Title: KOLSCHEFSKY v. HARRIS

State: wyoming

Issuer: Wyoming Supreme Court

Document:

KOLSCHEFSKY v. HARRIS2003 WY 8672 P.3d 1144Case Number: 02-23Decided: 07/15/2003
APRIL TERM, A.D. 2003

                                                                                                            

DELORES 
A. KOLSCHEFSKY and

DWAYNE H. KOLSCHEFSKY,

 
 
 

Appellants(Plaintiffs),

 

v.

 

MARK 
W. HARRIS and HARRIS

LAW FIRM, P.C.,

 
 
 

Appellees(Defendants).

 

Appeal 
from the District Court of Uinta County

The 
Honorable D. Terry Rogers, Judge 

 

Representing 
Appellant:

William R. Fix, Jackson, Wyoming

 
 
   

Representing 
Appellee:

V. Anthony Vehar of Vehar Law Offices, Evanston, 
Wyoming

 
 
       

Before HILL, C.J., and GOLDEN, LEHMAN*, and VOIGT, JJ., and 
BURKE, D.J.

 
 
          

Golden, 
J., delivers the opinion of the Court; Hill, C.J., files a 
dissenting opinion; Burke, D.J., files a dissenting opinion, 
with whom Hill, C.J., 
joins

 
  

* Chief Justice at time of oral argument

 
 
      

GOLDEN, Justice.

 
 

[¶1]           
Delores 
A. Kolschefsky and Dwayne H. Kolschefsky (Kolschefskys) filed a legal 
malpractice action against Mark W. Harris and Harris Law Firm, P.C. (Harris), 
claiming Harris was negligent in failing to file a medical malpractice claim on 
their behalf within the period of the statute of limitations.  The district court entered summary 
judgment against Kolschefskys on the grounds that their voluntary bankruptcy 
petition constituted an anticipatory breach or repudiation of the contingent fee 
agreement with their attorney, discharging him from any further performance as 
their attorney.  We affirm the 
summary judgment for that reason and on the additional grounds that the 
Kolschefskys' interest in the underlying medical malpractice claim was 
transferred by operation of law to their bankruptcy estate.

 
   
            
         
        

[¶2]           
Kolschefskys state numerous issues:

 
 
  

·        
Should the lower court have even considered the summary 
judgment motion which was untimely raised?

·        
Did the filing of the bankruptcy reject the fee agreement 
and, if so, what is the effect of the rejection?

·        
Did Harris re-affirm the fee agreement by his actions?

·        
Was Harris required to give notice in writing of his 
termination of the fee agreement?

·        
Do the Rules of Professional Responsibility have any 
applicability?

·        
Do the Rules Governing Contingency Fee Agreements have any 
applicability?

·        
Did Harris act as the Kolschefskys' attorney both before and 
after the filing of the bankruptcy petition?

·        
Even if the defense is deemed to have been timely asserted, 
then does the fact that the executory fee agreement was rejected nullify the 
attorney's responsibilities?

·        
Did Harris continue to represent the clients even after the 
bankruptcy petition was filed, and, if so, what is the effect of his continued 
representation?

 

Appellees state the issue from their perspective:

 

Was the district court correct in ruling that there was no 
genuine issue of material fact and that the Appellees were entitled to summary 
judgment as a matter of law?

 

[¶3]           
Delores Kolschefsky was allegedly injured on May 13, 1998, 
while undergoing chiropractic manipulation to her neck.  On June 15, 1998, 
the Kolschefskys consulted with Attorney Harris, who agreed to represent them 
regarding a possible medical malpractice claim against the chiropractor.  The Kolschefskys and 
Harris signed a written contingent fee representation agreement on June 18, 
1998.  Pursuant 
to the applicable statute of limitations, Wyo. Stat. Ann. § 1-3-107 (LexisNexis 
2001), any action against the chiropractor would have had to be brought within 
two years of the alleged injury date of May 13, 1998.

