Casandra Lobberecht And David L. Lobberecht, Individually And As Next Best Friends Of Keiffer Lobberecht, Adam Lobberecht, And Olivia Lobberecht Vs. Akella Chendrasekhar And The Iowa Clinic, P.c.

IN THE SUPREME COURT OF IOWA
No. 154 / 06–0672

Filed February 1, 2008

CASANDRA LOBBERECHT and DAVID L. LOBBERECHT, Individually
and as Next Best Friends of KEIFFER LOBBERECHT, ADAM
LOBBERECHT, and OLIVIA LOBBERECHT,

Appellants,

vs.

AKELLA CHENDRASEKHAR and THE IOWA CLINIC, P.C.,

Appellees.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Polk County, Joel D.

Novak, Judge.

Plaintiffs in medical-malpractice case appeal from summary

judgment in favor of defendants. DECISION OF COURT OF APPEALS

VACATED; JUDGMENT OF DISTRICT COURT AFFIRMED IN PART
AND REVERSED IN PART; CASE REMANDED.

Alfredo Parrish and Tammy Westhoff Gentry of Parrish, Kruidenier,

Moss, Dunn, Boles, Gribble & Cook, L.L.P., Des Moines, for appellants.

Robert D. Houghton of Shuttleworth & Ingersoll, P.L.C.,

Cedar Rapids, for appellees.
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LARSON, Justice.

Casandra and David Lobberecht sued Dr. Akella Chendrasekhar

and the Iowa Clinic for damages arising out of Dr. Chendrasekhar’s

allegedly negligent treatment of Casandra. The district court granted the

defendants’ motion for summary judgment on the ground the

Lobberechts were not the real parties in interest, and the court of

appeals affirmed. We vacate the decision of the court of appeals, affirm

the judgment of the district court in part and reverse it in part, and

remand.

I. Facts and Prior Proceedings.

Casandra Lobberecht had gastric bypass surgery on December 18,

2002, by Dr. Chendrasekhar, a doctor employed by the Iowa Clinic, P.C.

Lobberecht began experiencing abdominal pain, and on February 18,

2003, sought further treatment from Dr. Chendrasekhar, who suspected

she suffered from inflammation of the gallbladder. Shortly thereafter, he

performed surgery to remove Lobberecht’s gallbladder. Her abdominal

pain continued, however, and on March 29, 2003, she went to the Iowa

Methodist Medical Center emergency room with severe pain. She was

admitted to Iowa Methodist for pain control and additional tests to

determine the source of her pain. Lobberecht underwent a test that

revealed a fistula or an opening along the staple lines of her stomach

pouch. Lobberecht was discharged from the hospital on April 2, 2003,

and was told to return to Dr. Chendrasekhar for a follow-up after two to

three weeks. On April 22, 2003, Lobberecht returned to the Iowa Clinic

complaining of continued abdominal pain and a possible hernia.

Dr. Chendrasekhar again noted the presence of the fistula and told

Lobberecht that he would probably do repair work on the fistula during

her hernia surgery. On April 26, 2003, just before the date of her
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scheduled surgery, Lobberecht was admitted to the Iowa Methodist

Medical Center with severe abdominal pain due to either the hernia or

problems from the fistula. Surgery was performed on April 27, 2003, to

repair the hernia and the fistula. However, the fistula was not addressed

at that time due to excessive scar tissue. At Lobberecht’s June 5, 2003

follow-up visit, Dr. Chendrasekhar noted that Lobberecht was doing well

after the hernia surgery, although she began regaining some of her

weight.

On May 28, 2003, the Lobberechts filed for chapter 7 bankruptcy.

They did not list on their bankruptcy forms any potential medical-

malpractice claim against the defendants. The Lobberechts received

their discharge in bankruptcy on August 26, 2003.

On January 9, 2004, Lobberecht went to Mahaska Hospital with

abdominal pain. Over the next seven months, Dr. Timothy Breon of the

Mahaska Hospital performed several procedures intended to address the

problems occurring as a result of the fistula.

