Lingel v. Olbin

• Decision Date: 29 August 2000
• Docket Number: No. 2 CA-CV 99-0061.,2 CA-CV 99-0061.
• Citation: 198 Ariz. 249,8 P.3d 1163
• Parties: Rick and Joyce LINGEL, husband and wife, Plaintiffs/Appellants, v. Michael and Patricia OLBIN, husband and wife, Defendants/Appellees.
• Court: Arizona Court of Appeals

8 P.3d 1163

198 Ariz. 249

Rick and Joyce LINGEL, husband and wife, Plaintiffs/Appellants, v. Michael and Patricia OLBIN, husband and wife, Defendants/Appellees.

No. -0061.

Court of Appeals of Arizona, Division 2, Department B.

August 29, 2000.

Gabroy, Rollman & Bosse, P.C., By John Gabroy, Tucson, for Plaintiffs/Appellants.

Fines & Oden, P.L.C., By L. Anthony Fines, Tucson, for Defendants/Appellees.

OPINION

ESPINOSA, Chief Judge.

¶ 1 Plaintiffs/appellants Rick and Joyce Lingel appeal from the trial court's order granting summary judgment in favor of defendants/appellees Patricia and Michael Olbin in the Lingels' breach of contract action, which claimed entitlement to one-half of any proceeds recovered in the Olbins' wrongful death action for the death of Erik Olbin, the biological son of Patricia Olbin and Rick Lingel. The Lingels argue that the trial court erred in refusing to enforce the parties' agreement to share the proceeds of the wrongful death claim as well as contractual proceeds from an automobile insurance policy, finding both subject to the rule against assignment of personal injury claims. For the reasons set forth below, we conclude that such agreements are not enforceable in Arizona and, therefore, we affirm.

Facts and Procedural History

¶ 2 We view the evidence and all reasonable inferences therefrom in the light most favorable to the party opposing the motion below. Hill-Shafer Partnership v. Chilson Family Trust, 165 Ariz. 469, 799 P.2d 810 (1990). The material facts are largely undisputed. As noted above, Erik Olbin was the natural child of Patricia Olbin and Rick Lingel. After Rick and Patricia divorced, Rick relinquished his parental rights to Erik, and Patricia's new husband, Michael, adopted him. In May 1997, Erik was killed in a traffic accident at the age of twenty-four. Shortly thereafter, the Lingels and the Olbins entered into "an oral contract" in which they agreed to share equally Erik's estate, any insurance benefits "relating to Erik's death," and proceeds from any wrongful death action. An attorney friend of the Lingels, who had represented Erik in another matter, was present for this discussion. Rick later asked Michael to confirm the agreement in writing, which he did. Acting on the Olbins' desire "to get things moving," Rick brought a wrongful death action as Erik's "surviving father" against the driver who had struck and killed Erik, seeking to recover his damages for lost consortium, burial expenses, and other items.¹ The Olbins' attorney subsequently advised them that the Lingels had no right to recover for Erik's death and, at the Olbins' request, informed the Lingels they would not be sharing in Erik's estate or "any wrongful death recovery." The Olbins' attorney secured settlements against the driver and his insurance company and recovered underinsured motorist (UIM) benefits from an automobile insurance policy purchased by the Lingels that had covered Erik at the time of the accident. The Olbins also brought a wrongful death action against Pima County based on negligent road design.²

¶ 3 The Lingels sued the Olbins, alleging claims of breach of contract and breach of the covenant of good faith and fair dealing. The Olbins filed a counterclaim, seeking the return of money they had paid the Lingels and certain items in Erik's estate. The Olbins also filed a third-party complaint against the Lingels' attorney friend for breach of fiduciary duty, alleging he had led the Olbins to believe he would "protect their interests." The Olbins further alleged the attorney had erroneously advised them about the necessity of having a personal representative appointed for Erik's estate³ and about the Lingels' standing to file a wrongful death action and to inherit from the estate.

¶ 4 In their motion for partial summary judgment, the Olbins argued that a contract assigning a wrongful death action and all proceeds therefrom is not enforceable; that the purported agreement with the Lingels violated the statute of frauds; and that Rick Lingel, as the personal representative of Erik's estate, had breached his fiduciary duty to them. In opposition, the Lingels argued that the rule prohibiting the assignment of personal injury claims does not apply to wrongful death claims and any resulting proceeds, that the contract claims for UIM benefits and life insurance benefits were fully assignable as well as severable, that the statute of frauds was inapplicable, and that a material question of fact existed as to whether Rick had violated any duty he owed the Olbins. In their cross-motion for partial summary judgment, the Lingels contended there was no triable issue of fact about the enforceability of their agreement "to equally share all insurance benefits." The trial court granted the Olbins' motion, finding the common law rule prohibiting the assignment of personal injury claims and the proceeds therefrom applicable to actions for wrongful death and any resulting proceeds. The court also found that genuine issues of material fact existed as to whether the entire agreement was void, whether the parties must return life insurance proceeds they had already exchanged, and whether the Lingels were required to return items from Erik's estate.⁴ The trial court agreed that the contract claim for life insurance benefits was severable, but denied the remainder of the Lingels' motion, stating:

[T]he fact that the claim(s) were paid from a liability policy of [the driver] and an underinsured policy covering [Erik] is irrelevant and has no effect on the non-assignability of the claims.... The sole issues for trial concerning insurance policy assignments are the assignments of life insurance policies and how those assignments were obtained.

