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Edwards v. Franchini5/26/1998
not administered as part of a bankruptcy case and which is not abandoned to the debtor under Section 554 "remains property of the estate." Id. 554(d). Assets which the debtor does not schedule fall within this latter category of property which continues to be part of the bankruptcy estate. See ) (claim in state court action not scheduled as asset during bankruptcy proceedings not abandoned to debtor under Section 554, but remains part of bankruptcy estate).
{6} Plaintiffs did not schedule their claims against Defendants as assets in their bankruptcy petition. They did not bring them to the attention of the trustee when Defendants ceased representing them or at any time during the pendency of the bankruptcy proceedings, and the trustee did not become aware of the claims prior to the 1993 order closing the bankruptcy case. As unscheduled property, the claims continued to be the property of the bankruptcy estate after the closing of the case. See 11 U.S.C. 554(c), (d); ) (unscheduled property even though not concealed from trustee not abandoned by operation of Section 554(c)); In re Drexel Burnham Lambert Group, Inc., 160 B.R. 508, 514 (S.D.N.Y. 1993) (" ny asset not scheduled pursuant to 11 U.S.C. 521(1) remains property of the bankrupt estate."). Because the claims continued as assets of the bankruptcy estate, Plaintiffs did not have any right to enforce them in their own names. See In re Drexel Burnham Lambert Group, Inc. 160 B.R. at 514; In re Davis, 158 B.R. at 1002. Without the right to enforce the claims, Plaintiffs were not real parties in interest under Rule 1-017(A). The trustee, as the representative of the bankruptcy estate, was the real party in interest with the capacity to sue on the claims. See 11 U.S.C. 323.
Inclusion of Claims Within Bankruptcy Estate
{7} Plaintiffs also argue that a debtor's claim for legal malpractice does not become part of the bankruptcy estate. If Plaintiffs are correct in this argument, Defendants' position that only the bankruptcy trustee is the real party in interest to bring a claim against Defendants would be to no avail, for the trustee would not have responsibility for this type of claim as assets of the bankruptcy estate. To this end, Plaintiffs endeavor to raise a question of first impression in New Mexico: whether a legal malpractice claim is unassignable and exempt from attachment under New Mexico law. According to Plaintiffs, if their claims are unassignable and exempt, the claims would not be part of the bankruptcy estate. Because we do not accept this underlying bankruptcy law proposition, we do not decide the issue of whether legal malpractice claims can be assigned.
{8} With the Bankruptcy Reform Act, Congress substantially revised bankruptcy law. In its revisions, it expanded the definition of the property of the bankruptcy estate. See . Under the new Bankruptcy Code, "all legal or equitable interests of the debtor in property as of the commencement of the case" and "that the estate acquires after the commencement of the case" enter the estate. 11 U.S.C. 541(a)(1), (7). In contrast, Section 70a(5) (11 U.S.C. 110(a)(5) (1976)) of the old Bankruptcy Act only included within the estate "rights of action" which were transferable or subject to any type of levy or seizure prior to the filing of the bankruptcy petition. See ); . Demonstrating the new expansive nature of the bankruptcy estate, the Bankruptcy Code provides broadly that an interest of the debtor in property becomes property of the estate under Section 541(a), "notwithstanding any provision in an agreement, transfer instrument, or applicable non-bankruptcy law--(A) that restricts or conditions transfer of such interest by the debtor." 11 U.S.C. 541(c)(1).
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