Case Title: STEPHEN R. WINSHIP V. GEM CITY BONE & JOINT, P.C.

Citation: 

Docket Number: S-07-0246

State: wyoming

Court: Wyoming Supreme Court

Date: 2008-06-19T00:00:00Z

Document:
STEPHEN R. WINSHIP V. GEM CITY BONE & JOINT, P.C.2008 WY 68185 P.3d 1252Case Number: S-07-0246Decided: 06/19/2008
APRIL 
TERM, A.D. 2008

 
 

STEPHEN 
R. WINSHIP,Appellant(Defendant),v.GEM CITY BONE 
& JOINT, P.C.,Appellee(Plaintiff).

 
 

Appeal 
from the DistrictCourtofNatronaCounty

The 
Honorable Wade E. Waldrip, Judge

 
 
Representing 
Appellant:

Mark W. 
Gifford, Casper, Wyoming.  

 
 
Representing 
Appellee:

C.M. 
Aron of Aron and Hennig, LLP, Laramie, Wyoming.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

 
 
KITE, 
Justice.

            

[¶1]      This case 
presents the issue of whether an attorney, who distributes the proceeds of a 
personal injury action without paying a medical provider's bills after his 
client executed, with the attorney's knowledge, an assignment of the proceeds to 
the provider, is liable to the medical provider for the amount of those 
bills.  We conclude that the 
attorney is responsible to the medical provider for failing to honor his 
client's assignment and, consequently, affirm.

            

ISSUE

            

[¶2]      Attorney Stephen 
Winship presents the following issue on appeal:

 
 
            
Whether the district court erred in ruling that, as a matter of law, the 
terms of the Authorization to Release 
Medical Records and Consent to Lien obligated Appellant to directly pay 
Appellee the amount of outstanding medical charges from his client's settlement 
proceeds.  

 
 
Although 
worded differently, Gem City Bone and Joint, P.C.'s (GemCity) statement of the issue is 
similar.  

 
 
FACTS

            

[¶3]      Brand Jackman 
retained Mr. Winship to represent him in a personal injury action against 
Wyoming Technical Institute (WTI).  
GemCity provided treatment for 
his injuries, and Mr. Winship requested Mr. Jackman's medical records.  GemCity provided a release form to Mr. 
Winship which stated in relevant part:

 
 
AUTHORIZATION 
TO RELEASE MEDICAL RECORDS

AND 
CONSENT TO LIEN

 
 
TO:      GemCity Bone and Joint, 
P.C.

            
1909 Vista 
Drive

            
Laramie, WY  
82070

 
 
I, 
the undersigned, hereby authorize Stephen R. Winship, my attorney (or any 
attorney/employee of said law firm), to receive and copy any and all of my 
medical, hospital, mental, and psychological records in your possession, 
including a statement of all bills, paid or unpaid.  I waive any privilege to my 
attorneys.  Please do not release 
any information to insurance adjusters or other unauthorized 
individuals.

 
 
I 
further grant to Gem City Bone and Joint, P.C. a lien upon any and all claims of 
liability or indemnity for damages accruing to me for all outstanding charges 
for treatment and care on account of injuries giving rise to such claims and 
which necessitated such services, and I hereby authorize my attorney to pay, 
directly to Gem City Bone and Joint, P.C., all outstanding medical bills from 
any and all monies obligated to be paid to me by reason of any claims of 
liability or indemnity for damages accruing to me on account of injuries giving 
rise to such claims and which necessitated such services.

 
 
Mr. 
Winship signed the document in the space labeled: "ATTORNEY'S SIGNATURE" and 
forwarded it to Mr. Jackman.  Mr. 
Jackman did not send the document back to Mr. Winship, but signed it on January 
27, 2000, and sent it directly to GemCity.  GemCity then sent the medical records to Mr. 
Winship.  In addition, GemCity continued to treat Mr. Jackman, 
resulting in increased medical bills.     

 
 
[¶4]      Jeremy Michaels, 
another attorney, became involved in the personal injury litigation representing 
Mr. Jackman.  Mr. Michaels 
negotiated a settlement of Mr. Jackman's claims with WTI and prepared a 
statement of distribution of the proceeds of the settlement.  The statement, which was signed by Mr. 
Jackman on October 28, 2002, indicated that the proceeds were distributed to Mr. 
Jackman, another member of his family and his attorneys.  The statement also stated:  "CLIENT IS SOLELY RESPONSIBLE FOR 
PAYMENT OF ALL MEDICAL BILLS/LIENS, KNOWN AND UNKNOWN."  Mr. Jackman apparently did not pay 
GemCity.    

