The future belongs to those who prepare for it today. – Malcolm X. Medical debt financing companies require a plaintiff to assign the proceeds of their potential future settlement funds up to the amount of medical expenses financed and then demand that the tortfeasor’s insurance company pay them directly. Here, notwithstanding such a demand, Allstate paid the plaintiff, not MLM, who sued. The Court noted an assignment is a transfer of one’s right to performance to another. A conditional right to funds is assignable. But a right to a future right to funds is not, unless it is to all or a determinable portion of the funds. A demand for specific performance of payment of future funds may be enforceable. But an assignment cannot increase an obligor’s burden to perform. Here, the assignment was ill-defined and not independently determinable and thus not an assignment at the time it was made.
**Disclaimer: the author represents a company engaged in business similar to MLM.
“The other car collided with mine without giving warning of its intention.” (Anonymous). Here, MLM paid an accident victim’s medical bills in exchange for an assignment of settlement funds, if any. MLM gave notice of the assignment to the tortfeasor’s insurer Allstate, who then settled. Allstate paid the victim instead of MLM. MLM sued Allstate for breach of both the settlement contract and the assignment. The trial court dismissed MLM’s claims. The court of appeals reversed, holding: 1) personal injury claims may be validly assigned prior to settlement, as they were here; 2) the notice of assignment was sufficient and triggered Allstate’s duty to pay MLM, despite its lack of consent; and 3) because the victim had a claim against Allstate, MLM had a claim. Finally, the court rejected a request to apply the Federal pleading standards in Bell Atlantic v. Twombly. Dismissal reversed.
Owning a nightclub is so full of drama there is a reality TV show about it. This case starts with a bar fight, but ends with a lawsuit against an insurance broker. A Bar’s Patron is injured during a fight and sues. Bar’s insurance policy had an assault and battery exclusion and denied coverage. Bar didn’t think its policy had the exclusion, so Bar sued Broker. Bar settles with Patron and executes a “Bashor” agreement, assigning any proceeds from Bar’s claims. But the claims against Broker are dismissed because of the assignment. The court of appeals held: 1) Broker must show the settlement was unreasonable, 2) Bar could still claim assigned damages, 3) Broker’s failure to obtain the insurance requested gave rise to a negligence claim, and 4) that claim was assignable because it was a commercial, not personal transaction. Summary Judgment for Broker reversed and the case was reinstated.
Hard money lenders are private investment companies that offer shorter term loans secured by real property when traditional commercial real estate loans are not available from banking institutions. Here, a hard money lender, CCI, insured against its own losses for want of fidelity by CCI’s own officers, with a fidelity bond from Lloyds. CCI officers allegedly committed fraud in attracting investors to invest in CCI, which made hard money loans to commercial real estate borrowers. Following CCI’s bankruptcy, investors sued Lloyds on behalf of CCI, and CCI itself, to recover losses. Lloyds claimed its policy did not cover the investors’ losses. The court of appeals agreed. Indirect losses to investors are protected by liability policies, not fidelity bonds. Because Lloyds issued a fidelity bond to protect CCI directly, it did not cover indirect losses by investors.
Real estate development companies, through the individuals that control them, can run the special tax districts they create. Colorado’s Special District Act, meant to encourage development of open land, permits developers to control such districts and to pledge taxes and fees collected by the district to themselves. But, no government can delegate legislative functions to a private party such as a developer. Here, a special district attempted to assign the fees it collected to a developer. The developer then charged landowners interest on the fees. The court of appeals held that: 1) the district did not have the statutory authority to “assign” development fees, 2) developer could not charge interest on development fees, and 3) the assignment did not give developer a lien. Rather, districts can only “pledge” payments to developers, which must be set and collected by the district.