Cantu v. Schmidt

After their bankruptcy was converted from a chapter 11 reorganization to a chapter 7 liquidation, appellants Marco and Roxanne Cantu sued their bankruptcy attorney Ellen Stone relating to her representation prior to the conversion of their case. The chapter 7 trustee, Michael Schmidt, intervened in the action against Stone contending that the claims belonged to the estate. The parties eventually settled the malpractice case and the funds were deposited into the court registry pending a determination whether the settlement proceeds belonged to the Cantus individually or to the bankruptcy estate. The bankruptcy court held that the proceeds belonged to the estate, and the district court affirmed. The Fifth Circuit agreed with the bankruptcy court's analysis that the estate suffered injuries from Stone’s representation that would have allowed it to assert claims against her prior to conversion, and affirmed. View "Cantu v. Schmidt" on Justia Law