Holland & Knight, LLP v. Alan Deatley

MEMORANDUM

We affirm the district court’s decision granting summary judgment to law firm Holland & Knight on Alan DeAtley’s counterclaim for legal malpractice in this diversity suit based on Washington law.

DeAtley was judicially estopped from asserting the counterclaim. DeAtley had claimed an interest in his father’s paving business, Superior Asphalt, at the time he filed for Chapter 7 bankruptcy, yet he chose not to list it as an asset. This deprived DeAtley’s creditors of his claim of a share in the business, so that DeAtley’s debts were discharged without the creditors being able to pursue whatever interest DeAtley had.

DeAtley argues that it was unclear whether the interest which he admits he thought he had in Superior Asphalt was legally enforceable at the time he filed for bankruptcy. That was for his creditors and the bankruptcy court to decide, not him. The bankruptcy code requires scheduling all assets, including “potential” claims. 11 U.S.C. §§ 521 , 541. Failure to list an asset or interest on the bankruptcy schedules causes the debtor to be judicially estopped from pursuing a claim to recover that interest after discharge. Hamilton v. State Farm, Fire & Casualty…