IN RE CALESTINI

ORDER

PECKHAM, District Judge.

This case is before the Court on a petition to review a turnover order of the Referee in Bankruptcy. Petitioner is an attorney who had instituted, on behalf of the bankrupt, a personal injury action in the state courts. This state court suit was begun prior to the adjudication of petitioner's client as bankrupt. The Trustee sought to have the petitioner appointed as special counsel for the Trustee in prosecuting the civil action on the theory that title to the cause of action had vested in the Trustee. Petitioner resisted, claiming that the Trustee had no rights in the personal injury action and had no powers with regard to the attorney-client relationship between petitioner and bankrupt. The Trustee then filed an application for a turnover order, and, following hearing, the Referee ordered that petitioner turn over to the Trustee all legal files relating to the personal injury action. Petitioner has refused to comply since he takes the position that the summary jurisdiction of the bankruptcy court does not extend to this situation. Petitioner then filed this petition for review.

Two questions must be decided:1

Discussion of question No. 1. Section 70 of the Bankruptcy Act (11 U.S.C. § 110) provides in pertinent part that:

Thus, we look to the law of California to determine whether the personal injury action herein is subject, under that law, to "attachment, execution, garnishment, sequestration, or other judicial process." If it is, then the title to it is vested in the Trustee.

This precise question has been decided by the Ninth Circuit Court of Appeals in Carmona v. Robinson, 336 F.2d 518 (1964). The Court there concluded that under section 688.1 of the California Code of Civil Procedure,2 "a trial court may grant to a creditor a lien upon a plaintiff's cause of action for personal injury." 336 F.2d at 520. The cause of action was therefore "subject to attachment, execution, garnishment, sequestration, or other judicial process," and title to the action thus vested in the Trustee in accordance with section 70(a) (5). While the Ninth Circuit Court of Appeals cannot speak finally and authoritatively on California law, Carmona is the only case, state or federal, on point. While Carmona is therefore sufficient to decide this aspect of the present controversy, it should be noted that it receives support from those cases which have peripherally dealt with the same issue.3

Petitioner's position is incompatible with the holding of Carmona and of this court that a personal injury cause of action is "property" within section 70(a) (5) of the Bankruptcy Act, title to which therefore vests in the Trustee.

Discussion of question No. 2. Given the fact that by virtue of section 70(a) (5) and the Carmona decision the Trustee holds title to the cause of action, the next question is what are his rights vis-a-vis the attorney previously retained by the bankrupt and the legal files in that attorney's possession.

The petitioner herein was retained by the bankrupt pursuant to a contingent fee contract. This contract has been only partially performed and still remains, therefore, executory in nature. Section 70(b) of the Bankruptcy Act provides that the Trustee shall within sixty days of adjudication of bankruptcy assume or reject any executory contract. Moreover, "any such contract * * * not assumed or rejected within such time [as is the case here] * * * shall be deemed to be rejected." Section 70(b). Under this section, this court holds that the executory contract retaining petitioner has already been rejected since there was neither an express assumption or rejection within the statutory time period.4 The Trustee may still invite petitioner to qualify as special counsel on his behalf, but the Trustee does have the equal right not to retain petitioner.5 We assume that petitioner may apply for reimbursement for the value of his services to date in the event he is not retained further.

With regard to the legal files pertaining to the personal injury action, section 70(a) (1) of the Bankruptcy Act — giving the Trustee title to documents relating to the bankrupt's property— compels the conclusion that legal title to the files now resides in the Trustee. The word "documents" in section 70(a) (1) is defined in section 1(16) as including "any book, deed, record, paper, or instrument in writing."6 While section 70(a) (1) typically deals with such documents as deeds, contracts, books of account, and business records generally,7 a straightforward reading of the section makes it applicable to the pleadings, discovery papers, medical records, and other material in an attorney's legal file pertaining to a bankrupt's cause of action. This is compatible with the rationale of the section—that the bankrupt himself, prior to bankruptcy, would have the right to demand, as his property, those documents which relate to other of his property. In the instance of a legal file, the client has the right to the file. It is therefore "property" of the client, and upon his adjudication as a bankrupt, title passes to the Trustee.

Finally, insofar as petitioner argues that the Referee does not have summary jurisdiction over this legal file, he is incorrect. A Bankruptcy Court possesses summary jurisdiction as to all property in its possession, either actual or constructive possession.8 The Bankruptcy Court herein had constructive possession of the legal file of the bankrupt's personal injury action since that file was the property of the bankrupt and was held for her benefit by the attorney-petitioner. That is, summary jurisdiction is vested in the Bankruptcy Court over all property in actual possession of the bankrupt's agent, bailee, or other person holding for the benefit of the bankrupt.9 Such is the case here.

Accordingly, the Referee's Order Directing Turnover of Property to Trustee is hereby affirmed. The Trustee is entitled to the immediate possession of the items enumerated therein.

So ordered.