Virginia: Special Cases – a Lawyer’s Bankruptcy

Virginia: Special Cases – a Lawyer’s Bankruptcy

On October 24, 2014, the Virginia Supreme Court by Order in Clark v. Health Tech Resources, LLC, Record No. 132042, distinguished its holding in Kocher v. Campbell, 282 Va. 133 (2011) re the standing of a Bankruptcy petitioner to maintain a personal injury action after not listing the personal injury claim as an asset. Specifically, in Clark, where (unlike Kocher) the plaintiff petitioner’s personal injuries action accrued after initial Bankruptcy filing, the personal injury claim presumptively was not part of the Bankruptcy estate and plaintiff tentatively had standing to file suit. Id. at *2-3.

However, despite the Virginia Supreme Court reversing and remanding, plaintiff in Clark still may be precluded from pursuing the personal injuries claim on two grounds to be litigated. First, the Bankruptcy trustee has pending in Federal Court a motion for “turnover” to the estate, claiming “bad faith,” id. at *3; and second, in turn the State Court did not reach the issue of judicial estoppel, and will not do so until after the Bankruptcy Court has ruled on “bad faith” and “turnover”. Id. at 2, 3n.4.