We are asked in a certified question of law from the United States District Court for the District of Idaho (District Court) whether a legal malpractice claim that is transferred to an assignee in a commercial transaction, along with other business assets and liabilities, is assignable. We answer in the affirmative.
I.
FACTUAL AND PROCEDURAL HISTORY
Thomas R. Luciani and his law firm, Stamper, Rubens, Stocker & Smith P.S. (Luciani or Defendants), represented Magic Valley Regional Medical Center (Magic Valley) in defending a wrongful termination and False Claims Act action brought by former hospital employees (the Suter litigation).
Before July 1, 2006, Twin Falls County owned Magic Valley. But, in March 2006, Twin Falls County (on behalf of itself and Magic Valley), Twin Falls Health Initiatives Trust, Ltd. (TFHIT), and St. Luke’s Health System, Ltd., St. Luke’s Regional Medical Center, Ltd., and St. Luke’s Magic Valley Regional Medical Center (St.Luke’s) entered into a Sale and Lease Agreement for the Creation of a New Health System (Agreement). The Agreement provided for the transfer of Magic Valley’s assets
[I]t is the intent of the Parties that all property and interests of the Hospital whether real or personal, tangible or intangible, be leased, sold, assigned, licensed or transferred by [Twin Falls] County and the [Magic Valley] Subsidiaries, as applicable, to [St. Luke’s] (including any rights of first refusal, options or claims against third parties by the Hospital and settlements received thereto), whether or not reflected on the Hospital’s Balance Sheet and whether known or unknown, contingent or otherwise.
No specific assignment of a malpractice claim was made, but it is undisputed that St. Luke’s had knowledge of the Suter litigation and its liability implications, Luciani’s representation, and the decision to replace Luciani as counsel. The sale closed on July 1, 2006. St. Luke’s thereafter carried the burden of the Suter litigation, ultimately settling with the plaintiffs for $4.25 million and expending approximately $12 million in legal and expert defense expenses.
After the transaction closed, Magic Valley no longer existed. Although the transaction was not technically a merger, the operation and management of the center was taken over by St. Luke’s, and the Magic Valley management team became the St. Luke’s management team, with some minor changes. As the District Court put it, the “Agreement was effectively an asset and liability transfer from Magic Valley to St. Luke’s.”
St. Luke’s sued the Defendants in January of 2008 for legal malpractice in connection with the Suter litigation, seeking approximately $10 million in damages. The Defendants moved for summary judgment, claiming among other things that St. Luke’s could not pursue a malpractice claim because any purported assignment of such a claim is invalid in Idaho as a matter of law. Because the case is a diversity action, the District Court stated that Idaho law would be applied to resolve any substantive legal question. The District Court noted that the assignability of a legal malpractice claim in the factual context presented had not yet been squarely addressed by the Idaho Supreme Court and determined that the criteria for certification to this Court, pursuant to Idaho Appellate Rule 12.3, were satisfied with respect to this issue. The District Court therefore determined to certify the assignability question.
II.
CERTIFIED QUESTION
The question certified to the Court is “whether St. Luke’s (as Luciani’s former client’s successor) can step into the shoes of Magic Valley for Magic Valley’s legal malpractice claim against Luciani in light of the broad assignment language used in the Agreement or are legal malpractice actions not assignable in Idaho as a matter of law.”
III.
DISCUSSION
A. Standard of Review.
Courts of the United States may certify a controlling question of law in a
B. Although legal malpractice claims are generally not assignable in Idaho, where the legal malpractice claim is transferred to an assignee in a commercial transaction, along with other business assets and liabilities, such a claim is assignable.
The District Court certified this question, observing that “Idaho courts have not specifically addressed the issue of assignability of malpractice claims.” The District Court stated that this was a “narrow legal question.” Without any controlling precedent to resolve this question, and because “there are public policy issues on both sides of this legal question,” the District Court found certification appropriate. We agree that the question meets the certification criteria of I.A.R. 12.3.
