Eagle Mountain City v. Parsons Kinghorn & Harris, P.C.
2017 UT 31
| Utah | 2017Background
- Eagle Mountain City settled a prior dispute (the Well Lawsuit) with Cedar Valley and entered agreements that contemplated the City suing its former counsel Parsons Kinghorn for legal malpractice; Cedar Valley agreed to fund costs and receive a portion of any recovery.
- The Agreements gave Cedar Valley certain litigation-control rights (e.g., approval of settlement, mediation/arbitration if Clients disagree) and provided sharing of net recovery and payment of costs by Cedar Valley.
- The City filed a legal malpractice suit (tort and contract theories) against Parsons Kinghorn in December 2013.
- Parsons Kinghorn moved for summary judgment, arguing the Agreements assigned the malpractice claim to Cedar Valley and that voluntary assignments of legal malpractice claims violate public policy.
- The district court found the Agreements transferred substantial control (constituting at least a partial assignment) and dismissed the City’s suit without prejudice as violative of public policy, conditioning any refiling on proof of independent prosecution.
- The Utah Supreme Court reversed, assuming arguendo an assignment and holding that voluntary assignments of legal malpractice claims are generally permitted absent clear, compelling public policy reasons to the contrary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Agreements amounted to an assignment of the City’s legal malpractice claim | City: Agreements gave only a share of proceeds and limited control, not an assignment | Parsons Kinghorn: Agreements gave substantial control and a share of recovery, constituting an assignment | Court assumed assignment for purposes of decision and did not resolve this narrower question |
| Whether voluntary assignments of legal malpractice claims violate public policy | City: Such assignments are permissible and useful; procedural/ethical rules mitigate concerns | Parsons Kinghorn: Voluntary assignments commoditize claims, harm attorney-client relations, encourage collusion, and demean the profession | Held: Strong presumption in favor of assignability; public-policy objections unpersuasive under Utah rules; assignments presumptively allowed |
| Whether concerns (commoditization/champerty/frivolous suits) justify forbidding assignments | City: Rule 11, professional conduct rules, and modern litigation-funding norms deter frivolous suits and champerty | Parsons Kinghorn: Assignability would spawn meritless, marketable malpractice claims and increase frivolous litigation | Held: Rule 11, procedural safeguards, and reduced relevance of champerty sufficiently address these concerns |
| Whether assignment creates intolerable risks (privilege waiver, zealous advocacy chill, collusion, role‑switching) | City: Waiver scope and ethics rules already address privilege and conflict; zealous advocacy unlikely to be chilled; procedural safeguards deter collusion and expose position shifts | Parsons Kinghorn: Assignment undermines confidentiality, incentivizes collusion (consent judgments), and produces shameless position shifts undermining public respect | Held: These theoretical risks are mitigated by current Utah Rules of Professional Conduct and Civil Procedure; not a basis for categorical prohibition; case facts do not show such abuses |
Key Cases Cited
- Snow, Nuffer, Engstrom & Drake v. Tanasse, 980 P.2d 208 (Utah 1999) (upholding involuntary assignment of malpractice claims in bankruptcy; access-to-courts concerns outweigh attorney-protection arguments)
- Goodley v. Wank & Wank, Inc., 133 Cal. Rptr. 83 (Cal. Ct. App. 1976) (expressing commoditization concerns and condemning assignability of malpractice claims)
- Picadilly, Inc. v. Raikos, 582 N.E.2d 338 (Ind. 1991) (articulating concerns about chilling zealous advocacy and privilege issues from assignments)
- Kommavongsa v. Haskell, 67 P.3d 1068 (Wash. 2003) (rejecting commoditization and assignability concerns when safeguards exist)
- Ockey v. Lehmer, 189 P.3d 51 (Utah 2008) (stating standard for voiding contracts on public policy grounds)