 

[¶4]           
Between June 1998 and August 1999, Harris investigated 
Kolschefskys' case and attempted to obtain a medical expert to testify regarding 
the chiropractic standard of care and its breach.  The sufficiency and reasonableness of those 
efforts is contested by the parties, as is Harris' statement that he terminated 
his representation agreement with the Kolschefskys verbally in August 1999.  Nevertheless, it is 
undisputed that on November 16, 1999, Kolschefskys filed a joint petition for 
Chapter 7 liquidation in the United States Bankruptcy Court for the District of 
Wyoming.  
Despite the bankruptcy filing, Kolschefskys and Harris continued to have 
some limited discussions about the medical malpractice claim, and Harris made at 
least one contact to a potential expert witness on their behalf in May 
2000.  Harris 
then returned their file to Kolschefskys in July 2000.

 

[¶5]           
Kolschefskys filed their bankruptcy pro se; they did not 
consult with or inform Harris before the filing or seek any bankruptcy advice 
from him after the filing.  Mrs. Kolschefsky prepared the bankruptcy 
petition and schedules with the help of an instructional book and forms that she 
had purchased.  
In their bankruptcy filings, the Kolschefskys did not disclose as an 
asset their medical malpractice claim against the chiropractor or any legal 
malpractice claim against Harris.  They also did not identify the contingent fee 
agreement with Harris either as a liability or an executory contract.  Harris was listed as 
an unsecured creditor in the amount of $293 for costs he advanced in the medical 
malpractice matter.

 

[¶6]           
The bankruptcy trustee appointed to administer Kolschefskys' 
case filed his case report with the bankruptcy court on February 15, 2000, 
indicating that there were no assets to be administered for distribution to 
creditors and that all scheduled property should be abandoned back to the 
debtors.  A 
Discharge of Debtor was issued by the bankruptcy court on March 15, 2000, and 
the bankruptcy case was closed on March 22, 2000.

 

[¶7]           
In reviewing summary judgment, we apply the same standards 
as the trial court, without affording any deference to the trial court's 
decisions on issues of law.  Bevan v. Fix, 2002 WY 43, ¶13, 42 P.3d 1013, ¶13 (Wyo. 
2002).  In Bevan we 
stated:

 

Summary judgment is appropriate if the record, viewed in the 
light most favorable to the non-moving party, reveals that no genuine issues of 
material fact exist and the prevailing party is entitled to judgment as a matter 
of law.  Worley v. Wyoming 
Bottling Co., Inc., 1 P.3d 615, 620 (Wyo. 2000); Terry v. Pioneer Press, 
Inc., 947 P.2d 273, 275 (Wyo. 
1997); Davis v. 
Wyoming Medical Center, Inc., 934 P.2d 1246, 1250 (Wyo. 1997); W.R.C.P. 56(c).  A fact is material if it establishes or 
refutes an essential element of a claim or defense.  Tidwell v. HOM, 
Inc., 896 P.2d 1322, 1324 (Wyo. 
1995).

 

Id.  Moreover, we may uphold the grant of summary judgment upon 
any proper legal ground finding support in the record.  Id. at ¶26.

 

[¶8]           
The district court granted defendants' summary judgment 
based upon the effect of Kolschefskys' bankruptcy filing on the representation 
agreement between them and Harris.  We concur with the district court's 
analysis.

 

[¶9]           
We have held that in a legal malpractice action, although 
the standard of care sounds in tort when it is stated in terms of a reasonably 
competent attorney, the basis of the action is contractual and an 
attorney/client relationship is an essential element for maintenance of the 
lawsuit.  Bowen v. Smith, 838 P.2d 186, 196 (Wyo. 
1992); Brooks v. 
Zebre, 792 P.2d 196, 201 (Wyo. 
1990).  Viewing 
the facts in the light most favorable to the Kolschefskys, we accept that Harris 
had a valid attorney/client contract with them in November 1999 when they filed 
for bankruptcy.  
That contract was executory in that both sides' performance obligations 
had yet to be fulfilled.

 

[¶10]      Upon commencement of a bankruptcy case, the bankruptcy 
trustee has authority to assume or reject the debtor's executory contracts and 
leases.  11 
U.S.C. § 365(a) (2000).  In a Chapter 7 liquidation bankruptcy, "if the 
trustee does not assume or reject an executory contract . . . within 60 days 
after the order for relief, . . . then such contract is deemed rejected,"  id. at § 365(d)(1), and the rejection constitutes a 
breach of the contract relating back to the date the bankruptcy petition was 
filed.  Id. at § 365(g).