 
 
[¶5]      GemCity filed an action against Mr. Winship 
seeking payment of Mr. Jackman's medical bills.  GemCity included claims for breach of 
contract, breach of obligation imposed by law, and quantum meruit.  Mr. Winship filed a motion for summary 
judgment.  On September 11, 2006, 
the district court issued a decision letter granting summary judgment in favor 
of Mr. Winship on GemCity's first two claims.  The court denied Mr. Winship's summary 
judgment motion as to the quantum 
meruit claim.1    

 
 
[¶6]      Mr. Winship and 
GemCity filed cross motions for summary 
judgment on the remaining issues.  
The district court held a hearing on the motions and issued a decision 
letter on May 23, 2007.  It granted 
summary judgment in favor of Mr. Winship on the quantum meruit claim.  The district court, however, revisited 
its earlier summary judgment rulings:

 
 
[T]his 
Court previously granted summary judgment as to GemCity's breach of contract and breach of 
obligation imposed by law claims.  
In conducting additional research for purposes of the currently pending 
motions for summary judgment, this Court became aware of a substantial body of 
case law that addresses the obligation of an attorney to comply with an 
assignment or lien executed by an attorney's client, particularly when that 
attorney knows of or participated in the assignment.

 
 
The 
district court stated, "the majority of courts that have addressed the issue 
have concluded that, when an attorney participates in or knows of an assignment 
of or lien against litigation proceeds, then the attorney is obligated to honor 
that assignment by paying the proceeds directly to the assignee."  The court then ruled:  "This [c]ourt is compelled to follow the 
persuasive path set by the majority of sister jurisdictions that have addressed 
the issue in concluding that, as a matter of law, Winship is liable to 
GemCity for the amount of the 
assignment."     

 
 
[¶7]      Mr. Winship filed 
a motion requesting an opportunity to brief the issue raised by the district 
court in its decision letter, and the district court granted it.  However, after reviewing the parties' 
submissions, the district court issued an order affirming its decision letter of 
May 23, 2007, and entered a judgment in favor of GemCity in the amount of the outstanding 
medical bills.  This appeal 
followed.    

 
 
SUMMARY 
JUDGMENT STANDARD

 
 
[¶8]      Summary judgment 
motions are governed by W.R.C.P. 56(c):

 
 
The 
judgment sought shall be rendered forthwith if the pleadings, depositions, 
answers to interrogatories, and admissions on file, together with the 
affidavits, if any, show that there is no genuine issue as to any material fact 
and that the moving party is entitled to a judgment as a matter of 
law.

 
 
We 
review a district court's summary judgment rulings de novo, using the same materials and 
following the same standards as the district court.  The facts are reviewed from the vantage 
point most favorable to the party opposing the motion, and we give that party 
the benefit of all favorable inferences that may fairly be drawn from the 
record.  Sunshine Custom Paints & Body, Inc. v. 
South Douglas Highway Water & Sewer Dist., 2007 WY 206, ¶ 8, 173 P.3d 398, 401 (Wyo. 2007); Cook v. Shoshone First Bank, 2006 WY 13, 
¶ 11, 126 P.3d 886, 889 (Wyo. 2006).

 
 
DISCUSSION

 
 
[¶9]      Mr. Winship 
maintains that the district court erred as a matter of law when it ruled that he 
was responsible for failing to pay GemCity from the proceeds of Mr. Jackman's 
personal injury action.  He argues, 
first, that he did not enter into a direct contractual obligation with 
GemCity to pay the charges out of the 
proceeds of the settlement.  Mr. 
Winship asserts the district court properly interpreted the release in its 
September 11, 2006, decision letter, where it stated:

 
 
            
The problem with GemCity's cause of action for breach of 
contract is that there was no "contract" between Winship and GemCity; 
rather, the contract is between Jackman and GemCity.  The Release is written such that Jackman grants GemCity a 
lien and Jackman authorizes (but does 
not direct or require) his attorney to pay GemCity directly.  Although Winship signed the Release, 
there is no language included therein requiring him to honor Jackman's agreement 
or even requiring him to pay GemCity directly.

