Legal malpractice, assignment of claim, real party in interest: Davis v. Scott, COA, NPO 3/8/2013

247.  Legal Malpractice, assignments and real party in interest; tolling of the statute of limitations.
Davis vs. Scott, Hardin County
COA, Not Published, 3/8/2013

NICKELL, JUDGE: Tim Davis and Tim Davis & Associates, Inc. (collectively “Davis”) appeal from the February 21, 2011, order of the Hardin Circuit Court that denied Davis’s motion to alter, amend, or vacate the Court’s previous order dismissing, without prejudice, Davis’s legal malpractice lawsuit, Action No. 05- CI-00800 (“first action”), against John J. Scott and Whitlow & Scott (collectively “Scott”). Davis also appeals from the February 21, 2011, order of the Hardin Circuit Court that dismissed, with prejudice, Davis’s second legal malpractice lawsuit against Scott, Action No. 10-CI-002530 (“second action”). We reverse the trial court’s order in the first action and remand for further proceedings. We affirm the trial court’s dismissal of the second action.

This case involved an assignment of a legal malpractice claim with SCOKY ruling in the first appeal that “If an assignment is invalid or incomplete, the assignor may still maintain a suit in his or her name. Thus it would follow that Davis can pursue his malpractice claim as the real party in interest, as opposed to simply a nominal plaintiff.”  Davis v. Scott, 320 S.W.3d 87, 92 (Ky.  2010).

Our best understanding of the Supreme Court’s intention is that Davis should be permitted to pursue the first action by showing the assignment no longer exists and he is the real party in interest. There is no disagreement that, by order of the United States District Court, Middle District of Tennessee, the assignment no longer exists. The question thus becomes: how can Davis successfully show that he is now the real party in interest?

Upon concluding that an assignment had occurred between Davis and Global, the Supreme Court cited numerous factors that together established Davis was not the real party in interest. In particular, the Court noted:

Global selected and retained Davis’s counsel in the malpractice action and bore the financial responsibility for the cost of suing Scott. Because Davis is obligated to bring the action, he may not withdraw the suit. Davis is not permitted to settle the malpractice claim without Global’s express written consent. Davis agreed to share privileged, attorney-client information with Global. Global retained control over the initiation, continuation and/or dismissal of the malpractice claim.

Davis, 320 S.W.3d at 91. Therefore, if Davis can show these factors are no longer present, Global is in no other way involved in the legal proceedings, and Global no longer retains an interest in the outcome of the lawsuit, he succeeds in showing he is the real party in interest and the first action is thus no longer tainted. Upon these showings, the lawsuit should continue. However, if he is unable to prove to the trial court that he is, in fact, the real party in interest, then the order denying Davis’s motion to alter, amend, or vacate its previous order dismissing the case was appropriate.

For the foregoing reasons, the February 21, 2011, order dismissing Action No. 10-CI-002530 is affirmed. Additionally, the February 21, 2011, order of the Hardin Circuit Court denying Davis’s motion to alter, amend, or vacate in Action No. 05-CI-00800 is reversed and remanded for additional proceedings consistent with this Opinion.


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