ILNews

Legal malpractice claims not assignable

Jennifer Nelson
January 1, 2007
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In an Indiana Supreme Court ruling, the majority of justices held that legal malpractice claims are not assignable and courts cannot require a person to assign his or her chose in action.

In State Farm Mutual Automobile Insurance Co. v. Ruth Estep, Personal Representative of the Estate of Ewing Dan Estep, and Assignee of Rights of James D. Perkins, the high court yesterday reversed the trial court's order during proceedings supplemental forcing James Perkins' assignment of any potential chose in action against State Farm and held invalid any assignment by Perkins against his attorneys.

James Perkins had been ordered by the trial court to assign any cause of action he may have against his insurer, State Farm, to Ruth Estep, the personal representative of the estate of Ewing Dan Estep, who died as a result of injuries suffered from a motorcycle crash caused by Perkins. The estate was trying to recover $615,000 still owed from a judgment against Perkins in a personal injury action initiated before Estep's death.

In the original suit, Perkins retained his personal attorney, Jerry Susong, as co-counsel to Michael Stephenson, who was retained by State Farm. In March 2002, the jury awarded Estep's estate $675,000. The day after the verdict, State Farm paid Perkins' full policy limit of $50,000 to the estate, and the estate initiated proceedings supplemental a month later pursuant to Trial Rule 69(E) against Perkins for the unpaid amount.

Stephenson withdrew that July, concluding he completed his defense obligations under Perkins' insurance policy. Susong continued to represent Perkins. After Stephenson withdrew, the estate sought an order to have Perkins assign to it any cause of action Perkins may have against State Farm. Perkins refused and denied there was basis for any bad faith claims, but the court ordered him to assign to the estate any potential bad faith claims he may have against State Farm.

Perkins assigned to the estate all potential claims, demands, and causes of actions arising from the estate's personal injury claim against him. As a result, the estate sued State Farm in an Illinois court for the uncollected $615,000, alleging State Farm breached its duty of good faith owed to Perkins by not providing a conflict-free defense because Stephenson tried to withdraw his representation of Perkins but was denied. The estate also sued Susong, claming he should have told Perkins that Stephenson had a conflict of interest.

State Farm moved to intervene in the Indiana proceedings supplemental and asked the order compelling Perkins' assignment be vacated. The trial court denied both motions.

The Supreme Court, in a majority opinion written by Chief Justice Randall T. Shepard, concluded just as the court held under Picadilly Inc. v. Raikos, 582 N.E.2d 338, 341 (Ind. 1991), that legal malpractice claims are not assignable. Perkins could file a suit against Susong directly, but he cannot assign this to a third party because such assignments would be harmful to the lawyer-client relationship.

The majority also found the trial court ordering Perkins' forced assignment of his chose in action against State Farm was an error. Perkins can directly sue State Farm or voluntarily assign his chose in action, but he cannot be forced to assign it. Indiana follows the Direct Action Rule that prohibits a third party or judgment creditor from directly suing a judgment debtor's insurance carrier to recover an excess judgment.

In a separate opinion, Justices Ted Boehm and Brent Dickson dissented, noting State Farm should have been allowed to intervene in the proceedings supplemental and that the trial court erred in ordering assignment of Perkins' claims against State Farm.

Justice Boehm wrote that State Farm did not show a cognizable interest under Trial Rule 24(A) to intervene in the proceedings supplemental and does not satisfy all of the requirements under the rule.

Also in his dissent, Justice Boehm wrote that proceedings supplemental courts have a power to compel a judgment debtor to assign the debtor's potential causes of actions against third parties, just as other assets may be compelled to be transferred, so the assignment by the proceedings supplemental court was appropriate even though it was over Perkins' objection. 
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  1. Good luck, but as I have documented in three Hail Mary's to the SCOTUS, two applications (2007 & 2013),a civil rights suit and my own kicked-to-the-curb prayer for mandamus. all supported in detailed affidavits with full legal briefing (never considered), the ISC knows that the BLE operates "above the law" (i.e. unconstitutionally) and does not give a damn. In fact, that is how it was designed to control the lawyers. IU Law Prof. Patrick Baude blew the whistle while he was Ind Bar Examiner President back in 1993, even he was shut down. It is a masonic system that blackballs those whom the elite disdain. Here is the basic thrust:https://en.wikipedia.org/wiki/Blackballing When I asked why I was initially denied, the court's foremost jester wrote back that the ten examiners all voted, and I did not gain the needed votes for approval (whatever that is, probably ten) and thus I was not in .. nothing written, no explanation, just go away or appeal ... and if you appeal and disagree with their system .. proof positive you lack character and fitness. It is both arbitrary and capricious by its very design. The Hoosier legal elites are monarchical minded, and rejected me for life for ostensibly failing to sufficiently respect man's law (due to my stated regard for God's law -- which they questioned me on, after remanding me for a psych eval for holding such Higher Law beliefs) while breaking their own rules, breaking federal statutory law, and violating federal and state constitutions and ancient due process standards .. all well documented as they "processed me" over many years.... yes years ... they have few standards that they will not bulldoze to get to the end desired. And the ISC knows this, and they keep it in play. So sad, And the fed courts refuse to do anything, and so the blackballing show goes on ... it is the Indy way. My final experience here: https://www.scribd.com/document/299040062/Brown-ind-Bar-memo-Pet-cert I will open my files to anyone interested in seeing justice dawn over Indy. My cases are an open book, just ask.

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  3. They say it was a court error, however they fail to mention A.R. was on the run from the law and was hiding. Thus why she didn't receive anything from her public defender. Step mom is filing again for adoption of the two boys she has raised. A.R. is a criminal with a serious heroin addiction. She filed this appeal MORE than 30 days after the final decision was made from prison. Report all the facts not just some.

  4. Hysteria? Really Ben? Tell the young lady reported on in the link below that worrying about the sexualizing of our children is mere hysteria. Such thinking is common in the Royal Order of Jesters and other running sex vacays in Thailand or Brazil ... like Indy's Jared Fogle. Those tempted to call such concerns mere histronics need to think on this: http://www.msn.com/en-us/news/us/a-12-year-old-girl-live-streamed-her-suicide-it-took-two-weeks-for-facebook-to-take-the-video-down/ar-AAlT8ka?li=AA4ZnC&ocid=spartanntp

  5. This is happening so much. Even in 2016.2017. I hope the father sue for civil rights violation. I hope he sue as more are doing and even without a lawyer as pro-se, he got a good one here. God bless him.

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