346 P.3d 353
Mont.2015Background
- In 2008 a Flathead County defamation verdict awarded Stokes about $4 million.
- Stokes retained Greg Duncan in 2009 to advise on maintaining his appeal while discharging bankruptcy.
- Duncan filed a Chapter 11 petition on Stokes' behalf; Duncan later withdrew, and the case was converted to Chapter 7 with a Trustee appointed.
- In 2012 Stokes sued Duncan and Kathleen Glover for legal malpractice, breach of contract, and fiduciary duty; the Trustee moved to stay proceedings.
- The Trustee proposed selling the bankruptcy estate's interest in the action; Duncan outbid and purchased the estate's interest in 2012; the Bankruptcy Court later held the claims were estate property and sale was approved; the Montana District Court granted summary judgment in Duncan/Glover's favor in July 2014; Stokes appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the malpractice claim owned by Stokes or the bankruptcy estate? | Stokes argues accrual after filing; post-petition damages may matter. | Duncan/Glover contend the claim accrued pre-petition and is estate property. | The claims accrued pre-petition and are estate property; summary judgment affirmed. |
Key Cases Cited
- Cusano v. Klein, 264 F.3d 936 (9th Cir. 2001) (bankruptcy accrual and asset ownership principles)
- Lucas v. Stevenson, 368 P.3d 269 (Mont. 2013) (bankruptcy estate includes pre-petition claims)
- In re Brown, 363 B.R. 591 (Bankr. D. Mont. 2007) (prebankruptcy past and root of claims)
- In re Alvarez, 224 F.3d 1273 (11th Cir. 2000) (accrual timing in Chapter 7 vs Chapter 11)
- In re Witko, 374 F.3d 1040 (11th Cir. 2004) (post-petition accrual vs pre-petition harm)