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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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 9 11 For the Northern District of California United States District Court 10 BANKRUPTCY ESTATE OF CHIEN HWA LEACHMAN, AKA CHIEN HWA WANG, CHIEN HWA WANG-LEACHMAN by ARTHUR BRUNWASSER, Authorized Agent, 12 13 14 15 No. C-12-4072 EMC ORDER Plaintiff, v. MICHELLE HARRIS, STEVEN STOLTZ DBA STOLTZ FAMILY LAW PRACTICE, DOES 1 THROUGH 20, INCLUSIVE, Defendants. ___________________________________/ 16 17 18 TO ALL PARTIES AND COUNSEL OF RECORD: 19 The Court is in receipt of the parties’ briefs regarding Defendants’ motion to dismiss, 20 scheduled for hearing on December 14, 2012 at 2:30pm. Having reviewed the briefs, the Court 21 requests the parties be prepared to discuss at the hearing whether the ability of the court or trustee to 22 appoint a non-disinterested representative (such as a creditor) on behalf of the estate in a Chapter 7 23 context is limited to avoidance actions or extends to other third-party suits such as the action in the 24 instant case. See 11 U.S.C. § 327(a) (requiring any such representative be "disinterested"); In re 25 Parmetex, Inc., 199 F.3d 1029, 1031 (9th Cir. 1999) (“Although Defendants are correct that a trustee 26 must generally file an avoidance action under Chapter 7, we hold that under these particular 27 circumstances-where the trustee stipulated that the Creditors could sue on his behalf and the 28 bankruptcy court approved that stipulation-the Creditors had standing to bring the suit.”); Estate of 1 Spirtos v. One San Bernardino County Super. Ct. Case Numbered SPR 02211, 443 F.3d 1172, 1176 2 (9th Cir. 2006) (holding that the plaintiff “as a creditor of the estate who did not receive 3 authorization to sue from the trustee, lacks standing to assert a RICO claim on behalf of the estate,” 4 thereby implying that, had she received such authorization, she would have had standing). 5 The parties should also be prepared to discuss whether Arthur Brunwasser has a potential 6 conflict of interest in this litigation given his representation of Chien Hwa Leachman prior to the 7 involvement of Defendant the Stoltz Family Law Practice and the fact that Defendants allege that 8 the sanctions that are at the heart of Plaintiff’s legal malpractice claim resulted from conduct that 9 occurred during Mr. Brunwasser's representation of Ms. Leachman. See Defs.' Mot. to Dismiss, Docket No. 10, at 4:26-6:10. 11 For the Northern District of California United States District Court 10 12 Dated: December 13, 2012 13 _________________________ EDWARD M. CHEN United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2

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