T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on and i s notpr e c e de nt * e xc e pta s pr ovi de d by9th C i r . R . 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS F O R T H E N IN T H C IR C U IT H O LLA N D & K N I G H T, LLP, P l ai nt i ff

- A pp el l ee , v. AL AN De AT L E Y, D e f

e n d a n t - A p p e lla n t. a nd P AI N, HA MB L E N, C OF F I N, B R OO KE & M I LL ER , LL P

D e f e n d a n t. N o. 08- 35814 D. C. No . 2 : 0 6 - CV- 0 0 2 7 8 - J LQ ME MOR AN DU M *

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe E a s t e rn D i s tr i c tof W a s hi ngt on J us t i n L . Q ua c ke nbus h, S e ni orD i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d N ove m be r5, 2009

S e a tt l e , W a s hi ngt on B efo re: A L A R C Ó N , K L E IN F E L D an d C L IF T O N , C i rcu i tJu d g es. 

# FI LED NO V 24 2009 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

W e a ff i rm the di stri ctcourt ’ s dec i si on grant i ng sum m ary j ud gm entt o l aw f irm H o lla n d & K n ig h t o n A la n D e A tle y ’s c o u n te r c la im f o rle g a l m a lp r a c tic e in th is d iv e r s itys u it b a s e d o n W a s h in g to n la w . D eA t l eyw as j ud i ci al l y e st op ped from as se rt i ng the coun t er cl ai m . D eA t l ey ha d c l a i m e d a n i nt e r e s ti n hi s f a the r ’ s pa vi ng bus i ne s s , S upe r i orA s pha l t , a tthe tim e h e f ile d f o rC h ap te r7 b a n k ru p tc y , y e t h e c h o s e n o t to lis t it a s a n a s s e t. T h is depri ved D eA t l ey ’ s c re di t ors of hi s c l ai m of a s hare i n the bu si ness , so that D e A t l e y ’ s de bt s w e r e di s c ha r ge d w i thoutthe c r e di t or s be i ng abl e t o pur s ue w h a te v e rin te r e s t D e A tle yh a d . D e A t l e ya r gue s tha ti tw a s unc l e arw he the rthe i nt e r e s tw hi c h he a dm i t s he thoughthe ha d i n S upe r i orA s pha l tw a s l e ga l l ye nf or c e abl e a tthe t i m e he f i l e d f or b a n k ru p t c y . Th a tw a s f o rh i s c r e d i t o r s a n d th e b a n k ru p t c yc o u rtt o d e c i d e , n o th i m. T h e b a n k ru p tc yc o d e r e q u ir e s s c h e d u lin g a ll a s s e ts , in c lu d in g “p o te n tia l” c la im s . 11 U . S . C . §§ 52 1, 54 1. F ai l ure t o l i stan as se tor i nt er es ton the bank rupt cy s c h e d u le s c au s e s th e d e b to rto b e ju d ic ia llye s to p p e d f r o m p u r s u in g ac la im to r e c o v e rth a t in te r e s t a f

te rd is c h a r g e . H a m ilto n v . S ta te F a rm F ir e & C a s u a ltyC o ., 2 7 0 F .3 d 7 7 8 , 7 8 3 , 7 8 5 ( 9 th C ir . 2 0 0 1 ) . D e A tle yd is c h a r g e d o v e r$ 1 m illio n in3

de bt s dur i ng hi s C hapt e r7 ba nkrupt c y , y e the l i s t e d onl y$26, 000 i n a s s e t s a nd m a de no m e nt i on of

hi s i nt e r e s ti n S upe r i or . T he c r e di t or s w e r e de ni e d the opportuni tyt o pur s ue a s s e t s of S upe r i orA s pha l t , s o the di s tr i c tc ourti n the m a l pr a c t i c e a c t i on pr ope r l yde t e rm i ne d tha tthe di s tr i c tc ourti n the unde r l y i ng l i t i ga t i on w oul d ha ve “ i nvoke [ d] j udi c i a l e s t oppe l t o pr ot e c tthe i nt e gr i tyof the ba nkrupt c ypr oc e s s . ” H a m i l t on, 270 F . 3d a t785.

