ANDERSON, Chief Judge:
Fernando Alvarez appeals from the district court's order reversing an order of the bankruptcy court. His appeal raises the question of whether his legal malpractice cause of action, relating to the filing of his petition for bankruptcy, is property belonging to him as an individual or is property of his bankruptcy estate. We conclude that the malpractice claim is property of Alvarez's bankruptcy estate, and accordingly, we affirm the order of the district court.
I. FACTUAL & PROCEDURAL BACKGROUND
Fernando Alvarez filed a complaint against the law firm of Johnson, Blakely, Pope, Bokor, Ruppel & Burns ("Johnson Blakely") in Florida state court, alleging legal malpractice. The crux of Alvarez's malpractice claim is his allegation that Johnson Blakely negligently disregarded his instructions to file a reorganizational bankruptcy case (Chapter 11) on his behalf and instead filed a liquidating bankruptcy case (Chapter 7). Alvarez's complaint alleged that as a result of Johnson Blakely's negligent actions, Alvarez "sustained damages including, but not limited to, the loss of control and ownership of substantial assets, including ownership interests in stocks and a chose in action, loss of opportunity, loss of use of the assets, and other damages recoverable at law."
Johnson Blakely removed the malpractice action to the United States Bankruptcy Court for the Middle District of Florida.
The bankruptcy court held that the claims in Alvarez's complaint are not property of the estate and that, as a result, the trustee is not an indispensable party to the litigation. The bankruptcy court denied Johnson Blakely's motion for judgment on the pleadings, and Johnson Blakely appealed to the district court. The district court reversed, holding that the malpractice action is property of Alvarez's bankruptcy estate and that the bankruptcy trustee is indispensable to maintenance of the action. The district court remanded the case to the bankruptcy court for further proceedings consistent with its order. From the district court's order, Alvarez now appeals to this Court.
The issue we must decide is whether or not Alvarez's legal malpractice cause of action is property of his bankruptcy estate. Section 541(a)(1) of the Bankruptcy Code defines "property of the estate" to include "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1).
A. Florida Law
Under Florida law, a cause of action for legal malpractice has three elements: (1) the attorney's employment; (2) the attorney's neglect of a reasonable duty; and (3) the attorney's negligence was the proximate cause of loss to the client. See Steele v. Kehoe, 747 So.2d 931, 933 (Fla.1999). The third element of a legal malpractice claim, that the attorney's negligence be the proximate cause of loss to the client, is also referred to as the concept of "redressable harm." Lenahan v. Russell L. Forkey, P.A., 702 So.2d 610, 611 (Fla. 4th DCA 1997). Pursuant to Fla. Stat. Ann. § 95.031(1), a cause of action accrues "when the last element constituting the cause of action occurs."
At the moment Alvarez's bankruptcy petition was filed, his Chapter 7 bankruptcy estate was created, see § 541(a) ("The commencement of a case under section 301 ... of this title creates an estate."), his interests in property vested in the estate, and all of the legal ramifications attendant to creation of such an estate came into existence.
To the extent that Alvarez suggests that redressable harm occurring at the instant of filing is insufficient to make this cause of action part of his bankruptcy estate because the estate includes only interests the debtor holds immediately prior to filing,
B. Federal Bankruptcy Law
We reach the same conclusion by applying federal bankruptcy law. In Segal v. Rochelle, 382 U.S. 375, 86 S.Ct. 511, 15 L.Ed.2d 428 (1966), the Supreme Court considered the question, under the former Bankruptcy Act,
382 U.S. at 379, 86 S.Ct. at 515. The Court determined that two key elements pointing toward realization of a tax refund existed at the time the bankruptcy petitions were filed: 1) taxes had been paid on net income in prior years, and 2) the year of bankruptcy, at that point, exhibited a net operating loss. See id. at 380, 86 S.Ct. at 515. The Court concluded that the loss-carryback refund claims were "sufficiently rooted in the pre-bankruptcy past ... that [they] should be regarded as `property'" under the Bankruptcy Act. Id.
