Title: State Farm Mutual Automobile Insurance Co. v. Ruth Estep
Citation: N/A
Docket Number: 03S01-0505-CV-255
State: Indiana
Issuer: Indiana Supreme Court
Date: September 25, 2007

ATTORNEYS FOR APPELLANT 
 
 
 
 
ATTORNEYS FOR APPELLEE 
Karl L. Mulvaney 
Peter Campbell King 
Dennis F. Cantrell 
J. Kevin King 
Nana Quay-Smith 
Columbus, Indiana 
Candace L. Sage 
 
Indianapolis, Indiana 
  
 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 03S01-0505-CV-255 
 
STATE FARM MUTUAL AUTOMOBILE  
INSURANCE COMPANY, 
Appellant (Proposed Intervenor 
below), 
 
v. 
 
RUTH ESTEP, PERSONAL REPRESENTATIVE 
OF THE ESTATE OF EWING DAN ESTEP, AND 
ASSIGNEE OF RIGHTS OF JAMES D. PERKINS, 
 
 
 
 
 
 
 
 
Appellee (Plaintiff below). 
_________________________________ 
 
Appeal from the Bartholomew Circuit Court, No. 03C01-0008-CT-1117 
The Honorable Stephen R. Heimann, Judge 
_________________________________ 
 
On Petition To Transfer from the Indiana Court of Appeals, No. 03A01-0401-CV-30 
_________________________________ 
 
September 25, 2007 
 
Shepard, Chief Justice. 
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. 
  
 
Facts and Procedural History 
 
James Perkins was driving his pickup truck through Columbus, Indiana, when he hit the 
rear of Dan Estep’s motorcycle.  Estep suffered devastating injuries.1  In August 2000, Estep 
filed a personal injury action against Perkins. 
 
Perkins’ insurer, State Farm Mutual Automobile Insurance Company, retained attorney 
Michael Stephenson to defend him.  Perkins also retained his personal attorney, Jerry L. Susong, 
as Stephenson’s co-counsel.  Estep died before trial, and his Estate was substituted as plaintiff. 
 
Perkins’ automobile policy with State Farm had a $50,000 per person policy limit.  State 
Farm repeatedly offered to pay Estep the $50,000 policy limit, but Estep refused to accept the 
offer or submit a demand. 
 
Estep’s claim went to trial, and in March 2002 the jury awarded Estep’s Estate $650,000 
in compensatory damages and $15,000 in punitive damages.  The day after the verdict, State 
Farm paid Perkins’ full policy limit of $50,000 to the Estate. 
   
In April 2002, pursuant to Trial Rule 69(E), the Estate initiated proceedings supplemental 
to execution against Perkins, seeking satisfaction of the $615,000 that remained unpaid.2 
                                             
 
1 As a result of this collision, Perkins was convicted of operating a vehicle while intoxicated causing serious bodily 
injury, a class D felony.  See Perkins v. State, 812 N.E.2d 836, 837 (Ind. Ct. App. 2004). 
2 In accordance with standard practice, the Estate filed these proceedings supplemental in the same court and under 
the same cause number as the original proceeding against Perkins.  (Appellant’s App. at 66, 70-71.) 
 
 
 
2
 
 
 
Stephenson withdrew in July 2002, concluding he had completed his defense obligations 
under Perkins’ insurance policy.  Susong continued to represent Perkins.  Subsequent to 
Stephenson’s withdrawal, the Estate sought an order directing Perkins to assign to it any cause of 
action Perkins might have against State Farm.  State Farm was not a party to the proceedings 
supplemental and did not receive notice that the Estate was seeking the assignment.3 
 
When requested to assign any potential bad faith claim he might have against State Farm, 
Perkins refused and denied that there was any basis for such a claim.  Susong said on Perkins’ 
behalf that State Farm 
defended [Perkins] all the way through.  I personally would not . . . open[] the 
insurance company up to defending another case that their own insured does not 
wish to bring, without some showing of fact that they did do something.  . . . I’m 
not aware of any bad faith dealing on [State Farm’s] part[].   
(Hr’g Tr. at 7.) 
 
Over Perkins’ objection, the court ordered Perkins to assign to the Estate any potential 
bad faith claim Perkins might have against State Farm.  The assignment Perkins presented turned 
out to be even broader.  It assigned to the Estate all potential “claims, demands, and cause or 
causes of action” arising out of the Estate’s personal injury action against Perkins, including a 
specific assignment of any potential cause of action against State Farm. 
 
State Farm first received notice of the assignment in September 2003, when the Estate, as 
Perkins’ assignee, sued State Farm in an Illinois state court asking $615,000 in damages – the 
amount by which the Indiana judgment against Perkins exceeded his insurance coverage.4  The 
complaint alleged that State Farm breached its duty of good faith owed to Perkins by failing to 
provide Perkins with a conflict-free defense.  Asked at oral argument what indication there was 
                                             
 
3 At the time of Stephenson’s withdrawal, there was no indication that Perkins had any claim against State Farm or 
that the Estate sought assignment of any potential claim against State Farm.   
4 Since a proceeding supplemental is merely an extension of the underlying action, the merits of any assigned claim 
should not be tried in this limited forum.  See First Bank of Whiting v. Sisters of Mercy Health Corp., 545 N.E.2d 
1134, 1141 (Ind. Ct. App. 1989) (proceeding supplemental not appropriate forum to try a judgment creditor’s cause 
of action against a garnishee-defendant); Protective Ins. Co. v. Steuber, 175 Ind. App. 139, 370 N.E.2d 406 (1977) 
(garnishee entitled to change of venue where trial likely).    
 
 
 
3
 
 
that State Farm had acted in bad faith, counsel replied that there was an insurance policy, that it 
facially covered the claim, and that a judgment was entered against the insured.5 
 
The Estate also sued Perkins’ personal attorney Susong in the Illinois complaint, claiming 
Susong “actively participated” in Perkins’ defense and should have alleged to Perkins that 
Stephenson had a conflict of interest.  Stephenson was not named as a defendant. 
 
State Farm then moved to intervene in the Indiana proceedings supplemental and asked 
that the order compelling Perkins’ assignment be vacated.  The trial court denied both motions 
without comment or findings.  State Farm appealed from these denials. 
 
The Court of Appeals held that State Farm was entitled to notice and an opportunity to 
intervene in the proceedings supplemental.  State Farm Mut. Auto. Ins. Co. v. Estep, 818 N.E.2d 
114, 125-26 (Ind. Ct. App. 2004).6  The Court of Appeals further held that a court hearing a 
proceeding supplemental could force assignment of any claim Perkins had against State Farm, 
but only if the court first determined that a viable claim existed.  Id.  We granted transfer.  State 
Farm Mut. Auto. Ins. Co. v. Estep, 831 N.E.2d 748 (Ind. 2005). 
 
