Virginia Lawyers Weekly VA Lawyers Weekly
Where one of the debtors believes that he might be entitled to compensation under the recently-passed Camp Lejeune Justice Act of 2022, his motion to reopen the bankruptcy in order to disclose the claim was denied. The cause of action did not come into existence until Aug. 10, 2022, the date the statute was passed, which was after the prepetition date. As a result, the claim belongs to the debtor and is not property of the bankruptcy estate.
Background
On July 19, 2022 Norman L. Hancock and Phyliss R. Hancock, by counsel, filed a voluntary petition under Chapter 7 of the Bankruptcy Code. The Chapter 7 trustee appointed in this case filed a report of no distribution on Aug. 16, 2022. The debtors received their discharge on Oct. 19, 2022, and the case was closed on Oct. 24, 2022.
On Aug. 10, 2022, while the debtors’ case was still pending, the Camp Lejeune Justice Act of 2022 was enacted into law. The debtor alleges that he may have a claim under the Act for injuries and illness he suffered prior to the petition date. The debtors did not amend their schedules to include the claim in their Chapter 7 case. The debtors now seek permission to reopen the case to permit them to file amended schedules in order to disclose the claim.
Analysis
In a Chapter 7 case, property acquired by a debtor after the commencement of the bankruptcy case generally does not become property of the estate. Accordingly, the court must determine whether the debtor’s claim for the prepetition injury he allegedly suffered at Camp Lejeune is property of the debtors’ bankruptcy estate. If the claim is not property of the bankruptcy estate, then there is no need for the debtors to amend their schedules and statements to include the claim, and the motion should be denied.
The court finds that the debtor had no right to payment of the claim on the petition date. While the facts giving rise to the debtor’s alleged claim occurred prepetition, the right to assert that claim, the cause of action itself, did not come into existence until Aug. 10, 2022. The debtor’s right to payment under the Act did not accrue until the Act was signed into law. The Act is more than just a waiver of sovereign immunity – it created of a new federal cause of action. That new federal cause of action accrued on the date of enactment.
The date upon which the debtor suffered the alleged injury is irrelevant. The debtor did not have a claim within the meaning of the Bankruptcy Code until Aug. 10, 2022 – which occurred after the petition date. Because the debtor’s right to assert payment of the claim arose postpetition, the claim belongs to the debtor and is not property of the bankruptcy estate. The claim is not an asset that could be administered by a Chapter 7 trustee for the benefit of the creditors of the bankruptcy estate. As reopening this case would be futile, the court should deny the motion.
Debtors’ motion to reopen denied.
In re Hancock, Case No. 22-31936, Feb. 7, 2023. EDVA Bankr. at Richmond (Huennekens). VLW No. 023-4-004. 5 pp.
