American Abstract and Title Co. v. Rice, 03-754.

Citation186 S.W.3d 705
Decision Date17 June 2004
Docket NumberNo. 03-754.,03-754.
PartiesAMERICAN ABSTRACT AND TITLE COMPANY and Robert E. Adkins v. George and Alfreda RICE.
CourtSupreme Court of Arkansas

Dover Dixon Horne PLLC, by: Mark H. Allison, Little Rock, for appellants.

Nichols & Campbell, P.A., by: H. Gregory Campbell and Mark W. Nichols; Roberts Law Firm, by: Robert A. Russell, Jr., and Matthew C. Hutsell; and Thrash Law Firm, by: Thomas P. Thrash, Little Rock, for appellees.

TOM GLAZE, Justice.

This appeal initially requires us to determine whether a circuit court has jurisdiction to consider a complaint that raises questions concerning the unauthorized practice of law. We are also presented with a question concerning the sufficiency of the trial court's order certifying the matter as a class action.

The appellees in this case are George and Alfreda Rice, who purchased a home in Little Rock in June of 1999. Appellant American Abstract & Title Company ("American") acted as the settlement and escrow agent for the sale. The Rices filed a complaint against American and its CEO, Robert Adkins, alleging that American had engaged in the unauthorized practice of law and had violated provisions of the Arkansas Deceptive Trade Practices Act. The Rices also moved to certify the matter as a class action, seeking to name as class members "all persons who paid document preparation fees for the preparation of legal documents such as deeds, mortgages, and notes; who paid a settlement or closing [fee]; and/or who had money held in escrow by American that earned interest."

American objected to the case being certified as a class action, contending that the Rices had not made the requisite showings under Ark. R. Civ. P. 23. In addition, American alleged that the trial court did not have jurisdiction to decide "a critical threshold question—i.e., whether [American's] conduct constitutes the unauthorized practice of law." This was so, American argued, because jurisdiction to define and regulate the practice of law is vested in this court and the Supreme Court Committee on the Unauthorized Practice of Law ("CUPL," or "the Committee").

After a hearing, on April 7, 2003, the Pulaski County Circuit Court entered findings of fact and conclusions of law, and certified the following class of persons: "All persons who paid American Abstract a document preparation fee, a closing fee and/or had money in American Abstract's escrow account since May 30, 1997." From that order, American has appealed, raising the following two arguments: 1) the trial court did not have subject-matter jurisdiction to determine whether American engaged in the unauthorized practice of law; and 2) the trial court's class certification order is not sufficient. We first address American's argument that the trial court lacked jurisdiction to determine whether it engaged in the unauthorized practice of law. American contends that the sole body before whom such issues can be raised is the Committee. American bases its argument on Ark. Const. amend. 28, enacted by the people on November 8, 1938. Amendment 28 provides that "[t]he Supreme Court shall make rules regulating the practice of law and the professional conduct of attorneys at law."

On December 18, 1978, this court issued a per curiam opinion whereby it established the Supreme Court Committee on the Unauthorized Practice of Law. See Rule of Court Creating a Committee on the Unauthorized Practice of Law, 264 Ark. Appx. 960 (1978) (per curiam). In that opinion, this court stated the following:

The Constitution and laws of this state vest in the Supreme Court the duty and authority to regulate the practice of law and to prohibit the unauthorized practice of law. Pursuant thereto, the following rule is adopted to become effective as of February 1, 1979, and shall apply to all complaints of and matters or inquiries dealing with the unauthorized practice of law.

Under this order, the Rules of the CUPL provide that "[a]ll inquiries and complaints relating to the unauthorized practice of law shall be directed to the Committee, in writing, through the Administrative Office of the Courts." See Rule IIIa of the Rules of Court Creating a Committee on the Unauthorized Practice of Law (hereinafter "Rules").

