*1
Appellant,
v. American
Chiropractic,
West Broad
Family
Appellee.
Insurance,
Family
Chiropractic v. Am.
[Cite as W. Broad
Ins.,
497,
(Nos. and 2008-1489 Submitted 2008-1396 2009.) July 2009 Decided
April Lundberg J. Stratton, injured in an Kristy Norregard, must determine whether who was We who did not file suit or obtain a judgment against
automobile accident but tortfeasor, a may assign right proceeds prospective her settlement (“West Broad”), in Chiropractic exchange appellant, injuries resulting medical care she received from West Broad for from the accident. Appeals The Tenth District Court of refused to enforce the court certified that its conflict with the
proceeds. appellate following of other districts. We judgments appellate agreed accepted two certified conflicts for review: “May person injured who has been in an automobile accident but who yet liability present right
has not established for the accident and to settlement future, if proceeds, but who have even the future existence conditional, proceeds assign right, part, whole or to another under Ohio law?” preclude prospective “Does R.C. 3929.06 insurer, bringing direct action third who had
prior
assignment,
notice of such written
after the insurer distributed settlement
of that
disregard
assignment?”
Chiropractic
written
W. Broad
Ins.,
1469,
{¶ 6} a direct bringing prospective cludes insurer insurer after the distributed against action proceeds. of the court of judgment appeals. affirm the Consequently, we
7}{¶ History Facts and Procedural 6, 2002. July on was in an automobile accident Kristy Norregard {¶ 8} later, injuries Chiroprac- Broad she treatment for her West days sought Three time, Right to a document entitled “Assignment tic. At that she executed Judgment” to her Benefits Proceeds Settlement Receive and/or for these company compensation from the tortfeasor’s insurance to receive to directly treatment. was to made injuries exchange Payment for her Norregard. was any payment Broad before made West later, 30, 2004, two on notice of the years April gave Almost West Broad 9}{¶ (“AFI”), which was believed assignment appellee, Family American Insurance insured involved in the accident with to have the driver automobile that AFI a co-endorser Norregard. requested The notice name West Broad as any separate payable disbursement issued or issue a check to West on check did not the amount directly. identify Broad The notice due West Broad. lawsuit, January any Norregard 2006 and settled her prior filing {¶ 10} injuries directly with AFI. AFI the settlement claim for disbursed Norregard. against seeking an action AFI that the West Broad filed declaration
{¶ 11}
was
enforceable and that AFI was
to West
obligated
pay
valid and
$3,830.
Broad for the treatment
valued at
The trial court
provided Norregard
judgment
that the
Broad.
held
was enforceable and entered
Tenth
Appeals
judgment
The
District Court
reversed
of the trial
court, concluding
being”
had
made the
Norregard
“right
when she
Ins.,
W.
v. Am.
Franklin
Chiropractic
App.
Broad
No.
¶
07AP-721,
Instead,
judgments
appeals
courts of
accepted
Districts.
determined that a conflict does exist on both issues. We
We
discretionary
West Broad’s
on the same issues and consolidated the cases.
appeal
Broad,
1469,
Assignment of Settlement Proceeds An is a to another of all or of one’s part transfer (1996), exchange App.3d for valuable consideration. Hsu v. Parker 116 Ohio 632, 688 N.E .2d 1099. A vested in the assigned property required complete confer a on the present right assignee. Christmas Griswold (1858), 8 Ohio St. 563-564. Broad, agreement When entered into the with West she had cause of action the tortfeasor that had accrued at the time of the Am., Pilkington
accident. See
N.
Inc. v. Travelers Cas. &
Sur.