 
 
            
Looking at the plain language of the Release and focusing on a 
determination of the parties' intent, this [c]ourt cannot interpret the Release 
as requiring Winship to pay Jackman's 
medical obligations. 

 
 
(emphasis 
in original; footnote and citation omitted).  However, when the district court 
revisited the issue in its second decision letter, it focused on the law of 
assignments rather than whether, under the plain language of the release, Mr. 
Winship entered into a direct contractual obligation with GemCity.    

 
 
[¶10]   "An assignment' is a transfer of 
property or some other right from one person (the assignor') to another (the 
assignee'), which confers a complete and present 
right in the subject matter to the assignee."  6 Am. Jur. 2d Assignments § 1 (2007) (footnotes 
omitted).  See also, Central Wyo. Med. Lab, LLC v. Med. Testing 
Lab., Inc., 2002 WY 47, ¶ 21, 43 P.3d 121, 129 (Wyo. 2002).  It is not difficult to effectuate an 
assignment of a right or claim.

 
 
Any 
language, however informal, that indicates the intention of the owner of a claim 
or chose in action to transfer it, is sufficient to vest the property in the 
assignee; in determining whether an assignment has occurred, the courts look to 
substance, rather than the form. . . .  
An assignment may be in the form of an agreement or order or any other 
instrument that the parties may see fit to use for that 
purpose.

            

6 Am. 
Jur. 2d Assignments § 114 
(2007).  See also, 6A C.J.S. Assignments § 58 
(2007).

 
 
[¶11]   Assignments are contracts and, 
consequently, are interpreted in accordance with our typical rules of contract 
construction.  Central Wyo. Med. Lab., ¶ 21, 43 P.3d  at 129.   We interpret an unambiguous 
contract as a matter of law and in accordance with the ordinary and usual 
meaning of its terms.  See, Carlson v. Flocchini Invs., 2005 WY 19, 
¶ 15, 106 P.3d 847, 854 (Wyo. 2005).  

 
 
[¶12]   We agree with Mr. Winship that the 
plain language of the release does not, by itself, create a direct contract 
between him and GemCity.  Nevertheless, as the district court 
recognized in its second decision letter, the proper question about the release 
is not whether it created a direct contractual relationship between Mr. Winship 
and GemCity but whether Mr. Jackman properly assigned the 
proceeds of his personal injury claim to GemCity.  We must, therefore, look to the law of 
assignments and the rights and responsibilities created between the assignor, 
assignee and obligor or debtor to resolve the dispute between Mr. Winship and 
GemCity.   

 
 
[¶13]   Mr. Winship argues that many of the 
cases relied upon by the district court do not support a decision that an 
attorney should be liable for his client's medical bills.  First, he emphasizes the fact that the 
release only authorized him to pay 
Mr. Jackman's medical bills rather than directed him to pay the bills.  We are unsure whether Mr. Winship is 
contending that the release language was insufficient to create an assignment of 
the proceeds from Mr. Jackman to GemCity or whether he is arguing that the 
failure to use specific language directing him to pay the bills is important 
because he is an attorney and the assignor was his client.  We conclude that either position is 
untenable. 

 
 
[¶14]   With regard to the first question, 
whether the language used in the release created a valid assignment, Montgomery v. Locomotive Eng'rs' Mut. Life & 
Accident Ins. Ass'n, 47 Wyo. 86, 31 P.2d 71 
(Wyo. 1934), 
offers some guidance.  In that case, 
an insured assigned the proceeds from his life insurance policies with the 
defendant association to the locomotive engineers union to offset the costs of 
his stay in a home operated by the union.  
The assignment stated in relevant part:

 
 
This is 
to authorize the officers of the Locomotive Engineers Mutual Life & Accident 
Insurance Association to deduct whatever amount has been expended by the 
Brotherhood of Locomotive Engineers towards my maintenance in the Highland Park 
Home upon the maturing of my insurance certificates No. 82801-2 in favor of the 
Brotherhood of Locomotive Engineers.

 
 
This 
authority is given with the understanding that a reasonable amount will be left 
of my insurance to take care of my burial expenses, provided I leave no estate 
to take care of same.

