RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 19b0003p.06

BANKRUPTCY APPELLATE PANEL

OF THE SIXTH CIRCUIT

IN RE: EARL BENARD BLASINGAME; MARGARET 

GOOCH BLASINGAME,

Debtors.

___________________________________________

CHURCH JOINT VENTURE, L.P., on Behalf of Chapter 7 

Trustee,

Plaintiff-Appellant,

v.

EARL BENARD BLASINGAME; MARGARET GOOCH 

BLASINGAME; MARTIN A. GRUSIN; MAG

MANAGEMENT CORPORATION, dba JG Law Firm; 

TOMMY L. FULLEN; LAW OFFICE OF TOMMY L.

FULLEN,

Defendants-Appellees.

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No. 18-8017

On Appeal from the United States Bankruptcy Court

for the Western District of Tennessee at Memphis.

No. 08-28289; Adv. No. 14-00429—Jennie D. Latta, Judge.

Argued: February 12, 2019

Decided and Filed: April 5, 2019

Before: OPPERMAN, PRICE SMITH, and WISE, Bankruptcy Appellate Panel Judges.

_________________

COUNSEL

ARGUED: Bruce W. Akerly, AKERLY LAW PLLC, Coppell, Texas, for Appellant. Michael 

P. Coury, GLANKLER BROWN, PLLC, Memphis, Tennessee, for Appellees. ON BRIEF: 

Bruce W. Akerly, AKERLY LAW PLLC, Coppell, Texas, for Appellant. Michael P. Coury, 

GLANKLER BROWN, PLLC, Memphis, Tennessee, for Appellees.

>
No. 18-8017 In re Blasingame Page 2

_________________

OPINION

_________________

DANIEL S. OPPERMAN, Chief Bankruptcy Appellate Panel Judge. In this appeal, the 

Panel is asked to determine whether the bankruptcy court erred in holding that a malpractice 

action for denial of debtors’ discharges based on errors and omissions contained in a bankruptcy 

petition, as well as pre and post-petition legal advice, was not property of the debtors’ 

bankruptcy estate. The Panel finds the reasoning of Underhill v. Huntington National Bank (In 

re Underhill), 579 F. App’x 480 (6th Cir. 2014), to be both persuasive and binding. 

Accordingly, we AFFIRM.

ISSUE ON APPEAL

The issue on appeal is whether the bankruptcy court erred in its holding that the 

malpractice cause of action was not property of the bankruptcy estate.

JURISDICTION AND STANDARD OF REVIEW

The United States District Court for the Western District of Tennessee has authorized 

appeals to the Panel, and no party has timely filed to have this appeal heard by the district court. 

28 U.S.C. §§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as of 

right. 28 U.S.C. § 158(a)(1). Midland Asphalt Corp. v. U.S., 489 U.S. 794, 798, 109 S. Ct. 1494, 

1497 (1989) (quotation marks and citation omitted). The order before the Panel grants summary 

judgment to the Debtors and fully disposes of the adversary proceeding, making it a final order. 

Geberegeorgis v. Gammarino (In re Geberegeorgis), 310 B.R. 61, 63 (B.A.P. 6th Cir. 2004) 

(“[A]n order that concludes a particular adversarial matter within the larger case should be 

deemed final and reviewable in a bankruptcy setting.”) (citations omitted)).

An order granting summary judgment is reviewed de novo. Dymarkowski v. Savage (In 

re Hadley), 561 B.R. 384, 388 (B.A.P. 6th Cir. 2016). The determination whether a cause of 

action is property of the estate is a legal conclusion, reviewed de novo. Underhill, 579 F. App’x 

at 481-82. “Under a de novo standard of review, the reviewing court decides an issue 
No. 18-8017 In re Blasingame Page 3

independently of, and without deference to, the trial court’s determination.” Matteson v. Bank of 

Am., N.A. (In re Matteson), 535 B.R. 156, 159 (B.A.P. 6th Cir. 2015) (citations omitted).

FACTS

Earl and Margaret Blasingame (“the Debtors”) filed their chapter 7 bankruptcy petition 

on August 15, 2008. Martin Grusin provided legal advice to the debtors prior to the filing and at 

the beginning of the bankruptcy case. Tommy L. Fullen filed the petition and represented the 

Debtors in the chapter 7 case. (Grusin, Fullen and their law firms are collectively referred to as 

the “Malpractice Defendants”).

On February 22, 2011, the bankruptcy court granted the Trustee’s motion for summary 

judgment in an adversary proceeding seeking to deny the Debtors’ discharge. Montedonico v. 

