## F I L E D United States Court of Appeals Tenth Circuit 

### DEC 23 2002 

### PATRICK FISHER Clerk 

### PUBLISH UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

IN RE: RICHARD W. PARKER, Debtor.

_________________________ JENEE MARIE WATSON, Appellant,

v. RICHARD W. PARKER, Appellee. No. 01-3251

Appeal from the United States Bankruptcy

Appellate Panel (BAP No. KS-00-066) (KS Bankruptcy Court No. 96-42822)

Submitted on the Briefs: John Kurtz of Hubbard & Kurtz, L.L.P., Kansas City, Missouri, filed briefs for Appellant. Richard W. Parker, Appellee, filed a brief pro se.

Before SEYMOUR , ANDERSON and O’BRIEN , Circuit Judges.-2-

SEYMOUR , Circuit Judge.

The issue in this case is whether the bankruptcy co urt properly reopened a bankruptcy case to discharge a claim. The bankrupt cy court permitted debtor Richard W. Parker to reopen his Chapter 7 case and amend his schedules to include a legal malpractice claim that Jenee Watson , a former client, held against him. Ms. Watson appeals the decision of the bankruptcy appellate panel affirming the bankruptcy court. She contends the d ebtor should have been precluded by various equitable principles from reop ening his case. Alternatively, she maintains the claim is nondischargeable because it arose after the debtor’s discharge and/or because her claim otherwise met th e requirements of nondischargeability under the bankruptcy code. We affirm. There are two issues of first impression in this ca se. Because we agree with the position and reasoning of the bankruptcy appellate panel’s published decision on both of these matters, see Watson v. Parker (In re Parker) , 264 B.R. 685 (10th Cir. BAP 2001), we write only to make cle ar the position of the circuit on these two issues. The first issue we address is whether a debtor’s intent in failing to schedule a claim is relevant to a bankruptcy court’s decisio n to reopen a case in which there are no assets and no bar date. The circuits are split between applying-3-

equitable principles which include consideration of the debtor’s intent, or a more mechanical analysis which does not. Compare Faden v. Ins. Co. of North America (In re Faden) , 96 F.3d 792, 797 (5th Cir. 1996); Samuel v. Baitcher (In re Baitcher) , 781 F.2d 1529, 1534 (11th Cir. 1986); and Stark v. St. Mary’s Hospital (In re Stark) , 717 F.2d 322, 323-34 (7th Cir. 1983) (per curiam) , with Zirnhelt v. Madaj (In re Madaj) , 149 F.3d 467, 471 (6th Cir. 1998); Judd v. Wolfe (In re Judd) , 78 F.3d 110, 115-16 (3d Cir. 1996); and Beezley v. Calif. Land Title Co. (In re Beezley) , 994 F.2d 1433 (9th Cir. 1993) (per curiam). After reviewing the cases, we are persuaded that th e more mechanical approach is “better reasoned and more faithful to the language of the Bankruptcy Code.” Parker , 264 B.R. at 694. As the bankruptcy appellate pan el explained: Pursuant to § 727(b), the Debtor receives a dischar ge from all debts that arose before the date of the order for relief under Chapter 7, regardless of whether a proof of claim based on anysuch debt or liability is filed, unless an exception in 523(a) applies. Under § 523(a)(3)(A), a claim will not be discharged if it was neither listed nor scheduled and the creditor did not have notice or actual knowledge of the case so that the creditor could ti mely file a claim. Here the bankruptcy court correctly found that § 52 3(a)(3)(A) does not apply because the Debtor’s Chapter 7 case was ano asset case with no claims bar date set; therefore, Watson had suffered no prejudice because Watson will have an opportunity t o file a claim if any assets are discovered. Because § 523(a)(3)(A) does not apply, unless Watson can establish that the claim was nond ischargeable under one of the exceptions referenced in § 523(a)( 3)(B), her Claim was discharged by operation of law under § 727(b). We conclude that equitable considerations do not impact the dis chargeability of a debt under § 523(a)(3)(A), and therefore, it was un necessary to reopen the Debtor’s Chapter 7 case for the purpose of making that1 The bankruptcy appellate panel noted that the court s embracing a conduct (continued...) -4- determination. However, we find that the bankruptc y court did not abuse its discretion when it reopened the Debtor’s case because the court conducted the right analysis.

