Case Name: Delores A. KOLSCHEFSKY and Dwayne H. Kolschefsky, Appellants (Plaintiffs), v. Mark W. HARRIS and Harris Law Firm, P.C., Appellees (Defendants)
Court: Supreme Court of Wyoming
Jurisdiction: Wyoming
Decision Date: 2003-07-15
Citations: 72 P.3d 1144
Docket Number: No. 02-23
Parties: Delores A. KOLSCHEFSKY and Dwayne H. Kolschefsky, Appellants (Plaintiffs), v. Mark W. HARRIS and Harris Law Firm, P.C., Appellees (Defendants).
Judges: Before HILL, C.J., and GOLDEN, LEHMAN , and VOIGT, JJ., and BURKE, D.J.
Reporter: Pacific Reporter 3d
Volume: 72
Pages: 1144–1152

Head Matter:
2003 WY 86
Delores A. KOLSCHEFSKY and Dwayne H. Kolschefsky, Appellants (Plaintiffs), v. Mark W. HARRIS and Harris Law Firm, P.C., Appellees (Defendants).
No. 02-23.
Supreme Court of Wyoming.
July 15, 2003.
William R. Fix, Jackson, Wyoming, Representing Appellant.
V. Anthony Vehar of Vehar Law Offices, Evanston, Wyoming, Representing Appellee.
Before HILL, C.J., and GOLDEN, LEHMAN , and VOIGT, JJ., and BURKE, D.J.
Chief Justice at time of oral argument

Opinion:
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 bankruptey 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 Kolschef-skys' interest in the underlying medical malpractice claim was transferred by operation of law to their bankruptcy estate.
ISSUES
[¶2] Kolschefskys state numerous issues:
® Should the lower court have even considered the summary judgment motion which was untimely raised?
e Did the filing of the bankruptcy reject the fee agreement and, if so, what is the effect of the rejection?
e Did Harris re-affirm the fee agreement by his actions?
e Was Harris required to give notice in writing of his termination of the fee agreement?
e Do the Rules of Professional Responsibility have any applicability?
e Do the Rules Governing Contingency Fee Agreements have any applicability?
e Did Harris act as the Kolschefskys' attorney both before and after the filing of the bankruptey petition?
e 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?
e Did Harris continue to represent the clients even after the bankruptey 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?
FACTS
[¶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 bank-ruptey 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 Kol-schefskys 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 $298 for costs he advanced in the medical malpractice matter.
[¶6] The bankruptcy trustee appointed to administer Kolschefskys case filed his case report with the bankruptey 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 bank-ruptey court on March 15, 2000, and the bankruptey case was closed on March 22, 2000.
STANDARD OF REVIEW
[T7] 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, ¶ 18, 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 11 26, 42 P.8d 1018.
DISCUSSION
[¶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 P2d 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 bank-ruptey. That contract was executory in that both sides' performance obligations had yet to be fulfilled.
[¶10] Upon commencement of a bank-ruptey case, the bankruptcy trustee has authority to assume or reject the debtor's exec-utory contracts and leases. 11 U.S.C. § 865(a) (2000). In a Chapter 7 liquidation bankruptey, "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 § 8365(d)(1), and the rejection constitutes a breach of the contract relating back to the date the bankruptcy petition was filed. Id. at § 865(g).
[T11]l 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 lawyer ends onee a bankruptey petition is filed and the attorney/client contract is rejected or deemed rejected by the trustee. Banov v. Kennedy, 694 A2d 850, 859 (D.C.App.1997) (citing In re Taylor, 91 B.R. 302, 312 (Bnkr.D.N.J.1988)). 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. § S41i(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 (10 Cir.1986), and United States v. Whiting Pools, Inc., 462 U.S. 198, 204-05 n. 8, 103 S.Ct. 2309, 76 LEd.2d 515 (1983). The estate exists by operation of law and is not limited to that property disclosed by the debtors on their bankruptey schedules.
[¶14] Therefore, the Kolschefskys' medical malpractice claim against Mrs. Kolschef-sky's chiropractor became part of their bank-ruptey 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 bankruptey 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 bankruptey 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 bank-ruptey 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 bankruptey estate. Barowsky v. Serelson, 102 BR. 250, 253 (D.Wyo.1989), affd, 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.
CONCLUSION
[¶17] Because the Kolschefskys' bank-ruptey 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 malprac tice 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.