Ohio
482,
to “right West Broad her to or any receive collect check or monies offered for compensation by to any person any injury for which [her] received [she] treatment Chiropractic.” Because no proceeds settlement at existed the time of the assignment Norregard then had no right any funds, she had no rights assign. we hold that the agreement could not operate as because no Norregard right any settlement proceeds to transfer to West Broad. 17B West Broad contends that Norregard’s expectation of a settlement was
{¶ assignable even it was though contingent upon proving liability damages. Broad, however, relies on cases which the expected interest was based upon real property contingent estates of of a property inheritance interest that was in (1962), 559, 565, existence. v. See Moore Foresman 172 Ohio St. (1929), O.O.2d 253, 260-261, N.E.2d Hite v. Hite 120 Ohio St. N.E. In Norregard had not asserted a claim against the tortfeasor and had not right established or the to damages. right proceeds of a future settlement was unresolved. Consequently, Norregard’s any proceeds merely settlement at possibility the time she executed assignment to West Broad. Pennsylvania Co. Thatcher 78 Ohio St. 85 N.E.
syllabus, the court held that an equitable assignment prospective a settlement could not by assignee against be enforced the tortfeasor in a Thatcher, suit at law. In victim a railroad accident attempted assign to action filed. claim, no cause of had been although of his attorney his to recover from the may have acknowledged that the The court money in a suit for however, legally binding was not assignor; the assign- not to the terms of agreed a third who had damages against party at N.E. 55. ment. Id. legally could rejected the notion that notice of Thatcher
{¶ of a contractual or other party an unrelated third the absence obligate “a assigned portion when the notice parties, particularly relationship between Id., 85 N.E. in suit or settlement.” 78 Ohio St. may of whatever insufficient to reach the funds The court held that a notice so indefinite was syllabus. tortfeasor. two of the paragraph in the hands of a an assignment effect to such would introduce giving Thatcher also reasoned into who had not been involved the accident the interests of third a settlement between the negotiations may compromise addition, 55. In an assignment and the tortfeasor. Id. person However, occurs when the fund or to be transferred exists. there simultaneously until the tortfeasor funds in pays are for a exchange release. century of Thatcher still later. legal reasoning persuasive We find Thatcher, present any with because had no
Consistent
assignment,
assign.
settlement funds at the time of the
she had no
it
against Norregard,
West Broad had
contract that
be enforceable
but
AFI.
legally binding upon
policy
justify upholding
The conflict cases relied on
reasons to
public
*4
assignments.
such
Some districts believed that such
would encour
Ctr.,
age settlement and avoid
Roselawn
Inc. v.
litigation.
Chiropractic
See
¶
Co.,
297,
{¶ 22} ments A might encourage promote litigation discourage and settlement. or other full lacks chiropractor assignee expects payment negotiat- interest Likewise, the amount of the ing third-party ability debt. the insurer lacks the the amount or dispute charges. reasonableness insurer must take claim, these factors into account when and the result be less to settling may injured him or her to party, forcing litigate hopes obtaining greater recovery. Attorneys may taking therefore be deterred from smaller claims when are by assignees, leaving injured taken little to no funds for the attorney’s fee. Furthermore, if injured executes person multiple assignments to creditors, variety insurer may determining be faced with priority assignments and how to distribute settlement rata proceeds pro among if assignees numerous the debt exceeds the amount of the Generally, settlement. injured counsel, person represented by who receives the settlement funds and who negotiate payment lesser with his client’s creditors. West however, proposition, Broad’s on places obligation the insurer to identify locate each the time of settlement to determine the current subject and may the insurer to lawsuits. multiple Upholding legality of such assignments opens the door for other
creditors to seek debt protection through assignments: the pharmacy, repair automobile other If shop, providers. medical person executes an assignment satisfy accident, i.e., a debt that is not related to the a landlord debt, or consumer the insurer would be thrust into a credit situation that is completely accident, unrelated to the underlying and the unrelated third party becomes a de facto collection agent prioritize must and pay debts to avoid personal liability. Finally, we disfavor such assignments based upon their similarities to
champertous agreements that are
void as matter of law. See Rancman v.