 

[¶11]      A party's rejection or breach of an executory contract is an 
anticipatory repudiation of the contract which relieves the other party of any 
remaining performance.  
Roussalis v. 
Wyoming Medical Center, Inc., 4 P.3d 209, 254 (Wyo. 2000).  Thus a debtor's contractual relationship with 
a lawyer ends once a bankruptcy petition is filed and the attorney/client 
contract is rejected or deemed rejected by the trustee.  Banov v. Kennedy, 
694 A.2d 850, 859 (D.C.App. 1997) (citing In re Taylor, 91 B.R. 302, 312 (Bnkr.D.N.J. 1998)). The 
representation agreement between Kolschefskys and Harris was terminated by 
operation of law upon their bankruptcy filing before the running of the statute 
of limitations, and there was no longer an attorney/client contract upon which 
to base a legal malpractice claim.

 

[¶12]      Kolschefskys, however, raise additional arguments based on 
the alleged post-petition reaffirmation of the attorney/client agreement, or the 
creation of a new agreement.  We will therefore address an additional ground 
for upholding the summary judgment that would apply to any alleged post-petition 
malpractice.

 

[¶13]      The commencement of a bankruptcy case creates a bankruptcy 
estate as a discrete legal entity, separate and apart from the debtor, that 
includes "all legal or equitable interests of the debtor in property as of the 
commencement of the case."  11 U.S.C. § 541(a)(1) (2000).  This estate includes 
all causes of action existing on the petition date, whether or not a lawsuit has 
been commenced, and no matter how inchoate or unliquidated the underlying 
claim.  Dorr, Keller, Bentley & Pecha v. Dorr, Bentley & 
Pecha, 841 P.2d 811, 815 (Wyo. 
1992) (citing Delgado 
Oil, Inc. v. Torres, 785 F.2d 857 (10th Cir. 1986), and United States v. Whiting 
Pools, Inc., 462 U.S. 198, 204-05 n.8, 
103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983)).  The estate exists by operation of law and is 
not limited to that property disclosed by the debtors on their bankruptcy 
schedules.

 

[¶14]      Therefore, the Kolschefskys' medical malpractice claim 
against Mrs. Kolschefsky's chiropractor became part of their bankruptcy estate 
as of November 16, 1999, such that they no longer had any interest in the claim 
and no standing to bring a lawsuit based on that claim.  Dorr, Keller, Bentley 
& Pecha, 841 P.2d  at 816.  Although not argued by Harris, the same 
analysis would apply to any legal malpractice claim against Harris that accrued 
prior to the bankruptcy filing date.  This result occurs by operation of law, 
regardless of the intent or understanding of the parties.

 

[¶15]      Property may be abandoned by the trustee after notice and a 
hearing, 11 U.S.C. § 554(a) (2000), or upon request of a party and order of the 
court.  Id. at § 554(b).  In addition, scheduled property 
that is not otherwise administered by the trustee is automatically abandoned to 
the debtor when the case is closed.  Id. at § 
554(c).  
However, if not administered in the bankruptcy case or abandoned pursuant 
to one of these provisions, property remains in the estate even after discharge 
of the debtor and even when the case is closed.  Id. at § 
554(d).

 

[¶16]      The Kolschefskys did not disclose any medical malpractice or 
legal malpractice claim to the bankruptcy court, and there is no evidence of a 
hearing in that court on the issue of abandonment of these claims to the 
debtors.  The 
automatic abandonment provision upon closing of a bankruptcy case pursuant to 11 
U.S.C. § 554(c) is expressly limited to property that is properly scheduled. Any 
interest of the Kolschefskys accruing before their bankruptcy filing became and 
remains vested in their bankruptcy estate. Barowsky v. 
Serelson, 102 B.R. 250, 253 (D.Wyo. 1989), aff'd, 946 F.2d 1516 (10th Cir. 1991).  The bankruptcy trustee had exclusive standing 
to pursue that interest on behalf of the estate.  Dorr, Keller, Bentley 
& Pecha, 841 P.2d  at 815.  Therefore, even if a re-affirmed or new 
attorney/client contract was formed between Kolschefskys and Harris after the 
bankruptcy filing, and even if Harris' post-petition representation fell below 
the standard of a reasonably competent attorney, the Kolschefskys could not have 
been injured where they no longer owned any medical malpractice claim and would 
have had no standing to assert such a claim in court.

