Denley Rentals vs. Howard Etheridge

This case involves the assignability of a chose in action. The plaintiffs are two related limited liability companies and the person who was the owner/manager of both. The owner/manager contracted to purchase real property from the defendants, and later assigned his interest under the contract to one of the limited liability companies. The first limited liability company closed the transaction with the defendants. After the transaction was closed, the first company discovered a landfill located on the property that had not been disclosed by the defendants. The first company then transferred the property to the second limited liability company for de minimis consideration. The owner/manager of both companies made a "mental assignment" of the chose in action from the first company to the second company, and the second company incurred the cost of clearing the landfill debris. The plaintiffs jointly sued the defendants for breach of contract, fraud, and misrepresentation. The trial court dismissed the suit, holding that there was not a valid assignment of the chose in action, that the first company was precluded from recovery because it suffered no damages, and that the second company was precluded from recovery because it took the property with full knowledge of the defect. On appeal, we reverse and remand, finding that the chose in action was validly assigned.