On December 14, 2004, the Lobberechts filed suit against

Dr. Chendrasekhar and the Iowa Clinic, claiming negligent performance

of the gastric bypass surgery, negligent postoperative treatment, and

wrongful performance of unnecessary gallbladder surgery. The

defendants moved for summary judgment, claiming the plaintiffs lacked

standing to bring the lawsuit because the bankruptcy trustee was the

true party in interest. The district court agreed and granted summary

judgment in favor of the defendants. The court of appeals affirmed, and

the plaintiffs’ application for further review was granted by this court.

II. Scope of Review.

We review a district court’s ruling on a motion for summary

judgment for correction of errors at law. Peppmeier v. Murphy, 708
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N.W.2d 57, 58 (Iowa 2005). Summary judgment is appropriate “if the

pleadings, depositions, answers to interrogatories, and admissions on

file, together with the affidavits, if any, show that there is no genuine

issue as to any material fact, and that the moving party is entitled to a

judgment as a matter of law.” Iowa R. Civ. P. 1.981(3). The evidence

presented must be viewed in the light most favorable to the party

opposing summary judgment. Kelly v. Iowa Mut. Ins. Co., 620 N.W.2d

637, 641 (Iowa 2000); Gen. Car & Truck Leasing Sys., Inc. v. Lane &

Waterman, 557 N.W.2d 274, 276 (Iowa 1996).

III. Disposition.

The single issue presented is whether the plaintiffs’ medical-

malpractice cause of action against the defendants belongs to them, as

individuals, or to the bankruptcy estate. If the cause of action belongs to

the bankruptcy trustee, the plaintiffs are not the real parties in interest.

On the filing of a chapter 7 bankruptcy petition, a bankruptcy

estate is created, comprising “all legal or equitable interests of the debtor

in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1).

The Eighth Circuit summarized a court’s inquiry into whether property

belongs to the bankruptcy estate:

First, the court must decide whether the item constitutes
“property” under § 541(a)(1). Second, the court should look
to state law to ascertain the debtor’s interest in the property
. . . . Third, the court must find that the debtor had the
property interest at the time of filing the bankruptcy petition.

In re Mahendra, 131 F.3d 750, 755 (8th Cir. 1997) (citations omitted).

“The property of a bankruptcy estate is ‘broadly defined,’ . . . [and]

includes all causes of action that the debtor could have brought at the

time of the bankruptcy petition.” United States ex rel. Gebert v. Transp.

Admin. Serv., 260 F.3d 909, 913 (8th Cir. 2001) (citations omitted).

Whether a debtor has an interest in property at the time the bankruptcy
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petition is filed is determined by state law. In re Mahendra, 131 F.3d at

755; Collins v. Fed. Land Bank of Omaha, 421 N.W.2d 136, 138 (Iowa

1988) (“Whether a trustee in bankruptcy succeeds to property of the

debtor in a chapter 7 bankruptcy under 11 U.S.C. section 541(a)(1) turns

on whether the debtor has a legal or equitable interest in the property

under applicable state law at the time the bankruptcy petition is filed.”).

In Iowa, a person has a legal interest in a cause of action when it

accrues, and that occurs when “an aggrieved party has a right to

institute and maintain a lawsuit.” Dolezal v. Bockes, 602 N.W.2d 348,

351 (Iowa 1999). Here, we must determine when the plaintiffs’ cause of

action accrued to determine whether it is part of the bankruptcy estate.