 
I.  Assignability in General 
 
Under early common law, hardly any chose in action was assignable.  3 Samuel 
Williston, A Treatise on the Law of Contracts § 405, at 7 (3d ed. 1960).  Both Lord Coke and 
                                             
 
5 The complaint also alleged fraud, constructive fraud, and breach of contract against State Farm.  All counts relied 
on State Farm’s alleged failure to provide Perkins a conflict-free defense.  The claim of conflict rested on 
Stephenson’s unsuccessful attempt to withdraw his representation after he had trouble gaining Perkins’ attendance at 
hearings.  Stephenson’s motion to withdraw was denied on October 8, 2001, and Stephenson continued to prepare 
for trial. 
6 We agree that State Farm should have been permitted to intervene.  The Court of Appeals concluded State Farm 
had a right to intervene pursuant to Trial Rule 24(A), but we conclude instead that State Farm should have been 
permitted to intervene pursuant to Rule 24(B).  A party may be permitted to intervene “when an applicant’s claim or 
defense and the main action have a question of law or fact in common.”  Ind. Trial Rule 24(B)(2).  Perkins argued 
during the proceedings supplemental that he had no basis for any bad faith claim against State Farm and thus had 
nothing to assign.  (Appellant’s App. at 130.)  Upon receiving notice of the assignment, State Farm moved promptly 
to intervene in the proceedings supplemental, advancing an identical defense as regards the involuntary assignment.  
(Id. at 124-27.) 
 
 
 
4
 
 
Blackstone argued that assignment constituted champerty and maintenance, which were 
discouraged by the “‘wisdom and policy of the sages and founders of our law.’”  Id. (quoting 
Lampet’s Case (Eng.) 10 Coke, 46a, 48a).  See also Draper v. Zebec, 219 Ind. 362, 372, 37 
N.E.2d 952, 956 (1941) (“In Blackstone’s time it was thought that many, for the furtherance of 
pretended rights, conveyed some interest therein to great men in order to gain their support and 
influence over the courts in the interests of their cause.”).7  Discounting the fear of maintenance, 
others argued that assignment was barred by the doctrine of privity.  J.B. Ames, The Disseisin of 
Chattels: Inalienability of Choses in Action, 3 Harv. L. Rev. 337, 339 & n.2 (1890) (noting that 
rule barring assignments predated laws against maintenance and was justified in other European 
countries on grounds that such personal rights were non-transferable).  The intangible nature of a 
chose in action and the lack of commercial necessity are also credited as contributing to the non-
assignment rule.  4 Arthur Corbin, Corbin on Contracts: A Comprehensive Treatise on the Rules 
of Contract Law § 856, at 403 (1963). 
 
Whatever the reason for this rule, a variety of forces combined over the centuries to work 
its slow reversal.  The chose in action based on contract was the first to become assignable, 
primarily out of economic necessity.  Next, with the de-emphasis of privity, the passage of 
English statutes, and the demise of laws against champerty, choses in action for torts against 
personal property slowly gained the power of assignment.  The assignment of tort suits growing 
out of an injury to the person, however, or for wrongs done to the person, reputation, or feelings 
of the injured party, remained unassignable. 
 
The common law in most states today, including Indiana, teaches that any chose in action 
that survives the death of the assignor may be assigned.  “‘[A]ny cause or right of action may be 
assigned that, in accordance with the rules relating to the survivability of causes of action . . . 
would, on the death of the assignor, survive to his legal representative.’”  Armstrong v. Ill. 
Bankers Life Ass’n, 217 Ind. 601, 619, 29 N.E.2d 415, 422 (1940) (quoting 6 C.J.S. 
Assignments § 30).  An English statute on the survival of actions enacted in 1330 is responsible 
                                             
 
7 Overruled in part, O’Donnell v. Krneta, 238 Ind. 582, 154 N.E.2d 45 (1958). 
 
 
 
5
 
 
for this connection between survival and assignment.8  As one might expect, this rule derived 
from an English statute enacted more than a century before the invention of movable type is not 
tightly enforced. 
 
It seems anachronistic today to resolve the issue of assignability of a chose in action by 
deciding whether such a claim would survive the client’s death.  Instead, as we said in Picadilly, 
Inc. v. Raikos, 582 N.E.2d 338, 341 (Ind. 1991), “Assignment should be permitted or prohibited 
based on the effect it will likely have on modern society, and the legal system in particular.”  
This is a question properly within our purview as common law judges. 
 
 
II.  Legal Malpractice Chose in Action 
 
In Picadilly, we held that legal malpractice claims are not assignable.  Two primary 
policy concerns drove that conclusion: “the need to preserve the sanctity of the client-lawyer 
relationship, and the disreputable public role reversal that would result during the trial of 
assigned malpractice claims.”  Id. at 342.  We observed that assigning such claims would almost 
certainly result in the “merchandizing [of] such causes of action . . . which would encourage 
unjustified lawsuits against members of the legal profession, generate an increase in legal 
malpractice litigation, promote champerty and force attorneys to defend themselves against 
strangers.”  Id.  Balancing the advantages and disadvantages of such assignments, we barred 
assignment of legal malpractice claims, noting clients may still make these claims directly 
against their attorneys, but they cannot assign their choses in action.  Id. at 345. 
 
Perkins signed a general assignment to the Estate that included an assignment of any 
claim Perkins might have against his personal attorney Susong.  The Estate then used the 
assignment to sue Susong, alleging negligence and breach of duty to defend Perkins.  The 
complaint contended that Susong breached his duty of care owed to Perkins by failing to inform 
                                             
 
8 4 Edw. 3, c. 7 (1330).  That statute permitted the executor of a decedent’s estate to sue on actions for trespass to 
chattels owned by the decedent.  Courts interpreting this statute came to view the executor as the assignee of the 
decedent’s chose in action.  See W.W. Allen, Annotation, Assignability of Claim in Tort for Damage to Personal 
Property, 57 A.L.R.2d 603, 619 (1958). 
 
 
 
6
 
 
him that Stephenson had a conflict and by failing to require State Farm to appoint alternative 
counsel. 
 
Although Perkins could directly file a complaint against Susong, or Stephenson for that 
matter, Perkins cannot assign this opportunity against either of his attorneys.  As we explained in 
Picadilly, such assignments would likely be very harmful to the lawyer-client relationship.  582 
N.E.2d at 345.9  Perkins’ assignment of this claim is invalid. 
 
