Opinion ID: 1646811
Heading Depth: 1
Heading Rank: 7

Heading: Assignment of Rights

Text: In support of summary judgment, the defendants contend the plaintiff cannot assert her bad faith claims because they are premised on a defective seizure of Ms. Theus's inchoate rights to bring an action against them. By contrast, the plaintiff alleges Ms. Theus's claims against the defendants were assignable and, as such, also subject to seizure by writ of fieri facias. Notably, neither party's position is premised on conclusive statutory or jurisprudential law. In deference to the litigants, our research also corroborates the court of appeal's observation that there is a lack of definitive jurisprudence on the subject of the seizure of inchoate rights. In addressing this novel issue, we are guided by the principle of assignment of rights, another vehicle for the transfer of rights. The term assigns is defined in the Louisiana Civil Code as those to whom rights have been transmitted by particular title; such as sale, donation, legacy, transfer or cession. La. C.C. art. 3506(5) (emphasis added). Black's Law Dictionary 228-229 (6th ed.1990) defines cession as [t]he act of ceding; a yielding or giving up; surrender; relinquishment of property or rights ... In the civil law, an assignment. The act by which a party transfers property to another. The surrender or assignment of property for the benefit of one's creditors. (Emphasis in original.) Considerable jurisprudence exists on the issue of assignment of rights. The law is clear that a litigious right, a cause of action which is the subject of pending litigation, is transferable by assignment pursuant to Louisiana Civil Code article 2652. While this Court has never pointedly entertained the issue of the legality of an assignment of a cause of action prior to an assignor's filing suit on that cause of action, our state appellate courts have concluded such is permissible. See, e.g., Falco Lime, Inc. v. Plaquemine Contracting Co., Inc., 95-1784 (La.App. 1 Cir. 4/4/96), 672 So.2d 356; Maryland Casualty Co. v. Dixie Ins. Co., 622 So.2d 698 (La.App. 1st Cir.1993); Keith v. Comco Ins. Co., 574 So.2d 1270 (La.App. 2nd Cir.1991). The cases that arise in the insurance context impliedly recognize that, although the obligations with respect to excess exposure flow from the insurer to the insured, claims for breaches of those duties may be asserted by assignees of the insured (i.e., judgment creditors), irrespective of whether the bad faith suit is filed by the insured or the assignee. Similarly, our Louisiana federal courts have addressed on several occasions the issue of whether an inchoate right to file suit is subject of assignment under Louisiana law. See, e.g., Woodfield v. Bowman, 193 F.3d 354 (5th Cir.1999); Pontchartrain Gardens, Inc. v. State Farm General Ins. Co., 2009 WL 86671 (E.D.La.1/13/09); Steirwald v. Phoenix Ins. Co., 2001 WL 617542 (E.D.La.5/30/01); Sanderson v. H.I.G. P-XI Holding, Inc., 2001 WL 245788 (E.D.La.3/9/01). In the more recent cases, the courts reject the earliest proposition articulated in Parich v. State Farm Mutual Auto. Ins. Co., 919 F.2d 906 (5th Cir.1990), that a dispute not the subject of litigation is non-transferable by assignment. [6] In finding inchoate rights subject to assignment, the courts each rely on Louisiana Civil Code article 2642, which provides, in relevant part, that [a]ll rights may be assigned, with the exception of those pertaining to obligations that are strictly personal.... The courts found a judgment debtor's reliance on Louisiana Civil Code article 2652, as the basis that only litigious rights can be assigned, to be misplaced. Essentially, the courts reasoned article 2652 articulates only the rules regarding the redemption or extinguishment of litigious rights, and does not apply in any respect to the transfer of rights before a suit is filed. In addressing the plaintiff's argument that Ms. Theus's claims are subject to seizure because they are assignable, the court of appeal also considered the issue of the assignment of inchoate rights. It found such rights assignable for reasons similar to those expressed by the federal courts. Notwithstanding the court of appeal's conclusion in this regard, we do not venture to specifically address whether an unexercised right to institute a lawsuit may be assigned, as that issue is not presently before this Court. As initially raised, we decide today only whether the court of appeal was erroneous in rendering summary judgment premised on its conclusion that a potential right to file suit may not be seized pursuant to a writ of fieri facias.