In Re Alexander

456 B.R. 298, 2011 Bankr. LEXIS 3075, 2011 WL 3626420
CourtUnited States Bankruptcy Court, W.D. Kentucky
DecidedAugust 17, 2011
Docket19-30212
StatusPublished

This text of 456 B.R. 298 (In Re Alexander) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Alexander, 456 B.R. 298, 2011 Bankr. LEXIS 3075, 2011 WL 3626420 (Ky. 2011).

Opinion

MEMORANDUM-OPINION

JOAN A. LLOYD, Bankruptcy Judge.

This matter came before the Court on the following Motions of Debtor Joe S. Alexander (“Debtor”): Motion to Compel Adversary Proceeding, Motion to Vacate Order of Abandonment, Motion to Compel United States Trustee’s Office to Provide Debtor Copy of Complaint Review, Motion to Appoint New Trustee, and Motion to Compel Adversary Proceeding. Each Motion came before the Court for hearing on July 21, 2011. The Debtor appeared pro se. Also appearing were counsel for Trustee, Mark Flener, counsel for attorney Scott Bachert and the United States Trustee. The Court considered the arguments of Debtor and counsel for the parties, as well as the written submissions of each party on the pending Motions.

PROCEDURAL AND FACTUAL BACKGROUND

On or about February 10, 2006, Debtor was named as a Defendant in a civil action in Barren Circuit Court filed by Mammoth Medical, Inc. (“Mammoth”).

On March 3, 2006, Debtor consulted with and retained attorney Scott Bachert (“Bac- *300 hert”) regarding legal representation and bankruptcy advise in an effort to stay the Barren Circuit Court civil action and to deal with tax issues and pending financial matters.

On or about April 17, 2006, Bachert filed the Voluntary Petition on behalf of Debtor seeking relief under Chapter 13 of the United States Bankruptcy Code. The civil matter pending in the Barren Circuit Court was stayed by the filing of the Voluntary Petition pursuant to 11 U.S.C. § 362.

On or about April 27, 2006, Debtor’s bankruptcy case was converted from a Chapter 13 proceeding to one under Chapter 11 of the United States Bankruptcy Code.

On or about May 16, 2006, Debtor filed a Motion to Sell Real Estate regarding real property he owned located at 602 Johnny’s Lane, Scottsville, Kentucky pursuant to 11 U.S.C. § 363. Debtor sought a sale by public auction. The home had been mortgaged in the amount of $117,876.69 to Monticello Banking Company.

On or about April 30, 2006, Mammoth filed a motion seeking relief from the automatic stay of 11 U.S.C. § 362 to proceed with its litigation against Debtor in the Barren Circuit Court. Debtor filed an Objection to that motion on June 9, 2006. Monticello Banking Company also objected to Mammoth’s Motion on June 26, 2006.

On or about June 14, 2006, Debtor filed a Motion to Convert his case from one under Chapter 11 of the Code to one under Chapter 7 of the United States Bankruptcy Code. That Motion was granted on June 16, 2006. Also on June 16, 2006, Mark Flener was appointed as the Chapter 7 Trustee on Debtor’s case.

On June 30, 2006, the Court entered an Order modifying the automatic stay to allow Mammoth to proceed with the Barren Circuit Court action against Debtor in order to liquidate its claim.

On October 5, 2006, Trustee Flener filed a Motion to Compel Sale of the Real Estate Tracts 1-4 of Debtor’s farm and house.

On November 15, 2007, the Court entered an Order allowing Bachert to withdraw as attorney for the Debtor.

On December 27, 2007, Debtor received his Order of Discharge in the Chapter 7 case.

On February 5, 2008, Flener, as Trustee of Debtor’s bankruptcy estate, filed a Motion to Abandon “alleged legal malpractice” claims against various counsel for alleged claims that arose prior to the Debtor’s bankruptcy filing and those that took place after the filing of the bankruptcy petition. No objections were filed to the Trustee’s Motion and the Court granted the Trustee’s Motion on February 25, 2008.

In June 2008, Debtor retained attorney Vanessa Cantly to proceed on the alleged malpractice claim against Bachert. Bac-hert entered into a “Tolling Agreement” with Cantly to give her an opportunity to investigate Debtor’s allegations. The Tolling Agreement ran for one year beginning September 23, 2008. A second Tolling Agreement was signed by Cantly and Bac-hert’s legal malpractice insurance carrier on September 22, 2009 for a period of six months. That time period expired in March 2010.

In November 2010, attorney Cantly informed Debtor that she did not have time to pursue the alleged malpractice action and returned his file to him.

LEGAL ANALYSIS

The Court will address each of the Debt- or’s Motions separately.

*301 A. Motion to Compel

On June 13, 2011, Debtor filed a Motion to Compel Trustee Flener to file an adversary proceeding against attorney Baehert. Debtor alleges that from June 6, 2006 through November 28, 2008 Trustee became aware of concealed pre-petition financial transactions by Baehert involving Debtor. Debtor contends that the automatic stay should not have been terminated and that Trustee should have pursued the matter against Baehert. Debtor claims that on or about October 7, 2007, Debtor advised Trustee fully of potential malpractice claims against Baehert, but that the Trustee abandoned such claims in 2008.

The record of this case clearly demonstrates that Debtor had an opportunity to pursue his alleged malpractice claim against attorney Baehert, that he had an opportunity to object to the Trustee’s abandonment of the claim and that he failed to diligently pursue his legal options. This claim is now barred as a matter of law.

Debtor claims that the actions of Bac-hert that allegedly gave rise to a malpractice claim occurred pre- and post-petition. Only those events that occurred pre-petition were property of the bankruptcy estate. The Trustee’s duty under 11 U.S.C. § 704 was to administer assets of the estate for the benefit of creditors. Thus, it was only the alleged actions that arose pre-petition that were within the province of the Trustee. All other claims or actions were solely the Debtor’s responsibility to pursue.

In any event, any malpractice claim against Baehert was barred by the Kentucky statute of limitations regarding malpractice claims. KRS 418.245 requires that any action for negligent professional services, “shall be brought within one (1) year from the date of the occurrence or from the date when the cause of action was, or reasonably should have been, discovered by the party that is injured.” The record clearly demonstrates that Debtor became aware of and/or discovered any alleged claim in November 2007. Any claim that the estate may have had would have expired in November 2008.

However, the abandonment of the claim by the Trustee re-vested the claim in the Debtor by Order of the Court dated February 25, 2008, at least eight full months before the statute of limitations ran on the claim.

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Related

In Re Brinley
347 B.R. 613 (W.D. Kentucky, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
456 B.R. 298, 2011 Bankr. LEXIS 3075, 2011 WL 3626420, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-alexander-kywb-2011.