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Subject Matter of Assignments

An “assignment” is the transfer of property or some other right from one person to another, which confers the complete and present right to the subject matter to the assignee.[i]  An assignment constitutes a total relinquishment of any control over the property and results in the unconditional and complete transfer of all rights to, title in, and interest in the property.  An assignee stands in the shoes of the assignor and acquires all of assignor’s rights and liabilities through the assignment.[ii]  However, certain rights that are purely personal are not assignable.  For instance, an unexecuted fraud claim is personal and for the benefit of the assignor alone.  Similarly, the right to sue in federal court, unless a federal statute provides otherwise, is a personal right, which cannot be assigned.  The federal diversity jurisdiction statute provides that in certain instances, a plaintiff residing in a particular state may sue a defendant in another state in a federal court.[iii]  However, if the plaintiff assigns his/her claim to a citizen of another state, diversity jurisdiction is no longer available.[iv]

There is a strong presumption that any property right that is not personal is assignable.  This presumption can be overcome only by mutual agreement of the contracting parties or by a law stating otherwise.  Further, public policy considerations are also a factor in this regard.  “The presumption may be overcome only if it can be shown that the optioner would not have granted it but for his reliance upon the personal integrity, credit, or responsibility of the original optionee.  If that is shown to be the case, then the optioner has acted with that degree of trust and confidence which is singularly personal to the optionee/obligor and the option is personal in nature and not assignable.”[v]

Generally, courts favor the assignability of contractual rights and interests in real property.[vi]  Hence, in the absence of a contrary stipulation, executory contracts are assignable unless they involve a matter of personal trust, confidence, or are for personal services.[vii]

Similarly, a real estate option contract is presumed to be assignable unless there a stipulation to the contrary.[viii]  Courts have held that the assignment of legal malpractice claims involve matters of personal trust and personal service and hence are not assignable.  Assignment of such claims would undermine the important relationship between an attorney and client and “could relegate the legal malpractice action to the market place and convert it to a commodity to be exploited and transferred to economic bidders.”[ix]

[i] Smoker v. Hill & Associates, Inc., 204 B.R. 966 (N.D. Ind. 1997)

[ii] WAMCO, III v. First Piedmont Mortgage Corp., 856 F. Supp. 1076 (E.D. Va. 1994)

[iii] 28 U.S.C. § 1332

[iv] RTC Commercial Loan Trust 1995-NP1A v. Winthrop Mgmt., 923 F. Supp. 83, 88 (E.D. Va. 1996)

[v] Earth Products Co. v. Oklahoma City, 441 P.2d 399 (Okla. 1968)

[vi] Board of County Comm’rs v. Pfeifer, 190 Colo. 275 (Colo. 1976)

[vii] Scott v. Fox Bros. Enterprises, Inc., 667 P.2d 773, 774 (Colo. Ct. App. 1983)

[viii] Clark v. Shelton, 584 P.2d 875 (Utah 1978)

[ix] Roberts v. Holland & Hart, 857 P.2d 492, 495 (Colo. Ct. App. 1993)

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