 

[¶17]      Because the Kolschefskys' bankruptcy filing terminated both 
their contractual relationship with their attorney and their property interest 
in a pre-petition medical malpractice claim, they had no standing to pursue 
either a legal malpractice claim against their attorney or a medical malpractice 
claim against the medical provider. Summary judgment is appropriate, not because 
there are no contested issues of fact, but because the contested factual issues 
are not material to the controlling and dispositive federal law.  We need not address 
other issues raised by the Kolschefskys.  Summary judgment in favor of Harris is 
affirmed.

  

HILL, Chief 
Justice, dissenting.

 

[¶18]   I respectfully dissent because I am not 
convinced that the bankruptcy statutes are intended to provide the kind of 
protection to an alleged tortfeasor that the majority ascribes to them.  It is my conclusion 
that the standard of review governing summary judgment, the existence of genuine 
issues of material fact, and the applicable law require that this case be 
remanded for trial wherein the fact-finder will have to resolve the import of 
those disputed facts.

 

[¶19]   I agree with the standard of review 
articulated by the majority, but I do not think the opinion is faithful to that 
standard in analyzing this case, nor do I concur with the law the majority 
applies to the facts of the case.

 

[¶20]   The one truly undisputed fact is that 
the Kolschefskys, acting pro se, filed a bankruptcy petition in November of 
1999, and they received the protections available to debtors in the bankruptcy 
court.  In their 
bankruptcy petition, they did not list as an asset a medical malpractice claim 
against a chiropractor who had treated Mrs. Kolschefsky, nor did they list a 
legal malpractice claim against Harris.  Of course, at that point they did not know 
that they had such a claim against Harris because the gravamen of their 
complaint against him did not occur until more than six months after the filing 
of the bankruptcy petition.

 

[¶21]   Citing 11 U.S.C. § 365(d)(1), the 
majority appears to conclude that the bankruptcy proceeding operated to relieve 
Harris of any obligation he had to the Kolschefskys, as their attorney in the 
medical malpractice action, even though Harris continued to act in that matter 
until into the late spring and early summer of the year 2000.1

 

[¶22]   The majority comes close to 
acknowledging that Harris may never have effectively terminated his contract 
with the Kolschefskys (because such a termination would have had to have been in 
writing, and it was not), may have reaffirmed his pre-November 1999 contract 
with the Kolschefskys through his actions in continuing to represent them, 
and/or that he may have entered into a new contract with them.  These are, of 
course, some of the factual issues that need to be resolved by a 
fact-finder.  
However, perhaps in recognition of these factual issues, the majority 
then retreats to another basis on which the summary judgment order should be 
affirmed.

 
[¶23]   In ¶13 of the majority's opinion, this 
second basis for affirmance is that, by operation of law, all assets of the 
Kolschefskys went into the bankruptcy estate, including all causes of action 
existing on the date of the petition, "whether or not a lawsuit has been 
commenced, and no matter how inchoate or unliquidated the underlying 
claim.  The 
estate exists by operation of law and is not limited to that property disclosed 
by the debtors on their bankruptcy schedules."  Continuing, the majority concludes that the 
claim against Mrs. Kolschefsky's chiropractor became a part of the bankruptcy 
estate and, therefore, she no longer had any interest whatever in it.  I am not convinced 
that the authority cited entirely supports that proposition.

 

[¶24]   However, the majority makes a secondary 
conclusion, which I do not think can stand scrutiny at all:  "Although not argued 
by Harris, the same analysis would apply to any legal malpractice claim against 
Harris that accrued prior to the bankruptcy filing date.  This result occurs 
by operation of law, regardless of the intent or understanding of the 
parties."  In my 
view, that conclusion is not consonant with the facts (i.e., Harris did not commit his malpractice until the 
middle of the year 2000 when he let the statute of limitations run on Mrs. 
Kolschefsky's claim against her chiropractor), nor is the proposition supported 
by substantiating authority.  It is my opinion that the pertinent authority 
is to the contrary.  
Legal malpractice claims are not the sort of executory contracts that are 
included within the reach of 11 U.S.C. § 365(d)(1).  Although I agree 
with the majority that the claim against the chiropractor is an asset of the 
bankruptcy estate, and apparently is being treated as such while this litigation 
proceeds, some portions of that claim also may well not become assets of the 
bankruptcy estate.  
11 U.S.C. §§ 522(d)(11)(D) and (E) (1993) (exempting a payment, not to 
exceed $7,500, on account of personal bodily injury, not including pain and 
suffering or compensation for actual pecuniary loss, as well as payments for 
loss of future earnings).  2 David D. Epstein, Steve H. Nickles, and 
James J. White, Bankruptcy, §§ 8-18 at 510-515 
(1992); 11 USCS § 522, nn. 178-80 (1997); 11 USCS § 541, n.72 (1997).

