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Tuesday, September 25, 2007

Ind. Decisions - Supreme Court decides insurance assignment case

In State Farm Mutual Automobile Insurance Co. v. Ruth Estep, a 24-page, 3-2 opinion, Chief Justice Shepard writes for the majority:

In this motor vehicle collision case, defendant’s insurance carrier offered to pay policy limits even as it continued to defend its insured. Plaintiff refused the offer. A jury awarded damages above policy limits, and the carrier immediately paid on its policy.

In proceedings supplemental, the trial court ordered the insured to assign any cause of action he might have against his insurer and directed plaintiff’s counsel to prepare the assignment. The assignment became a global one, which plaintiff deployed to sue both the carrier and defendant’s personal attorney. We held fifteen years ago, however, that assigning claims against lawyers is impermissible. Most of the reasons for that rule also pertain to involuntary assignments such as the one before us. * * *

The trial court’s order requiring Perkins’ forced assignment of his chose in action against State Farm was error. This does not in any way prohibit Perkins from directly suing State Farm or from voluntarily assigning his chose in action.

Conclusion. We reverse the order issued during proceedings supplemental forcing Perkins’ assignment of any potential chose in action against State Farm and hold invalid any assignment by Perkins against his attorneys.

Sullivan and Rucker, JJ., concur.
Boehm, J., concurs and dissents with separate opinion in which Dickson, J., joins. [which begins on p. 11 of 24]

I agree with the majority that under this Court’s precedent in Picadilly, Inc. v. Raikos, 582 N.E.2d 338 (Ind. 1991), Perkins’s legal malpractice claims against his attorney Jerry L. Susong are not assignable. I also agree with the majority’s brief statement that because proceedings supplemental are “merely an extension of the underlying action, the merits of any assigned claim should not be tried in this limited forum.”

I dissent in part because I do not agree with the majority that State Farm should have been allowed to intervene in the proceeding supplemental. The Court of Appeals concluded that State Farm had a right to intervene pursuant to Indiana Trial Rule 24(A). The majority does not directly address intervention as of right but finds permissive intervention proper. I do not agree that State Farm should have been permitted to intervene pursuant to Indiana Trial Rule 24(B). I also disagree with the majority’s view that the trial court erred in ordering assignment of Perkins’s claims against State Farm. * * *

Finally, I believe the majority is mistaken in its concern that permitting involuntary assignments will result in widespread use of that technique. Most insureds cheerfully assign bad faith claims to settle with a plaintiff who obtains a judgment in excess of policy limits. In the rare case where that does not occur, the plaintiff/judgment creditor must evaluate the risks and potential rewards of pursuing a bad faith claim on behalf of an insured when the insured professes satisfaction with the insurer’s performance. The practical barriers to such a claim will deter many if not most such claims. I would permit the Estate to take its chances.

Dickson, J., joins.

Posted by Marcia Oddi on September 25, 2007 02:56 PM
Posted to Ind. Sup.Ct. Decisions