IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

November 15, 2005 Session

KATHRYN HEADRICK v. BRADLEY COUNTY MEMORIAL HOSPITAL,

ET AL.

 Appeal from the Circuit Court for Bradley County

No. V-99-380 Lawrence Puckett, Judge

No. E2005-00925-COA-R3-CV - FILED JANUARY 31, 2006

In this appeal, the issue presented is whether a party has standing to pursue a personal injury claim

in state court that accrued after the filing of the party’s bankruptcy petition and before the closing

of the bankruptcy case. Ms. Headrick filed a Chapter 13 bankruptcy petition. While the bankruptcy

case was pending, Ms. Headrick was involved in a single car accident and was treated for her injuries

by Dr. Daniel Johnson at Bradley County Memorial Hospital. Subsequently, she converted her

Chapter 13 bankruptcy case to a Chapter 7 bankruptcy case. While the Chapter 7 case was still

pending, she discovered that she suffered a hip fracture in the car accident which she alleges that Dr.

Johnson and the Hospital failed to timely diagnose and treat. Thereafter, Ms. Headrick received a

discharge in bankruptcy and the bankruptcy case was closed. Ms. Headrick then filed a medical

negligence case against Dr. Johnson and Bradley Memorial Hospital. The Defendants filed a motion

for summary judgment asserting that Ms. Headrick did not have standing to bring the case. The trial

court agreed and dismissed the case. After review of the record and applicable authorities, we hold

that Ms. Headrick’s post-bankruptcy cause of action is not part of the bankruptcy estate and

therefore, as a matter of law Ms. Headrick did have standing to bring the lawsuit. The trial court’s

decision is reversed.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed; Cause 

Remanded

SHARON G. LEE, J., delivered the opinion of the court, in which HERSCHEL P. FRANKS, P.J., and

CHARLES D. SUSANO, JR., J., joined.

Shelley I. Stiles, Brentwood, Tennessee, and Robert J. Shockey, Nashville, Tennessee, for the

appellant, Kathryn Headrick.

Arthur P. Brock and Timothy J. Millirons, Chattanooga, Tennessee, for the appellee, Daniel Johnson,

M.D., individually and d/b/a Southeast Tennessee Orthopaedics.

Sue E. Scruggs and Blake F. Murchison, Chattanooga, Tennessee, for the appellee, Bradley County

Memorial Hospital. 
 In a Chapter 13 bankruptcy case, a portion of a debtors’ future earnings is collected by a trustee and paid to

1

creditors. A Chapter 13 debtor does not receive a discharge of debts, but is allowed to extend or reduce the debt load

through a plan of rehabilitation. In a Chapter 7 bankruptcy case, the trustee collects and liquidates a debtor’s assets and

the debtor receives a discharge of debts.

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OPINION

I.

This appeal involves a claim for medical negligence intertwined with a bankruptcy case. On

January 10, 1997, Kathryn Headrick filed a Chapter 13 bankruptcy petition in the United States

Bankruptcy Court for the Eastern District of Tennessee. In the schedule of personal property

attached to her petition, Ms. Headrick stated that there were no unliquidated claims of any nature.

On December 4, 1997, Ms. Headrick was injured in a one-car accident. She was treated at Bradley

County Memorial Hospital (“the Hospital”) by Dr. Daniel Johnson of Southeast Tennessee

Orthopaedics for injuries that included a broken arm and a broken leg. On March 3, 1998, Ms.

Headrick filed a notice with the bankruptcy court to convert her Chapter 13 case to a Chapter 7 case.1

She listed Dr. Johnson and the Hospital as creditors. On April 24, 1998, a bankruptcy creditors

meeting was held in the case which was described as being a “no assets” case. On either April 30,

1998, or May 1, 1998, Ms. Headrick discovered that she had a fractured hip that she claimed Dr.

Johnson and the Hospital failed to properly diagnose and treat following her car accident in

December of 1997. Ms. Headrick did not list or otherwise identify the potential cause of action

against Dr. Johnson or the Hospital as an asset in any of the bankruptcy schedules. She did not

amend her bankruptcy filings to disclose the potential medical negligence claim. On November 24,

1998, her bankruptcy trustee filed a report stating that there was no property available for distribution

from the estate over and above that exempt by law. On November 30, 1998, the bankruptcy court

entered an order discharging Ms. Headrick of her debts. On March 17, 1999, a final decree was

entered in the Chapter 7 bankruptcy case and the case was closed. The next month, on April 28,

1999, Ms. Headrick filed suit against Dr. Johnson and the Hospital alleging that they had negligently

failed to diagnose and treat her hip fracture and that she had been damaged by this omission. Dr.

