Page 35 - January 2020 BarJournal

FEATURE
COLUMN ETHICS PERSEPECTIVESPECTIVE
ETHICS PER COLUMN

Second, the defense attorney should con- But the recent developments with bankrupt- loyalty and diligent representation. Would it
sider the type of bankruptcy proceeding to cy-related judicial estoppel also prompt recon- suffice for defense counsel to notify the debtor/
determine whether certain claims accruing sideration of the defense’s ethical obligations. plaintiff’s counsel of the concealed claim? And
post-petition even belong to the bankruptcy If the doctrine serves equitable purposes by what, if anything, can defense counsel do if the
estate. Whereas Chapter 7 bankruptcies limit protecting the integrity of judicial proceedings, bankruptcy proceedings already have closed
the bankruptcy estate to assets existing at the does that mean that defense counsel—whose with debts discharged?
time of filing, Chapter 13 bankruptcies ex- client has no stake in the bankruptcy proceed- The bar would be wise to give ethical guidance
tend to property “acquire[d] after the com- ing—must take steps as an officer of the court to on these issues. If the legal claims truly belong
mencement of the case” but before “the case alert the bankruptcy trustee and/or bankruptcy to the bankruptcy estate as a potential asset, one
is closed, dismissed, or converted.” 11 U.S.C. court of the concealed asset? Likely not. Typi- would think that the estate and bankruptcy court,
§ 1306(a)(1). Further, Chapter 13 debtors may cally, an attorney’s duty of candor extends only at a minimum, should know before taking any
retain possession of estate property (“debtors to the proceedings in which the attorney appears action on that potential asset. And, depending
in possession”), as well as the right to prose- on behalf of a client. See Ohio Prof. Resp. R. 3.3. on the status of the bankruptcy proceedings, it
cute civil actions on behalf of estate property, Attorneys have a greater duty of disclosure in ex may behoove defense counsel to engage with the
during the pendency of the bankruptcy pro- parte settings, see id. R. 3.3(d) & cmt. 14, a duty proper adversary from the outset. Should efforts
ceeding. See, e.g., 11 U.S.C. § 1306(b) (“Ex- to preserve the integrity of adjudicative proceed- to correct the record in the bankruptcy proceed-
cept as provided in a confirmed plan or order ings, see id. R. 3.3 cmt. 12, and a duty to report ing prove fruitless, the defense would then stand
confirming a plan, the debtor shall remain in professional misconduct, id. R. 8.3, but none of on stronger footing in seeking judicial estoppel.
possession of all property of the estate.”). these rules speak specifically to the situation of
These details may well impact whether the defense counsel whose client has no stake in the
debtor/plaintiffs even have standing to pur- bankruptcy proceeding. Disclosure obligations Chad Eggspuehler is Counsel with Tucker Ellis LLP.
sue claims—and if they do, whether they do may arise, however, if a debtor/plaintiff sought to As a member of the Appellate & Legal Issues Group,
so in their individual capacities or on behalf settle an undisclosed claim, under circumstances he specializes in crafting succinct and thoughtful
of their bankruptcy estates. And they will where the defense should know the claim be- solutions to complex legal issues at all stages of
necessarily guide defense counsel’s strategy longs to the bankruptcy estate. litigation. He has been a CMBA member since
concerning whether or not to interpose a ju- Depending on the circumstances, disclosure 2015. He can be reached at (216) 696-5919 or
dicial estoppel defense. may conflict with defense counsel’s duties of chad.eggspuehler@tuckerellis.com.

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JANUARY 2020 CLEVELAND METROPOLITAN BAR JOURNAL | 35