See In re Swift, 129 F.3d 792, 795 (5th Cir. 1997) (“Our first task, then,

is to determine whether Swift had a property interest in the causes of

action against State Farm at the time he filed bankruptcy. Stated

differently, we must determine whether Swift’s causes of action had

accrued.”). The plaintiffs, relying on the statute-of-limitations provisions

of Iowa Code section 614.1(9), contend that their cause of action for

medical malpractice did not accrue until they knew, or should have

known, they were injured. Section 614.1(9) provides that medical-

malpractice cases must be brought

within two years after the date on which the claimant knew,
or through the use of reasonable diligence should have
known, . . . of the existence of [] the injury or death for which
damages are sought in the action, whichever of the dates
occurs first . . . .

The plaintiffs argue that their medical-malpractice claim could not

have accrued as of the date they filed for bankruptcy because, as of that

date, they did not know, and could not reasonably have known, of their

injury. Unfortunately for the plaintiffs, the present case is not a statute-

of-limitations case. The statute of limitations under section 614.1(9)
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determines when a cause of action is lost by passage of time. However,

for bankruptcy purposes, the question is not when the cause of action

was lost, but when it was acquired. In other words, could the plaintiffs

have sued prior to May 28, 2003, the date they filed their bankruptcy

petition? If so, the cause of action belonged to the trustee in bankruptcy

and not the plaintiffs.

A federal court explained the distinction between accrual for

statute-of-limitations purposes and accrual for bankruptcy purposes. As

that court noted,

the statute of limitations may begin to run on a date other
than that on which the suit could first be maintained. A
classic example illustrates this. Consider a case of medical
malpractice in which the treating physician has left a
dangerous metal instrument inside the body of his patient.
At the time the doctor finishes the surgery, the doctor has
completed a tort. He has violated a legal duty owed to the
patient, and the patient was injured by that violation. If the
patient instituted suit at this moment, his suit would be
viable.

Swift, 129 F.3d at 796. The court in Swift concluded that the

bankruptcy estate, not the plaintiffs, was the owner of the cause of

action for negligence and breach of fiduciary duty, even though the

plaintiffs’ claim had not accrued for statute-of-limitations purposes at

the time they filed their bankruptcy petition. Id. at 802. Thus, accrual

for statute-of-limitations purposes is irrelevant to determining whether a

cause of action has accrued for bankruptcy purposes.

In Iowa, a medical-malpractice cause of action accrues when “all

the necessary elements have occurred.” Slater v. Farmland Mut. Ins. Co.,

334 N.W.2d 728, 730 (Iowa 1983).

To establish a prima facie case of medical malpractice, the
plaintiff must submit evidence that shows the applicable
standard of care, the violation of the standard of care, and a
causal relationship between the violation and the harm
allegedly experienced by the plaintiff.
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Peppmeier, 708 N.W.2d at 61–62.

In this case, the plaintiffs’ petition alleges the defendants were

negligent in the following respects:

a. In performance of the Roux-en-Y Gastric Bypass
procedure utilizing an outdated and inadequate
technique, below the current standard of care;
b. In failing to completely divide the stomach as
necessary for a successful outcome;
c. In failing to properly and adequately perform an
anastomosis of the gastric pouch to the small bowel of
the Roux limb.
d. In failing to exercise a degree of care and skill
ordinarily exercised in the performance of such
surgery under the conditions and circumstances then
and there existing.

All of these acts occurred on December 18, 2002, the date of the surgery.

As of that date, the plaintiffs’ medical-malpractice cause of action had

accrued for bankruptcy purposes, and the plaintiffs’ right to sue was

complete. The cause of action therefore became the property of the

bankruptcy estate, and the district court and the court of appeals

properly concluded that the plaintiffs were not the real parties in

interest. However, the proper remedy is not to dismiss, but to allow a

reasonable time, as determined by the district court, for substitution of

the real party in interest. See Iowa R. Civ. P. 1.201. We vacate the

decision of the court of appeals, affirm the judgment of the district court

in part, reverse it in part, and remand.

DECISION OF COURT OF APPEALS VACATED; JUDGMENT OF

DISTRICT COURT AFFIRMED IN PART AND REVERSED IN PART;

CASE REMANDED.

All justices concur except Appel, J., who takes no part.