Johnson and the Hospital filed a motion for summary judgement seeking a dismissal of Ms.

Headrick’s lawsuit on the basis of the bankruptcy filings. The trial court, relying on this Court’s

opinion in Tangwall v. Stapleton, No. E2001-02121-COA-R3-CV, 2002 WL 1723692, (Tenn. Ct.

App. E.S., filed July 25, 2002) no appl. perm. filed, determined that once Ms. Headrick filed for

bankruptcy, her cause of action against Dr. Johnson and the Hospital became a part of the bankruptcy

estate, and the trustee in bankruptcy became the proper party to bring these actions. Concluding that

at the time Ms. Headrick filed the lawsuit she did not have legal standing to bring the case, the trial

court dismissed the case as to Ms. Headrick, but not as to the bankruptcy trustee. Ms. Headrick

appeals and seeks our review of the trial court’s decision. 
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II.

The sole issue we address in this appeal is whether the trial court erred in dismissing Ms.

Headrick’s lawsuit by summary judgment upon grounds that Ms. Headrick lacked standing to pursue

the cause of action because it was property of her bankruptcy estate and was not disclosed to her

bankruptcy trustee during the pendency of her bankruptcy. 

III.

Summary judgments enable courts to conclude cases that can and should be resolved on

dispositive legal issues. See Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993); Airport Props. Ltd.

v. Gulf Coast Dev., Inc., 900 S.W.2d 695, 697 (Tenn. Ct. App.1995). They are appropriate only

when the facts material to the dispositive legal issues are undisputed. Accordingly, they should not

be used to resolve factual disputes or to determine the factual inferences that should be drawn from

the evidence when those inferences are in dispute. See Bellamy v. Federal Express Corp., 749

S.W.2d 31, 33 (Tenn. 1988).

To be entitled to a summary judgment, the moving party must demonstrate that no genuine

issues of material fact exist and that he or she is entitled to judgment as a matter of law. See Tenn.

R. Civ. P. 56.04; Byrd v. Hall, 847 S.W.2d at 210; Planet Rock, Inc. v. Regis Ins. Co., 6 S.W.3d 484,

490 (Tenn. Ct. App.1999). A summary judgment should not be granted, however, when a genuine

dispute exists with regard to any material fact. Seavers v. Methodist Med. Ctr., 9 S.W.3d 86, 97

(Tenn. 1999); Hogins v. Ross, 988 S.W.2d 685, 689 (Tenn. Ct. App. 1998). Our task on appeal is

to review the record to determine whether the requirements for granting summary judgment have

been met. See Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn. 1997); Aghili v. Saadatnejadi, 958

S.W.2d 784, 787 (Tenn. Ct. App. 1997). Tenn. R. Civ. P. 56.04 provides that summary judgment

is appropriate where: (1) there is no genuine issue with regard to the material facts relevant to the

claim or defense contained in the motion, see Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993); and

(2) the moving party is entitled to a judgment as a matter of law on the undisputed facts. See

Anderson v. Standard Register Co., 857 S.W.2d 555, 559 (Tenn. 1993). A party seeking a summary

judgment must demonstrate the absence of any genuine and material factual issues. Byrd v. Hall,

847 S.W.2d 208, 214 (Tenn. 1993). 

When the party seeking summary judgment makes a properly supported motion, the burden

shifts to the non-moving party to set forth specific facts establishing the existence of disputed,

material facts which must be resolved by the trier of fact. See Byrd v. Hall, 847 S.W.2d at 215.

Robinson v. Omer, 952 S.W.2d 423, 426 (Tenn. 1997). The non-moving party may not simply rest

upon the pleadings, but must offer proof by affidavits or other discovery materials (depositions,

answers to interrogatories, and admissions on file) provided by Rule 56.06 showing that there is a

genuine issue for trial. If the non-moving party does not so respond, then summary judgment, if

appropriate, shall be entered against the non-moving party. Tenn. R. Civ. P. 56.06.
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Summary judgments do not enjoy a presumption of correctness on appeal. See Nelson v.

