Kommavongsa v. Haskell

Decision Date01 May 2003
Docket NumberNo. 71713-3.,71713-3.
Citation149 Wash.2d 288,67 P.3d 1068
CourtWashington Supreme Court
PartiesKhene KOMMAVONGSA, individually and as guardian ad litem of Sivilay T. Nammathao, an incompetent, Appellant, v. Stephen HASKELL and Jane Doe Haskell, his wife, Stephen K. Eugster and Jane Doe Eugster, his wife, Christopher M. Grimes and Jane Doe Grimes, his wife, and the law firm of Eugster Haskell, Respondents. and Allstate Insurance Company, a foreign corporation, and Marybeth and John Doe Conger, a marital community, Brian Sheldon and Jane Doe Sheldon, a marital community, Defendants. Phoukeo Nammathao, individually and as guardian ad litem of Napha T. Nammathao, an incompetent, Appellant, v. Stephen Haskell and Jane Doe Haskell, his wife, Stephen K. Eugster and Jane Doe Eugster, his wife, Christopher M. Grimes and Jane Doe Grimes, his wife and the law firm of Eugster Haskell, Respondents. Allstate Insurance Company, a foreign corporation, and Marybeth and John Doe Conger, a marital community, Brian Sheldon and Jane Doe Sheldon, a marital community, Defendants.

A. Graham Greenlee, Lenell Nussbaum, Seattle, for Appellant.

Peter Johnson, Hugh Lackie, Amy Clemmons, Spokane, for Respondent.

KENNEDY, J.1

This case, which was certified for direct review by Division Three of the Court of Appeals, raises a narrow question of first impression in Washington: Whether a legal malpractice claim is assignable to an adversary in the same litigation that gave rise to the alleged legal malpractice. We answer that narrow question in the negative on grounds of public policy, leaving for another day the broader issue of whether legal malpractice claims may be assignable in other circumstances. In so ruling, we affirm the judgment of the Spokane County Superior Court in these consolidated proceedings, insofar as the court ruled that the assignment in this case violates public policy, and insofar as the court permitted substitution of the assignor as the real party-plaintiff in interest. But we reverse the court's ruling that the substitution did not relate back to the initial filing date of the legal malpractice action under CR 17(a), so that the action was barred by the statute of limitations, and we remand so that the legal malpractice claim may proceed in normal course as between the proper parties thereto.

FACTS

On August 19, 1995, 39-year-old Sivilay Nammathao and her 10-year-old daughter Napha Nammathao were riding in a vehicle being driven by Khamchanh Soratsavong on State Route 395 in Franklin County, Washington. Mr. Soratsavong, whom Sivilay Nammathao recognized as her husband although the parties were not married, fell asleep while driving, and the vehicle rolled over. Sivilay Nammathao sustained a severe brain injury and remains in a vegetative state. The child Napha suffered a concussion, internal injuries, and fractures of the leg and pelvis. Because Sivilay Nammathao is legally incompetent as a result of her injuries, and Napha is a minor, guardians ad litem were appointed for each, for the purpose of the personal injury lawsuits that followed. Khene Kommavongsa was appointed as the guardian ad litem for Sivilay Nammathao, and Phoukeo Nammathao was appointed as the guardian ad litem for Napha.

On May 18, 1996, each guardian ad litem served Mr. Soratsavong with a summons and complaint for personal injuries that had been filed in Benton County Superior Court, alleging that the injuries to the mother and child were the result of negligence on the part of Mr. Soratsavong.

Mr. Soratsavong was insured by Allstate Indemnity Company, with policy limits of $50,000. The record is silent as to whether Mr. Soratsavong notified Allstate when he was served with the lawsuits. On July 5, 1996, the Benton County Superior Court entered orders of default against Mr. Soratsavong for failure to appear and defend the lawsuits. No default judgments were entered at that time.

Allstate learned about the orders of default on July 15, 1996, and retained the Eugster Haskell law firm to appear for its insured, and to move to set aside the orders of default. The law firm took no immediate action. On August 30, 1996, the guardians ad litem submitted affidavits setting forth the extent of Sivilay and Napha's injuries. On September 11, 1996, the court entered default judgments of liability in each of the lawsuits, leaving the damages amounts blank.

On October 11, 1996, Christopher Grimes, an associate at Eugster Haskell, filed a motion to vacate the order of default in Sivilay Nammathao's case. He did not file a motion in Napha's case. The motion in Sivilay Nammathao's case was denied because a default judgment of liability had already been entered, and no meritorious defense was proposed. The law firm took no further action in either lawsuit. Allstate eventually tendered the $50,000 policy limits into the registry of the court.