Interim
Funding
Settlement
Corp.,
may not assign to the of a if proceeds does not exist at the time of the assignment. Norregard had no present any settlement funds at the time and thus had no rights to assign. contract that may be enforceable *5 Norregard, but it is not legally binding AFI. upon
Application of R.C. 3929.06 The question second for review asks whether R.C. 3929.06 precludes {¶ 27} assignee from a bringing against direct action the third-party insurer who had proceeds the settlement paid but nevertheless notice of the prior assignment. written contrary to the action 3929.06(B) a civil injured person bringing precludes R.C.
{¶ has first obtained injured person until the tortfeasor’s insurer against the has not insured and the insurer against judgment damages days. within 30 only when the insurer applies contends that R.C. 3929.06 judicially has been determined. proceeds insurance after pay does not literally. more Akron R.C. 3929.06 interpreted The conflict cases likewise and the court of assignments, that does not mention *6 assignment, Norregard in order for there to a valid existing right must be most, At right assignee. that would have created a nothing bills, Broad had a contractual for medical but no right against Norregard West to enforce the AFI. legal right agreement against addition, AFI at the Norregard had no direct of action
time of the because she had not met the terms of R.C. 3929.06. assignee greater because West Broad’s as are no than West Norregard’s, Broad was also from a direct action AFI. prohibited filing Consequently, we affirm the of the court of appeals.
Judgment affirmed. O’Donnell, J., concurs. JJ., in judgment Lanzinger,
O’Connor concur and the answers to the certified questions only.
Moyer, C.J., Cupp, JJ., Pfeifer dissent. C.J., dissenting.
Moyer, I dissent because I find the assignment between (“West Broad”) Kristy Norregard and West Broad Chiropractic to be enforce- able. Therefore I would hold West Broad should be permitted recover from American Family Insurance for its failure to pay pursuant I assignment. Additionally, would hold that prohibit R.C. 3929.06 does not of an injured person suit to filing collect from the insurer on the assignment when the insurer has disregarded while distributing proceeds.
I Assignment the right contingent future
proceeds is permitted equitable assignment as issue, In the first injured certified-conflict we are asked whether an conditional, party may assign its compensation injuries future for its when yet has not established the the tortfeasor or present compensation. to such I would answer affirmative, upon prior based our cases concerning assignments of future inter- ests. I majority’s holding dissent from the on the first certified- conflict issue. The lead that in opinion validly assign states order to a contingent
{¶ interest, assignor must have a “property right existence.” [is] any compensa- According opinion, Norregard’s to the lead injuries chiropractic Broad for care is invalid personal tion for her any nor did present right proceeds, had no to settlement because However, in our the lead attempting explain precedent, exist. for an that do not actually imposes requirements equitable opinion *7 ability the requirements unduly in our case law. These new constrict exist a future interest. assign at contingent, property right A future interest is an uncertain best. of in is its property speculative,
This is so because the existence
the
not
on the occurrence of some
future condition
depending
specified
existence
interests,
definition,
by
fate.
caprice
Additionally, contingent
but also on the
interest,
in
holder of
present property right
although they
do not vest
the
the
in
in
such
may give
equity.
general,
rise
enforceable
at
an
assignments
expectancy
were not enforced as contracts
law because
was
(1929),
253, 262-264,
intangible.
deemed too
Hite v. Hite
120 Ohio St.
166 N.E.
193;
559, 566,
(1962),
v.
172
and Moore
Foresman
Ohio St.
18 O.O.2d
179
349;
175, 188,
(1908),
v.
Pennsylvania
N.E.2d
Co. Thatcher
78 Ohio St.
85 N.E.
However, a right
assignments
recognized
to enforce
of future interests was
188-189,
in
N.E. 55. In
for an
equity.
85
order
to be enforced
in
that
an
in
equity,
require
assignor
“expectancy”
object
we
have
Hite,
260-261,
law,
assignment.
belong
contingent
ability
the holder
such as the
to assign the
Hite,
Id.;
260-261,
contingent interest.