Martin, 958 S.W.2d 643, 646 (Tenn. 1997); City of Tullahoma v. Bedford County, 938 S.W.2d 408,

412 (Tenn. 1997). Accordingly, when we review a summary judgment, we view all the evidence in

the light most favorable to the non-movant, and we resolve all factual inferencesin the non-movant's

favor. See Luther v. Compton, 5 S.W.3d 635, 639 (Tenn. 1999); Muhlheim v. Knox County Bd. of

Educ., 2 S.W.3d 927, 929 (Tenn. 1999). A summary judgment will be upheld only when the

undisputed facts reasonably support one conclusion - that the moving party is entitled to a judgment

as a matter of law. See White v. Lawrence, 975 S.W.2d 525, 529 (Tenn. 1998); McCall v. Wilder,

913 S.W.2d 150, 153 (Tenn. 1995).

IV.

The trial court’s order dismissing Ms. Headrick’s case provided as follows:

Defendant’s Motions for Summary Judgment are controlled by the

case of Tangwell v. Stapleton et al, LEXIS 2002 Tenn. App. LEXIS

542, and the opinion authored by Judge Franks. Although that case

involved a cause of action which had accrued before the filing of the

plaintiff’s Bankruptcy Petition and the case here does not, the

Bankruptcy Code burdens the petitioner with a continuing

responsibility to disclose to the trustee, during the pendency of the

Bankruptcy Proceedings, a personal injury malpractice cause of action

she realizes has accrued to her during the course of the Bankruptcy.

[FN1 U.S.C. § 541(a)(7).] Under the Bankruptcy Code, plaintiff’s

cause of action against these defendants became a part of the Estate

in Bankruptcy and theTrustee in Bankruptcy became the proper party

to bring these actions. [FN2 11 U.S.C. § 554(c) and (d).] Which, as

Judge Franks opined, means that the bankrupt plaintiff loses legal

standing to bring them. [FN3 Tangwell v. Stapleton] 

Therefore, the motions of the defendants are granted and the case is

dismissed with prejudice as to Kathryn Headrick, but not as to the

Trustee in Bankruptcy.

Under the United States Bankruptcy Code, when a debtor files a bankruptcy petition, a

bankruptcy estate is created which includes all of the debtor’s legal or equitable interests in property

as of the commencement of the case. 11 U.S.C. §541 (a)(1). These interests in property include

causes of action. Bauer v. Commerce Union Bank, 859 F.2d 438, 441 (6 Cir. 1988). Upon the th

appointment of a trustee in bankruptcy, the trustee succeeds to all causes of action formerly held by

the debtor, and the debtor lacks standing to pursue those causes of action. 11 U.S.C. §323(a); Bowie

v. Rose Shanis Financial Services, LLC, 862 A.2d. 1102 (Md. Ct. App. 2004); Vucak v. City of
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Portland, 96 P.3d 362 (Or. Ct. App. 2004). Property that the debtor schedules in the petition that

has not been administered when the court closes the case is abandoned to the debtor. 11 U.S.C.

§554(c). But estate property which is not administered as part of the bankruptcy case and which is

not abandoned to the debtor under section 554 remains property of the estate.

As we have noted, Ms. Headrick’s bankruptcy was converted from a Chapter 13 case to a

Chapter 7 case on March 3, 1998. The Bankruptcy Code, 11 U.S.C. §348(a), provides:

Conversion of a case from a case under one chapter of this title to a

case under another chapter of this title constitutes an order for relief

under the chapter to which the case is converted, but, ... does not

affect a change in the date of the filing of the petition, the

commencement of the case, or the order of relief.

Subsection (f)(1)(A) of § 348 further provides that when a case under chapter 13 is converted to a

case under another chapter such as Chapter 7:

[P]roperty of the estate in the converted case shall consist of property

of the estate, as of the date of the filing of the petition, that remains

in the possession of or is under the control of the debtor on the date

of conversion. 

(emphasis added).

 Accordingly, when a case is converted from Chapter 13 to Chapter 7, we must look to the

date of the filing of the Chapter 13 case to identify the property of the Chapter 7 estate as defined

by §541. See also In re Peters, 44 B.R. 68, 70 (Bankr. M.D. Tenn. 1984). Ms. Headrick filed her

Chapter 13 case on January 10, 1997. Her cause of action originated with an injury that occurred

on December 4, 1997 - approximately 11 months after her case commenced under Chapter 13. She

did not discover her cause of action until late April or early May of 1998 - approximately 16 months

after her case commenced under Chapter 13. Thus, Ms. Headrick’s cause of action had not arisen

when she filed her Chapter 13 petition and therefore, pursuant to §348, it did not become property

of the Chapter 7 bankruptcy estate. 