D eA t l eyar gu es thathe ac t ed i n g oo d fai th o n the advi ce of hi s bankrup t cy c ouns e l i n nots c he dul i ng hi s i nt e r e s ti n S upe r i or . C ouns e l ’ s a dvi c e doe s not prot ec tD eA t l eyfr om the es t op pel , si nce he gotthe benefi tof the di sc harge. S ee H a m i l t on, 270 F . 3d a t784- 85; E a s tm a n v. U ni on P a c i f i c R a i l r oa d C o. , 493 F . 3d 1151, 1157- 58 ( 10th C i r . 2007) . A nd D e A t l e y ’ s pl e a di ng i n thi s m a l pr a c t i c e a c t i on es t abl i shes the abse nce of goo d fai th. H e c l ai m ed thathe and h i s f ather transfe rr ed a s s e t s t o ke e p the m outof hi s c r e di t or s ’ ha nds , a nd tha thi s “ i nt e r e s t ” i n S upe r i or A s pha l t“ be c a m e an i s s ue ” “ dur i ng” the ba nkrupt c y . S e e N ot i c e R e ga r di ng R e l a t e d L i t i g a t i o n , E x . 1 ¶ 2 0 ( e ) - ( f ) , Ho l l a n d & K n i g h tL L P v . De At l e y , No . C V0 6 - 2 7 8 ( E .D . W a . A u g . 2 9 , 2 0 0 8 ) ( d o c k e t e n try1 6 0 ) ; s e e a ls o D e A tle yv . B a rn e tt, 112 P . 3d 540, 543 ( W a s h. A pp. 2005) ( “ the D e A t l e y s c hos e t o di s c ha r ge the bu rdens of [ a di ff

er ent ] contra ctob l i gat i on and d i d n otl i stthei r a l l egedl y m atured4

r i ghtof f i r s tr e f us a l a s a n a s s e t ” ) . J udi c i a l e s t oppe l i n the ba nkrupt c yc ont e xt prevent s l i t i gant s f

rom abusi ng the bank rupt cyproces s i n thi s m anner.

In the al t ernat i ve, i nd ependent l y c om pel l i ng the sa m e r es ul t , D eA t l eyl ac ked s ta n d in g to b r in g h is s u it a g a in s t h is f a th e rto e n f

o r c e h is in te r e s t in S u p e r io r . W he n apa rtyf

a i l s t o s c he dul e ac l a i m i n ba nkrupt c y , tha tc l a i m r e m a i ns the pr ope rtyof

the of the ba nkrupt c ye s t a t e e ve n a f t e rdi s c ha r ge , a nd the de bt orl a c ks st andi ng t o p ursue i t . D un m ore v. U ni t ed S t at es , 35 8 F . 3d 11 07 , 11 12 (9th C i r. 2 0 0 4 ) . D e A tle yc la im s h e d id n o t h a v e ac la im o f o w n e r s h ip o f

S u p e r io ru n til h is f a th e rs ig n e d aw r itte n g u a r a n tyin 1 9 9 4 , a f te rth e b a n k ru p tc yw a s c o m p le te . H ow e ve r , the 1994 gua r a ntyi s “ s uf f i c i e nt l yr oot e d i n the pr e - ba nkrupt c ypa s t ” a nd r e m a in s p a rt o f

th e b a n k ru p tc ye s ta te . I n r e R y e r s o n , 7 3 9 F .2 d 1 4 2 3 , 1 4 2 6 ( 9 th C i r. 19 84 ) ( ci t at i on om i tt ed). D eA t l ey ’ s c on t ent i on thathe had n o cl ai m t o a shar e of S upe r i orA s pha l tunt i l a f t e rthe ba nkrupt c yw a s ove ri s be l i e d bythe doc um e nt he , hi s w i f

e , a nd hi s m othe rs i gne d a nd pr e s e nt e d t o hi s f a the rbe f or e the b a n k ru p tc y . T h e 1 9 9 4 g u a r a n ty , w h ic h D e A tle yc la im s c r e a te d an e w p o s tba nkrupt c yr i ght , s a y s tha ti t“ f i ni s h[ e s ] the pr oc e s s of

tr a ns f e rr i ng 50% of

the5

o w n e r s h ip to h im a s w e h a v e a g r e e d to d o f o rm a n yy e a r s .” ( e m p h a s is a d d e d ) . B e c au s e D e A tle yf

a ile d to lis t th e c la im o n h is b a n k ru p tc ys c h e d u le s , h is in te r e s t in S upe r i orr e m a i ns pa rtof the ba nkrupt c ye s t a t e a nd di d notr e ve rtt o hi m upon d is c h a r g e o f

h is d e b ts . C u s a n o v . K le in , 2 6 4 F .3 d9 3 6 , 9 4 6 ( 9 th C ir . 2 0 0 1 ) . B e c au s e th e in te r e s t in S u p e r io ris n o t D e A tle y ’s p r o p e rty , h e la c k s s ta n d in g to p u rs u e it. H is m alp ra ctice s u itag ain st h is law ye rs fo r f aili n g to p u rs u e D eA tl ey ’s cl ai m i n S u p eri o r m o re effecti v el y i s th erefo re m eri t l ess.

T he unde r l y i ng l i t i ga t i on i n w hi c h D e A t l e ya l l e ge s H ol l a nd & K ni ght com m i tt ed m alprac t i ce w as do om ed t o fai l for tw o rea sons i nd ependentof ea ch other, j ud i ci al es t op pel and l ac k o f s t andi ng . H e there fore suff er ed no dam ages a nd s um m a ryj udgm e ntw a s appr opr i a t e . S e e D auge rtv. P appa s , 704 P . 2d 600, 60 3-04 (W as h. 19 85 ).

AF F I RME D.