In yesterday’s 5-2 decision in Law Office of David J. Stern, P.A. vs. Security National Servicing Corporation, No. SC06-361 (Florida July 5, 2007), the Florida Supreme Court quashed the Fourth District Court of Appeal’s decision and held that an assignee of a note and mortgage did not have standing to bring an action for legal malpractice as there was lacking an attorney-client relationship and it did not acquire the cause of action. A law firm reportedly committed malpractice in its pursuance of a mortgage foreclosure action. During the time in question, the involved note and mortgage were transferred several times. The ultimate holder sought to sue the law firm for malpractice.
The Florida Supreme Court held that ultimate holder of the mortgage did not have standing to bring a legal malpractice action based upon acts that occurred during the law firm’s representation of a prior holder of the note and mortgage. The Court noted that the time of the alleged negligent act or omission is the critical point for testing the scope and existence of the attorney-client relationship. The ultimate mortgagee did not gain standing to sue the law firm for prior acts of legal malpractice at the trial court level by forming an attorney-client relationship during the appeal of the foreclosure action.
The Court also held that the ultimate mortgagee did not receive a valid assignment of the right to sue the law firm. The Court adopted the majority view that legal malpractice claims are generally not assignable. “Legal malpractice claims are not assignable because of the personal nature of legal services which involve a confidential, fiduciary relationship of the very highest character, with an undivided duty of loyalty owed to the client.” Forgione v. Dennis Pirtle Agency, Inc., 701 So.2d 557, 559 (Fla. 1997) Furthermore, the Court refused to recognize the assignment of a legal malpractice claim as part of a general assignment of a note and mortgage. The Court also found that the ultimate mortgagee was not assigned and did not acquire the legal malpractice claim when it purchased the note and mortgage by general assignment.
The Court noted two major policy concerns justifying a general prohibition against the assignment of legal malpractice claims of protecting attorney-client confidences and preventing a market for legal malpractice claims.