 

[¶25]   However, that is beside the point 
because the medical malpractice claim is not at issue here.  It is the legal 
malpractice claim that is now of immediate and practical importance to the 
Kolschefskys, and the pertinent authority holds that such a claim is not 
affected by a bankruptcy filing.  Because it is a uniquely personal matter, a 
cause of action for legal malpractice is not assignable and, therefore, does not 
become a part of the estate of the bankrupt.  Christison v. 
Jones, 405 N.E.2d 8, 11-12 (Ill.App. 1980); Francis M. Dougherty, 
Annotation, Assignability of Claim for Legal 
Malpractice, 40 A.L.R. 4th 684 (1985 and 
Supp. 2001); and see 1 Epstein, Nickles, and White, 
supra, § 3-14b at 168-69.

 

[¶26]   Finally, I do not think the bankruptcy 
statutes have such a "long-arm" as to provide protection to an alleged 
tortfeasor under circumstances such as these.  The bankruptcy statutes serve very strictly 
defined purposes and principally affect the debtor-creditor relationship.  The excerpts taken 
by the majority from the bankruptcy statutes are not designed to define or limit 
the sort of relationship, or the facts and circumstances, that are at issue 
here.  See generally Daniel R. Cowans, Bankruptcy Law and Practice, 7th ed. (1998 and Supp. 2000).  Reason is the soul 
of law, and when the reason of any particular law ceases, so does the law 
itself.  GGV v. JLR, 2002 WY 
19, ¶8, 39 P.3d 1066, ¶8 (Wyo. 
2002).

[¶27]   I would reverse the order of the 
district court and remand for further proceedings consistent with what I have 
set out above. 

BURKE, District Judge, 
dissenting, with whom HILL, Chief Justice, 
joins.

 

[¶28]   I respectfully dissent.  I find that genuine 
issues of material fact exist which preclude summary judgment.

 

[¶29]   For purposes of summary judgment we must 
provide all favorable inferences to be gleaned from the evidence to the party 
opposing the motion.  
In that vein, we must take as true the unrefuted opinion testimony of the 
Kolschefskys' expert.  
According to that expert, Mr. Harris breached his duties to the 
Kolschefskys by failing to properly and timely investigate the claim, failing to 
advise the Kolschefskys as to the applicable statute of limitations, failing to 
advise the Kolschefskys of the impact of bankruptcy upon the client's 
chiropractic malpractice claim, and failing to take action during the bankruptcy 
to preserve the chiropractic malpractice claim after receiving notice that the 
bankruptcy had been filed.  There is factual support for those opinions in 
the record.

 

[¶30]   The record demonstrates that Harris was 
aware that the Kolschefskys were having financial difficulties.  As a result of Mrs. 
Kolschefsky's chiropractic malpractice injury, the Kolschefskys accumulated 
medical bills amounting to $30,000.  In a discussion with Harris, Mr. Kolschefsky 
brought up the subject of bankruptcy and Harris told him that it might not be a 
bad idea.  
During the course of their relationship, Harris sent numerous letters to 
creditors on behalf of the Kolschefskys to stave off collection efforts while he 
investigated the chiropractic malpractice claim.  Harris never advised the Kolschefskys that 
filing bankruptcy could negatively impact their chiropractic malpractice 
claim.

