Barens v. Everett

• Decision Date: 23 January 2003
• Docket Number: No. 01-1148.,01-1148.
• Citation: 351 Ark. 479,95 S.W.3d 740
• Parties: Karen BARNES v. John C. EVERETT.
• Court: Arkansas Supreme Court

Page 740

95 S.W.3d 740

351 Ark. 479

Karen BARNES v. John C. EVERETT.

No. 01-1148.

Supreme Court of Arkansas.

January 23, 2003.

COPYRIGHT MATERIAL OMITTED

McMath, Vehik, Drummond, Harrison & Ledbetter, P.A., by: Phillip H. McMath, Little Rock, for appellant.

Barber, McCaskill, Jones & Hale, P.A., by Robert L. Henry III and James D. Robertson, Little Rock, for appellee.

DONALD L. CORBIN, Justice.

This case involves an allegation of attorney malpractice. Appellant Karen Barnes charged Fayetteville attorney John Everett with malpractice, alleging that Everett was negligent in advising her to settle her claim with an insurance agent, which, in turn, barred her claim against the insurance company. She filed suit against Everett in the Washington County Circuit Court in August 2000, and a jury trial was held in May 2001. The jury returned a verdict in favor of Everett, and Barnes now brings this appeal. Barnes raises five points for reversal, three of which challenge evidentiary rulings and two that challenge jury instructions. This appeal was certified to us from the Arkansas Court of Appeals, pursuant to Ark. Sup.Ct. R. 1-2(a)(5). We affirm.

The record reflects that Barnes was in an automobile accident on September 6, 1995, in which her vehicle was struck by another vehicle driven by Jerry Herring. It was later discovered that Herring, who had fled the scene of the accident, was uninsured. Barnes was insured by National Security Fire and Casualty Company, under a policy purchased by her father from Rebsamen Insurance, Inc. Barnes reported the accident and the fact that Herring was uninsured to Rebsamen. Rebsamen informed her that her policy was for liability only and did not provide uninsured motorist coverage.' When Barnes inquired as to the status of her policy, Rebsamen produced a document, purporting to bear Barnes's signature, showing a written declination of uninsured motorist coverage. After reviewing the document, Barnes informed Rebsamen that the signatures on the documents were not hers, and that her last name had been misspelled three of the four times as "Barens."

Following her discovery of the forged signatures, Barnes made a claim against Rebsamen and National for payment of her damages. National settled with Barnes on the property damage caused to her vehicle, but refused further payment for her medical expenses.

Barnes hired Everett to represent her in a suit against both Rebsamen and National. Everett filed a complaint on her behalf in the Pulaski County Circuit Court in January 1997. The complaint charged both defendants with fraud and with violating the Arkansas Trade Practices Act. The complaint also alleged that under the doctrine of respondeat superior, National was liable for the acts of its agent, Rebsamen. The complaint alleged further that Barnes was entitled to the full amount available for uninsured motorist coverage from National, which coverage was implied by operation of law because Barnes had never declined the coverage in writing.

Rebsamen answered the complaint, but National did not. A jury trial was scheduled in the Pulaski County Circuit Court in December 1997, before the Honorable Judge John Plegge. Rebsamen appeared for trial, but National did not. That morning, Everett negotiated a settlement for $10,000 with Rebsamen. Everett informed Barnes of the offer and advised her to take it. When Barnes inquired about the effect of the settlement on her suit against National, Everett informed her that her acceptance of the offer from Rebsamen would not impair her suit against National. Barnes accepted the offer. Thereafter, the trial court allowed Everett to proceed against National in a default trial. Because National had defaulted, the jury was only asked to consider the issue of damages. Thereafter, Everett presented his case and asked the jury for compensatory damages of $25,000 and punitive damages of $250,000. The jury returned a verdict of $25,000 compensatory damages and $500,000 in punitive damages.

Following the jury's award, National appeared before the Pulaski County Circuit Court and moved to set aside the default judgment. National alternatively sought a remittitur of the punitive damages. The trial court denied the motion to set aside, but reduced the award of punitive damages to $250,000. National then appealed.

The Arkansas Court of Appeals reversed and dismissed the judgment against National. See National Sec. Fire & Cas. Co. v. Barnes, 65 Ark.App. 13, 984 S.W.2d 80 (1999). First, the court determined that National was not in default, because Rebsamen's answer raised a common defense and thus inured to National's benefit. The court then held that under the theory of respondeat superior, Barnes's settlement with Rebsamen, the agent, released National, the principal, from liability. The decision was issued on January 13, 1999.

