Statek Corporation v. Development Specialists, Inc., plan administrator for Coudert Brothers LLP
The Second Circuit recently shed light on how bankruptcy courts should apply choice-of-law rules to state law claims. In Statek Corporation v. Development Specialists, Inc., Plan Administrator for Coudert Brothers LLP (In re Coudert Brothers LLP), No. 10-2723-bk (2d Cir. February 28, 2012), a former client of Coudert Brothers filed a pre-bankruptcy malpractice suit in Connecticut state court. The action was stayed when Coudert Brothers filed for bankruptcy in New York. The malpractice plaintiff then perfected its claim in bankruptcy, but the plan administrator moved to disallow it. The bankruptcy court disallowed the claim, finding that New York law applied and that the claim was time-barred under the New York statute of limitations. The district court affirmed, but the Second Circuit reversed, holding that a bankruptcy court should look to the choice of law rules of the state where the underlying prepetition complaint was filed, not the choice-of-law rules of the state in which the bankruptcy court sits.