Richard K. Schultze; Lorenzo
Zunino; Robert Becchetti; Richard Questoni, Appellants,
David N. Chandler, Sr.; David N. Chandler, P.C., Appellees.
Argued December 4, 2013—San Francisco, California
Filed July 18, 2014
Appeal from the United States District Court for the Northern District of California William Alsup, District Judge, Presiding No. 3:11-cv-04940-WHA
Paul A. Frassetto (argued), Frassetto Law Offices, San Francisco, California, for Appellants.
James A. Murphy (argued) and Arthur J. Harris, Murphy, Pearson, Bradley & Feeney, San Francisco, California, for Appellees.
Before: Stephen S. Trott, Sidney R. Thomas, and Mary H. Murguia, Circuit Judges.
The panel filed (1) an order amending its opinion filed July 18, 2014, and (2) an amended opinion affirming the district court's affirmance of the bankruptcy court's dismissal of a malpractice action against an attorney for an unsecured creditors' committee.
The panel held that the bankruptcy court properly exercised jurisdiction over the legal malpractice action after its removal from state court because the action was a core proceeding. Agreeing with other circuits, the panel held that a post-petition claim brought against a court-appointed professional is a core proceeding. The panel held that this lawsuit fell easily within the definition of a core proceeding because the attorney's employment by the committee and compensation were approved by the bankruptcy court, his duties pertained solely to the administration of the bankruptcy estate, and the claim asserted by committee members was based solely on acts that occurred in the administration of the estate.
The panel stated that it need not decide whether the bankruptcy court's entry of final judgment was invalid under Stern v. Marshall, 131 S.Ct. 2594 (2011), because the bankruptcy court dismissed the complaint for failure to state a claim, and the district court reviewed this dismissal de novo. As such, plaintiffs received all the review Article III requires.
The panel held that the bankruptcy court correctly dismissed the action on the basis that the attorney represented only the committee and did not owe an individual duty of care to the committee members.
The opinion filed July 18, 2014, is amended as follows: Footnote 1 is deleted in its entirety and the following language inserted in lieu thereof:
We need not decide whether the bankruptcy court's entry of final judgment was invalid under Stern v. Marshall, 131 S.Ct. 2594 (2011), because in this case, the bankruptcy court dismissed Chandler's complaint for failure to state a claim, and the district court reviewed this dismissal de novo. See Schultze v. Chandler, No. C 11-4940 WHA, 2011 WL 6778823, at *2–3 (N.D. Cal. Dec. 27, 2011).As such, Plaintiffs received all the review Article III ...