120
at
Ohio St.
rested on the at provision law the to seek redress for already expectancy being sustained. had and a legally recognized remedy injuries. nature of a for her Her interest future was Thus, her is expectation pursuing right. on contingent her success assigned. in law recognized and founded relief a property opinion' property of the lead premise {¶ —that assignments. concerning equitable our by precedent contradicted must exist—is N.E. Co. v. Judkins In Gen. Excavator assignment for the equitable ignored by opinion, is the lead we enforced which not contract, yet performed the work had been although of a by “an is created equitable due. held that no were We accept, supported on and an intention on other intention one side consideration, appropri to make an disclosing present purpose sufficient by 165, 190 fund.” at N.E. 389. ation of debt or Id. Excavator, did assignor As from the facts Gen. apparent issue, at property nor was existence present right
have a
165-166,
made.
Excavator
128 Ohio St.
time the
Gen.
contract,
the assignor
on the
so
had
performed
N.E.
No work had been
no
as to the first
payment.
payment
received
*8
an
merely
had
assignor
of
“debt or fund”—the
element
the
—the
in
that
the court Gen. Excavator held
the
expectation interest. Yet
167,
court
It was
sufficient for the
apparently
valid.
at
valid
Gen. Excavator:
or the
consideration.
Excavator
128
underlying
create
Gen.
Rather,
165,
majority deny
at
the
the
the
appellee
St.
interest or existence. Excavator have met in this equitable assignment under Gen. been case. Hite, 253, 120 at The cases cited in the lead Ohio St. opinion, Moore, 172 Ohio at O.O.2d 179 N.E.2d do alter St. supports premise opinion Hite result. Neither nor Moore lead only assigned that the that be are those which the expectations future fact, “a In upon property right [already] interest is based existence.” both Hite and Moore future interest based on recognized 260-261, 166 not in actual could Hite at property assigned equity. existence Moore, N.E. paragraph syllabus. one Hite, In expected his assignor assigned inheritance his sister, Hite,
mother’s estate to his assignee. Ohio St. N.E. law, 193. The Hite court held that the was not enforceable at but was enforceable in it equity, inequitable because would have been to allow the assignor to retain both inheritance and given by the consideration res, assignor actually i.e., the event that subject inherited the matter, 260-261, N.E. 193. The Hite court enforced the assignment, though even at the time of the assignment, assignor had no present rights property, did not exist when property made, assignment was assignor’s expectancy only and the “potential had exis- tence,” contingent on the occurrence of event. Hite is no support for the conclusion that an expectation interest can be assigned when it is a “property [already] existence.” Moore, we came to conclusion that unsurprising because Ohio law
recognized protectable equitable or beneficial ownership held in trust (although the beneficiary present ownership), legal Moore, beneficiary could that interest in equity. *9 123,
O.O.2d
{¶ property or the property existence of the contingent may before a interest Yet, illustrate, assigned. as Hite contingent and Moore will rarely —if presently existing ever—involve property rights actual property existence. The Hite court expressly recognized assignor’s that the right to property was
507
no existing
had
assignor
of that
right,
a “mere
upon
expectancy”
based
Hite, 120 Ohio
assignment.
at
the time of
and that no
existed
right,
which,
contingent
any,
if
260-261,
imagine
It is
equitable
come
has
into
object
has occurred and
contingency
Hite,
193; Moore,
262-264,
who did
cannot be enforced
majority
equitable assignments
holds
this holding
not consent
But
is
parties
agreements.
third
who did
Cincinnati, Chicago &
contrary
precedent
Pittsburg,
established in
directly
367,
924,
(1898),
362,
v.
58
Gen.
Ry.
Louis
Co. Volkert
Ohio St.
Excavator,
Furthermore,
opinion’s
190
the lead
128 Ohio St.
N.E. 389.
Thatcher,
55, misplaced,
85
reasoning
reliance on the
78 Ohio St.
N.E.
law, and
Thatcher
in an action at
money damages
because
addressed
syllabus.
cited from Thatcher is dicta.
reasoning
Volkert,
attorney
his fee from an
assigned
unpaid
but
debtor
assignee,
disregarded
1. The
have cited
Ohio court of
two cases from the courts of last resort of
six
appeals cases,
parties
Square
Akron
including
following:
trial
other
and several state and federal
court
states,
cases,
Chiropractic
Creps,
Cartwright
v.