In answering the question, St. Luke’s concedes that the “majority of jurisdictions to have considered the issue articulate a general rule of non-assignability.” However, it argues that this general rule only applies when the assignment is made to a stranger to the attorney-client relationship, rather than to a successor in a commercial transaction. St. Luke’s contends that courts considering the situation here — where a legal malpractice claim is assigned to a successor in interest in a commercial transaction1 — have found an exception to the general rule, and allowed assignment. It further argues that legal malpractice claim assignment is consistent with Idaho case law, and would not implicate any of the policy concerns that courts disallowing assignment have identified. Finally, St. Luke’s contends that barring assignment here would lead to the inequitable result of “allowing] an attorney to escape the consequences of his legal malpractice by the happenstance of a change in ownership of his corporate client.”
Luciani argues in response that the attorney-client relationship in the Suter Litigation was between Luciani and Twin Falls County, not Magic Valley. That being the case, any legal malpractice claim would have to be asserted by Twin Falls County or its successors. He therefore contends that because St. Luke’s did not succeed to the ownership of Twin Falls County, it cannot assert any of the county’s claims. Alternatively, Luciani argues that legal malpractice claims are actions based in tort, and are thus nonassignable. He also makes the related argument that because at the time of the assignment legal malpractice claims did not survive,
It is settled in Idaho that “choses in action are generally assignable.” Purco Fleet Servs., Inc. v. Idaho State Dep’t of Fin.,
In contrast to Idaho’s modern rule generally allowing claim assignment, at “early common law, a chose in action arising out of a tort” could not be assigned. 6 Am.Jur.2d Assignments § 53 (2012). Early Idaho case law established that actions “of a personal nature” are typically not assignable. See MacLeod v. Stelle,
The assignability of a cause of action is by the authorities intimately associated with, and in most cases held to depend upon, the same principle as the survival of a cause of action. Thus, if it survives, it may be assigned; if not, it may not. [J Broadly stated and referred to in Kloepfer v. Forch, [32 Idaho 415 ,184 P. 477 (1919) ] actions of a personal nature are not assignable. A long line of authorities has established this principle. Some cases have held that an injury suffered by fraud, false representations, or deceit, is of such personal nature, does not survive, and is not assignable. [ ] The later, and to me the better considered, cases have tended toward, and many of them have reached, the conclusion that the injuries of a personal nature which do not survive are such as injury to person, malicious prosecution, false imprisonment, libel, slander, and the like; and that an injury which lessens the estate of the injured party does survive, and thus is assignable.
Id. at 75,
Assignment of property-related claims is also expressly permitted by I.C. § 55-402, which provides that “[a] thing in action arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner.”
Although assignment of claims is generally allowed, most courts find an exception for legal malpractice claims. This is because, “[a]s a general rule, an attorney will be held liable for negligence only to his or her client and not to someone with whom the attorney does not have an attorney-client relationship.” Harrigfeld,
It is the unique quality of legal services, the personal nature of the attorney’s duty to the client and the confidentiality of the attorney-client relationship that invoke public policy considerations in our conclusion that malpractice claims should not be subject to assignment. The assignment ofsuch claims could relegate the legal malpractice action to the market place and convert it to a commodity to be exploited and transferred to economic bidders who have never had a professional relationship •with the attorney and to whom the attorney has never owed a legal duty, and who have never had any prior connection with the assignor or his rights. The commercial aspect of assignability of choses in action arising out of legal malpractice is rife with probabilities that could only debase the legal profession. The almost certain end result of merchandizing such causes of action is the lucrative business of factoring malpractice claims which would encourage unjustified lawsuits against members of the legal profession, generate an increase in legal malpractice litigation, promote champerty and force attorneys to defend themselves against strangers. The endless complications and litigious intricacies arising out of such commercial activities would place an undue burden on not only the legal profession but the already overburdened judicial system, restrict the availability of competent legal services, embarrass the attorney-client relationship and imperil the sanctity of the highly confidential and fiduciary relationship existing between attorney and client.
