Attorney's Title Guar. Fund, Inc. v. Town BankAnnotate this Case
Defendants, Heartland Wisconsin Corp. and Town Bank, were creditors of a Milwaukee real estate investor and landlord (Debtor). The issue in this case was which defendant had priority over proceeds of the Debtor’s legal malpractice claim that was held in escrow pending resolution of their dispute. Heartland claimed that the Debtor validly assigned the proceeds of his legal malpractice claim, which gave Heartland a security interest in those proceeds that was superior to Town Bank’s interest. Town Bank claimed that it obtained a superior interest in the proceeds by levy and that proceeds from legal malpractice claims are not assignable. The Supreme Court concluded (1) the debtor lawfully assigned the potential proceeds from his legal malpractice claim as collateral for a debt to Heartland; and (2) Heartland perfected a security interest in the proceeds before Town Bank obtained a superior interest in the proceeds, and therefore, Heartland was entitled to the proceeds.