 
III.  Insured’s Chose in Action Against Insurer 
 
To be sure, an insured may directly assert a claim against an insurer for breach of the 
duty of good faith.  Erie Ins. Co. v. Smith ex rel. Hickman, 622 N.E.2d 515, 519 (Ind. 1993) 
(“recognition of a cause of action for the tortious breach of an insurer’s duty to deal with its 
insured in good faith is appropriate”).  This duty and resulting cause of action arise out of the 
insurance contract between the insured and the insurer.  Menefee v. Schurr, 751 N.E.2d 757, 760 
(Ind. Ct. App. 2001) (tort arises from “special relationship” between insured and insurer). 
 
On the other hand, like virtually every other American jurisdiction, Indiana follows the 
Direct Action Rule, prohibiting a third party or judgment creditor from directly suing a judgment 
debtor’s insurance carrier to recover an excess judgment.  See, e.g., City of South Bend v. 
Century Indem. Co., 821 N.E.2d 5, 9-10 (Ind. Ct. App. 2005) (“The ‘direct action rule’ bars a 
party from pursuing a claim based on the actions of an insured directly against the insurer.”);10 
Menefee, 751 N.E.2d at 761 (any excess liability of insurance carriers arises out of relationship 
between insurer and insured, and insurance carrier owes no duty to third party); Bennett v. Slater, 
                                             
 
9 Allowing a client to assign his chose in action against his attorney would weaken the attorney’s duty of loyalty and 
confidentiality.  In addition, this could become a dangerous “bargaining chip in the negotiation of settlements—
particularly for clients without a deep pocket.  An adversary might well make a favorable settlement offer to a 
judgment-proof or financially strapped client in exchange for the assignment of that client’s right to bring a 
malpractice claim against his attorney.”  Picadilly, 582 N.E.2d at 342-43. 
10 The direct action rule is “well-settled” in Indiana, subject to a limited exception “[w]here the plaintiff is not suing 
the insurance company to establish that its insured committed a tort against the plaintiff, but rather is suing to 
establish whether the insurer can deny coverage or whether the insurance policy remained in effect, such suit is not a 
direct action against an insurer.”  City of South Bend, 821 N.E.2d at 10 (quotation omitted). 
 
 
 
7
 
 
154 Ind. App. 67, 289 N.E.2d 144 (1972) (possible tort action available for insured to sue insurer 
directly, not available to third party). 
 
The direct action rule is so widely embraced as the result of shared conclusions about the 
adverse consequences flowing from third parties suing carriers directly.  Menefee, 751 N.E.2d at 
761 n.2 (noting, in 2001, all but four states followed the direct action rule).  The California 
Supreme Court once abandoned the direct action rule, then reversed itself after a decade of 
“adverse social and economic consequences.”  Moradi-Shalal v. Fireman’s Fund Ins. Co., 758 
P.2d 58, 66-68 (Cal. 1988) (overruling Royal Globe Ins. Co. v. Superior Court, 592 P.2d 329 
(Cal. 1979)).   The California court concluded that permitting third-party direct actions against 
insurance companies promoted multiple-litigation, unwarranted settlement demands, escalating 
insurance costs, and serious conflicts of interest between the insureds and their insurers: 
[Allowing direct suits by third parties] promotes multiple litigation, because . . . 
[it] encourages . . . two lawsuits by the injured claimant: an initial suit against the 
insured, followed by a second suit against the insurer for bad faith refusal to 
settle. . . .  [It also] encourage[s] unwarranted settlement demands by claimants, 
and . . . coerce[s] inflated settlements by insurers seeking to avoid the cost of a 
second lawsuit and exposure to a bad faith action. . . .  [It may also lead to] 
escalating insurance costs to the general public resulting from insurers’ increased 
expenditures to fund coerced settlements . . . .  [Finally it] create[s] a serious 
conflict of interest for the insurer, who must not only protect the interests of its 
insured, but also must safeguard its own interests from the adverse claims of the 
third party claimant.  This conflict disrupts the settlement process and may 
disadvantage the insured. 
Id. at 66-67 (citations omitted). 
 
Our Court of Appeals correctly recognized that involuntary assignment of claims against 
carriers whose insureds do not believe they have been wronged by their insurance companies 
was inconsistent with the direct action rule.  And it would produce roughly the same results.  
  
First, permitting these forced assignments would certainly result in multiple litigation, as 
it would understandably become ordinary practice for judgment creditors to pursue insureds’ 
insurance carriers where insureds cannot themselves fulfill the judgment.   
 
 
 
 
8
 
 
Second, these assignments would change adversely the dynamic in settlement 
negotiations.  A new consideration in the bargaining – and one that would affect whether people 
choose to exercise their right to trial – would be the possibility of an excess coverage claim and 
the cost of litigating it, even successfully.  This realistic concern would exacerbate potential 
conflicts of interest between the insured and the insurer, as the insurer would be forced to greater 
vigilance in the course of simultaneously protecting both its interest and the insured’s interest. 
 
Third, the increased risk and cost would be borne by insureds who never make a claim 
and found their insurance service satisfactory.  Allowing judgment creditors to force assignments 
in an attempt to recover judgments above the insured amount would render meaningless the 
bargains made in the marketplace between millions of insureds and hundreds of insurers about 
the amounts of policy coverage and the premiums necessary under standard underwriting 
principles to cover those policy amounts. 
 
This case illustrates sharply how consumer agreements between insureds and their 
insurers would be disregarded as judgment creditors attempt to recover amounts not insured for.  
Perkins and State Farm agreed to a $50,000 policy, and Perkins – and other consumers – paid 
premiums based on State Farm’s calculation of risk.  State Farm repeatedly offered to pay full 
policy limits to the Estate, and indeed, paid policy limits the day after judgment.  Nonetheless, 
the Estate forced an assignment of Perkins’ alleged cause of action against State Farm in an 
attempt to recover an additional $615,000.  The $615,000 excess judgment was clearly not part 
of State Farm’s bargained-for risk based on a $50,000 consumer agreement.   
 
More importantly, however, State Farm’s increased risk would affect more than just 
Perkins’ premiums.  It would affect all the drivers who never experience a collision, drivers who 
think they are paying for a stated amount of coverage.  Their real coverage would extend to 
some higher number that is sufficient to cover excess payouts and, of course, additional legal 
costs associated with litigating the proper amount of the payout above the stated limits.  In effect, 
drivers who never have an accident would have to pay additional premiums to cover the requests 
of claimants who think the insureds’ carriers did not do as good a job for the insureds as the 
insureds themselves think they did.   
 