No.
attorney’s
instead.
58 Ohio
at
well
Ohio St.
of Thatcher
equitable
—that
equity
must be enforced in
and cannot
case,
be enforced in actions at
law—has
on this
bearing
particularly because of
Thatcher,
now
defunct distinction
between actions
law and at
See
equity.
(“There
509 60, 66, (1892), 49 Ohio v. not. Cincinnati generally were Hafer and champerty against policy the general Thatcher reflect dicta of And the a third by of a lawsuit maintenance (i.e., with the the interference maintenance of exchange portion in for litigation assist agreed has who party of the the needs may undermine assignments by prohibiting proceeds) intro- by and frustrate settlement needlessly complicate litigation, injured party, See, process. and settlement litigation party third a self-interested ducing 121, 2003- 99 Ohio St.3d Funding Corp., Rancman v. Interim Settlement e.g., ¶ Ohio-2721, at 10. 789 N.E.2d dicta, undesirability permitting of addresses, Thus, Thatcher (or underlying cause of the portions in action of choses assignment
equitable
injury
her
action)
did not
Yet
torts.
personal-injury
to settlement
tortfeasor;
her
assigned
she
of action
of action
a cause
assigning
between
an
difference
important
There is
proceeds.
of action.
of that cause
pursuit
from future
proceeds
assigning
and
and raise
into the litigation
third party
insert a self-interested
former would
litigation
cognizable right
imparts
The latter
champerty.
concerns of
an enforceable
party
the third
party
gives
the third
the cause of action to
cause of
resolution of the
are
proceeds
to the extent
there
right only
the courts of last
by
as
recognized
significant
has been
action. This distinction
states,
out. Charlotte-Mecklen
appellant points
other
as
resort of at least three
Auth.,
655;
Plaza
Expressway
Achrem
similar to those of a future in this case—of the assignment Accordingly, Rancman: in Thatcher and not raise the concerns noted settlement —does claim or injury litigation involved in the will not have a to be assignee discussion, compromise will not and the settlement resulting injured party. to settle with the ability of the tortfeasor rule to proper is the Therefore, I hold that the rule Volkert would Insurance, which Family American Broad recover from and that West apply to its terms. according pay but did had notice II a third- by assignee bar a lawsuit 3929.06 does not
R.C.
disregard
paid
insurer who
it had notice
which
issue,
reasons that
opinion
the lead
certified
to the second
regard
With
an insurer who
suing
precludes
R.C. 3929.06
of an
of which it
notice.
I
disagree.
disregard
Inc. v.
apply
plainly
MedCorp,
Courts are
statutes as
written.
Ohio
charged
Servs.,
{¶ death, or damages injury, to a loss to the or plaintiff person if, plaintiff plaintiff representative or for whom is a person legal another the debtor, against judgment the time that the cause of action accrued the the death, loss, judgment against liability debtor was insured for that or injury, the plaintiff or in interest is plaintiffs judgment the successor entitled as creditor to have an to of liability coverage provided amount the limit up remaining the of judgment policy liability applied debtor’s insurance to the satisfaction of the final judgment. “(2)
(¶ If, thirty days entry judgment within after the of the final referred (A)(1) section, to in of division this insurer that policy the issued the of liability insurance has not the an to paid judgment creditor amount the equal remaining limit of liability coverage provided policy, in that the creditor judgment may file in the court that the final a judgment supplemental complaint entered against the insurer a seeking entry judgment ordering the of to pay judgment the insurer the (C) creditor requisite Subject section, the amount. to division of this the civil action supplemental based on shall complaint proceed the the against insurer the same as original manner the civil action the against judgment debtor. “(B) (A)(2)of Division this section does not the authorize commencement of a civil action an a insurer until court the final judgment enters (A)(1) described in division of this in the section distinct civil action for damages between plaintiff and an insured tortfeasor and until the expiration of the (A)(2) thirty-day period to in of referred division this section.” 3929.06(B) R.C. is of portion the statute at That portion issue. an injured the statute wait requires days judgment against after a filing tortfeasor suit against before the tortfeasor’s insurer collect on that judgment. majority The does not dispute reading 3929.06. R.C. statute injured confines to one type itself of lawsuit—a suit by person collect from an judicial insurer after a determination of the of a prohibition in tortfeasor —and the the statute pertains only filing of a lawsuit to such a judgment collect on after 30 days passed have from the final judgment of damages. words R.C. 3929.06 to that stretches the I cannot follow the rationale the insurer on an when assignee a to collect
preclude by suit 3929.06(B) R.C. money disregard distributed a of action. to such cause simply apply does facts this case. The Moreover, application the statute has no no and has unless judgment application to collect on applies
statute suits 3929.06(A)(1). In this entered as described R.C. judgment civil has been settled with no or need collect on insurer was there —the the insurer files suit because party out of court. When terms, statute, has its own no assignment, by disregard of to such a suit. application best, majority’s At with to R.C. 3929.06 non holding regard of R.C. 3929.06 “underlying premise” The
sequitur.
