Court Opinion

ID: 9627738
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:52:44.968234+00
Date Added: 2024-06-11T15:39:17.116672
License: Public Domain

ZIMMERMAN, Justice,
concurring and dissenting:
¶ 21 I concur in the result reached by the majority. However, I dissent from a portion of its reasoning and the resulting statement of the law. Specifically, I agree that the court of appeals properly refrained from determining whether a legal malpractice claim is assignable in Utah and properly held that a legal malpractice claim is not beyond the reach of an involuntary transfer such as a judicially sanctioned execution sale. I also agree with the majority that public policy should restrict a lawyer’s ability to execute *213on a malpractice cause of action held by a former client against that lawyer. However, I disagree with' the scope of the prohibition fashioned by the majority.
¶ 22 The majority holds that no malpractice claim against a lawyer can be purchased by that lawyer at an execution sale under any circumstances. I think this goes too far. Instead, I would hold that a fairer balance between the public policy offended by a lawyer’s potential ability to single out for extinction a legitimate claim against the lawyer and the right of every creditor, lawyers included, to levy on all the assets of a delinquent debtor would be reached by forbidding a lawyer to execute on a malpractice cause of action against that lawyer unless it is the only remaining asset of the debtor. Such a rule would be sufficient to preclude a lawyer from finding a way to execute upon and extinguish a cause of action against that lawyer when the client had other assets available to satisfy the debt owed — the abusive possibility that seems to underlie the majority’s rule. Once that potential for overreaching is obviated, I can see no public purpose served by creating a unique species of property— malpractice causes of action — that are immune from levy under all circumstances by the lawyer against whom they are asserted. This can only serve to give the debtor additional and unjustified leverage over the lawyer in trying to settle such a suit for more than it is objectively worth. This may be good news to those suspicious of lawyers, but serves no other apparent purpose.
¶ 23 The only argument the majority offers in support of its blanket rule that warrants response here is the claim that unless the lawyer is barred from recovery, the “value of the legal malpractice claim will never be fairly determined.” Under the rule I propose, the claim could be executed on only if there were no other assets. Such a situation is likely to arise only in the context of the debtor’s bankruptcy. And, in such a situation, there is already in place enough structure to assure that the debtor is not unfairly overreached. If the judgement debtor has already filed for bankruptcy, the claim will be part of the bankruptcy estate and the bankruptcy trustee will be in a position to assess and obtain the fair market value of the claim. On the other hand, if the execution against the malpractice claim precipitates the debt- or’s decline into bankruptcy, and the transfer was for less than reasonably equivalent value, the bankruptcy trustee will probably have the power to avoid the transfer.
¶ 24 To illustrate, 11 U.S.C.A. section 548 deals with fraudulent transfers. It states:
(a)(1) The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily—
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(B)(1) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
(ii)(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation. . ’..
11 U.S.C.A. § 548(Supp.l999). Because I would require that in order to execute against a legal malpractice claim, that claim must be the last asset, once that asset has been sold at an execution sale the debtor will, in all likelihood, be insolvent. Thus, if the execution against the claim took place within a year of the filing and was not for reasonably equivalent value, the trustee will have the power to avoid it. There is no need for the additional blanket protection of the debt- or from his lawyer that the majority fashions.
¶ 25 Justice STEWART concurs in Justice ZIMMERMAN’S concurring and dissenting opinion.