California Appellate Tracker

Ulrich v. Walker (In re Boates)

June 21, 2016

A bankruptcy trustee may reject as an executory contract a pre-bankruptcy retainer agreement the bankrupt entered into with a lawyer in contemplation of future non-dischargeability litigation—thereby recovering for the bankrupt estate the retainer the bankrupt paid before filing his bankruptcy petition.

Anticipating bankruptcy, Boates signed a retainer agreement with lawyer, agreeing to pay lawyer $60,000 as a flat fee for defending Boates in an expected adversary proceeding contesting dischargeability of a large debt. The agreement provided that the $60,000 fee would be earned on payment. Held, the Chapter 7 trustee could reject the fee agreement as an executory contract under 11 USV 365 and recover the $60,000 from lawyer. All of lawyer’s services under the fee agreement were still unperformed when Boates filed his bankruptcy petition, and Boates’s obligation to pay litigation costs was also unperformed. Hence, the agreement was an executory contract that the trustee could reject.

United States Bankruptcy Appellate Panel of the Ninth Circuit (Kurtz, J.); June 9, 2016; 2016 WL 3213665

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Ulrich v. Walker (In re Boates)

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