Bankruptcy Estate of Chien Hwa Leachman et al v. Harris et al

Filing 42

ORDER REGARDING 12/14/12 2:30 P.M. MOTION HEARING. Signed by Judge Edward M. Chen on 12/13/12. (bpf, COURT STAFF) (Filed on 12/13/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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For the Northern District of California

United States District Court

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BANKRUPTCY ESTATE OF CHIEN HWA
LEACHMAN, AKA CHIEN HWA WANG,
CHIEN HWA WANG-LEACHMAN by
ARTHUR BRUNWASSER, Authorized
Agent,

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No. C-12-4072 EMC

ORDER

Plaintiff,
v.
MICHELLE HARRIS, STEVEN STOLTZ
DBA STOLTZ FAMILY LAW PRACTICE,
DOES 1 THROUGH 20, INCLUSIVE,
Defendants.
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TO ALL PARTIES AND COUNSEL OF RECORD:

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The Court is in receipt of the parties’ briefs regarding Defendants’ motion to dismiss,

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scheduled for hearing on December 14, 2012 at 2:30pm. Having reviewed the briefs, the Court

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requests the parties be prepared to discuss at the hearing whether the ability of the court or trustee to

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appoint a non-disinterested representative (such as a creditor) on behalf of the estate in a Chapter 7

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context is limited to avoidance actions or extends to other third-party suits such as the action in the

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instant case. See 11 U.S.C. § 327(a) (requiring any such representative be "disinterested"); In re

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Parmetex, Inc., 199 F.3d 1029, 1031 (9th Cir. 1999) (“Although Defendants are correct that a trustee

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must generally file an avoidance action under Chapter 7, we hold that under these particular

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circumstances-where the trustee stipulated that the Creditors could sue on his behalf and the

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bankruptcy court approved that stipulation-the Creditors had standing to bring the suit.”); Estate of

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Spirtos v. One San Bernardino County Super. Ct. Case Numbered SPR 02211, 443 F.3d 1172, 1176

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(9th Cir. 2006) (holding that the plaintiff “as a creditor of the estate who did not receive

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authorization to sue from the trustee, lacks standing to assert a RICO claim on behalf of the estate,”

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thereby implying that, had she received such authorization, she would have had standing).

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The parties should also be prepared to discuss whether Arthur Brunwasser has a potential

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conflict of interest in this litigation given his representation of Chien Hwa Leachman prior to the

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involvement of Defendant the Stoltz Family Law Practice and the fact that Defendants allege that

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the sanctions that are at the heart of Plaintiff’s legal malpractice claim resulted from conduct that

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occurred during Mr. Brunwasser's representation of Ms. Leachman. See Defs.' Mot. to Dismiss,
Docket No. 10, at 4:26-6:10.

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For the Northern District of California

United States District Court

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Dated: December 13, 2012

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_________________________
EDWARD M. CHEN
United States District Judge

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