 
 
9
 
 
 
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.11 
 
 
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. 
                                             
 
11 See, e.g., Economy Fire & Casualty Co. v. Collins, 643 N.E.2d 382, 384 (Ind. Ct. App. 1994) (insured’s estate 
voluntarily entered into assignment agreement with plaintiff, assigning estate’s cause of action against insurer, but 
releasing estate from any future obligation). 
 
 
 
10
 
 
Boehm, Justice, concurring in part and dissenting in part. 
 
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. 
I.  Jurisdiction of Proceedings Supplemental over the Merits of an Assigned Claim 
 
I agree with the majority that a proceeding supplemental is not the proper forum to 
resolve the merits of an assigned claim.  The majority did not advance its reasoning supporting 
this conclusion.  I take this opportunity to do so because I believe some of the reasons for this 
conclusion are also relevant to the propriety of permitting State Farm to intervene in this case. 
 
The resolution of the merits of an assigned claim in proceedings supplemental is 
inconsistent with the statutory scheme governing proceedings supplemental.  Before the adoption 
of the Indiana Trial Rules in 1970, it was well established that proceedings supplemental were 
filed as new and independent civil actions.  Baker v. State ex rel. Mills, 109 Ind. 47, 52, 9 N.E. 
711, 713 (1887); Burkett v. Holman, 104 Ind. 6, 11–12, 3 N.E. 406, 409–10 (1885).  Indiana 
Trial Rule 69(E) effected a substantial change in the law.  The Civil Code Study Commission’s 
comment on Trial Rule 69(E) reads in pertinent part: 
Rule 69(E) retains the basic statutes upon [proceedings supplemental] but 
introduces simpler pleadings and procedure.  However, this rule makes some 
significant changes.  For one thing, the court rendering judgment retains venue or 
 
 
 
11
 
 
jurisdiction over proceedings supplemental, contrary to prior law which fixed 
venue at the defendant’s residence.  Relief is allowed by motion, and the order to 
appear in proceedings supplemental is granted ex parte without hearing, thus 
clarifying present procedures.  Necessarily, this means that the remedy is merely a 
continuation of the original action both in name and in cause number. 
Indiana Rules of Civil Procedure: Proposed Final Draft 262 (1968).  In the years since Trial Rule 
69(E) was adopted, Indiana courts have routinely held that proceedings supplemental are merely 
extensions of the underlying action, not separate and independent actions.  See, e.g., Arend v. 
Estler, 737 N.E.2d 1173, 1175 (Ind. Ct. App. 2000); Citizens Nat’l Bank v. Harvey, 167 Ind. 
App. 582, 589, 339 N.E.2d 604, 608 (1976).  Consequently, proceedings supplemental serve the 
limited purpose of determining whether an asset is in the judgment debtor’s possession or subject 
to the judgment debtor’s control and can be attached to satisfy the judgment.  Kirk v. Monroe 
County Tire, 585 N.E.2d 1366, 1368 (Ind. Ct. App. 1992).   
 
Proceedings supplemental to execution have historically been summary in nature and 
have facilitated the timely collection of unsatisfied judgments.  Lewis v. Rex Metal Craft, Inc., 
831 N.E.2d 812, 820 (Ind. Ct. App. 2005).  But proceedings supplemental have refused to serve 
as forums for hearing new and independent causes of action that the debtor may have against 
third parties.  See First Bank of Whiting v. Sisters of Mercy Health Corp., 545 N.E.2d 1134, 
1141 (Ind. Ct. App. 1989), trans. denied (concluding that a proceeding supplemental is not an 
appropriate forum to try a judgment creditor’s cause of action against a garnishee-defendant).  
Thus, once assignments of actions were made, there was nothing left for the proceedings 
supplemental court to do.  Trial Rule 69(E) authorizes the court in proceedings supplemental to 
“apply” property to the judgment as provided in the statute.  The statute authorizes the 
proceedings supplemental court to order any non-exempt “property, income, or profits of the 
judgment debtor . . . to be applied to the satisfaction of the judgment.”  Ind. Code § 34-55-8-7(a) 
(2004).  It does not purport to confer jurisdiction over the merits of the assigned claim. 
 
There are also practical reasons why the merits of an assigned claim should not be tried in 
proceedings supplemental.  There is no jury in a proceeding supplemental, and one of the parties 
may be entitled to a jury on the merits of the claim.  In this case, the merits of the judgment 
debtor’s claim against State Farm are at least somewhat related to the claim that resulted in the 
judgment that the Estate seeks to execute.  That is not always the case.  For example, resolution 
 
 
 
12
 
 
of an unliquidated tort claim may entail a variety of issues inappropriate for the court that created 
the judgment.  In addition, the claim may turn on witnesses or other evidence that are difficult or 
impossible to secure in the forum giving rise to the judgment.  Perhaps more importantly, Trial 
Rule 69(E) contemplates expedited procedures that may be unfair to resolution of the merits on 
an unliquidated claim.  To resolve these inherent tensions, either the claim will be tried in a 
truncated way or the proceeding supplemental will be converted into a full-blown trial.  There is 
no reason to choose either of these undesirable alternatives.  Requiring the matter to be tried as a 
freestanding independent lawsuit avoids both.   
II.  Intervention 
 
In a footnote the majority states that State Farm should have been permitted to intervene 
pursuant to Trial Rule 24(B).  The majority does not directly address the holding of the Court of 
Appeals that State Farm was entitled to intervene as of right.  For the following reasons, I 
conclude that intervention, whether of right or permissive, was improper, and the trial court 
properly denied State Farm’s motion. 
 
Motions to intervene as a matter of right are governed by Trial Rule 24(A).  Persons 
seeking to intervene as a matter of right pursuant to Trial Rule 24(A) “must show (1) that they 
have an interest in the subject of the action; (2) that the disposition of the action may as a 
practical matter impede their protection of that interest; and (3) that representation of their 
interest by existing parties is inadequate.  Herdrich Petroleum Corp. v. Radford, 773 N.E.2d 319, 
324 (Ind. Ct. App. 2002), trans. denied.  Whether a particular factual situation satisfies this three-
part test is within the trial court’s discretion.  Id. 
 
