Church Joint Venture v. Blasingame (In re Blasingame), Case No. 08-28289-L
| Decision Date | 09 May 2018 |
| Docket Number | Case No. 08-28289-L,Adv. Proc. No. 14-00429 |
| Parties | In re: EARL BENARD BLASINGAME and MARGARET GOOCH BLASINGAME, Debtors. Church Joint Venture, a limited partnership, on behalf of Edward L. Montedonico, Chapter 7 Trustee of the Bankruptcy Estate of Earl Benard Blasingame and Margaret Gooch Blasingame, Plaintiff, v. Earl Benard Blasingame, Margaret Gooch Blasingame, Martin A. Grusin, MAG Management Corp. d/b/a JG Law Firm, Tommy L. Fullen, and Law Office of Tommy L. Fullen, Defendants. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Tennessee |
The following is ORDERED:
BEFORE THE COURT is the Motion for Summary Judgment filed on behalf of Church Joint Venture, a limited partnership, acting derivatively on behalf of Edward L. Montedonico, Chapter 7 Trustee of the bankruptcy estates of Earl Benard Blasingame and Margaret Gooch Blasingame ("Plaintiff") (Dkt. No. 73). The Motion seeks summary judgment with respect to the question of whether causes of action for legal malpractice against Defendants Grusin, MAG Management Corp., Fullen, and Law Offices of Tommy L. Fullen (collectively the "Malpractice Defendants"), arising out of their representation of the Defendants Earl Benard Blasingame and Margaret Gooch Blasingame, belong exclusively to the Debtors' bankruptcy estates. The Plaintiff maintains that acts of legal malpractice occurring after the bankruptcy case was filed had their genesis in the pre-petition period, and thus constitute assets of the bankruptcy estate. In support of its motion, the Plaintiff relies upon the Original Complaint and the First Amended Original Complaint filed in Church Joint Venture, A Limited Partnership, on Behalf of Edward L. Montedonico, Chapter 7 Trustee v. Grusin, et al., Adv. Proc. No. 12-00454, Bankruptcy Court of the Western District of Tennessee (the "Malpractice Action"), and the Original Complaint filed in Blasingame v. Grusin, et al., No. 9231, Chancery Court of McNairy County, Tennessee (the "Debtors' Chancery Court Malpractice Action"). Each of the Defendants has filed a response in opposition to the Motion for Summary Judgment. Defendant Fullen relies upon the Answer filed by himself and Defendant Law Offices of Tommy L. Fullen in the Malpractice Action. The Plaintiff has filed replies to the Debtors' Response and the other Defendants' Responses. The Plaintiff and the Debtors have filed Supplemental Briefs.
The Original Complaint in the Malpractice Action was filed in the United States District Court for the Western District of Tennessee on February 13, 2012, and was referred to the Bankruptcy Court for the Western District of Tennessee pursuant to 28 U.S.C. § 157(a), and its standing order In re Jurisdiction and Proceedings Under the Bankruptcy Amendments Act of 1984,Misc. No. 81-30 (W.D. Tenn. July 10, 1984). A Motion for Withdrawal of the Reference was filed by Defendants Grusin and JG Law Firm on February 8, 2017, which is pending before the District Court. A Motion for Recusal of the undersigned bankruptcy judge was filed by Defendants Fullen and Law Offices of Tommy L. Fullen in the Malpractice Action on March 15, 2018. It is being held in abeyance pending the decision of the District Court on the withdrawal of the reference.
The present adversary proceeding seeks more narrow relief. It asks whether any causes of action for legal malpractice arising out of the filing and prosecution of the Debtors' bankruptcy case up until the disqualification of the Malpractice Defendants on July 19, 2011, are property of the Debtors' bankruptcy estate. Jurisdiction over a complaint arising under the Bankruptcy Code lies with the district court. 28 U.S.C. § 1334(b). Pursuant to authority granted to the district courts at 28 U.S.C. § 157(a), the district court for the Western District of Tennessee has referred to the bankruptcy judges of this district all cases arising under title 11 and all proceedings arising under title 11 or arising in or related to a case under title 11 in the standing order referenced above. The determination of what property constitutes property of the bankruptcy estate is one of the core duties of the bankruptcy judge. See 28 U.S.C. § 157(b)(2)(A); Stern v. Marshall, 564 U.S. 462, 473-75, 131 S. Ct. 2594, 2603, 180 L. Ed. 2d 475 (2011). Accordingly, the bankruptcy court has authority to enter its judgment concerning the Plaintiff's Motion for Summary Judgment subject only to appellate review under section 158 of title 28. 28 U.S.C. § 157(b)(1).