In August 2000, Barnes filed suit against Everett for attorney malpractice in the Washington County Circuit Court. The complaint alleged that Everett was negligent in advising her to accept the offer made by Rebsamen, and that his negligence was the proximate cause of her losing the judgment against National. A jury trial was held in May 2001, before the Honorable Judge Kim Smith.

During the trial, both Barnes and her father, Howard Barnes, testified that they had specifically asked Everett whether settling with Rebsamen would impair the suit against National, and that Everett had assured them that it would not.

Barnes also presented testimony from attorney Jeff Pence, who stated that, in his opinion, a lawyer practicing in Arkansas in December 1997 should have known that settling a claim with the agent, which was premised on a theory of respondeat superior, would have the effect of releasing the principal. Pence stated further that an attorney who failed to advise his client of this would be in violation of the standard of care at the time. On cross-examination, however, Pence acknowledged that the law would not release a principal following settlement with the agent if there was an independent claim still pending against the principal. Pence then admitted that the suit filed by Everett had stated an independent claim against National for breach of contract.

Everett testified that he was knowledgeable about the law of respondeat superior. He also testified that, at the time he advised Barnes to settle her claim with Rebsamen, he knew that the settlement with Rebsamen would release National from any claim of liability under respondeat superior. Everett maintained, however, that he advised Barnes to settle with Rebsamen because he believed that the complaint stated independent claims against National, specifically a claim of fraud and a claim for breach of contract for the uninsured motorist coverage, that would remain viable. Two other witnesses called by Everett echoed his testimony about the viability of the remaining claims against National. The jury found in favor of Everett, and this appeal followed.

We note at the outset that an attorney is negligent if he or she fails to exercise reasonable diligence and skill on behalf of a client. Pugh v. Griggs, 327 Ark. 577, 940 S.W.2d 445 (1997); Schmidt v. Pearson, Evans, and Chadwick, 326 Ark. 499, 931 S.W.2d 774 (1996). To prevail on a claim of attorney malpractice, a plaintiff must prove that the attorney's conduct fell below the generally accepted standard of practice and that such conduct proximately caused the plaintiff damages. Id. To prove damages and proximate cause, the plaintiff must show that, but for the alleged negligence of the attorney, the result in the underlying action would have been different. Id. In this respect, a plaintiff must prove a case within a case, as he or she must prove the merits of the underlying case as part of the proof of the malpractice case. An attorney is not liable to a client when, acting in good faith, he or she makes mere errors of judgment. Id. Moreover, an attorney is not, as a matter of law, liable for a mistaken opinion on a point of law that has not been settled by a court of the highest jurisdiction and on which reasonable attorneys may differ. Id.

I. Evidentiary Issues

Barnes raises five points on appeal, the first three of which involve evidentiary issues. The decision to admit or refuse evidence is within the trial court's discretion and we will not reverse the trial court's ruling absent an abuse of discretion and a showing of prejudice. See Columbia Nat'l Ins. Co. v. Freeman, 347 Ark. 423, 64 S.W.3d 720 (2002); Madden v. Aldrich, 346 Ark. 405, 58 S.W.3d 342 (2001); Dodson v. Allstate Ins. Co., 345 Ark. 430, 47 S.W.3d 866 (2001). With this standard of review in mind, we discuss Barnes's arguments.

A. Damages Awarded in the Default Trial

Barnes first argues that the trial court erred in refusing to allow her to present evidence of the amount of damages obtained, a total of $525,000, in the default, trial against National. She contends that the amount of damages was relevant to her claim of malpractice to show that, but for Everett's negligence, she would have been successful in her claim against National. She contends further that because the jurors were not informed of the amount of damages previously awarded, they were forced to speculate or guess as to the damages that would have been awarded. The record reflects that this latter argument was not raised in the trial court. This court has repeatedly stated that it will not consider an argument raised for the first time on appeal. See, e.g., Arkansas Blue Cross & Blue Shield v. Hicks, 349 Ark. 269, 78 S.W.3d 58 (2002); Laird v. Shelnut, 348 Ark. 632, 74 S.W.3d 206 (2002); Hurst v. Holland, 347 Ark. 235, 61 S.W.3d 180 (2001). Accordingly, we will confine our review to the preserved issue of the evidence's relevance.

During a pretrial hearing, Everett sought to exclude this evidence on the ground that it was irrelevant and its admission would be unfairly prejudicial...