Pursuant to Rule 54(b), Ariz. R. Civ. P., 16 A.R.S., the trial court entered judgment in favor of the Olbins, and this appeal followed.

Standard of Review

¶ 5 In ruling on a motion for summary judgment, a trial court must decide whether a genuine issue of material fact exists and whether the moving party is entitled to judgment on the merits as a matter of law. Ariz. R. Civ. P. 56(c), 16 A.R.S.; Orme School v. Reeves, 166 Ariz. 301, 802 P.2d 1000 (1990). In reviewing the ruling, we "determine whether the trial court correctly applied the substantive law to [the] facts." St. Luke's Health Sys. v. State, 180 Ariz. 373, 376, 884 P.2d 259, 262 (App.1994). We are not bound by the trial court's legal conclusions and review those questions de novo. Elia v. Pifer, 194 Ariz. 74, 977 P.2d 796 (App.1998).

Assignment of Wrongful Death Actions

¶ 6 It is well established in Arizona, and the Lingels acknowledge that, absent statutory authorization, an assignment of a cause of action for personal injuries against a third-party tortfeasor is void and unenforceable. Allstate Ins. Co. v. Druke, 118 Ariz. 301, 576 P.2d 489 (1978); State Farm Fire & Cas. Co. v. Knapp, 107 Ariz. 184, 484 P.2d 180 (1971); Lo Piano v. Hunter, 173 Ariz. 172, 840 P.2d 1037 (App.1992). The Lingels contend, however, that the trial court improperly expanded existing law in concluding that "any agreement made by a personal injury or wrongful death plaintiff to pay another person part of the proceeds of a personal injury or wrongful death action is unenforceable in Arizona." To determine whether proceeds of a wrongful death action are assignable, we first consider whether the underlying action itself may be assigned, examining the history and rationale of the rule prohibiting the assignment of claims for personal injury. No Arizona court has directly addressed this question.

¶ 7 Historically, the assignment of tort actions for personal injuries has been prohibited because, among other reasons, such actions do not survive the death of the injured person in the absence of statute. See Karp v. Speizer, 132 Ariz. 599, 647 P.2d 1197 (App. 1982); Harleysville Mut. Ins. Co. v. Lea, 2 Ariz.App. 538, 410 P.2d 495 (1966); see also Liberty Mut. Ins. Co. v. Thunderbird Bank, 113 Ariz. 375, 555 P.2d 333 (1976) (generally, claims that survive the plaintiff's death are assignable). The Lingels argue that because an action for wrongful death is a statutory, as opposed to common law, cause of action, A.R.S. §§ 12-611 to 12-613, it necessarily survives the death of the person entitled to assert it as a property right and is therefore "freely assignable," citing several cases from other jurisdictions. We note that none of those cases involves wrongful death actions and some offer slim support for the Lingel's theory.⁵ After examining our own statutes and precedents, we reject their argument for several reasons.

¶ 8 First, in Arizona, whether a claim is statutory is not determinative of its assignability or survivability. As the Olbins point out, the question of whether a claim survives a person's death is answered by Arizona's survival statute, A.R.S. § 14-3110. That statute provides:

Every cause of action, except a cause of action for damages for breach of promise to marry, seduction, libel, slander, separate maintenance, alimony, loss of consortium or invasion of the right of privacy, shall survive the death of the person entitled thereto or liable therefor, and may be asserted by or against the personal representative of such person, provided that upon the death of the person injured, damages for pain and suffering of such injured person shall not be allowed.

In their action for the wrongful death of their adult son, the Olbins apparently asserted only a claim for "loss of consortium."⁶ But, under § 14-3110, a claim for loss of consortium does not survive the death of the person entitled to assert it. Thus, under the rationale of Harleysville, that claim could not be assigned. Cf. Badia v. City of Casa Grande, 195 Ariz. 349, 988 P.2d 134 (App.1999) (pursuant to § 14-3110, damages for plaintiff's pain and suffering did not survive her death from unrelated injuries); Katz v. Filandro, 153 Ariz. 601, 739 P.2d...