Central District Consumer Bankruptcy Attorney's Association

Ch 7 Debtor, construction contractor, received discharge in 2010, no assets case. State Court Construction defect case filed 2013 for work performed in 2005 by Debtor, a sub-contractor. DefectPlaintiff's purchased propertyand discovered defect after petition date. Plaintiff's attorney is arguing claim arose after the petition date.
so . . .
So,
is it correct that Debtor's work performed in 2005, which is now claimed as defective in 2013, is a prepetition claim even if the current
claimants did not have a relationship with the debtor prepetition?
Rutters group says: a claim arises when the wrongful act occurs; and there is some relationship or contact between the debtor and claimant, or the claimant could fairly contemplate that it might have sustained an injury Epstein v. Official Committee of Unsecured Creditors of Estate of Piper Aircraft Corp. (11 th Cir. 1995) 58 F3d 1573, 1577. Claims against aircraft manufacturer's bankruptcy estate for personal injury or property damage that might occur in the future as result of improperly manufactured or designed aircraft or parts did not qualify as "Claims"
OR . . . In re Clements, 136 B.R. 557 (Bankr.C.D.Cal., 1992) cites
a
claim arises for the purposes of bankruptcy. In re Jensen, 127 B.R. 27
(9th Cir.BAP 1991). The BAP analyzed three different theories for when such
claims arise: (1) with the right to payment; (2) upon the establishment of the
relationship between the debtor and the creditor; and (3) based upon the
debtor's conduct. After careful analysis of all three theories, the BAP
concluded that the third theory, that a claim arises based upon the Debtor's
conduct, is the proper law in this Circuit. Jensen, 127 B.R. at 32. See
also In re Johns-Manville Corp., 57 B.R. 680, 690 (Bankr.S.D.N.Y.1986)
("focus should be on the time when the acts giving rise to the alleged
liability were performed");
The Plaintiffs could not have known of the defect prepetition becausethey purchased the house post petition and under Epstein the court seems to indicate 2 factors are necessary - the wrongful act and relationship for the claim to arise. In re Clements seems to state that a claim arises based on the Debtor's conduct. . . In Jensen, the hazardous waste was released prepetition.
Seems the Debtors act is performing work and that occurred in 2005, definitely prepetition
So - in a construction defect case, for the purposes of establishing when the claim arises - is it a prepetion claim based on Debtors Acts (performed in 2005) or not a claim because there was no relationship between the debtor and the plaintiffs prepetition?
Thanks in advance for your response.
Law Office of Catherine Christiansen

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