If the merits of Perkins’s assigned claim against State Farm were properly before the 
proceedings supplemental court, presumably State Farm would be entitled to intervene.  
However, the “subject matter of the action” in the proceedings supplemental was limited to the 
question of whether to assign Perkins’s potential claim against State Farm.  That subject matter 
did not include an evaluation of the merits of the assigned claim.  State Farm claims an interest 
in the question of who, as between the Estate and Perkins, had the right to bring a bad faith 
claim.  In support of this argument, State Farm cites the statement of Perkins’s attorney who 
states that Perkins knew of no evidence that would support a bad faith claim against State Farm: 
 
 
 
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I was just saying that I would not have Mr. Perkins voluntarily agree to an 
assignment to bring in a third party on the basis that there may be some reason 
that they owe something that we have no objection to.  They defended him.  We 
discussed that considerably as far as they defended him far beyond and they had a 
suit separate which the court here can take notice of, as far as bringing them into 
the suit.  They defended it all the way through.  I personally would not be party to 
opening the insurance company up to defending another case that their own 
insured does not wish to bring, without some showing of fact that they did do 
something.  Because I’m not aware of any bad faith dealing on their parts . . . .  
But personally on his behalf I would not advise him nor have him voluntarily 
grant an assignment that would open up a third party to a law suit.”  [Transcript 
9/16/02 Hearing pp 7-8]. 
From this statement, State Farm infers that Perkins did not intend to bring a lawsuit for bad faith 
against State Farm.  State Farm reasons that it was interested in the assignability of Perkins’s 
claim because if there were no assignment the only party entitled to bring suit (Perkins) would 
not have sued.  I do not believe that State Farm has stated a cognizable interest under Trial Rule 
24(A).  In my view, State Farm has merely alleged an interest in not being sued.  Standing alone 
this is insufficient to establish that a would-be-intervenor is “interested” in the subject matter of 
an action.12  In simple terms, a party cannot sue just to prevent the opponent from asserting a 
claim; the defense of the claim is the means to assert that interest.  And once the issue is in court 
in one forum, a declaratory judgment in another court should be denied on equitable principles. 
 
The authority cited by State Farm does not dictate a contrary result.  Indiana courts have 
recognized that insurers have a right to intervene in tort actions between the insured and an 
underinsured motorist.  See, e.g., Westfield Ins. Co. v. Axsom, 684 N.E.2d 241, 244 (Ind. Ct. 
App. 1997); Vernon Fire & Cas. Ins. Co. v. Matney, 170 Ind. App. 45, 50-51, 351 N.E.2d 60, 64 
(1976).  These decisions have recognized that insurers have a cognizable interest warranting 
intervention in the tort actions between the insured and an underinsured tortfeasor because the 
underinsured motorist’s liability to the insured is “inseparably tied to the legal liability” of the 
insurer in subsequent contract litigation with the insured.  Axsom, 684 N.E.2d at 244.  In 
                                             
 
12 See, e.g., Laube v. Campbell, 215 F.R.D. 655, 657 (M.D. Ala. 2003) (finding that corrections officers were not 
entitled to intervene as of right under Rule 24 of the Federal Rules of Civil Procedure in an ongoing lawsuit because 
they merely alleged that the lawsuit exposed them to a speculative risk of future civil and criminal liability); Bolden 
v. O’Connor Cafe of Worcester Inc., 734 N.E.2d 726, 731, 735 n.17 (Mass. App. Ct. 2000) (stating that “having to 
engage in subsequent litigation is not, in and of itself, an impairment to a proposed intervener’s interest which 
justifies intervention” under statute requiring a would-be-intervenor to “claim an interest relating to the property or 
transaction which is the subject of the litigation”). 
 
 
 
14
 
 
contrast, the question of whether to assign Perkins’s bad faith claim does not involve any 
determination that State Farm is liable on this claim. 
 
State Farm also does not satisfy the other two requirements of intervention as of right.  
Trial Rule 24(A) provides for intervention if “the disposition of the action may as a practical 
matter impair or impede [the would-be-intervenor’s] ability to protect his interest.”  State Farm 
argues that if it is not allowed to intervene and challenge the assignment in the Indiana 
proceedings supplemental, it would be barred by estoppel principles from challenging the 
validity of the assignment in the Illinois litigation.  According to State Farm, if it objected to the 
assignment for the first time in the Illinois bad faith litigation, the Illinois court would deem 
those objections a collateral attack on a final Indiana judgment and hold that State Farm waived 
its right to object by not intervening in the proceedings supplemental to set the assignment aside.  
I believe this argument is without merit. 
 
Under the Full Faith and Credit Clause of the Constitution of the United States, a 
judgment of an Indiana court is entitled to the same effect in another state that it would be given 
in Indiana.  See, e.g., Baker by Thomas v. GMC, 522 U.S. 222, 233 (1998) (“A final judgment in 
one State, if rendered by a court with adjudicatory authority over the subject matter and persons 
governed by the judgment, qualifies for recognition throughout the land.”); Tom-Wat,                         
Inc. v. Fink, 741 N.E.2d 343, 347 (Ind. 2001) (“Under the Full Faith and Credit Clause of the 
Constitution of the United States, the courts of this state are obligated to enforce a judgment of 
the courts of a sister state.”).  A judgment is binding in favor of or against parties to the 
proceedings in which it is rendered and their privies.  Montana v. United States, 440 U.S. 147, 
153-54 (1979).  It is also well settled that, with certain exceptions, the doctrine of res judicata 
generally does nothing to affect the rights of those who are neither parties nor in privity with a 
party.  United States v. Clark County, Ind., 113 F. Supp. 2d 1286, 1291 (S.D. Ind. 2000).  As I 
see it, State Farm was not a proper party to the proceedings supplemental.  Nor is State Farm in 
privity with Perkins as to any issue of Perkins’s claim against State Farm.  Accordingly, State 
Farm should not be estopped from raising the validity of an assigned claim in the Illinois 
litigation.   
 
 
 
15
 
 
 
State Farm also argues that its interests were not adequately represented by Perkins.  This 
is true, but if State Farm is denied intervention in this proceeding, State Farm would remain free 
to raise whatever defenses it has to the pending claim in Illinois.  These include its contention 
that the claim has no merit and that the claim is not assignable.  In sum, the trial court properly 
rejected State Farm’s motion to intervene under Trial Rule 24(A). 
 
Much of the same reasoning supports the trial court’s decision to deny permissive 
intervention under Trial Rule 24(B).  Trial Rule 24(B) explicitly states that “[i]n exercising its 
discretion the court shall consider whether the intervention will unduly delay or prejudice the 
adjudication of the rights of the original parties.”  We therefore review a trial court’s denial of a 
motion for permissive intervention for abuse of discretion.  Herdrich, 773 N.E.2d at 324.  I 
believe the trial court was not only within its discretion but was correct.   
 