 
 

Id. 
at 
72.  As is clear from the language 
of the assignment, the assignor (the insured) simply authorized the obligor (the 
association) to pay the amount due to the assignee (the union); it did not 
direct the obligor to do so.  
Although other issues were raised about the validity of the assignment in 
Montgomery, there 
was no argument that its wording did not create a valid assignment.   

 
 
[¶15]   The assignment language in the 
release at issue here is very similar to the language in Montgomery: 

 
 

I 
hereby authorize my attorney to pay, directly to Gem City Bone and Joint, P.C., 
all outstanding medical bills from any and all monies obligated to be paid to me 
by reason of any claims of liability or indemnity for damages accruing to me on 
account of injuries giving rise to such claims and which necessitated such 
services.

 
 
The 
release clearly indicated that Mr. Jackman, who was the owner of the claim, 
intended to transfer the proceeds to GemCity for payment of his medical 
bills.  It makes no difference 
whether the language authorizes or directs the obligor to honor the assignment 
as long as it indicates that the assignor intended to transfer his right to the 
assignee.  Applying the rule that we 
give effect to the ordinary meaning of the language of an assignment and the 
precedent set forth in Montgomery, we conclude the release effected a 
valid assignment of Mr. Jackman's settlement proceeds to GemCity for payment of his medical 
bills.  

 
 
[¶16]   The next question is whether 
additional or different wording is required to obligate an attorney to honor his 
client's assignment.  As the 
district court indicated in its second decision letter, there are numerous cases 
in which courts have applied basic assignment principles to circumstances like 
those at bar.  Those cases hold that 
an attorney must honor his client's assignment of the proceeds of his claim to a 
creditor.  See, e.g., Moore v. Weinberg, 644 S.E.2d 740 (S.C. 
Ct. App. 2007); Berkowitz v. Haigood, 
606 A.2d 1157 (N.J. Super. Ct. 1992); Romero v. Earl, 810 P.2d 808 (N.M. 
1991).  In Moore, Wheeler was indebted to Moore pursuant to a 
note.  In order to satisfy his debt, 
Wheeler assigned Moore an interest in his anticipated proceeds 
from pending litigation.  Weinberg, 
who was Wheeler's attorney in the litigation, prepared the assignment 
document.  The litigation settled 
and Weinberg distributed the funds to Wheeler, after taking his attorney's 
fee.  Unfortunately, Mr. Weinberg 
"overlooked" the assignment.  
Moore 
initiated an action against Weinberg to recover under the assignment.  Id. at 742-43.  The South Carolina court of appeals ruled that 
Weinberg was required to comply with the assignment and, because he failed to do 
so, the assignee had a claim against him.  
Id. at 746-49.  See also, Hsu v. Parker, 688 N.E.2d 1099, 1102 
(Ohio Ct. App. 1996).     

            

[¶17]   The facts in Berkowitz are very similar to those in 
the case at bar.  The client was 
injured in an automobile accident and received medical treatment from Dr. 
Berkowitz.  To secure payment of the 
medical bills, the client executed a document which stated that the doctor would 
wait for payment from insurance proceeds or from the funds received as a result 
of the client's pending personal injury litigation.  Later, the client signed another 
document which "purported to create a lien against the proceeds of his personal 
injury action and directed and authorized his attorney to disburse the funds to 
the medical provider."  Berkowitz, 606 A.2d  at 1158.  The client's attorney was notified of 
the documents.  Id. at 1159.  The New Jersey Superior Court held that 
the client's assignment was effective and, because the attorney had notice of 
it, he was liable to the doctor for failing to honor it.  Id. at 1159-60.  See also, Brinkman v. Moskowitz, 238 N.Y.S.2d 876 
(N.Y. Sup. Ct. 
1962).  

 
 
[¶18]   There are courts which have refused 
to honor such assignments.  In Quality Chiropractic, PC v. Farmers Ins. 
Co., 51 P.3d 1172, 1181-82 (N.M. Ct. App. 2002), the New Mexico Court of 
Appeals held that the common law rule against assignment of personal injury 
claims prohibited a medical provider from enforcing, against an attorney, an 
assignment signed by the attorney's client.  The New Mexico Court of Appeal's reasoning in Quality Chiropractic is not applicable 
in Wyoming 
because we have expressly recognized the right to assign personal injury causes 
of action.  See, e.g., Northern Utilities Div. of KN Energy, Inc. 
v. Town of Evansville, 822 P.2d 829, 837 (Wyo. 1991).  Moreover, in the case at bar, Mr. Jackman 
assigned the proceeds of his claim rather than the claim itself.  