American contends that this language gives CUPL exclusive jurisdiction to consider any and all matters pertaining to the unauthorized practice of law. The Rices respond that they never asked the trial court to declare that American was engaging in the unauthorized practice of law; instead, their complaint alleged that American's conduct was false and constituted deceptive trade practices in violation of Ark.Code Ann. § 4-88-101, et seq. (Repl. 2001), the Arkansas Deceptive Trade Practices Act. We do not agree with American that the CUPL has exclusive jurisdiction over matters such as this one. The rules of this court creating the CUPL make it plain that, while the Committee is vested with the authority to investigate claims relating to the unauthorized practice of law, nevertheless, the CUPL itself has no power to enforce whatever decision it may reach regarding any given investigation. For example, Rule III provides that "[a]ll inquiries and complaints relating to the unauthorized practice of law shall be directed to the Committee, in writing, through the Administrative Office of the Courts." When the CUPL receives such an inquiry or complaint, it may make a determination that the action or course of conduct does or does not constitute unauthorized practice of law. See Rule IIIa (emphasis added). Moreover, Rule IIIc provides that, in the event the CUPL issues an advisory opinion in which it makes a finding that someone has engaged in the unauthorized practice of law, it "may bring an action or actions in the proper court[s] seeking to enjoin that conduct deemed to constitute unauthorized practice of law[.]" (Emphasis added.)

The Appendix to these Rules further clarifies that any remedial action the CUPL might take is purely discretionary, rather than mandatory. The Appendix to Rule 7 notes that, under Rule IIIc, the Committee "may seek injunctive relief in the appropriate court[s] if issuance of the advisory opinion does not result in cessation of those acts or course of conduct the Committee has pronounced to be the unauthorized practice of law." (Emphasis added.) Plainly, the CUPL is without either the authority or the ability to take any affirmative action on its own—other than issuing a nonbinding advisory opinion—to see to it that a party ceases engaging in the unauthorized practice of law. Without this ability to enforce its own rules, the Committee clearly cannot be vested with exclusive jurisdiction to consider allegations that a person or entity has engaged in the unauthorized practice of law. In other words, CUPL does not have the authority to enforce its opinions without filing a complaint in circuit court, where it can obtain a declaration finding a person is unlawfully practicing law and an injunction to force that person to stop the unauthorized practice. The CUPL, at most, shares jurisdiction in these matters; most certainly, the Committee does not have exclusive authority in these matters.

We further point out that, over the years, this court has decided numerous cases involving the unauthorized practice of law, without mentioning the CUPL or deciding whether the trial court that heard the case was without jurisdiction to have done so. In Lenders Title Co. v. Chandler, 353 Ark. 339, 107 S.W.3d 157 (2003), this court determined that the trial court's class certification order was insufficient, and remanded the matter to the circuit court. Certainly, if the circuit court did not have jurisdiction to consider the same issues in Lenders, this court would have remanded the case to the CUPL, but instead, we sent it back to the trial court.

Likewise, in Knight v. Day, 343 Ark. 402, 36 S.W.3d 300 (2001), this court held that an accountant did not commit constructive fraud by engaging in the unauthorized practice of law, affirming the trial court's ruling to that effect without ever mentioning that the trial court did not have jurisdiction to make that determination in the first place. Rather, the court simply noted, at the conclusion of the opinion, that because "the circumstances of this case involve allegations of the unauthorized practice of law, we hereby direct the Clerk to forward a copy of this opinion" to the CUPL. Knight, 343 Ark. at 408, 36 S.W.3d 300. Similarly, in Smith v. National Cashflow Systems, Inc., 309 Ark. 101, 827 S.W.2d 146 (1992), this court reviewed and affirmed a determination by the trial court that the actions of appellee National Cashflow Systems did not constitute the unauthorized practice of law, without considering or declaring that the trial court had no jurisdiction to make such a determination.

If the CUPL had exclusive subject-matter jurisdiction to consider whether the parties in these cases were engaging in the unauthorized practice of law, this court would have at least mentioned it, since subject-matter jurisdiction is an issue that can be raised sua sponte. See e.g., Skelton v. City of Atkins, 317 Ark. 28, 875 S.W.2d 504 (1994); Head v. Caddo Hills School District, 277 Ark. 482, 644 S.W.2d 246 (1982); Bratcher v. Bratcher, 36 Ark.App. 206, 821 S.W.2d 481 (1991) (subject-matter jurisdiction is always open, cannot be waived, and can be raised by this court sua sponte). Therefore, we reject American's argument that the trial court did not have jurisdiction to consider the Rices' claims regarding American's alleged unauthorized practice of law.

We now turn to the American's second point for reversal: the trial court's order certifying the class in this case was not sufficient. Rule 23 of the Arkansas Rules of Civil Procedure details the requirements for a class-action suit. It states:

(a) One or more members of a class may sue or be sued as representative parties on behalf of all only if (1)...

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