A motion for summary judgment may be granted if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a), incorporated at Fed. R. Bankr. P. 7056. "'Summary judgment is proper if the evidence, taken in the light most favorable to the nonmoving party, shows that there are nogenuine issues of material fact and that the moving party is entitled to judgment as a matter of law.'" Pazdzierz v. First American Title Ins. Co. (In re Pazdzierz), 718 F.3d. 582, 586, (6th Cir. 2013), quoting Mazur v. Young, 507 F.3d 1013, 1016 (6th Cir. 2007). The Court of Appeals for the Sixth Circuit has described the standards for granting summary judgment as follows:
A genuine issue of material fact exists when, "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). In deciding whether this burden has been met by the movant, this court views the evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). However, to survive summary judgment, the plaintiff must present affirmative evidence sufficient to show a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S. Ct. 2505. Therefore, "[i]f the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50, 106 S. Ct. 2505.
White v. Wyndham Vacation Ownership, Inc., 617 F.3d 472, 475-76 (6th Cir. 2010). When cross motions for summary judgment are filed, the court must consider each motion in turn to determine whether it may be granted. Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503, 506 (6th Cir. 2003); Taft Broadcasting Co. v. U.S., 929 F.2d 240, 248 (6th Cir. 1991).
In this case, the parties have agreed that the facts alleged in each of their complaints are substantially similar and may be taken as true for the purpose of analyzing when the cause or cause of action for legal malpractice accrued.
The Blasingame Defendants filed a petition for voluntary relief under Chapter 7 of the Bankruptcy Code on August 15, 2008. They were represented by the Fullen Defendants in consultation with the Grusin Defendants. On February 22, 2011, this court granted summary judgment to the Trustee on the question of whether the Debtors were entitled to discharge. "Memorandum on Plaintiffs' Motion for Partial Summary Judgment on Discharge Claims,"Montedonico v. Blasingame (In re Blasingame), Adv. Proc. No. 09-00482 (Bankr. W.D. Tenn.), Adv. Proc. Dkt. No. 117. The Debtors filed a motion to alter or amend judgment, which was supported by the Affidavits of Defendants Grusin and Fullen. This motion was denied by the court on May 9, 2011. On July 19, 2011, the Malpractice Defendants were disqualified from further representation of the Debtors pursuant to this court's "Order Granting Motion to Disqualify Counsel," Adv. Proc. No. 09-00482, Dkt. No. 187.
The Debtors hired new counsel, David J. Cocke, who filed a motion to alter or amend and for relief from the judgment denying the Debtors' discharges, which was granted. After an extended trial, the court again denied the Debtors' discharges on January 15, 2015. Adv. Proc. No. 09-00482, Dkt. No. 598.
The Plaintiff was granted derivative standing to pursue a malpractice action on behalf of the Trustee against the Malpractice Defendants on January 30, 2012. (Bankr. Dkt. No. 403). The Plaintiff filed the Original Complaint on February 13, 2012, and the First Amended Original Complaint on February 2, 2017. The Debtors filed their Original Complaint in the Chancery Court of McNairy County, Tennessee, on February 21, 2017. Both complaints describe substantially similar actions by the Malpractice Defendants that resulted in the denial of the Debtors' discharges. The parties agree that the facts alleged in the complaints are substantially similar that they may be taken as true for the purpose of analyzing the pending motion.
This complaint in this adversary proceeding asks the court to declare that the Debtors' causes of action for legal malpractice are property of their bankruptcy estates. The discussion thus must begin with section 541(a) of the Bankruptcy Code, which provides:
11 U.S.C. § 541(a). None of the exceptions set forth in subsections (b) or (c)(2) apply to the question of the ownership of a legal malpractice action. In Butner v. United States, the Supreme Court clarified:
Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding. Uniform treatment of property interests by both state and federal courts within a State serves to reduce uncertainty, to discourage forum shopping, and to prevent a party...
To continue reading
Request your trial