 

[¶31]   Facts supporting an ongoing 
attorney-client relationship post-bankruptcy also appear in the record.  The Kolschefskys 
believed that Harris continued to represent them and was pursuing a claim 
against the chiropractor, even after the bankruptcy.  Despite the 
bankruptcy filing in November, 1999, Harris sent a letter on April 25, 2000, to 
a treating neurologist.  In the letter, Harris requested information 
about Mrs. Kolschefsky, referring to her as his client.  In a follow-up 
telephone conversation on May 1, 2000, Harris informed the neurologist that he 
was not qualified to give an expert opinion in Mrs. Kolschefsky's case but asked 
if he could identify any chiropractors who could give an opinion.  Harris never 
communicated any termination of his representation to the Kolschefskys in 
writing.

 

[¶32]   I do not take issue with the majority's 
analysis that by operation of bankruptcy law the executory fee agreement was 
breached by the Kolschefskys.  However, I disagree that the effect of that 
breach resulted, as a matter of law, in the termination of the attorney-client 
relationship.  
The majority equates the duty to perform as specified in the contract 
with the professional duty arising from the attorney-client relationship.  I discern a 
difference.  The 
latter imposes an obligation to meet a standard of care.  The standard of care 
is not set forth in the fee agreement and must be established by expert 
testimony.

 

[¶33]   The majority summarily concludes that 
the breach ended the attorney-client relationship because it constituted an 
anticipatory repudiation of the attorney-client contract and relieved Harris 
from further responsibilities on behalf of the Kolschefskys.  I interpret the 
facts differently, and based upon his conduct, so did Harris.  He continued to hold 
himself out as the Kolschefskys' attorney months after the bankruptcy.  Harris never 
provided written notice of termination and did not return the Kolschefskys' file 
to them until the Kolschefskys' sought new counsel.  Additionally, Harris 
failed to raise bankruptcy as an affirmative defense in the legal malpractice 
case for many months and then only after the deadline for dispositive motions 
had passed.2

 

[¶34]   We have recognized that the existence of 
an attorney-client relationship will often present an issue for the trier of 
fact.  Meyer v. Mulligan, 889 P.2d 509, 513-514 
(Wyo. 1995).  In 
this case material issues of fact concerning the duration of the attorney-client 
relationship render summary judgment inappropriate.  The doctrine of 
anticipatory repudiation should not be applied when the facts are equivocal as 
to whether the party on the receiving end of a breach considered it a 
repudiation of the contract.  Rather, the Kolschefskys' bankruptcy is more 
properly viewed as an element of damage incurred by them, rather than as an 
event which eliminates any possible claims the Kolchevskys may have against 
Harris, e.g., Laiben v. 
Roberts, 936 S.W.2d 220 (Mo.Ct. App. 1996).

 

[¶35]   I also cannot agree that the 
Kolschefskys lacked standing to pursue their claim against Harris.

 

[¶36]   In concluding that Harris did not owe 
any duties to the Kolschefskys, the majority limits its inquiry to the point in 
time that the statute of limitations lapsed, after the bankruptcy was 
concluded.  The 
majority concludes that any pre-petition misconduct by Harris is not actionable 
because it became, and remains, property of the bankruptcy estate.  I disagree.  The cause of action 
resulting from those acts did not become part of the bankruptcy estate because 
it was not a legally cognizable interest when the Kolschefskys filed 
bankruptcy.

 

[¶37]   A bankruptcy estate includes "all legal 
or equitable interests of the debtor in property as of the commencement of the 
case."  11 
U.S.C. § 541(a).  
The majority states that this includes "all causes of action existing on 
the petition date, whether or not a lawsuit has been commenced, and no matter 
how inchoate or unliquidated the underlying claim."  I agree that causes 
of action become part of the bankruptcy estate, but I do not believe that the 
authority cited supports the conclusion that the Kolschefskys had a cause of 
action against Harris when they filed for bankruptcy.

 

[¶38]   The majority cites DKBP v. Dorr, Bentley 
& Pecha, 841 P.2d 811, 815 (Wyo. 1992) to demonstrate that the 
Kolschefskys had an interest in property, that being an unliquidated or inchoate 
claim against Harris.  
However, what we stated in that case was:

 

The filing of the petition in the bankruptcy court on 
February 1, 1990, created an estate.  That estate consisted of "all legal 
or equitable interests of the debtor [D&A] in property" wherever located and 
by whomever held.  
11 U.S.C. § 541 (1988) (emphasis added).  This includes any and 
all causes of action existing on the petition date.  Delgado Oil, Inc. v. Torres, 785 F.2d 857 (10th Cir. 
1986). 

