LA: Malpractice Claims Not Assignable in Louisiana!

Taylor v. Babin, 13 So. 3d 633 (La. App. 2009)

LA: Underlying Tort Suit

Student Contributor: Laura Stein

Facts:  Plaintiffs was in a motorboat accident that injured his two passengers.  He did not have liability insurance that would cover the passengers’ injuries so he retained another lawyer to file a voluntary petition in bankruptcy court.  The passengers filed a separate complaint in bankruptcy court to argue their claims against him were not dischargeable in bankruptcy.  The court signed and entered a consent order based upon all parties’ consent and lifted the automatic stay of their lawsuits against Plaintiff and it was found he did negligently cause the accident and was found to be intoxicated at the time but his actions were not wanton or reckless.  Plaintiff in the instant action alleged legal malpractice was committed because at the time the consent order was signed in bankruptcy court, the statute for dischargement of claims did not apply to the actions brought against him because he wasn’t found to act in a wanton or reckless manner and that his lawyers did not properly research whether it applied. Plaintiff assigned his legal malpractice claims to the plaintiffs in the underlying action.  Defendants objected to the petition arguing that plaintiffs had no right of action to bring the lawsuit because legal malpractice claims are not assignable under Louisiana law.

Issue: Is a legal malpractice claim assignable under Louisiana law?

Ruling:  The statute provided that all rights may be assigned, with the exception of those pertaining to obligations that are strictly personal.  While the Louisiana Supreme Court had held that tort actions are not strictly personal, it has been in cases where the plaintiff died subsequent to filing the action.  The assignee-Plaintiffs also argued they could have initiated this action on their own behalf without the assignment. However, that is only in cases where the debtor- increases his insolvency by failing to file a legal malpractice action against former lawyer.  Here, if he did file suit, he would have increased his insolvency by means of legal fees and costs.  Defendants argued legal malpractice claims shouldn’t be assignable for public policy considerations and a majority of other states do not allow it.  An attorney does not owe a legal duty to his client’s adversary when acting on his behalf, so a non-client cannot hold his adversary’s attorney personally liable for malpractice.  To allow malpractice claims to be assignable would be “detrimental to an attorney’s duty of loyalty and confidentiality to his client, would promote collusion, and would increase a lawyer’s reluctance to represent an underinsured or insolvent client”.  However, at least 2 other states (ME and PA) do allow assignment of legal malpractice claims.

Lesson:  Legal malpractice claims are not assignable; it is restricted to only the parties involved.