Supreme Court rejects novel fix-up in car wreck case

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A logging company in Allendale County won’t be able to settle a multi-million dollar lawsuit pending against it by filing a malpractice claim against its attorneys and assigning the proceeds to the man injured in a wreck involving one of the company’s rigs, the South Carolina Supreme Court ruled July 15.

George Skipper claims that he and his wife were driving down a Chatham County, Georgia, highway in September 2010 when improperly loaded logs fell from a tractor trailer owned by Specialty Logging Co., and that the ensuing wreck caused him permanent serious injury. Skipper’s attorney wrote to Specialty’s insurer, ACE Property and Casualty Insurance Co., offering to settle his claim for the full $1 million in liability coverage Specialty carried.

ACE retained two lawyers from Atlanta, Brantley Rowlen and Erin Lawson Coia, to represent Specialty and the driver of the rig. They offered Skipper only $50,000 to settle the claim, which led to Skipper rejecting the offer and filing suit in Allendale County. Skipper claims that Rowlen and Coia, without consulting Specialty, then rejected his subsequent offers to settle the case for more than Specialty’s policy limits, as well as an offer to try the case under a high-low agreement.

Specialty, its owner, and the driver of the rig eventually retained their own lawyers and signed a $4.5 million confession of judgment admitting liability for the Skippers’ injuries and losses. As part of the deal, they also agreed to pursue a legal malpractice claim against ACE, Rowlen, and Coia, and assigned most of the interest in that claim to the Skippers. In exchange, the Skippers agreed not to execute the judgment as long as Specialty cooperated in the legal malpractice litigation.

Together, the Skippers and Specialty filed a malpractice action against Rowlen and Coia in state court. In their complaint, they alleged that the attorneys acted solely on behalf of ACE during settlement negotiations and adversely to the interests of their actual clients. The suit also claims that Rowlen and Coia failed to act in Specialty’s best interests in rejecting the offer to settle the claim for the full policy limits, inform Specialty about subsequent offers to settle the case, or advise them to seek independent counsel once a conflict of interest emerged.

The case was later removed to federal court. Because South Carolina’s appellate courts had never decided whether a legal malpractice claim can be assigned between the adversaries involved in the litigation in which the alleged malpractice arose, U.S. District Judge J. Michelle Childs certified the question to the South Carolina Supreme Court.

Although bad-faith claims against insurers themselves can be assigned to opposing parties in South Carolina, the court unanimously held that legal malpractice claims, on the other hand, could not be assigned in such a way. Doing so, the court said, would increase the risk of collusion between plaintiffs and defendants, and threaten the integrity of the attorney-client relationship.

“Permitting these assignments would allow plaintiffs ‘to drive a wedge between the defense attorney and his client by creating a conflict of interest,’” Judge John Kittredge wrote for the court, citing an earlier decision by a Texas court. Kittredge noted that most states that have considered the issue have forbidden such arrangements.

Kittredge also wrote that allowing such assignments would encourage lawyers to flip their positions on a case in order to chase after the biggest payment, citing a New Jersey decision which held that “a party should not be permitted to transmute a claim against a penniless adversary into a claim against the adversary’s wealthier lawyer based on the lawyer’s supposed negligence towards the adversary.”

Skipper and Specialty had argued in their malpractice complaint that in this case something of the reverse was true—that Specialty owns substantial assets that would be put in serious jeopardy if the case were allowed to proceed to trial.

Under the agreement between Specialty and Skipper, the court’s ruling means that the confession of judgment and the agreement not to pursue claims against Specialty are also nullified. Because of the court’s ruling, the case will be remanded back to state court, where Skipper will resume his negligence suit against Specialty. The decision does not affect Specialty’s right to bring a malpractice lawsuit against its attorneys directly at a later date.

Blake Hewitt of Bluestein Nichols Thompson & Delgado in Columbia, Mark Tinsley of Gooding & Gooding in Allendale, and Randolph Murdaugh of Peters, Murdaugh, Parker, Eltzroth & Detrick in Hampton represented Skipper and Specialty. Robert Hood, Robert Hood Jr., and Deborah Harrison Sheffield of the Hood Law Firm in Charleston represented Rowlen and Coia.

The six-page decision is Skipper v. ACE Property & Casualty Insurance Co. (Lawyers Weekly No. 010-082-15). The full text of the opinion is available online at sclawyersweekly.com.

Follow David Donovan on Twitter @SCLWDonovan