- Case Type:
- Case Status:
- BAP No. NV-18-1175-KuTaB (9th Circuit, Mar 05,2019) Not Published
- BAP for 9th Circuit affirmed ruling of bankruptcy court (D. Nev.) denying chapter 7 trustee's motion for (1) determination that malpractice cause of action of debtors against their bankruptcy attorney was property of bankruptcy estate and (2) damages for debtors' violation of the automatic stay. Property interests are created under state law. Bankruptcy court properly determined that under Nevada law, damages for malpractice accrued postpetition. Consequently, malpractice claim was not property of bankruptcy estate.
- Procedural context:
- Chapter 7 trustee moved for (1) determination that malpractice cause of action of debtors against their bankruptcy attorney was property of bankruptcy estate and (2) damages for debtors' violation of the automatic stay. Bankruptcy court denied motion. Trustee appealed to BAP for 9th Circuit.
- Attorney represented debtors in chapter 7 case. Debtors sought to discharge unsecured federal income tax claims. Debtors obtained discharge. Attorney advised debtors that their IRS debts were discharged. Subsequently, debtors received letter from IRS notifying them that they owed $257k for 2012. Because of an extension debtors had received from IRS for 2012 tax year, attorney had filed bankruptcy case six days too early to discharge that debt.
- Kurtz, Taylor, Brand
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