Law stipulates that personal tort claims are not assignable and hence, injuries which are purely personal in nature, such as emotional distress, cannot be assigned to another person.[i] In the absence of a statute allowing the survival of personal torts, unliquidated and unvested personal torts claims are not assignable.[ii] Therefore, individuals are prohibited from assigning to a third person, a cause of action in tort for a personal injury that does not survive the death of the person injured.
Examples of personal tort claims that are not assignable include assault and battery, personal injury, false imprisonment, malicious prosecution, invasion of privacy, conspiracy and unfair and deceptive trade practices. In addition, courts have held that defamation is a personal injury claim and hence is not assignable. The court differentiated the nature of defamation and observed that defamation invades the interest in personal or professional reputation and good name, vindicating personal interests.[iii]
A bad faith action can be brought under contract and tort and courts have held that although personal tort claims may not be assigned to a third party, there is nothing in law or public policy which would prohibit the assignment of punitive damages relating to a bad faith breach of an insurance contract.[iv]
[i] Murphy v. Allstate Ins. Co., 553 P.2d 584 (Cal. 1976)
[ii] In re Schmelzer, 350 F. Supp. 429, 431 (S.D. Ohio 1972)
[iii] Truck Ins. Exch. v. Bennett, 53 Cal. App. 4th 75, 85 (Cal. App. 2d Dist. 1997)
[iv] Cuson v. Maryland Casualty Co., 735 F. Supp. 966, 969 (D. Haw. 1990)