OSHPD

Introduction

The Office of Statewide Health Planning and Development (OSHPD), a State of California agency, agreed to insure a loan incurred by Traid, a newly formed nonprofit corporation. The loan was for the purchase of two hospitals. John Browning, an attorney at Musick, Peeler & Garrett (MPG), represented Triad in the acquisition of the hospitals. After Triad defaulted on its debt and filed for bankruptcy protection, OSHPD sued Mr. Browning and MPG, both on its own behalf and on behalf of Triad as a special representative of the bankruptcy estate. The trial court granted summary judgment in favor of Mr. Browning and MPG. OSHPD argues that it raised sufficient questions of material fact to warrant denial of the summary judgment motion.

In the published portion of this opinion, we conclude that OSHPD has standing as a special representative of the bankruptcy estate to bring an action for legal malpractice on behalf of Triad. Although under California law a chose in action for legal malpractice is not assignable, under federal law it is retained in a chapter 11 bankruptcy estate and may be prosecuted by a special representative. Because no assignment has occurred, the…