Failure to disclose alleged cause of action for legal malpractice as an asset in Chapter 7 bankruptcy petition
Failure to list or disclose alleged cause of action for legal malpractice as an asset…
A plaintiff filed a Chapter 7 bankruptcy petition with the U.S. Bankruptcy Court and failed to list or disclose as an asset his alleged cause of action for legal malpractice against an attorney. Based upon the plaintiff’s failure to list or disclose this alleged cause of action in the bankruptcy case, he is barred from bringing the instant action because he lacks the legal capacity to sue the defendant attorney. This case ought to be dismissed.
In Whelan v. Longo, 23 AD3d 459, 460 [2d Dept 2005] affd, 7 NY3d 821 [2006], the Second Department held that the failure of a plaintiff to disclose a cause of action as an asset in a prior bankruptcy proceeding, the existence of which the plaintiff knew or should have known existed at the time, deprived the plaintiff of the legal capacity to sue subsequently on that cause of action. In the Whelan case, the Second Department opined that, based on the decision of the Supreme Court, Appellate Term, Ninth and Tenth Judicial Districts, in the underlying case, the plaintiff knew or should have known of the facts allegedly giving rise to the legal malpractice cause of action at the time she filed her bankruptcy petition.
In affirming, the NYS Court of Appeals (Whelan v. Longo, 7 NY3d 821, 822 [2006]) stated that:
Plaintiff knew or should have known of the facts allegedly giving rise to the legal malpractice cause of action at the time she filed her February 2002 bankruptcy petition (see Dynamics Corp. of Am. v. Marine Midland Bank–New York, 69 N.Y.2d 191, 513 N.Y.S.2d 91, 505 N.E.2d 601 (1987)). Thus, plaintiff’s failure to disclose that cause of action in her bankruptcy petition deprived her of the legal capacity to sue in this action.
