ILNews

Legal malpractice claims not assignable

Jennifer Nelson
January 1, 2007
Keywords
Back to TopCommentsE-mailPrintBookmark and Share
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. 
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. My mother got temporary guardianship of my children in 2012. my husband and I got divorced 2015 the judge ordered me to have full custody of all my children. Does this mean the temporary guardianship is over? I'm confused because my divorce papers say I have custody and he gets visits and i get to claim the kids every year on my taxes. So just wondered since I have in black and white that I have custody if I can go get my kids from my moms and not go to jail?

  2. Someone off their meds? C'mon John, it is called the politics of Empire. Get with the program, will ya? How can we build one world under secularist ideals without breaking a few eggs? Of course, once it is fully built, is the American public who will feel the deadly grip of the velvet glove. One cannot lay down with dogs without getting fleas. The cup of wrath is nearly full, John Smith, nearly full. Oops, there I go, almost sounding as alarmist as Smith. Guess he and I both need to listen to this again: https://www.youtube.com/watch?v=CRnQ65J02XA

  3. Charles Rice was one of the greatest of the so-called great generation in America. I was privileged to count him among my mentors. He stood firm for Christ and Christ's Church in the Spirit of Thomas More, always quick to be a good servant of the King, but always God's first. I had Rice come speak to 700 in Fort Wayne as Obama took office. Rice was concerned that this rise of aggressive secularism and militant Islam were dual threats to Christendom,er, please forgive, I meant to say "Western Civilization". RIP Charlie. You are safe at home.

  4. It's a big fat black mark against the US that they radicalized a lot of these Afghan jihadis in the 80s to fight the soviets and then when they predictably got around to biting the hand that fed them, the US had to invade their homelands, install a bunch of corrupt drug kingpins and kleptocrats, take these guys and torture the hell out of them. Why for example did the US have to sodomize them? Dubya said "they hate us for our freedoms!" Here, try some of that freedom whether you like it or not!!! Now they got even more reasons to hate us-- lets just keep bombing the crap out of their populations, installing more puppet regimes, arming one faction against another, etc etc etc.... the US is becoming a monster. No wonder they hate us. Here's my modest recommendation. How about we follow "Just War" theory in the future. St Augustine had it right. How about we treat these obvious prisoners of war according to the Geneva convention instead of torturing them in sadistic and perverted ways.

  5. As usual, John is "spot-on." The subtle but poignant points he makes are numerous and warrant reflection by mediators and users. Oh but were it so simple.

ADVERTISEMENT