Entertainer, Inc. v. Duffy

• Decision Date: 10 May 2012
• Docket Number: No. 11–766.,11–766.
• Parties: The ENTERTAINER, INC., and Charles E. Wells, Appellants v. Cory DUFFY, Appellee.
• Court: Arkansas Supreme Court

2012 Ark. 202

407 S.W.3d 514

The ENTERTAINER, INC., and Charles E. Wells, Appellants

v.Cory DUFFY, Appellee.

No. 11–766.

Supreme Court of Arkansas.

May 10, 2012.

James W. Harris, Hoskins & Harris, P.A., Blytheville, for Appellants.

Tony L. Wilcox, Wilcox, Parker, Hurst & Lacy, Chris A. Averitt, Jay Scholtens, Scholtens & Averitt, PLC, Jonesboro, for Appellee.

KAREN R. BAKER, Justice.

Appellants, The Entertainer, Inc., and Charles E. Wells (sometimes referred to collectively as “appellants”), appeal from orders of the Mississippi County Circuit Court in a personal-injury action filed against them by appellee Cory Duffy. On appeal, appellants assert that they are entitled to a new trial because their attorney abandoned them and failed to comply with Rule 64, that The Entertainer should not be responsible for the $10,000 attorney-fee award, that The Entertainer is immune from suit and thus the circuit court lacked subject-matter jurisdiction, and that there is not a basis for an award of punitive damages to Duffy. The Arkansas Court of Appeals certified this case to us, stating that the issues presented concern the power of this court to regulate the practice of law. Accordingly, our jurisdiction is pursuant to Arkansas Supreme Court Rule 1–2(a)(5) and (d) (2011). We affirm.

On November 30, 2009, appellee filed a complaint alleging that on February 28, 2009, he was shot twice while standing outside The Entertainer waiting for a taxi. Appellee named as defendants The Entertainer, an Arkansas corporation with its primary place of business in Mississippi County, and Wells, the alcohol-permit holder. The complaint averred that there had been numerous shooting incidents at The Entertainer, that The Entertainer's alcohol permit had been suspended, and that it had been fined due to shootings, stabbings, and fights. Further, appellee alleged that appellants were aware that intoxicated, unruly, and violent patrons had caused damage to other innocent patrons, such as himself, and failed to have adequate policies and procedures and security on hand to protect the patrons. Appellee asserted claims for breach of high duty of care, negligence, negligent hiring, negligent retention, and negligent supervision and training. In addition, appellee sought punitive damages claiming appellants' actions were willful and wanton, and committed with a reckless disregard of the consequences.

On December 19, 2009, appellee served Wells with the complaint, summons, and written discovery, and after Wells failed to respond, appellee filed a motion for default judgment. The circuit court entered an order granting the motion on February 1, 2010. Later, on that same day, attorney J.L. Wilson filed an answer on behalf of appellants, although The Entertainer had not yet been formally served with the complaint or summons. In pleadings filed on his behalf by Wilson, Wells acknowledged that a default judgment had been entered against him; however, Wilson never filed a motion to set aside the default judgment.

The Entertainer was served by warning order with a complaint and summons, and in August 2010, appellee served written discovery requests upon Wilson. Wilson failed to respond to the discovery, and appellee filed a motion to compel on September 23, 2010. Wilson did not respond to the motion, and on November 8, 2010, the circuit court ordered a response within ten days. Wilson did not respond, and on December 9, 2010, appellee filed a motion for sanctions. Again, Wilson did not respond.

In January 2011, the circuit court sanctioned The Entertainer by striking its answer and entered a default judgment against it. The order was served on Wilson; however, he never filed a motion to set aside the sanction or the default judgment. The circuit court set a hearing for April 1, 2011, for the sole purpose of determining damages. Appellee and the circuit court furnished notice of the hearing to Wilson, but neither Wilson nor his clients attended the hearing. The hearing was held on April 1, 2011, and on that same date, the circuit court entered an order awarding appellee $520,000 in compensatory damages and $1,560,000 in punitive damages, plus costs.

Ten days after entry of the judgment, a new law firm entered an appearance on behalf of appellants, filing a motion for a new trial and asserting that irregularities in the proceedings affected appellants' substantial rights. Specifically, appellants stated that they failed to appear for the hearing because Wilson abandoned them and failed to inform them of the hearing. Appellants also argued that it was improper to award punitive damages in a negligence case, that The Entertainer was a nonprofit entity and immune from any tort liability, and that The Entertainer should never have been made a party pursuant to Arkansas Code Annotated section 23–79–210.