opinion
lead
states
invalid,
confirms the conclusion that
because
assign.
majority
then answers the
existing property
property rights
precludes
3929.06
“yes,” concluding
assign-
second certified
R.C.
insurer
bringing
ee from
a direct action
after
insurer
written
disregard
agreement.
This
has distributed settlement
majority’s reasoning
assign-
is odd
if the
is correct and
conclusion
because
*13
action,
invalid,
never had a cause of
and there is
ment was
then West Broad
If the
view
carried to its
preclude.
majority’s
for R.C.
were
nothing
3929.06
conclusion,
question
we
not reach
second certified
then
should
logical
—the
action; rather,
not
lack of a valid
statute does
preclude
insurer,
and
second certified
precludes
the action
above,
invalid;
I
not
argued
agree
moot. As
do
therefore,
regard
I
with
majority’s holding
cannot
with the
R.C. 3929.06.
agree
Furthermore,
law on
to collect on
majority ignores
the settled
suits
assignee
equitable assignment
An
sue
improperly
assignment.
did
pay according-
debtor who had notice of the
but
not
third-party
Volkert,
one, two,
three of
ly.
58 Ohio
50 N.E.
and
paragraphs
St.
Excavator,
syllabus;
Ill remedy injuries. being had a to seek a for her I that her future in the lawsuit or would hold Broad, assignable. assignee, settlement was is entitled to enforce the Insurance, debtor, assignment against Family American under settled law. R.C. does not apply prohibit 3929.06 West Broad from suing properly American for failure to distribute under terms of the assignment. Therefore, I dissent. Cupp, JJ., and concur the foregoing opinion.
Pfeifer Katz, Teller, III, Brant McCarthy & Hild and James F. for appellant. Frost, Co., L.P.A., Maddox, & Maddox Norman and Mark for appellee. S. Boehm, Kurtz & and John P. Lowry Lowry; Montgomery, Rennie & Jonson, George Jonson and D. reversal amici urging curiae Ohio State Chiropractic Association Ohio Osteopathic Association. Andress, Faust,
Roetzel & Laura M. Wyss, Jerome urging G. affirmance for amicus curiae Ohio Trial Attorneys. Association Civil Appellant. Ohio, Appellee, Harrison,
The State
Harrison,
as State v.
[Cite
Department discovered a running tape
placed
recorder
behind a
can in
trash
restroom
police
department’s ladies’ locker room.
tape
recorder
belonged
Harrison,
to appellant David
Wapakoneta’s
who was then
of police.
chief
notes
the statute
Square
assigning potential
on
prohibition
to read into the statute
appeals refused
¶
2004-0hio-1988,
reject-
Cartwright
10.
WL
proceeds.
settlement
in
that case settled
of R.C. 3929.06 because the
application
ed the
Thus,
inapplicable
suit.
that court considered the statute
having
without
file
¶