Applying the rationale of Segal to the instant case, we conclude that Alvarez's legal malpractice cause of action is also sufficiently rooted in his pre-bankruptcy past that it should be considered property of Alvarez as of the commencement of his bankruptcy case, and thus property of his estate. Alvarez established an attorney-client relationship with Johnson Blakely prior to his filing for bankruptcy, and this cause of action arises directly out of Alvarez's interactions with the firm prior to filing—i.e. Alvarez's instructions to Johnson Blakely to file Chapter 11 and the firm's alleged disregard of those instructions—i.e. the preparation and filing instead of a Chapter 7 petition. Simultaneous with the filing, Alvarez suffered significant harm from the firm's alleged negligence, i.e. the loss of control of assets. The claim in the instant case is even more firmly "rooted in the pre-bankruptcy past" than the claim in Segal. See also Tomaiolo, 205 B.R. at 15 (concluding that debtor's legal malpractice claims, including claim concerning services in the preparation of documents filed with the bankruptcy petition, were sufficiently rooted in the pre-bankruptcy past to be includible in bankruptcy estate).
The bankruptcy trustee is the legal representative of the bankruptcy estate, with capacity to sue and be sued. See 11
Alvarez also argues that the bankruptcy court erred in denying his motion to remand or abstain. Assuming arguendo, but not deciding, that we might appropriately exercise appellate jurisdiction over that issue, we decline to exercise it. We have held that the malpractice cause of action is property of the estate. The trustee in bankruptcy, not Alvarez, is the appropriate person to urge remand or abstention, matters which can be addressed by the bankruptcy court on remand.
The judgment of the district court is
HILL, Circuit Judge, concurring dubitante:
I concur with the majority. I confess some doubt, however, as to the enthusiasm with which they reach their result. The term "property of the estate" is comprised of "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541 (emphasis added). Therefore it seems to me that whether a claim is "property of the estate" depends upon whether the claim accrued before or after the filing of the petition. In Florida, the accrual of a negligence action is measured from the time the injuries are sustained and not from the time the full extent of the damages have been ascertained. Trizec Properties, Inc. v. Biltmore Constr. Co., Inc., 767 F.2d 810, 812 n. 4 (11th Cir.1985) (emphasis added).
Here I believe the claim accrued at the moment the petition was filed. What we then have is a single act which produces two conflicting results. When the petition is filed, the estate is instantly created but the alleged tort is also completed. If the filing injures the plaintiff, how can the claim be a part of the estate as of the commencement of the case? Or, if the filing injures the plaintiff, how can the claim not be a part of the estate, and the plaintiff be said to have been injured after the commencement of the case, when the last act producing the injury coincides with the estate creation?
With these doubts expressed, and a belief, as the majority opines, that the term "property of the estate" should be generously construed, I concur, because I believe the general purposes of the bankruptcy
Along these lines, we note that a study of relevant Florida caselaw may create some confusion about use and meaning of the word "accrual." As explained above, under Fla. Stat. Ann. § 95.031(1), "[a] cause of action accrues when the last element constituting the cause of action occurs." Some Florida cases, however, suggest that the concept of accrual in the legal malpractice context includes the discovery aspect of the statute of limitations inquiry. See, e.g., Peat, Marwick, Mitchell & Co. v. Lane, 565 So.2d 1323, 1325 (Fla.1990) ("Generally, a cause of action for negligence does not accrue until the existence of a redressable harm or injury has been established and the injured party knows or should know of either the injury or the negligent act."); cf. Swift, 129 F.3d at 796-98 (noting that recent Texas cases "have muddied the waters" and blended the issue of accrual and the start of the statute of limitations "because of the luxury of the discovery rule in a statute of limitations case" and because "the issue of accrual of a cause of action rarely occurs apart from the issue of when the statute of limitations begins to run"). As noted, however, a cause of action can accrue for ownership purposes in a bankruptcy proceeding before the statute of limitations begins to run. Thus, our inquiry is concerned with when Alvarez's legal malpractice "accrued" in the sense of Fla. Stat. Ann. § 95.031(1), i.e. when the last element constituting his cause of action occurred.
After concluding that the refund claims were property of the bankrupts as of filing, the Segal Court then proceeded to make the additional determination, required under the former Act but not the current Code, that the loss-carryback refund claims were property "which prior to the filing of the petition [the bankrupt] could by any means have transferred ...," in order to reach its ultimate determination that the refunds claims were property of the bankrupts' estates. 382 U.S. at 381-85, 86 S.Ct. at 516-18.