The trial court indicates that it relied upon Tangwall v. Stapleton, et al in reaching its

decision. In Tangwall, we affirmed the trial court’s ruling that the plaintiff did not have standing

to assert a cause of action that he had failed to set forth in his bankruptcy schedules and that the

cause of action remained a part of the plaintiff’s bankruptcy estate under control of the bankruptcy

trustee. However, that case is readily distinguishable from the present matter because under the facts

in Tangwall the cause of action at issue accrued before the debtor filed his bankruptcy petition.
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Although in the case now before us the trial court acknowledged this distinction, the trial court

determined that 11 U.S.C. § 541(a)(7) imposed a duty upon Ms. Headrick to disclose a cause of

action accruing during the pendency of her bankruptcy case. We respectfully disagree.

11 U.S.C. §541(a)(7) provides that “[any] interest in property that the estate acquires after

the commencement of the case” is included in the property of the bankruptcy estate. (emphasis

added). Property acquired by the estate should not be confused with property acquired by the debtor.

§ 541(a)(7) applies only to property that is acquired post-petition by the bankruptcy estate. It does

not apply to property that is acquired post-petition by the debtor. In re Doemling, 127 B.R. 954, 956

(W.D. Penn. 1991). See also Casey v. Hochman, M.D., 963 F.2d 1347 (10 Cir.1982). Ms. th

Headrick’s cause of action was not acquired by the estate, but by her individually as a result of an

injury to her person, and any recovery she might realize as a result of her lawsuit would be to

compensate for that personal injury, not to compensate for an injury to the estate. §541(a)(7) does

not bring Ms. Headrick’s cause of action within the bankruptcy estate. 

The appellees cite Stanley v. Sherwin-Williams Co., 156 B.R. 25 (W.D. Va. 1993) in support

of the trial court’s ruling in this matter. In Stanley, the debtor, a painting contractor, filed a petition

under Chapter 11 of the Bankruptcy Code. Thereafter, a cause of action arose in favor of the debtors

against the Sherwin-Williams Company for interference with contractual relations. The debtor’s

bankruptcy case then converted to Chapter 7 and the debtor subsequently received a discharge of his

debts under that chapter. After receiving his discharge, the debtor filed suit against SherwinWilliams. At no time did the debtor amend his bankruptcy schedule of assets to include the cause

of action. The Court ruled that because the debtor’s cause of action existed prior to his discharge,

it was property of the bankruptcy estate. The Court determined that the property remained property

of the estate because it had neither been formally abandoned nor abandoned by operation of law as

scheduled property. Accordingly, the Court held that the debtor lacked standing because the cause

of action was not his to assert.

In their brief, the appellees state that we relied on Stanley in our opinion in Tangwell. While

we did cite Stanley in the latter case, we did so only for the proposition that “[i]f a cause of action

is not formally scheduled, it will remain property of the estate, having been neither administered nor

abandoned by the trustee, and the debtor will have no standing to assert it.” Tangwell, id. at *7. We

did not rely upon Stanley for the proposition that a debtor lacks standing to assert an unscheduled

cause of action acquired post-petition, and we do not agree with that holding.

Our review of applicable case law reveals a split of authority with regard to the issue of

whether a debtor’s cause of action that arises post-petition is property of the bankruptcy estate, as

discussed in Charts v. Nationwide Mutual Insurance Co., 300 B.R. 552 (D. Conn. 2003). In Charts,

the plaintiffs husband and wife filed a Chapter 7 petition. A few months thereafter and prior to their

discharge, husband, who operated an insurance agency, entered into an agency agreement with the

defendant. Subsequently, the defendant cancelled the agreement, giving rise to claims in favor of
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the plaintiffs. As in the matter sub judice, the plaintiffs failed to disclose these claims during the

pendency of their bankruptcy, and in their motion for summary judgment, the defendants argued that

the claims constituted property of the estate and therefore, the plaintiffs could not assert them for

lack of standing. Upon review of a recommended ruling that the plaintiffs’ claims should be deemed

to be estate property, the Court noted that various cases, among them Stanley v. Sherwin-Williams

Co., had addressed the issue and had reached disparate conclusions:

In the recommended ruling on the original motion for

summary judgment, the Court relied on Correll v. Equifax

Check Servs., Inc., 234 B.R. 8 (D. Conn. 1997), in which the

Court held that pursuant to § 541(a)(7), a Fair Debt Collection

Act cause of action arising out of dunning letters received by

the debtor after the bankruptcy petition was filed constituted

property of the estate. See Correll, 234 B.R. at 10. Other

courts have reached similar conclusions based on § 541(a)(7).