Property of the estate includes all of the debtor's inchoate 
and unliquidated interests.  United States v. 
Whiting Pools, Inc., 462 U.S. 198, 204-05 n.8, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983)  (Estate succeeds to no more or greater causes of action 
against third parties than those held by the debtor.)  Property of the 
estate includes "any interest in property that the estate acquires after the 
commencement of the case.  11 U.S.C. § 541(a)(7).  Property of the 
estate in a Chapter 7 case of a non-individual includes all property, income, 
receivables, causes of action, etc., generated or acquired during a preceding 
Chapter 11 case. Id.

As a partner in DKBP, D&A had an interest in managing 
that partnership.  
See, e.g., 
Wyo. Stat. § 17-13-501(iii)(1989).  That management interest passed to the estate 
when D&A filed for bankruptcy.  In re Cardinal 
Industries, Inc., 105 B.R. 834, supplemented 109 B.R. 743 (Bankr. S.D. Ohio 
1989). 

When a cause of action accrues before the bankruptcy 
petition, that claim is property of the estate, regardless of whether or not a 
lawsuit based upon that cause of action had been commenced.  
In re James, 120 B.R. 802 (E.D.Pa. 1990); 
In re E.F. Hutton Southwest Properties, II, Ltd., 
103 B.R. 808 (N.D.Tex. 1989); In re Johns-Manville 
Corporation, 57 B.R. 680 (S.D.N.Y. 1986).

 

Id.  (Bold emphasis added.)

 

[¶39]   We acknowledged that a cause of action is a form of property encompassed by the 
bankruptcy code and that a trustee succeeds to a cause of 
action held by a debtor at the time the bankruptcy petition is filed.  Id. at 816. (citing Cain v. 
Hyatt, 101 B.R. 440 (E.D. Pa. 1989)).

 

[¶40]   In DKBP, we 
cited a footnote from United States v. Whiting Pools, Inc., 462 U.S. 198, 204-05, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983) for the proposition that a debtor's 
bankruptcy estate includes inchoate and unliquidated interests.  841 P.2d  at 
815.  However, 
we clarified that statement with a parenthetical explaining that the "[e]state 
succeeds to no more or greater causes of action against third parties than those 
held by the debtor."  
Id.  Moreover, while the scope of 11 U.S.C. § 
541(a) is broad, it is not intended to expand the debtor's rights against others 
more than they exist at the commencement of the case.  Whiting Pools, Inc., 462 U.S.  at 204-5, n.8; see also S. Rep. No. 95-989 at 82 (1978).

 

[¶41]   The analysis in DKBP which speaks of a cause of 
action is largely ignored by the majority.  Not surprisingly 
then, the majority does not examine whether the Kolschefskys had a 
cause of action against Harris when they filed for bankruptcy.

 

[¶42]   It is state law, and not federal 
bankruptcy law, which determines whether a debtor has an interest in a 
particular item of property and the extent of that interest at the commencement 
of the bankruptcy case.  Butner v. United 
States, 440 U.S. 48 (1979); Ellwanger v. Budsberg (In re 
Ellwanger), 140 Bankr. 891, 900 (Bankr. 
W.D. Washington 1992).

 

[¶43]   In Wyoming, a cause 
of action accrues only when forces wrongfully put in motion 
produce injury.  
Duke v. 
Housen, 589 P.2d 334, 343 (Wyo. 
1979) cert. denied 444 U.S. 863, 100 S. Ct. 132, 62 L. Ed. 2d 86; Cross v. Berg Lumber Company, 7 P.3d 922, 930 (Wyo. 2000).  We have recognized 
that a cause of action exists when the plaintiff could have first filed and 
prosecuted the action to successful completion. Gillis v. 
F & A Enterprises, 934 P.2d 1253, 1255 (Wyo. 1997).