The text of Trial Rule 24 reveals that it does not contemplate intervention in proceedings 
supplemental, whether as of right or permissive, except by a potential garnishee.  Indiana Trial 
Rule 24(C) applies to intervention as of right and permissive intervention.  It states 
A person desiring to intervene shall serve a motion to intervene upon the parties 
as provided in Rule 5.  The motion shall state the grounds therefor and set forth or 
include by reference the claim, defense or matter for which intervention is sought.  
Intervention after trial or after judgment for purposes of a motion under Rule 50, 
59, or 60, or an appeal may be allowed upon motion. 
The rule is specific as to the post-judgment circumstances under which a new party can 
intervene.  Each of the listed trial rules (50, 59, and 60) contemplates a motion attacking the 
merits of the original decision, and none deals with addressing collateral issues.  Specifically, 
Trial Rule 24(C) makes no mention of Trial Rule 69, which governs proceedings supplemental.  
Allowing intervention in proceedings supplemental would allow third parties to inject new issues 
into a forum designed to afford only a summary procedure.  The merits of such a claim should be 
given a full hearing, including any rights to demand a jury or change of judge, and the other 
incidents of a trial of any newly presented issue.  The reasons identified in Part I to deny 
jurisdiction over the merits of the assigned claim equally dictate denial of intervention to litigate 
the assignability in proceedings supplemental.   
 
 
 
16
 
 
Because I believe the trial court was correct in denying State Farm’s motion to intervene, 
I must address an additional argument raised by State Farm but not addressed by the majority.  
State Farm argues that pursuant to subsection (4) of Trial Rule 69(E) it was entitled to notice and 
an opportunity to be heard in the proceedings supplemental.  Subsection (4) provides that 
proceedings supplemental to execution may be enforced by verified motion or with affidavits 
alleging: 
[I]f any person is named as garnishee, that garnishee has or will have specified or 
unspecified nonexempt property of, or an obligation owing to the judgment debtor 
subject to execution or proceedings supplemental to execution, and that the 
garnishee be ordered to appear and answer concerning the same or answer 
interrogatories submitted with the motion. 
The rule goes on to provide that persons who are named by the judgment creditor as garnishees 
are entitled to notice and an opportunity to be heard in the proceedings supplemental.  The Estate 
did not name State Farm as a garnishee in its motion initiating the proceedings supplemental.  
State Farm claims this violated its right to notice and an opportunity to be heard under Trial Rule 
69(E) because it is a  “garnishee.”  State Farm’s argument focuses on the “will have . . . an 
obligation owing” language in subsection (4) of Trial Rule 69(E).  According to State Farm, in 
attempting to reach State Farm through assignment, the Estate assumed that State Farm had some 
obligation to Perkins.  See T.R. 69(E) (stating that a garnishee is one who has or will have “an 
obligation owing the judgment debtor”).  State Farm concludes that because the Estate assumed 
State Farm would owe an obligation to Perkins for bad faith, the Estate was required to name 
State Farm as a garnishee in the Estate’s motion initiating a proceeding supplemental to 
execution.   
It is true that the Estate claims State Farm has an obligation to Perkins.  However, as 
explained above, if State Farm has a valid obligation to Perkins, it is not an obligation that is 
“subject to execution in a proceeding supplemental” because it cannot be reduced to judgment in 
a proceeding supplemental.  The only matter before the proceeding supplemental court was the 
Estate’s effort to reach property in Perkins’s possession, not the resolution of Perkins’s claims 
against State Farm.  Perkins was clearly the “owner” of any claim that may exist against State 
Farm.  Because the merits of Perkins’s claim cannot be tried in a proceeding supplemental, the 
only property the Estate can reach in the proceeding supplemental is the contingent and 
 
 
 
17
 
 
unliquidated tort action against State Farm.  This potential tort action was Perkins’s property, but 
it is not an obligation State Farm owed Perkins.13  Accordingly, I believe that State Farm was not 
a garnishee and was not entitled under Trial Rule 69(E) to notice and an opportunity to be heard 
in the proceeding supplemental. 
III.  Involuntary Assignment of Perkins’s Claim Against State Farm 
 
The majority holds that the “trial court’s order requiring Perkins’s forced assignment of 
his chose in action against State Farm was error.”  The majority seems to base this holding on (1) 
the fact that the assignment was involuntary and (2) that the assignment violated the direct action 
rule.  In my view, it is of no consequence that the assignment was over Perkins’s objection.  
Also, I do not believe that this assignment implicates the direct action rule. 
 
A.  Involuntary Assignment 
 
The majority states that it was error for the trial court to force Perkins to assign his claim 
against State Farm but that Perkins could voluntarily assign this claim.  For the following 
reasons, I disagree.  
 
Trial Rule 69(E) allows the proceedings supplemental court to apply the debtor’s 
nonexempt property to satisfaction of a judgment.  Similarly, Indiana Code section 34-55-8-7 
allows the proceedings supplemental court to order “any property, income, or profits of the 
judgment debtor . . . to be applied to the satisfaction of the judgment.”  The proceedings 
supplemental court can enforce its orders by “attachment or otherwise.”  Id.  The court is also 
authorized by statute to “forbid transfers of property and choses in action” by the judgment 
debtor, thereby preventing the judgment debtor from engaging in fraudulent transfers and 
unfairly remaining judgment-proof.  Id.  Finally, section 34-55-8-7 grants the proceedings 
supplemental court continuing jurisdiction over a judgment debtor’s future income, profits, and 
                                             
 
13 In the typical case, a garnishee’s presence is necessary in proceedings supplemental in order for the proceeding 
supplemental to acquire jurisdiction over the debtor’s property that is in the garnishee’s possession.  The garnishee’s 
presence may also aid in the resolution of any factual disputes regarding whether the garnishee possesses the 
debtor’s property.  In this case, State Farm’s presence was not needed to establish the proceeding supplemental 
court’s jurisdiction over Perkins’s bad faith claim because that claim was already in Perkins’s sole possession.  If the 
claim lacks merit, it has no value, but it is nonetheless assignable. 
 
 
 
18
 
 
assets.  Id.  Any of these methods can produce an assignment that is done intentionally even if it 
is done in compliance with a court order and is not cheerfully or willingly done. 
 
