Opinion ID: 2277535
Heading Depth: 1
Heading Rank: 3

Heading: Effect of Improper Assignment

Text: We now turn to the more difficult question in this case: what is the proper remedy? As both parties acknowledge, the general rule is that an invalid assignment has no effect on the validity of the underlying action. [I]f an assignment is invalid or incomplete, the assignor may still maintain a suit in his or her name. 6 Am. Jur.2d Assignments § 122 (2010). Thus, it would follow that Davis can pursue his malpractice claim as the real party in interest, as opposed to simply a nominal plaintiff. Indeed, several other jurisdictions considering similar circumstances have acknowledged that the underlying legal malpractice claim survives an invalid assignment. See Weiss v. Leatherberry, 863 So.2d 368, 373 (Fla.Dist.Ct.App.2003) (remanding matter to trial court because invalidity of the agreement [to assign] has no effect on the underlying cause of action for legal malpractice). See also Botma v. Huser, 202 Ariz. 14, 39 P.3d 538, 542 (2002); Weston v. Dowty, 163 Mich.App. 238, 414 N.W.2d 165, 167 (1987); Tate v. Goins, et al, 24 S.W.3d 627, 635 (Tex.App. 2000). However, while we agree that Davis has not forfeited his claim, we also cannot ignore the fact that the present suit was born of the invalid assignment and is, therefore, tainted in some respect. As stated by the Court of Appeals of Arizona, to allow Davis to proceed on the present claim would be to wink at the rule against assignment of legal malpractice claims. Botma, 39 P.3d at 543. Moreover, this matter is complicated by the fact that the invalid assignment was made pursuant to a settlement agreement that has been approved by a federal district court. The parties dispute the effect the settlement agreement has on the viability of the malpractice claim. Scott argues that the trial court is without jurisdiction to alter the agreement because it was approved by the federal district court and, therefore, may only be modified by that court. Davis argues that the agreement is void ab initio because the assignment is prohibited by Kentucky law. We reject Davis's claim that the agreement is void. The assignment reflects only a portion of the overall agreement between Global and Davis. The invalidity of the assignment provision does not automatically void the entire agreement. We cannot necessarily, however, accept Scott's assertion that the agreement may only be modified by the federal district court. It is unclear from the record before this Court whether the settlement agreement was made a part of the federal district court judgment, therefore, making it subject to that court's continued jurisdiction. At any rate, by its own terms, the agreement may only be modified with the approval of both Global and Davis. We believe the most appropriate solution under these circumstances is to remand the matter to the circuit court with directions to dismiss Davis's complaint without prejudice. As stated above, though Davis has not forfeited his malpractice claim, the current suit, born of the improper assignment, cannot be permitted to continue. Should Davis wish to reassert his claim against Scott, he will be able to do so only upon a showing that the attempted assignment is no longer in place and that he is the real party in interest. For the foregoing reasons, the opinion of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded to the Hardin Circuit Court for proceedings consistent with this opinion. All sitting. All concur.