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ATTORNEYS FOR APPELLANT Karl L. Mulvaney Dennis F. Cantrell Nana Quay-Smith Candace L. Sage Indianapolis, Indiana

ATTORNEYS FOR APPELLEE Peter Campbell King J. Kevin King Columbus, Indiana

In the

Indiana Supreme Court
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No. 03S01-0505-CV-255 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant (Proposed Intervenor below), v. RUTH ESTEP, PERSONAL REPRESENTATIVE OF THE ESTATE OF EWING DAN ESTEP, AND ASSIGNEE OF RIGHTS OF JAMES D. PERKINS, Appellee (Plaintiff below).

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Appeal from the Bartholomew Circuit Court, No. 03C01-0008-CT-1117 The Honorable Stephen R. Heimann, Judge _________________________________ On Petition To Transfer from the Indiana Court of Appeals, No. 03A01-0401-CV-30

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September 25, 2007 Shepard, Chief Justice. In this motor vehicle collision case, defendant's insurance carrier offered to pay policy limits even as it continued to defend its insured. Plaintiff refused the offer. A jury awarded damages above policy limits, and the carrier immediately paid on its policy.

In proceedings supplemental, the trial court ordered the insured to assign any cause of action he might have against his insurer and directed plaintiff's counsel to prepare the assignment. The assignment became a global one, which plaintiff deployed to sue both the carrier and defendant's personal attorney. We held fifteen years ago, however, that assigning claims against lawyers is impermissible. Most of the reasons for that rule also pertain to involuntary assignments such as the one before us.

Facts and Procedural History

James Perkins was driving his pickup truck through Columbus, Indiana, when he hit the rear of Dan Estep's motorcycle. Estep suffered devastating injuries. 1 In August 2000, Estep filed a personal injury action against Perkins.

Perkins' insurer, State Farm Mutual Automobile Insurance Company, retained attorney Michael Stephenson to defend him. Perkins also retained his personal attorney, Jerry L. Susong, as Stephenson's co-counsel. Estep died before trial, and his Estate was substituted as plaintiff.

Perkins' automobile policy with State Farm had a $50,000 per person policy limit. State Farm repeatedly offered to pay Estep the $50,000 policy limit, but Estep refused to accept the offer or submit a demand.

Estep's claim went to trial, and in March 2002 the jury awarded Estep's Estate $650,000 in compensatory damages and $15,000 in punitive damages. The day after the verdict, State Farm paid Perkins' full policy limit of $50,000 to the Estate.

In April 2002, pursuant to Trial Rule 69(E), the Estate initiated proceedings supplemental to execution against Perkins, seeking satisfaction of the $615,000 that remained unpaid. 2
1

As a result of this collision, Perkins was convicted of operating a vehicle while intoxicated causing serious bodily injury, a class D felony. See Perkins v. State, 812 N.E.2d 836, 837 (Ind. Ct. App. 2004). 2 In accordance with standard practice, the Estate filed these proceedings supplemental in the same court and under the same cause number as the original proceeding against Perkins. (Appellant's App. at 66, 70-71.)

2

Stephenson withdrew in July 2002, concluding he had completed his defense obligations under Perkins' insurance policy. Susong continued to represent Perkins. Subsequent to

Stephenson's withdrawal, the Estate sought an order directing Perkins to assign to it any cause of action Perkins might have against State Farm. State Farm was not a party to the proceedings supplemental and did not receive notice that the Estate was seeking the assignment. 3

When requested to assign any potential bad faith claim he might have against State Farm, Perkins refused and denied that there was any basis for such a claim. Susong said on Perkins' behalf that State Farm defended [Perkins] all the way through. I personally would not . . . open[] the insurance company up to defending another case that their own insured does not wish to bring, without some showing of fact that they did do something. . . . I'm not aware of any bad faith dealing on [State Farm's] part[]. (Hr'g Tr. at 7.)

Over Perkins' objection, the court ordered Perkins to assign to the Estate any potential bad faith claim Perkins might have against State Farm. The assignment Perkins presented turned out to be even broader. It assigned to the Estate all potential "claims, demands, and cause or causes of action" arising out of the Estate's personal injury action against Perkins, including a specific assignment of any potential cause of action against State Farm.

State Farm first received notice of the assignment in September 2003, when the Estate, as Perkins' assignee, sued State Farm in an Illinois state court asking $615,000 in damages

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Indiana Law