Id. at 694-95 (footnote omitted). For the reasons exp lained by the bankruptcy appellate panel, we agree with the Third, Sixth, an d Ninth Circuits that the debtor’s intent in failing to schedule a debt is ir relevant to the bankruptcy court’s decision to reopen. The second issue concerns determination of the date on which a claim arose for purposes of classifying it as a pre- or post-pe tition claim. The circuits are divided as to whether to use a conduct theory, whic h determines the date of a claim by the date of the conduct giving rise to the claim, or an accrual theory, which determines the date of a claim pursuant to th e state law under which liability for the claim arose. Compare Grady v. A.H. Robins Co., Inc. , 839 F.2d 198 (4th Cir. 1988), with Avellino & Bienes v. M. Frenville Co., Inc. (I n re M. Frenville Co. Inc.) , 744 F.2d 332 (3d Cir. 1984). We recognized this split of authority in Franklin Savings Ass’n v. Office of Thrift Supervis ion , 31 F.3d 1020, 1022 (10th Cir. 1994), but found it unnecessary to take a position. We now adopt the conduct theory as the one more in tune with the plain language and the policy underlying the Bankruptcy C ode. 1 See Parker , 264 B.R.1 (...continued)

theory are divided as to a basic conduct theory ver sus a “narrow conduct theory” (also called the “Pipertest.”) See Parker , 264 B.R. at 697 n.12. The narrow conduct theory courts hold that a claim arises at t he time of conduct only if the claimant had a specific relationship with the debto r at the time the conduct occurred. See, e.g., Epstein v. Official Comm. of Unsecured Creditors of Estate of Piper Aircraft Corp ., 58 F.3d 1573 (11th Cir. 1995); Lemelle v. Universal Mfg. Corp. , 18 F.3d 1268 (5th Cir. 1994); California Dep’t of Health Servs. v. Jensen (In re Jensen) , 995 F.2d 925 (9th Cir. 1993). As noted by the panel, because the relationship in the case before us would meet eithe r test, we need not decide which version of the conduct theory to adopt. -5- at 696. We note, first of all, the Fourth Circuit’ s remark that it “ha[s] found no court outside the Third Circuit which has followed the reasoning and holding of Frenville . All of the cases coming to our attention which h ave considered the issue have declined to follow Frenville ’s limiting definition of claim.” Grady , 839 F.2d at 201. As the Fourth Circuit pointed out , “[i]n the case of a claim . . . the legislative history shows that Congress intende d that all legal obligations of the debtor, no matter how remote or contingent, wil l be able to be dealt with in bankruptcy. The Code contemplates the broadest pos sible relief in the bankruptcy
court.” Id. at 202. Turning “to the pertinent parts of the st atutes at hand,” the court noted: Section 362(a)(1) provides for an automatic stay of , among other things, judicial action against the debtor “. . . t o recover a claim against the debtor that arose before the commenceme nt of the case under this title.” Section 101(4)(A) defines a cla im to be a “right to payment whether or not such right is reduced to jud gment, liquidated, unliquidated, fixed, contingent, matured, unmatured , disputed, undisputed, legal, equitable, secured or unsecured. ”-6-

Id. at 202. With respect to contingent claims, the co urt stated: We do not believe that there must be a right to imm ediate payment of money in the case of a tort . . . , as present here , when the acts constituting the tort . . . have occurred prior to the filing of the petition, to constitute a claim under § 362(a)(1). It is at once apparent that there can be no right to the immediat e payment of money on account of a claim, the existence of which depends upon a future uncertain event. But it is also apparent th at Congress has created a contingent right to payment as it has the power to create a contingent tort or like claim within the protection of § 362(a)(1). We are of opinion that it has done so. Id. at 203. Pursuant to this reasoning, we hold that the malpractice claim here arose on the date it allegedly occurred, which was prior to the filing of the debtor’s petition. We are also persuaded by the bankruptcy appellate p anel’s resolution of the other issues raised by Ms. Watson substantially forthe reasons set forth in its thorough and well-reasoned opinion. We therefore AFFIRM

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