered)
In re Blasingame, 559 B.R. 692 (6th Cir. BAP 2016) (panel opinion affirming that malpractice claim is not estate property)