On February 21, 1998, Eugster Haskell withdrew as counsel for Mr. Soratsavong. On February 23, 1998, Allstate retained Patrick McMahon to appear for Mr. Soratsavong and to move to set aside the default judgments. Mr. McMahon filed motions to vacate the default judgments in both cases, but the motions were denied because they were brought more than one year after entry of the judgments.

In late 1998, the guardians' attorney contacted Allstate to attempt negotiation of the monetary amount of the default judgments. The guardians' attorney expressed interest in satisfying the judgments against Mr. Soratsavong in exchange for an assignment of Soratsavong's legal malpractice claim against Eugster Haskell. Allstate referred the guardians' attorney to Eugster Haskell.

Thereafter, the guardians' attorney and Mr. Soratsavong's attorney began negotiating a settlement agreement. On September 9, 1999, the attorneys for the guardians ad litem and Mr. Soratsavong stipulated that the monetary amount of Sivilay Nammathao's damages was $12,244,129.39 and that the monetary amount of Napha's damages was $177,136.15. That same day, the trial court entered default judgments nunc pro tunc for these amounts. By the terms of the settlement, Mr. Soratsavong, who is of limited means, contributed the $50,000 policy limits toward satisfaction of the judgments. And in exchange for the guardians' covenant not to execute upon the remainder of the judgments, Mr. Soratsavong assigned to the guardians his legal malpractice claim against the Eugster Haskell law firm, its principals Stephen Eugster and Stephen Haskell, and its associate Christopher Grimes.

The following day, the guardians ad litem petitioned and were appointed as guardians ad litem for Sivilay Nammathao and Napha Nammathao, for purposes of bringing the legal malpractice claim. On that same day, each of the guardians filed a separate legal malpractice lawsuit, individually and as guardian ad litem of Sivilay Nammathao and Napha Nammathao, respectively, in Spokane County Superior Court. The complaints alleged that the default judgments were the result of the defendants' failure to properly defend Mr. Soratsavong from the Benton County personal injury lawsuit by timely moving to vacate the orders of default and default judgments.

Eugster Haskell and the individual defendants appeared through counsel, and subsequently moved to consolidate the legal malpractice actions, which motion was granted. On May 24, 2000, the defendants moved to dismiss the consolidated claims under CR 12(b) and CR 56, on the basis that assignments of legal malpractice claims are void as against public policy in Washington. The guardians ad litem responded to the motion on June 12, 2000, arguing that there is no prohibition against assigning legal malpractice claims in Washington, but if the court were to conclude to the contrary, they should be permitted to substitute Mr. Soratsavong as the party plaintiff. On June 22, 2000, the trial court announced its oral decision, ruling that legal malpractice claims cannot be assigned in Washington on grounds of public policy, and ruling that Mr. Soratsavong could be substituted as the party plaintiff, upon a proper motion.

On August 7, 2000, the guardians ad litem filed their motion to substitute Mr. Soratsavong as the party plaintiff, and on August 10, 2000, Mr. Soratsavong signed and filed a document in which he joined in that motion and in which he ratified the legal malpractice lawsuits. On August 17, 2000, the defendants filed a memorandum in opposition to the motion to substitute party plaintiff, and sought dismissal of the consolidated lawsuits, on grounds that the statute of limitations had run and that any substitution of party plaintiff should not relate back to the date the malpractice lawsuits were filed.

On November 13, 2000, the trial court entered its order in the consolidated proceedings, granting the motion to substitute Mr. Soratsavong as the party plaintiff, but ruling that the substitution would not relate back to the filing of the complaints under CR 17(a) and CR 15(c). Contemporaneously, the trial court entered an order dismissing the legal malpractice lawsuits on the ground that the statute of limitations had run before Mr. Soratsavong was substituted as the proper party plaintiff.

The guardians ad litem appealed to Division Three of the Court of Appeals. That court certified the appeal to this court, and we accepted the certification because the assignability of legal malpractice claims presents a legal question of first impression in Washington.

Standard of Review

Legal questions of first impression (like other legal questions) are reviewed de novo. City of Univ. Place v. McGuire, 144 Wash.2d 640, 649, 30 P.3d 453 (2001). A trial court's ruling on relation back under CR 17(a) and CR 15(c) is reviewed for abuse of discretion. Nepstad v. Beasley, 77 Wash.App. 459, 468, 892 P.2d 110 (1995).

ANALYSIS
I

The traditional test for assignability of a cause of action in Washington is this: "Does the cause of action...

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