Blasingame (In re Blasingame), Adv. No. 09-00482 ECF No. 117 (Bankr. W.D. Tenn.). On July 

19, 2011, the bankruptcy court issued an order disqualifying the Malpractice Defendants from 

further representation of the Debtors in that case. The Debtors hired new counsel, who was 

effective in getting relief from the summary judgment denying discharge. However, following a 

trial, on January 15, 2015, the bankruptcy court again entered an order denying the Debtors’ 

discharge. The BAP affirmed the order on appeal.1

On January 30, 2012, the bankruptcy court granted Church Joint Venture (“CJV”) 

derivative standing to pursue a malpractice action on behalf of the estate against the Malpractice 

Defendants. CJV filed its original complaint on February 13, 2012, and a First Amended 

Complaint on February 2, 2017. Church Joint Venture, L.P. v. Grusin, et al. (In re Blasingame), 

Adv. No. 12-00454 (Bankr. W.D. Tenn.). The Debtors also filed a malpractice complaint in 

Tennessee state court on February 21, 2017. Both complaints aver substantially similar actions 

by the Malpractice Defendants that allegedly resulted in the denial of the Debtors’ discharges.

On December 2, 2014, CJV filed another adversary proceeding, seeking declaratory relief 

that the claims against the Malpractice Defendants constitute property of Debtors’ estate; this is 

 

1

In re Blasingame, 559 B.R. 692 (B.A.P 6th Cir. 2016). See also In re Blasingame, 559 B.R. 676 (B.A.P 

6th Cir. 2016) (detailing some of the allegations of malpractice in reviewing the bankruptcy court’s order 

sanctioning the Malpractice Defendants).
No. 18-8017 In re Blasingame Page 4

the case from which this appeal arises. On January 2, 2018, CJV filed a motion for summary 

judgment seeking a determination that the malpractice cause of action arose pre-petition and was 

property of the bankruptcy estate. The Malpractice Defendants and Debtors each filed individual 

responses, to which CJV replied. The parties agreed that there were no genuine issues of 

material fact. The issue before the bankruptcy court was solely whether under the facts alleged, 

the malpractice cause of action arose pre-petition, and was thus property of the bankruptcy 

estates.

The bankruptcy court treated Debtors’ response to CJV’s motion for summary judgment 

as a cross-motion. The court reviewed Tennessee law to determine when the cause of action for 

legal malpractice accrued and held that the cause of action arose post-petition. (Order on Motion 

for Summary Judgment, Adv. P. 14-00429 ECF No. 94 (May 10, 2018) (the “Summary 

Judgment Order”).) CJV timely appealed.

DISCUSSION

Federal Rule of Bankruptcy Procedure 7056, which incorporates Rule 56 of the Federal 

Rules of Civil Procedure, governs summary judgment in bankruptcy adversary proceedings. The 

Court of Appeals for the Sixth Circuit has described the standard to grant a motion for summary 

judgment as follows:

A court must grant summary judgment “if the pleadings, depositions, answers to 

interrogatories, and admissions on file, together with the affidavits, if any, show 

that there is no genuine issue as to any material fact and that the moving party is 

entitled to judgment as a matter of law.” Under this test, the moving party may 

discharge its burden by “pointing out to the [bankruptcy] court . . . that there is an 

absence of evidence to support the nonmoving party's case.” The nonmoving 

party cannot rest on its pleadings, but must identify specific facts supported by 

affidavits, or by depositions, answers to interrogatories, and admissions on file 

that show there is a genuine issue for trial. Although we must draw all inferences 

in favor of the nonmoving party, it must present significant and probative 

evidence in support of its complaint. “The mere existence of a scintilla of 

evidence in support of the [nonmoving party's] position will be insufficient; there 

must be evidence on which the jury could reasonably find for the [nonmoving 

party].”
No. 18-8017 In re Blasingame Page 5

Buckeye Ret. Co., LLC, v. Swegan (In re Swegan), 383 B.R. 646, 652–53 (B.A.P. 6th Cir. 2008) 

(quoting Gibson v. Gibson (In re Gibson), 219 B.R. 195, 198 (6th Cir. BAP 1998) (internal 

citations omitted) (alterations in Gibson)).

In the present case, CJV moved for summary judgment, asserting that there were no 

genuine issues of material fact for trial. During the hearing, the Debtors’ attorney stated:

On the material fact issue, I think we’re in agreement. There is no material fact. 

Both of the complaints that are attached to Mr. Akerly’s motion are substantially 

the same complaint. They both allege the same damage, denial of discharge, 

which was a distinctly post-petition event.

(Tr. of April 19, 2018 Hr’g 19:3-8, Adv.P. 14-00429 ECF No. 110.) The bankruptcy court 

agreed and found that there were no genuine issues of material fact for trial. The bankruptcy 

court concluded that the malpractice action belonged to the Debtors, not the bankruptcy estate, 

and entered judgment for the Debtors.