 

[¶44]   The Kolschefskys' claim against Harris 
is one for damages based upon legal malpractice.  A cause of action for legal malpractice based 
upon a breach of a professional duty is a tort.  Rino v. Mead, 2002 WY 144, ¶16 n.1, 55 P.3d 13 ¶16 n.1 (Wyo. 
2002).  A tort 
is not complete and actionable until all of the elements of the tort: duty, 
breach, proximate cause and damages are present.  Nowotny v. L & B 
Contract Industries, Inc., 933 P.2d 452 (Wyo. 1997).  
The Kolschefskys could not have brought a malpractice claim against 
Harris as of the date they filed for bankruptcy because all of the elements of 
the tort were not yet present.  The Kolschefskys claim damages resulting from 
their discharge in bankruptcy and from the loss of their chiropractic 
malpractice claim.  
These damages did not arise until after the bankruptcy was 
filed.

 

[¶45]   The Kolschefskys claim that Harris' 
failure to properly advise them and diligently pursue their chiropractic 
malpractice claim forced them to file bankruptcy.  Questions of fact appear in the record 
concerning whether actions of Harris caused or contributed to the bankruptcy 
filing.  A 
question also exists concerning the appropriate standard of care involved in 
representing a client with a personal injury claim who is in financial 
distress.  The 
Kolschefskys' expert opines that under these circumstances, the standard of care 
requires counseling that bankruptcy could impact the personal injury claim.  If attributable to 
Harris, any damages resulting from the discharge in bankruptcy could not have 
occurred until the bankruptcy was concluded.  Laiben, 936 S.W.2d 220.

 

[¶46]   As to the chiropractic malpractice 
claim, I agree with the majority that it remains property of the bankruptcy 
estate.  The 
damage suffered by the Kolschefskys is the loss of that claim.  Arguably, the 
Kolschefskys first suffered damage immediately after the filing of the 
bankruptcy when the ownership of their chiropractic malpractice claim was 
transferred to their bankruptcy estate.3  Alternatively, 
damages may have arisen when the statute of limitations elapsed.  Regardless of when 
the damages arose after the bankruptcy filing, damages did not exist prior to 
the filing.

 

[¶47]   A cause of action against Harris did not 
exist as of commencement of the bankruptcy because 
the Kolschefskys did not incur any damages until after the bankruptcy was 
filed.  
Accordingly, the cause of action against Harris never became property of 
the bankruptcy estate.  
The Kolschefskys were the rightful owners of the legal malpractice claim 
when they filed their complaint against Harris.

 

[¶48]   The district court erred in granting the 
Defendants' motion for summary judgment.  I would reverse and remand for further 
proceedings.

 

FOOTNOTES

 

   1Construing, or deciphering, a statute such as 11 U.S.C. § 
365 is a daunting task.  The statute itself is nine pages long (in 
USCS), and the interpretive notes and decisions section associated with that 
statute take up over 175 pages.  Merely as an example, I point out that the 
general purpose of that section is to allow a debtor to reject an executory 
contract in order to relieve the bankruptcy estate of burdensome obligations 
while at the same time providing a means whereby the debtor can force others to 
continue to do business with it when bankruptcy filings might otherwise make 
them reluctant to do so.  11 USCS § 365, n.2 (1995); Chateaugay Corporation v. LTV Steel Company, 10 F.3d 944, 954-55 (2nd Cir. 1993).  While § 365 may 
"speak" to the issues in this case in some way I am unable to ascertain, I am at 
least convinced that, to the extent it speaks, it does not say what the majority 
attributes to it.

 

2The majority does not 
address the Kolschefskys' assertion that the district court abused its 
discretion by considering the late-filed motion.  I agree that we are unable to review this 
issue because the Kolschefskys' brief cites to documents that do not appear in 
the record on appeal.  
However, I find that Harris' failure to raise the bankruptcy issue until 
very late in the proceedings indicates that Harris did not ascribe to the 
bankruptcy the significance that the majority does in its 
opinion.

 

3However, the claim may not 
have been truly lost at that point.  There is a possibility that the loss of 
ownership of the claim may have been remedied before the statute of limitations 
passed.  In the 
opinion of Kolschefskys' expert, an attorney in Harris' position could pursue 
several options to recover a claim from the bankruptcy estate.  Harris could have 
sought to recover the claim from the bankruptcy estate by either offering to 
purchase the claim or requesting that the trustee abandon the claim back to the 
Kolschefskys.  I 
consider the availability and likely success of any of these options suitable 
issues for trial.