 
 
[¶19]   In Yorgan v. Durkin, 715 N.W.2d 160, 162 
(Wis. 2006), 
the client signed a document purporting to assign part of the proceeds from his 
personal injury claim to his chiropractor.  
The attorney did not pay the chiropractor from the settlement proceeds, 
but the Wisconsin Supreme Court refused to hold the attorney responsible because 
the assignment specifically included a contingency indicating the attorney could 
refuse to comply with the terms of the assignment, in which case the patient 
would be required to pay the medical bills.  Id. at 165.  The court also refused to enforce the 
assignment on public policy grounds.   
Id. at 167-70.  The case at bar is distinguishable from 
Yorgan because the language used in 
the release did not include a contingency that Mr. Winship could refuse to 
comply with the assignment.      

 
 
[¶20]   As we indicated earlier, Mr. 
Winship argues that many of the cases relied upon by the district court do not 
support a decision that he should be liable for his client's medical bills 
because the assignments in those cases specifically directed the attorney to pay 
the creditor, while Mr. Jackman simply authorized Mr. Winship to pay Gem 
City.  He argues the specific 
direction to the attorneys was an important factor in holding the attorneys 
responsible.  

 
 
[¶21]   While the assignments in many of 
the cases Mr. Winship referred to do contain words specifically directing the 
attorney to pay the proceeds to the assignee, see, e.g., Moore, 644 S.E.2d  at 746; Hsu, 688 N.E.2d  at 1101-02, others do 
not.  For example, in Leon v. Martinez, 638 N.E.2d 511, 512-14 
(N.Y. Ct. App. 1994), a personal injury plaintiff signed a document that simply 
stated, "I give" a percentage of any recovery to certain persons.  The New York Court of Appeals held that 
the document was sufficient to support a claim against an attorney for failing 
to pay settlement proceeds to the assignees.   Id.  
 We see no reason why the 
language effecting an assignment must be more definite or specifically direct 
the obligor to honor the assignment when the obligor is the assignor's 
attorney.  Consequently, as long as 
the intention to transfer the claim or the proceeds thereof is clear, the 
assignment is effective. 

 
 
[¶22]   Moreover, payment of the settlement 
proceeds to a client's valid assignee does not violate an attorney's ethical 
obligations.  When the settlement 
proceeds were distributed in 2002, Rule 1.15(c) of the Wyoming Rules of 
Professional Conduct for Attorneys at Law2 stated in relevant 
part:

 
 
(c) 
Except as stated in this rule or otherwise permitted by law or by agreement with 
the client, a lawyer shall promptly deliver to the client or third person any 
funds or other property that the client or third person is entitled to receive 
and, upon request by the client or third person, shall promptly render a full 
accounting regarding such property.  
Complete records of such account funds and other property shall be kept 
by the lawyer and shall be preserved for a period of five years after 
termination of the representation.

 
 
As the 
plain language of the rule states, the attorney is obligated to deliver to his 
client and third parties any funds they are entitled to receive.  Thus, the rule does not require, or even 
allow, the attorney to pay funds belonging to a third party to his client.  Comment 3 to Rule 1.15 specifically 
recognizes the possibility of "a client's creditors [having] just claims against 
funds or other property in a lawyer's custody."  

 
 
[¶23]   In Leon, the court interpreted a rule with 
similar language as requiring an attorney to distribute to the client only 
property that he is "entitled to receive."  
Leon, 638 N.E.2d  at 514.  In Bonanza Motors, Inc. v. Webb, 657 P.2d 1102, 1105 (Idaho Ct. App. 1983), the 
Idaho Court of Appeals interpreted a similar rule and stated:  "In our view, the rule does not shield 
the law firm from responsibility for failing to transmit the assigned funds to 
the creditor-assignee."  See also, Moore, 644 S.E.2d  at 747-48.  The Berkowitz court also held that, under 
the New Jersey rules of professional conduct, an attorney has an obligation to 
honor his client's assignment of the proceeds of pending litigation to a third 
party.   Berkowitz, 606 A.2d  at 1159-60.  Like these courts, we believe that an 
attorney who holds funds for his client stands in the same position as any other 
obligor with respect to an assignment of those funds by his client to a 
creditor.      