Section 541(a) of the Bankruptcy Code explains that, with few exceptions, the 

bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the 

commencement of the case.” It is axiomatic that “[p]roperty interests are created and defined by 

state law.” Butner v. United States, 440 U.S. 48, 55; 99 S. Ct. 914, (1979). It is equally as true 

that it is federal law, not state law, that determines when a debtor’s property interest becomes 

property of the bankruptcy estate.

State substantive law determines the “nature and extent” of causes of action, see 

Tyler v. DH Capital Mgmt., Inc., 736 F.3d 455, 461 (6th Cir. 2013), but federal 

bankruptcy law dictates when that property interest becomes property of the estate 

for purposes of § 541, see In re Terwilliger’s Catering Plus, Inc., 911 F.2d 1168, 

1172 (6th Cir. 1990).

Underhill, 579 F. App’x at 482.

In Underhill, the bankruptcy court and Bankruptcy Appellate Panel looked at the factual 

allegations giving rise to a cause of action for tortious interference with a contract and held that 

the cause of action was “sufficiently rooted in the pre-bankruptcy past” such that the cause of 

action was property of the bankruptcy estate. Underhill, 579 F. App’x at 481. However, the 

Sixth Circuit Court of Appeals reversed, holding that: “[p]re-petition conduct or facts alone will 
No. 18-8017 In re Blasingame Page 6

not ‘root’ a claim in the past; there must be a pre-petition violation. [Tyler] at 462. That is, a 

cause of action qualifies as bankruptcy estate property only if the claimant suffered a prepetition injury.” Underhill, 579 F. App’x at 482 (emphasis added) (citing Tyler, 736 F.3d at 462; 

In re Witko, 374 F.3d 1040, 1044 (11th Cir. 2004) (concluding that legal-malpractice claim 

belonged to the debtor because he “did not suffer any harm from the alleged legal malpractice 

prior to or contemporaneous with filing his bankruptcy petition”)).

In the present case, the bankruptcy court provided a detailed review of when a legal 

malpractice claim arises under Tennessee law. Both CJV’s and the Debtors’ malpractice 

complaints allege that the Malpractice Defendants were negligent in representing the Debtors 

both before and after the Debtors’ bankruptcy filing, and that the Debtors were injured by that 

negligence when their discharges in bankruptcy were denied. The bankruptcy court concluded 

that 

[n]either of the complaints describes a cause of action that could have been 

pursued by the Debtors prior to the filing of their bankruptcy petition. . . . The 

Debtors had no cause of action against the Malpractice Defendants at the 

commencement of their case, and their complaint is not administrative in nature. 

It is personal to them and is not property of the bankruptcy estate.

(Summary Judgment Order at 11.)

CJV argues that the bankruptcy court applied the incorrect standard of law in deciding 

when the cause of action arose. It asserts that the bankruptcy court should have looked at when 

the conduct leading to the injury occurred as opposed to when the injury accrued under state law. 

It argues that if the bankruptcy court had done so, it would have determined that “the damage of 

the denial of discharge is ‘sufficiently rooted’ in the pre-bankruptcy ‘conduct’ of the Malpractice 

Defendants.” (Appellant’s Br. at 11, BAP Case No. 18-8017 ECF 17.)

Underhill controls and binds the bankruptcy court and this Panel. In Underhill, the Sixth 

Circuit rejected the concept that pre-petition conduct alone was sufficient to determine that a 

claim was sufficiently rooted to be considered property of the estate. The Court of Appeals held 

that a pre-petition violation is required—“[t]hat is, a cause of action qualifies as bankruptcy 

estate property only if the claimant suffered a pre-petition injury.” Underhill, 579 F. App’x at 

482-83 (citation omitted). Here, the parties’ malpractice complaints assert the same injury, the 
No. 18-8017 In re Blasingame Page 7

denial of the Debtors’ discharges. Accordingly, there was no pre-petition injury, the malpractice 

cause of action arose post-petition and is not property of the bankruptcy estate.

In the alternative, CJV argues that “the Bankruptcy Court erred because [it] did not 

consider splitting the claims and stating that two separate and distinct causes of action exist, one 

in the pre-petition period and one in the post-petition period.” (Appellant’s Br. at 25, BAP Case 

No. 18-8017 ECF 17.) The Panel finds no merit in this argument. CJV’s complaint does not 

state a cause of action for pre-petition malpractice based upon a cognizable pre-petition injury. 

Rather, it states a cause of action that identifies the injury as the denial of the Debtors’ 

discharges. During oral argument, Appellant reiterated its position that the injury from the 

malpractice alleged in the complaint was the post-petition denial of discharge. The complaint 

does not state two different causes of action. As the Sixth Circuit explained in Underhill, 

because there was no pre-petition injury, the cause of action articulated in the complaint belongs 

to the Debtors and is not property of the bankruptcy estate. 

CONCLUSION

The Summary Judgment Order holding that the malpractice cause of action is not 

property of the bankruptcy estate and granting summary judgment to the Debtors is 

AFFIRMED.