On April 19, 2011, The Entertainer filed an objection to the $10,000 attorney-fee award granted by the oral ruling of the circuit court at the hearing. On April 28, 2011, the circuit court entered an order awarding appellee attorney's fees in the amount of $10,000 to be paid by The Entertainer. The circuit court did not act on the motion for a new trial and it was deemed denied on May 11, 2011. Appellants filed a notice of appeal on May 16, 2011.

Appellants first argue that they are entitled to a new trial pursuant to Arkansas Rule of Civil Procedure 59 because their attorney abandoned them and failed to comply with Arkansas Rule of Civil Procedure 64. Arkansas Rule of Civil Procedure 59 permits a trial court to grant a new trial upon showing that the substantial rights of the aggrieved party have been materially affected due to one of the enumerated grounds. Ark. R. Civ. P. 59(a) (2011). The trial court has a broad latitude of discretion in the granting of new trials. Security Ins. Co. of Hartford v. Owen, 255 Ark. 526, 501 S.W.2d 229 (1973). This discretion is not limited to cases where sufficiency of the evidence is the ground for the motion. Id. In determining questions as to errors of law, the trial court will not be reversed in the absence of a manifest abuse of discretion. Id. Manifest abuse of discretion means a discretion improvidently exercised, i.e., exercised thoughtlessly and without due consideration. Id.

Appellee argues that appellants are not entitled to relief as they were not diligent in protecting their interests citing Diebold v. Myers General Agency, Inc., 292 Ark. 456, 731 S.W.2d 183 (1987). There, Diebold defaulted on a note to repay money her son had stolen, and upon being sued, she contacted her son who hired an attorney. Diebold had nothing more to do with the case. The attorney was permitted to withdraw on the day of trial and judgment was entered against Diebold. Because she had not taken one single step to protect her interests other than contacting her son, a person she knew was irresponsible, Diebold could not prevail on a claim for relief under Rules 60 and 64.

Appellants cite to Jones–Blair Co. v. Hammett, 326 Ark. 74, 930 S.W.2d 335 (1996), for the proposition that a new trial is warranted under Rule 59 when counsel fails to withdraw in conformity with Rule 64. Arkansas Rule of Civil Procedure 64(b) provides that “[a] lawyer may not withdraw from any proceeding or from representation of any party to a proceeding without permission of the court in which the proceeding is pending.” Ark. R. Civ. P. 64(b) (2011). In Jones–Blair, the attorney withdrew as counsel on the day of trial without notifying the client. We reversed the trial court's refusal to set the judgment aside under then Rule 60(c) because the attorney did not follow the requirements set forth in Rule 64. We noted that the focus of the trial court in permitting withdrawal under Rule 64 should be aimed at protecting the client's interests, requiring the trial court to play an active role. We distinguished Diebold on the basis that in that case the appellant had made no efforts to communicate with her attorney.

Here, the record shows that Wilson failed repeatedly to respond on behalf of his clients at critical times resulting in serious legal consequences for appellants. Appellants argue that this failure to respond on their behalf makes their situation more egregious than that in Jones–Blair, and thus, more deserving of a new trial. However, appellants' argument fails to recognize the pivotal distinctions between Jones–Blair and their case. In Jones–Blair after an attorney was hired, Jones–Blair kept in contact with him, and had a reasonable basis for believing that the trial had been cancelled. Jones–Blair learned of the judgment entered against them only when notified by the opposing counsel, then promptly petitioned to set aside the judgment and requested a hearing. At the hearing Jones–Blair presented evidence showing communications with their attorney and establishing that an irregularity in the proceedings precluded them from receiving a fair trial and entitling them to relief under Rule 59(a)(1).

Here, the record is devoid of evidence regarding appellants' contact with Wilson. Appellants never moved to set aside the default judgment and presented no evidence from which the circuit court could have determined that they, like Jones–Blair, kept in contact with their attorney or kept abreast of what was occurring in the proceedings. Instead, as in Diebold, appellant's claim for a new trial is based solely on deficiencies in counsel's conduct. A client is generally bound by the acts of his counsel and cannot avoid the consequences of his attorney's neglect or omissions. See, e.g., Florence v. Taylor, 325 Ark. 445, 928 S.W.2d 330 (1996). Because of appellants' failure to present evidence that they kept in contact with Wilson or attempted to keep abreast of the proceedings, we find no abuse of discretion in the denial of their motion for a new trial.

Next, The Entertainer argues that it should not be responsible for the $10,000 attorney's-fee award...