 
 
[¶24]   As we explained earlier, the 
language used in the release clearly evidenced Mr. Jackman's intention to 
transfer his right to the proceeds of his personal injury action to GemCity for payment of his medical 
bills.  We turn now to the question 
of what happens when an obligor/debtor fails to honor an assignment.  

 
 
[¶25]   The responsibility of the 
obligor/debtor to the assignee of a debt has been examined in treatises.  6 Am Jur. 2d Assignments § 142 (2008) discusses the 
effect of the obligor's payment to the assignor after notice of an 
assignment:

 
 
After 
a notice of an assignment has been given to the obligor, the assignor has no 
remaining power of release. Thus, if a notice 
of the assignment has been given to the obligor, he or she must pay the 
assignee, and remains liable to the assignee 
if he or she pays the assignor instead. 

 
 
(footnotes 
omitted).  Similarly, 6A C.J.S. Assignments § 106 (2008) states, in 
relevant part:

When 
there is a valid assignment in place, performance under a contract runs to the 
assignee.  Thus, when a creditor 
assigns its interest in an existing debt owed to it, the debtor must generally 
pay the debt to the assignee, not the original creditor.

 
 
. 
. . . 

 
 
[A]fter 
a debtor has received notice of a valid assignment, or obtained knowledge of it 
in any manner, a payment to the assignor or any person other than the assignee 
is at the debtor's peril and does not discharge him or her from liability to the 
assignee, and the debtor's settlement with and release by the assignor will not 
defeat the assigned right . . . .

 
 
(footnotes 
omitted).  Many courts have applied 
these basic principles to hold an attorney, who has notice of the assignment, 
responsible for failing to honor his client's assignment to a third party.   See, e.g., Hsu, 688 N.E.2d  at 1102; Berkowitz, 606 A.2d at 1159-60; Brinkman, 238 N.Y.S.2d  at 876; Bonanza Motors, 657 P.2d at 1104-05; Romero, 810 P.2d  at 809.3   

 
 

[¶26]   Mr. Winship does not seriously 
argue that he did not have notice of the assignment.  He signed the release document himself 
and sent it on to Mr. Jackman.  
Although Mr. Jackman did not return the executed document to Mr. Winship, 
he should have been aware that the release had been signed because he received 
the medical records.  Thus, the 
district court properly held Mr. Winship responsible to GemCity and entered judgment against the 
attorney in the amount of Mr. Jackman's medical bills.             

 
 
CONCLUSION

 
 
[¶27]   Mr. Jackman clearly assigned his 
interest in the proceeds of his personal injury action to GemCity for payment of his medical 
bills.  As obligor, Mr. Winship was 
required to honor that assignment.  
It is irrelevant that he had not entered into a direct contract with 
GemCity.  Under the well-settled law of 
assignments, an obligor who has notice of an assignment and fails to honor it is 
responsible to the assignee.  The 
district court, therefore, properly held Mr. Winship was responsible to 
GemCity for Mr. Jackman's medical bills.4   

 
 
[¶28]   Affirmed. 

 
 
FOOTNOTES

 
 

1The district 
court found "it necessary to bifurcate' its discussion of those costs that were 
incurred as a result of medical treatment by Gem City versus those costs that 
were litigation-related expenses (such as expert witness fees)."  The district court ruled that there was 
insufficient information about any litigation related expenses and, therefore, 
denied summary judgment as to that matter.  
The record was subsequently clarified to establish that GemCity was not claiming any litigation 
related expenses.  Thus, that issue 
is not presented here.

 
 

2A 
substantially similar version of the rule is currently codified at Wyoming Rules 
of Professional Conduct for Attorneys at Law 
1.15(e).

 
 

3See Stilson v. Hodges, 934 P.2d 736 
(Wyo. 1997), 
for a discussion of similar concepts in the context of insurance 
subrogation.  

 
 

4We offer no 
opinion on whether Mr. Winship could proceed against his client or the other 
attorney, Mr. Michaels, to recover the amounts owed to GemCity.