Court of Appeals of Georgia Rules Legal Malpractice Claims are Assignable


The Court of Appeals of Georgia has affirmed the denial of an attorney’s motion for partial summary judgment in a legal malpractice claim. In Villanueva v. First American Title Insurance Company, an insurer brought a negligence claim against an attorney who represented a client in the refinance of a mortgage.

At the time of the refinance, the subject property was subject to two prior mortgages. The new lender prepared closing instructions, requiring the attorney to pay off both mortgages. Following the closing, loan proceeds were deposited into the attorney’s escrow account. However, the attorney’s law associate stole the funds and the prior mortgages were never satisfied.

The lender had required the borrower to procure title insurance for the transaction. The title policy entitled the lender to reimbursement for losses arising from the loan transaction, and gave the insurer an assignment of the lender’s rights against the parties to the loan and against the closing attorney.

The insurer, as assignee, then filed a malpractice claim against the attorney. The attorney moved for summary judgment, arguing that legal malpractice claims were not assignable. The trial court denied the attorney’s motion. He appealed.

Under Georgia law, actions that arise out property rights are assignable, but personal claims, based on fraud or bodily injury, are not. The appellate court affirmed the lower court ruling, finding that the claim filed by the insurer was one for monetary loss and not based on fraud and therefore was fully assignable. The case was remanded for further proceedings.

Decision: Villanueva v. First American Title Insurance Company.doc

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