Osborne v. Tulis

13-4402
Osborne v. Tulis
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY ORDER@). A PARTY CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
New York, on the 19th day of February, two thousand fifteen.
PRESENT:
BARRINGTON D. PARKER,
PETER W. HALL,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
_____________________________________
Patrisha S. Osborne, George R. Osborne,
Debtors-Appellants,
v. 13-4402
Mark S. Tulis,
Trustee-Appellee.
_____________________________________
FOR DEBTORS-APPELLANTS: Patrisha S. and George R. Osborne, pro se,
Elizaville, NY
FOR TRUSTEE-APPELLEE: Stuart E. Kahan, Oxman Tulis Kirkpatrick
Whyatt & Geiger, LLP, White Plains, NY
Appeal from a judgment of the United States District Court for the Southern District of
New York (Briccetti, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Pro se appellants Patrisha and George Osborne appeal from the district court’s judgment
affirming bankruptcy court orders reopening proceedings1 and denying the Osbornes’ motions for
reconsideration and dismissal.
Debtors centrally challenge the bankruptcy court’s order of December 13, 2012, granting
the trustee’s motion to reopen the Chapter 7 bankruptcy estate so as to administer debtors’
malpractice claim against their former attorneys. Debtors’ malpractice claim alleges they were
harmed by their former attorneys’ failure to obtain an extension of the automatic stay of the
foreclosure of their farm during a Chapter 11 proceeding which was initiated on August 8, 2011,
and dismissed, upon the debtors’ motion, on December 16, 2011. The order denying the
extension of the stay was entered on September 20, 2011. The time to appeal that ruling expired
on October 4, 2011. See Fed. R. Bankr. P. 8002(a)(1); Fed. R. Bankr. P. 8002(d)(2)(a). The
Chapter 7 proceeding on appeal in this case was jointly commenced by the debtors on November
9, 2011. A foreclosure sale of debtors’ farm took place on January 26, 2012.
A debtor’s cause of action is “property” that automatically becomes part of a Chapter 7
estate on the commencement of the Chapter 7 proceeding if that cause of action had already
accrued at the time of filing. See Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d 116, 122 (2d
Cir. 2008) (per curiam). Although debtors’ home was not sold until January 26, 2012, New York
1
We agree with the parties that the court has jurisdiction to hear an appeal from the order reopening the Chapter 7
bankruptcy estate on this record. See Fed. R. Bankr. P. 8002(b)(1)(D) (extending the time to appeal where a timely
motion for reconsideration is filed).
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law governing legal malpractice makes clear that the accrual of a legal malpractice claim occurs, at
the latest, at the time the attorney’s mistakes become irrevocable, rather than when the first
foreseeable consequence of the botched representation comes to fruition. See McCoy v. Feinman,
99 N.Y.2d 295, 305 (2002) (malpractice action for negligent drafting of a stipulation accrued “at
the latest, on the day the judgment incorporating the stipulation was filed in the county clerk’s
office”); Zorn v. Gilbert, 8 N.Y.3d 933, 934 (2007) (mem.) (“Plaintiff’s cause of action accrued, at
the latest . . . when a judgment of divorce was entered in the underlying action.”); Americana
Capital Corp. v. Nardella, 946 N.Y.S.2d 470, 470–71 (App. Div. 1st 2012) (malpractice in
drafting security agreement accrued upon execution of agreement rather than at time plaintiff
sought to enforce the agreement); Landow v. Snow Becker Krauss, P.C., 975 N.Y.S.2d 119, 120
(App. Div. 2d 2013) (malpractice action accrued on the date of faulty tax advice rather than on date
favorable tax status was lost); Chi. Title Ins. Co. v. Mazula, 849 N.Y.S.2d 333, 334 (App. Div. 3d
2008) (malpractice claim in adding a nonexistent right of way to deed accrued at the time of the
deed’s execution rather than upon use of the right of way); 5 Awnings Plus, Inc. v. Moses Ins. Grp.,
Inc., 970 N.Y.S.2d 158, 159–60 (App. Div. 4th 2013) (malpractice action accrued upon execution
of agreement assigning plaintiff a debt rather than on date collection was sought). Because the
Osbornes bring suit over negligent advice in connection with a motion that was denied in
September 2011 (and which would have to have been appealed in October 2011), their cause of
action accrued prior to the filing of their November 2011 Chapter 7 petition, and the malpractice
claim was an asset of the Chapter 7 estate. The trustee appropriately reopened the Chapter 7
proceeding to administer it.
Debtors’ alternative argument that the trustee abandoned the malpractice cause of action is
without merit. “[A] trustee’s intent to abandon an asset must be clear and unequivocal.”
3
Chartschlaa, 538 F.3d at 123. No such clear abandonment occurred here. Indeed, the
malpractice cause of action was not even listed by the debtors on the schedule of assets in the
original Chapter 7 proceedings.
Regarding the denial of their motion for reconsideration, the Osbornes generally argue that
the district court’s adverse ruling exhibited bias. However, “[a]dverse rulings, standing alone, do
not establish judicial bias or prejudice . . . nor create a reasonable question of judicial impartiality.”
See United States v. Schwartz, 535 F.2d 160, 165 (2d Cir. 1976) (citation omitted). Because the
Osbornes offer no other reason supported by the record that the district court erred in affirming the
denial of their motion for reconsideration, we affirm.
As to the district court’s affirmance of the bankruptcy court’s denial of the debtors’ motion
for dismissal of the reopened Chapter 7 proceeding, the Osbornes argue on appeal that the
bankruptcy petition should have been dismissed with respect to George because the malpractice
claim belonged solely to Patrisha. Although the Osbornes raised this argument in the district
court, we decline to address it because they did not raise it during the bankruptcy proceedings.
See In re Johns-Manville Corp., 759 F.3d 206, 219 (2d Cir. 2014) (failure to raise argument in the
bankruptcy court waived the argument even if raised in the district court). Indeed, the argument
they offered in support of their motion for dismissal in the bankruptcy court was based on
compliance with 11 U.S.C. § 109’s credit counseling requirements, an issue they do not raise on
appeal to this Court. See Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998) (“Issues not
sufficiently argued in the briefs are considered waived and normally will not be addressed on
appeal.”).
4
We have reviewed the Osbornes’ remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O=Hagan Wolfe, Clerk
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