Gingold v. Allen, No. A05A0338.
| Decision Date | 06 April 2005 |
| Docket Number | No. A05A0338. |
| Citation | 272 Ga. App. 653,613 S.E.2d 173 |
| Parties | GINGOLD et al. v. ALLEN. |
| Court | Georgia Court of Appeals |
T. Bart Gary, Erica S. Jansen, Freeman Mathis & Gary, Atlanta, for Appellant.
Jones & Bell, Linley Jones, Atlanta, for Appellee.
Timothy L. Allen sued his former bankruptcy attorney, Ira D. Gingold, for legal malpractice claiming that Gingold's negligent advice caused Allen's arrest on felony theft by deception charges. Gingold denied liability and moved for judgment on the pleadings contending that the trustee of Allen's Chapter 7 bankruptcy was the real party in interest to prosecute the malpractice action, and seeking dismissal or a ruling that the trustee be substituted for Allen as the proper plaintiff. The trial court denied the motion and found that Allen was the real party in interest and the proper plaintiff. We granted Gingold's application for an interlocutory appeal, and for the following reasons we reverse.
At issue is whether the malpractice claim belongs to Allen, making him the real party in interest to prosecute the claim under OCGA § 9-11-17(a), or whether the claim is property of his Chapter 7 bankruptcy estate, making the bankruptcy trustee the real party in interest. When Allen's bankruptcy petition was filed on April 30, 2001, this created an estate broadly defined under federal law as the debtor's "legal or equitable interests ... in property as of the commencement of the case." 11 USC § 541(a)(1); Kittle v. ConAgra Poultry Co., 247 Ga.App. 102, 105, 543 S.E.2d 411 (2000). This broad definition of property included any legal malpractice cause of action Allen had which accrued prior to the commencement of the bankruptcy case. United Technologies Corp. v. Gaines, 225 Ga.App. 191, 192, 483 S.E.2d 357 (1997); Denis v. Delta Air Lines, 248 Ga.App. 377, 379, 546 S.E.2d 805 (2001). In a Chapter 7 bankruptcy proceeding, the trustee is appointed by the bankruptcy court and charged with the duty to liquidate property in the debtor's estate to satisfy creditor's claims. Johnson v. Alvarez (In re Alvarez), 224 F.3d 1273, 1277, n. 9 (11th Cir.2000). Accordingly, if the legal malpractice cause of action accrued prior to the April 30, 2001 commencement of the bankruptcy case, then it is property of the bankruptcy estate and the trustee is the real party in interest. Witko v. Menotte (In re Witko), 374 F.3d 1040, 1042-1044 (11th Cir.2004); Johnson, 224 F.3d at 1278, n. 12. Although federal law determines when a debtor's interest in property is property of the bankruptcy estate under 11 USC § 541, the property interests at issue are created and defined by state law, so state law controls the issue of when the present malpractice cause of action accrued. Butner v. United States, 440 U.S. 48, 54-55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979); Witko, 374 F.3d at 1043. It follows that, in order to determine whether the cause of action belongs to the bankruptcy trustee rather than to Allen, the more precise issue is whether under state law the action accrued prior to the April 30, 2001 commencement of the bankruptcy case.
The legal malpractice complaint alleges that, while acting as Allen's bankruptcy attorney prior to commencement of the bankruptcy case, Gingold negligently advised Allen to stop payment on two outstanding checks to creditors; that Allen relied on this advice and stopped payment on the checks; that these actions established probable cause for his arrest on felony charges of theft by deception; and that he was subsequently arrested and jailed on felony theft by deception warrants obtained by the creditors. Gingold denied that he advised Allen to stop payment on the checks. The record shows that, although Allen was not arrested and jailed on the warrants until after the discharge order was entered in the bankruptcy case on August 20, 2001, the alleged negligent advice to stop payment on the checks; the actual stop payment by Allen; and the felony arrest warrants obtained by the creditors after the stop payment, all occurred prior to the April 30, 2001 commencement of the bankruptcy case.
On these facts, we conclude that Allen's legal malpractice cause of action accrued prior to the April 30, 2001 commencement of the bankruptcy case. Whether sounding in contract or tort, a legal malpractice action accrues and the applicable statute of limitation commences to run from the date that the alleged wrongful act breached the...
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...debtor's motive in failing to list the claim, are likewise unavailing. Further, unlike the plaintiff/debtor in Gingold v. Allen, 272 Ga.App. 653, 654, 613 S.E.2d 173 (2005), which Presiding Judge Miller cites in her separate dissent, Richards has already filed one motion to reopen in the ba......
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