In Re Edgeworth

Christine Genson, the appellants mother, died on June 7, 1989, while under the care of appellee Dr. Lewis Edgeworth. A month later, Edgeworth filed for protection under chapter 7 of the Bankruptcy Code. Appellants did not participate in the bankruptcy case but, after Edgeworth received a discharge, they sought and obtained bankruptcy court approval to file a medical malpractice claim in state court. Shortly afterward, Edgeworth persuaded the bankruptcy court to reverse itself -- to enforce his discharge by enjoining the lawsuit pursuant to 11 U.S.C. § 524(a). The district court affirmed. The question before us is whether the appellants may pursue their lawsuit against Dr. Edgeworth in order to collect any judgment solely from the proceeds of his malpractice liability policy. We hold that they may do so, because 11 U.S.C. § 524(e) excludes the liability insurance carrier from the protection of bankruptcy discharge and the proceeds of the policy were not property of Edgeworths estate.