Neither Trial Rule 69(E) nor the statute expressly authorizes a proceedings supplemental 
court to order a judgment debtor to execute an assignment of the debtor’s potential causes of 
action against third parties.  But the purpose of proceedings supplemental is to discover property 
and reach assets that the judgment debtor has failed or refused to apply in payment of a judgment 
and which cannot be reached by an ordinary execution.  Union Bank & Trust Co. v. Vandervoot, 
122 Ind. App. 258, 264, 101 N.E.2d 724, 727 (1951).  Judgment debtors ordinarily appear in a 
proceedings supplemental court precisely because they have not voluntarily paid their creditors 
and will pay, if at all, only if compelled by the court.  Accordingly, although the power to 
compel assignment is not spelled out in so many words in the relevant statutes, the powers that 
are explicit and the purpose of proceedings supplemental make clear that, just as other assets 
may be compelled to be transferred, a proceedings supplemental court has the power to compel a 
judgment debtor to assign the debtor’s potential causes of action against third parties.  Thus, in 
my view, the assignment ordered by the proceedings supplemental court was appropriate even 
though it was over Perkins’s objection. 
 
An assignment of a bad faith claim ordinarily arises in the context of a judgment in 
excess of policy limits.  Insureds not infrequently enter into voluntary assignments of potential 
bad faith claims against their insurers incident to settling the claims against them.  The unusual 
feature of this case is that the insured professes satisfaction with his insurer’s performance.  If 
that is found to be correct, of course, the insurer will prevail in defending the bad faith claim.  
But I do not think that permitting an involuntary assignment is likely to be a source of frequent 
litigation as the majority believes.  In order to be worth spending the effort to pursue such a 
claim, even on a contingent fee, a bad faith claim must have some merit.  Therefore, I do not 
share the majority’s concern that permitting involuntary assignment will be frequently invoked 
or costly. 
 
The issue presented by an involuntary assignment is whether Perkins or the Estate gets to 
evaluate the merits of the claim and decide whether to pursue it.  For the reasons explained 
above, I see no basis in conventional legal doctrine to prohibit an involuntary assignment.  But if 
 
 
 
19
 
 
involuntary assignments are prohibited, the effect is to give Perkins the ability to control the 
claim.  I think it virtually certain that most insureds who are willing to deny any validity to a bad 
faith claim will be judgment-proof.  The insured who has nothing to lose may not be the most 
objective evaluator of the potential claim.  He may be disinclined to pursue the claim because 
any recovery will inure to the benefit of the injured party to satisfy the judgment.  He may even 
be motivated by animosity towards the injured party and also may decide not to pursue it because 
continued litigation could be an annoyance to him with no potential net reward.  For all these 
reasons, the insured should not be able to defeat such a claim by disavowing it any more than he 
can destroy any other asset to preclude the injured party from levying on it to satisfy the 
judgment.  And I see nothing in existing rules of law that should prevent the injured party (in this 
case the Estate) from attempting to prove its case if it believes the claim is worth pursuing.  It 
seems an uphill battle in the face of Perkins’s avowed satisfaction with his insurer’s 
performance, but I see no reason to deny the Estate the ability to form its own judgment on that 
issue. 
 
Because I believe the trial court ruled correctly in ordering assignment of Perkins’s 
claims against State Farm, I must address an additional argument against the assignment raised 
by State Farm but not addressed by the majority.  State Farm argues that Perkins’s potential bad 
faith claim is not “property” within the meaning of Trial Rule 69(E) and Indiana Code section 
34-55-8-7 because it is a contingent and unliquidated claim for damages in tort.  I agree that 
Perkins’s potential claim is contingent and unliquidated.  There has been no judicial finding of 
bad faith, fraud, or breach of contract, and Perkins may be correct in his view that there is no 
merit to these claims.  I disagree, however, that because Perkins’s potential claim is unliquidated 
and contingent, it is not “property” within the meaning of Indiana’s statutory provisions 
governing proceedings supplemental to execution.  Several forms of choses in action have been 
found to be property subject to proceedings supplemental.  Most have been less speculative than 
an unliquidated tort claim.  See, e.g., Burkett v. Bowen, 118 Ind. 379, 380-81, 21 N.E. 38, 38-39 
(1889) (holding that promissory notes and mortgage owing to a judgment debtor and in the hands 
of a third party can be reached in proceedings supplemental); Fowler v. Griffen, 83 Ind. 297, 299 
(1882) (holding that funds “and choses in action of the judgment debtor, in the hands of third 
parties,” can be reached in proceedings supplemental); Butler v. Jaffray, 12 Ind. 427, 432-33 
 
 
 
20
 
 
(1859) (holding that promissory notes payable to judgment debtors and fraudulently transferred 
to a third-party trustee can be reached in proceedings supplemental). 
 
A judgment creditor can seek to attach whatever property a judgment debtor has.  This 
principle is subject only to the exemption laws and is not limited to liquidated claims.  A “chose 
in action” is the “right to receive or recover a debt, demand, or damages on a cause of action ex 
contractu or for tort or omission of a duty.”  Picadilly, 582 N.E.2d at 339 n.1 (quoting Black’s 
Law Dictionary 219 (5th ed. 1979)).  As such, it is an asset that may have value, however 
speculative.  Moreover, there is specific authority for the proposition that a debtor’s contingent 
and unliquidated cause of action against a third party is “property” that can be reached in a 
proceeding supplemental under Indiana law.  In In re Great Lakes Steel & Fabricating Industries, 
Inc., 83 B.R. 1015 (Bankr. N.D. Ind. 1988), a judgment debtor had a pending counterclaim 
against a third party.  In a state court proceeding supplemental, the judgment creditor had been 
allowed to attach the unliquidated and contingent counterclaim.  Id. at 1017.  The judgment 
debtor subsequently filed for bankruptcy, and the bankruptcy court upheld the validity of the 
proceeding supplemental attachment order, thereby giving the judgment creditor the benefit of 
the contingent claim at the expense of other creditors of the judgment debtor.  Id. at 1021.  
Notwithstanding the fact that the judgment debtor’s counterclaim against the third party was 
contingent and unliquidated, the claim was the proper subject of a proceeding supplemental 
attachment order.  Id.  The bankruptcy court found that “to hold otherwise would permit a 
judgment debtor to keep its choses in action judgment-proof” until the claim was settled or tried 
and would “render nugatory the continuing jurisdictional control” given the proceeding 
supplemental court by Indiana Code section 34-55-8-7.  Id. at 1022.  The bankruptcy court also 
agreed that future interests incapable of reasonable evaluation have not been subject to 
prejudgment attachment.  This is consistent with “the general view that claims for unliquidated 
damages cannot be reached by attachment or garnishment process” before the party seeking 
attachment or garnishment has obtained a judgment against the obligee.  6 Am. Jur. 2d 
Attachment & Garnishment § 127 (2004).  But the greater protection provided a defendant in 
prejudgment proceedings is not necessary in proceedings supplemental where the judgment 
 
 
 
21
 
 
creditor’s claim has already been adjudicated.  Id.14  I find the reasoning of the bankruptcy court 
in Great Lakes persuasive.  I also note that decisions from other jurisdictions are consistent with 
my reading of the Indiana statute permitting judgment creditors to attach “property.”15  
Accordingly, I believe that “property” in Trial Rule 69(E) and Indiana Code chapter 34-55-8 
includes a judgment debtor’s contingent and unliquidated tort actions. 
 