Id. at 87. Based largely on these public policy considerations, assignment of legal malpractice claims has been prohibited in the majority of jurisdictions that have considered the issue. See
Despite this majority rule, courts considering the precise transaction here — a commercial transfer of a legal malpractice claim, along with other assets and liabilities, to a successor in interest — have allowed assignment. See 6 Am.Jur.2d Assignments § 57 (“Legal malpractice claims, transferred along with other assets and obligations to an assignee in a commercial transaction, may be assignable.”). For example, in Cerberus Partners, L.P. v. Gadsby & Hannah,
The legal malpractice claim asserted by the plaintiffs here arose out of a larger earlier commercial loan transaction. The plaintiffs did not merely purchase the legal malpractice claim, but were instead the assignees of the Lenders’ original agreements with respect to the loans to [the bankrupt debtor], and the plaintiffs acquired, along with those loans, all of the attendant obligations and rights that went along with those loans, including but not limited to the Lenders’ legal malpractice action against the defendants.
Id. at 1059. And, though the court recognized that “various and plausible” public policy reasons existed for prohibiting the assignment of legal malpractice claims, it drew a “distinction between market assignments involving purely economic transactions, such as involved in the case before us, and freestanding malpractice personal injury claim assignments that necessarily involve and invoke the unique lawyer-client relationship.” Id. at
Other courts considering the assignment of legal malpractice claims, along with the transfer of other assets and obligations, have allowed such assignments. See, e.g., Richter v. Analex Corp.,
We agree with the foregoing authorities and hold that, while legal malpractice claims are generally not assignable, where the legal malpractice claim is transferred to an assignee in a commercial transaction, along with other business assets and liabilities, such a claim is assignable. Luciani argues that because legal malpractice is a tort — or alternatively, because it does not survive — it cannot be assigned. We disagree. For one thing, it is settled in Idaho that “[l]egal malpractice actions are an amalgam of tort and contract theories.” Bishop v. Owens,
Allowing an assignment in the specific context of this ease would not implicate the policy concerns identified in Goodley. See, e.g., Cerberus Partners, L.P.,
Luciani provides no compelling reason why allowing assignment in this case would undermine the attorney-client relationship, or increase litigation. The cases he proffers concern assignments to strangers, or former adversaries in litigation, as opposed to successors.
Based on the rationale set out by this Court in MacLeod and upon I.C. § 55-402, we hold that where a legal malpractice claim is transferred to an assignee in a commercial transaction, along with other business assets and liabilities, such a claim is assignable.
IV.
CONCLUSION
Based on the facts posited by the United States District Court, we answer the certified question as follows: “St. Luke’s can step into the shoes of Magic Valley for Magic Valley’s legal malpractice claim against Luciani.”
Notes
. Luciani disputes that Magic Valley was his client in his briefing to this Court. He contends that Twin Falls County was his client in the Suter litigation. ("Twin Falls County, the Hospital's owner during the time period of Luciani’s representation of the Hospital, was Luciani’s client.”). But this argument plainly deviates from the question certified by the District Court, as well as the factual background presented in the District Court’s Order, which stated that, ”[t]he facts of this case related to this specific legal issue are not disputed by the parties. Defendants Thomas Luciani and his law firm Stamper, Rubens, Stocker & Smith, P.S. [] represented Magic Valley Regional Medical Center ('Magic Valley’) to defend a wrongful termination and False Claims Act action.” We do not act as a finder of fact in proceedings of this nature but rely instead on the facts presented by the United States court.
. Excluding hospital records St. Luke’s did not reasonably need, Twin Falls County’s rights under the Agreement, the sale proceeds from a parcel of real property, and certain TFHIT funds.
. This argument requires some context. In its brief, St. Luke's noted that the Idaho Legislature had amended I.C. § 5-327 in 2010 (2010 Idaho Sess. Laws, ch. 349, p. 911), providing for general survivability of negligence claims. I.C. § 5-327(2). Luciani's contention is that this does not reflect an Idaho public policy favoring assignability under the theory that “if it survives, it may be assigned," particularly because the legislative amendment occurred after; the assignment was made in this case. However, the argument is immaterial because our decision is not affected by either the previous or amended version of I.C. § 5-327.
. See, e.g., Goodley,