See Polvay, 1997 WL 188127, at *2 (“Causes of action

arising after the debtor files for bankruptcy generally become

part of the estate.”); Stanley v. Sherwin-Williams Co., 156

B.R. 25 (W.D.Va. 1993)(debtor did not have standing to

maintain cause of action for interference of contractual

relations which arose prior to the discharge of his estate); In

re Griseuk, 165 B.R. 956, 957-59(Bankr.M.D.Fl.

1994)(holding that personal injury action arising during the

pendency of the bankruptcy proceedings was property of the

estate); DeLarco v. DeWitt, 136 A.D.2d 406, 408, 527

N.Y.S.2d 615 (N.Y. App. Div. 1988) (“Upon the filing of a

voluntary bankruptcy petition, all property which a debtor

owns or subsequently acquires, including a cause of action,

vests in the bankruptcy estate.”) However, other courts have

held that post-petition, pre-discharge causes of action under

similar circumstances are property of the debtor. See In re

Durrett, 187 B.R. 954, 413, 417-19 (Bankr.D.N.H. 1995)

(personal injury action arising post-petition did not become

part of the bankruptcy estate); In re Doemling, 127 B.R. 954,

955-56 (W.D.Pa. 1991) (tort claim arising out of post-petition

automobile accident was property of the debtor, rather the

estate).

Taken together, these cases indicate that there may be no

bright-line test for whether a cause of action that accrues postpetition will be included as part of the bankruptcy estate.

Rather, in making such a determination, the Court should

consider whether the cause of action “is sufficiently rooted in
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the pre-bankruptcy past and so little entangled with the

bankrupt’s ability to make an unencumbered fresh start.”

Doemling, 127 B.R. at 957 (citing Segal v. Rochelle, 382 U.S.

375, 86 S.Ct. 511, 15 L.Ed.2d 428 (1966) and noting that it is

still controlling despite the revision of the bankruptcy code in

1978) (internal quotations omitted).

(emphasis added).

The Court in Charts held that the plaintiffs did not lack standing to pursue their claims

because the claims “did not involve matters that could be traced to the plaintiffs’ pre-petition

conduct” and the agreement out of which the claims arose “was not ‘rooted in the debtor’s prebankruptcy past’ (which ended with the filing of the petition...).” Charts, id. at 558.

5-541 Collier on Bankruptcy ¶541.03 (Alan N. Resnick & Henry J. Sommer eds., 15 ed., th

2005) provides as follows regarding whether property acquired by the debtor post-petition becomes

property of the bankruptcy estate:

As a general rule, the estate is normally comprised only of

property interests belonging to the debtor at the time the

petition is filed. In general, property of an individual not then

owned but subsequently acquired by the debtor does not

become property of the estate, but rather, becomes the

debtor’s personal property, clear of all claims that are

ultimately discharged in the bankruptcy case.

Under the statute, “any interest in property that the estate

acquires after the commencement of the case” is included in

“property of the estate” by section 541(a)(7). By obvious

implication, property acquired postpetition by the individual

debtor is usually not property of the estate. However, a case

in the United States Supreme Court [Segal v. Rochelle, 382

U.S. 375 (1966)] concluded that when postpetition property

“is [so] rooted in the pre-bankruptcy past and so little

entangled with the bankrupt’s ability to make an

unencumbered fresh start [then] it should be” property of the

estate.

(emphasis in original).

The exception noted by Collier to the general rule that after acquired property of a debtor

does not constitute property of the bankruptcy estate is the same exception noted by the Court in

Charts deriving from the Supreme Court’s opinion in Segal. And even this exception has been
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rejected in the recent case of In re Holstein, 321 B.R. 229,238 (N.D. Ill. 2005) (finding that the

debtor in Segal had an interest in the subject asset when the bankruptcy was filed and that Segal

“does not expand estate property to include legal or equitable interests a debtor acquires postpetition, as long as a clever trustee can tie those interests to the ‘pre-bankruptcy past’”.) 

In the present case, the cause of action asserted by Ms. Headrick is not rooted in her “prebankruptcy past” and so, even under that exception, there is no basis for finding that her cause of

action is property of her bankruptcy estate. Therefore, her failure to disclose the cause of action

during the pendency of her bankruptcy should not stop her from asserting it at present. See Farmer

v. Taco Bell Corporation 242 B.R.435, 441 (W.D. Tenn. 1999).

V.

For the foregoing reasons, we reverse the judgment of the trial court and remand for further

action consistent with this opinion. Costs on appeal are adjudged against the appellees, Daniel

Johnson, M.D., individually and d/b/a/ Southeast Tennessee Orthopaedics, and Bradley County

Memorial Hospital.

_________________________________________

SHARON G. LEE, JUDGE