B.  Direct Action Rule 
 
The majority concludes that an “involuntary assignment of claims against carriers whose 
insureds do not believe they have been wronged by their insurance companies was inconsistent 
with the direct action rule.”  For the following reasons, I disagree. 
 
Indiana Law recognizes that an insured may assert a claim against an insurer for breach 
of the duty of good faith.  USA Life One Ins. Co. v. Nuckolls, 682 N.E.2d 534, 541 (Ind. 1997); 
Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 519 (Ind. 1993).  Indiana courts have also 
acknowledged causes of action brought by insureds for their insurers’ failure to defend them 
from liability in the third-party context.  See, e.g., Gooch v. State Farm Mut. Auto. Ins. Co., 712 
N.E.2d 38 (Ind. Ct. App. 1999), trans. denied; Dimitroff v. State Farm Mut. Auto. Ins. Co., 647 
N.E.2d 339, 341 (Ind. Ct. App. 1995).  The Court of Appeals has explicitly refused, however, to 
recognize any bad faith action brought by a third-party claimant directly against the tortfeasor’s 
insurer.  Menefee v. Schurr, 751 N.E.2d 757, 761 (Ind. Ct. App. 2001), trans. denied; Dimitroff, 
647 N.E.2d at 342; Eichler v. Scott Pools, Inc., 513 N.E.2d 665, 667–68 (Ind. Ct. App. 1987).  
Courts applying this so-called “direct action rule” have reasoned that insurance companies do not 
have a special relationship giving rise to a duty of good faith to an injured third party/judgment 
                                             
 
14 Accord McClure Oil Corp. v. Whiteford Truck Lines, 627 N.E.2d 1323, 1326 (Ind. Ct. App. 1994) (holding that 
contingent interest of judgment debtor as remainderman in any surplus remaining in trust account after payment of 
trust to the judgment debtor’s creditors according to trust terms was capable of attachment in proceeding 
supplemental); Sandler v. Gilliland, 605 N.E.2d 1174, 1178 (Ind. Ct. App. 1993), trans. denied (holding that the 
contingent interest of a judgment debtor in the surplus, if any, of an escrow account created for the benefit of a 
judgment debtor’s creditors was subject to attachment in a proceeding supplemental). 
15 In Puzzo v. Ray, 386 So. 2d 49, 51 (Fla. Dist. Ct. App. 1980), the court concluded that “property” under the 
Florida supplementary proceedings statute includes a debtor’s cause of action for conversion against a third party.  
The Florida court held that a construction of the Florida statute to include a debtor’s potential causes of action 
furthered the remedial purpose of proceedings supplemental to provide the judgment creditor a speedy and direct 
means to discover and claim assets that cannot readily be reached by ordinary legal process.  Puzzo, 386 So. 2d 49.  
In Associated Ready Mix, Inc. v. Douglas, 843 S.W.2d 758, 761-62 (Tex. App. 1992), the court concluded that 
“property” under the Texas turnover statute includes the debtor’s potential causes of action against third parties. 
 
 
 
22
 
 
creditor.  See Menefee, 751 N.E.2d at 760; Bennett v. Slater, 154 Ind. App. 67, 73–74, 289 
N.E.2d 144, 148 (1972).  Similarly, courts do not view an injured party as a third-party 
beneficiary of the tortfeasor’s contract with the insurer.  See, e.g., Hartman v. United Heritage 
Prop. & Cas. Co., 108 P.3d 340, 346 (Idaho 2005) (noting that the basis of the prohibition on 
direct actions is that the person allegedly injured by the insured is not a party to the insurance 
contract and has no rights under it); State Farm Mut. Auto. Ins. Co. v. Allen, 744 S.W.2d 782, 
785–86 (Mo. 1988); Schmalfeldt v. N. Pointe Ins. Co., 652 N.W.2d 683, 687 (Mich. Ct. App. 
2002) (stating that the insured contract benefits the insured and the injured plaintiff was “merely 
an incidental beneficiary of the contract who was not entitled to enforce the contract against the 
insurer”). 
 
The majority holds that the forced assignment violates the direct action rule by permitting 
the Estate, as a third party, to sue Perkins’s insurer.  I do not agree that the assignment implicates 
the direct action rule.  The direct action rule is nothing more than an application of standard 
third-party beneficiary doctrines under contract law and a rejection of any special relationship 
between the insurer and a victim of the insured.  To the extent policy considerations underlie the 
direct action rule, the concern is that permitting the insurer to be made (or to make itself) a party 
to the dispute between the insured alleged tortfeasor and an injured party may unfairly expose to 
the jury the “deep pocket” of the insurer in an action where the conduct of the insured is the 
issue.  Allstate Ind. Co. v. Keltner, 842 N.E.2d 879, 884 (Ind. Ct. App. 2006); Rausch v. 
Reinhold, 716 N.E.2d 993, 1002 (Ind. Ct. App. 1999).  This concern is not presented by a claim 
of bad faith refusal to pay claims because in that case the conduct of the insurer itself is in issue 
and the insurer is properly before the court.   
 
The assignee of an insured’s bad faith claim against the insurer does not bring an 
independent claim or seek recognition of a duty of good faith running from the insurer to the 
assignee.  Nor does the assignee claim to be a third-party beneficiary of the contract.  Rather, the 
assignee merely stands in the insured’s shoes and enforces the insured’s claims against the 
insurer.  See Pettit v. Pettit, 626 N.E.2d 444, 447 (Ind. 1993).  Accordingly, I do not agree that 
the assignment in this case authorized the Estate to bring an independent action asserting the 
right of a third party against State Farm.  The Estate merely seeks to enforce whatever rights or 
claims State Farm’s first-party insured could have brought.  I do not express any view as to the 
 
 
 
23
 
 
 
 
 
24
 
 
merit of such claims but believe that to the extent Perkins had a claim, it was validly assigned to 
the Estate. 
 
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.