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Florida Second DCA rules that bankruptcy estate trustee can pursue negligence action against debtor's attorneys even though tort judgment against debtor was discharged by bankruptcy court

On October 25, 2017, in Herendeen v. Mandelbaum, No. 2D15-4300, the Florida Second DCA ruled that a bankruptcy estate trustee was entitled to pursue a professional negligence action against a law firm that had represented the debtor in a wrongful death case, notwithstanding the fact that the liability arising from the wrongful death judgment was discharged by the bankruptcy court. The defendant law firm had obtained a summary judgment from the trial court on the theory that the discharge of the bankruptcy judgment in effect extinguished the trustee’s cause of action for legal malpractice. The Second DCA cited Stanley v. Trinchard, 500 F.3d 411, 425 (5th Cir. 2007), which held that a bankruptcy discharge eliminates only a debtor's personal liability and not the debt itself, and concluded that the bankruptcy trustee was entitled to pursue the claim so as to maximize the value of the estate, if for no other reason than to provide a source of compensation for the bankruptcy trustee.

The Second DCA also rejected the defense argument that as a matter of public policy the bankruptcy trustee was not entitled to sue the law firm for failure to adequately defend the debtor against a punitive damage claim (on the theory that punitive damages cannot be collected from a non-party to a punitive damage award). The Second DCA concluded that the trustee’s action did not improperly shift punitive damages to the law firm or make it an indemnitor .