Madden v. Aldrich

• Decision Date: 01 November 2001
• Docket Number: No. 00-825.,00-825.
• Citation: 346 Ark. 405,58 S.W.3d 342
• Parties: Jean M. MADDEN v. Jon and Debbie ALDRICH.
• Court: Arkansas Supreme Court

58 S.W.3d 342

346 Ark. 405

Jean M. MADDEN v. Jon and Debbie ALDRICH.

No. 00-825.

Supreme Court of Arkansas.

November 1, 2001.

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Cross, Gunter, Witherspoon & Galchus, P.C., by M. Stephen Bingham, Little Rock, for appellant.

Boswell, Tucker & Brewster, by Ted Boswell, Bryant, for appellees.

DONALD L. CORBIN, Justice.

This is a tort suit brought against two attorneys for conduct that arose out of an adoption scam. In early October 1996, attorney Gordon Humphrey advised attorney Ed Webb that he represented a birth mother who wished to place her baby for adoption. Humphrey was employed by the Madden Law Firm at the time. Webb initially tried to place the baby with a Connecticut couple, but that did not work out. Soon thereafter, Appellees Jon and Debbie Aldrich contacted Webb's office regarding information about adopting a child. Webb advised them that he knew of an expected child who was available, but that they needed to take action immediately for fear that the child would be placed elsewhere. Upon Webb's advice, the Aldriches wrote two checks to Webb, totaling $7,500, for the birth mother's medical expenses and Webb's legal fee. Webb subsequently confirmed with Humphrey that he had a couple interested in adopting the baby, and he wrote Humphrey a check for $5,000. In January 1997, it was revealed that there was no birth mother or baby and there never had been. Humphrey later pled guilty to a federal criminal charge for his actions and was sentenced to two years' imprisonment.

As a result of the incident, the Aldriches brought suit against Humphrey and Appellant Jean Madden in the Saline County Circuit Court. The claim against Madden was that she, as his employer, had been negligent in the hiring, retention, or supervision of Humphrey. The jury returned unanimous verdicts against Humphrey and Madden and assessed compensatory damages of $100,000, which were apportioned between Humphrey (seventy-five percent), Madden (twenty-four percent), and Webb (one percent). Additionally, the jury awarded punitive damages of $1,000,000 against Humphrey. Madden appeals from that judgment and from the trial court's denial of her posttrial motions. She raises numerous points for reversal, one of which involves our construction of Ark. Code Ann. §§ 16-22-310 (Repl.1999) and 16-114-303 (Supp.1999). Our jurisdiction is thus pursuant to Ark. Sup.Ct. R. 1-2(b)(6). We affirm.

I. Immunity

The first issue that we must address is Madden's assertion that the trial court erred in finding that she was not entitled to immunity under section 16-22-310 and its counterpart, section 16-114-303. Madden asserts that she is immune from the Aldriches' negligence claim because they were not her clients or Humphrey's. Thus, she argues that there was no privity of contract, as required under sections 16-22-310 and 16-114-303. The trial court found that there was direct privity through an agency relationship, namely that Webb was an agent of the Aldriches who contracted with Humphrey, who was Madden's agent, for the purpose of arranging an adoption. We agree with Madden that the trial court's finding of direct privity was in error. Nonetheless, we affirm the trial court's ruling that Madden was not entitled to immunity because she was not being sued in connection with the performance of professional services.

Sections 16-22-310 and 16-114-303 were enacted by the General Assembly in Act 661 of 1987, and both sections are identical as they pertain to this case. In pertinent part, the sections provide:

No person licensed to practice law in Arkansas and no partnership or corporation of Arkansas licensed attorneys or any of its employees, partners, members, officers, or shareholders shall be liable to persons not in privity of contract with the person, partnership, or corporation for civil damages resulting from acts, omissions, decisions, or other conduct in connection with professional services performed by the person, partnership, or corporation, except for:

(1) Acts, omissions, decisions, or conduct that constitutes fraud or intentional misrepresentations. Emphasis added.

This court has held that "the plain language of Ark.Code Ann. § 16-22-310 requires the plaintiff to have direct privity of contract with `the person, partnership, or corporation' he or she is suing for legal malpractice." McDonald v. Pettus, 337 Ark. 265, 271, 988 S.W.2d 9, 12 (1999) (emphasis added). Similarly, this court has held that section 16-22-310 "enunciates the parameters for litigation by clients against attorneys." Clark v. Ridgeway, 323 Ark. 378, 388, 914 S.W.2d 745, 750 (1996) (emphasis added). This court has not heretofore been asked to construe this provision in any situation other than actions for legal malpractice or professional negligence. Thus, the question of whether this immunity extends to situations in which an attorney is being sued as an employer for negligently supervising an attorney-employee is one of first impression.

The basic rule of statutory construction is to give effect to the intent of the General Assembly. Barclay v. First Paris Holding Co., 344 Ark. 711, 42 S.W.3d 496 (2001); St. Paul Fire & Marine Ins. Co. v. Griffin Constr. Co., 338 Ark. 289, 993 S.W.2d 485 (1999). In considering the meaning of a statute, we construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. Id. If the language is plain and unambiguous and conveys a clear and definite meaning, there is no need to resort to rules of construction. Id. Notwithstanding, statutes will not be given a literal interpretation if it leads to absurd consequences that are clearly contrary to legislative intent. Id.

In the present case, the suit was filed against Madden based on her actions or omissions as an employer pertaining to her supervision of her employee, Humphrey. The record reflects that the issue of immunity was presented to the trial court in a motion for summary judgment. In response to Madden's motion, the Aldriches submitted two depositions given by Madden, one from this case, and the other from a different case involving a similar adoption scam by Humphrey. In those depositions, Madden admitted that when she hired Humphrey, she was aware that he had previously had his law license suspended by this court. She stated that Humphrey told her that the suspension had been the result of a charge that he had co-mingled funds from his general account with those in his client-trust account. She indicated that she had been satisfied with his explanation of the suspension, and that, accordingly, she did not attempt to verify his recitation of the events. She stated that although she initially had no concern in hiring him, she later developed concerns when she received a telephone call from a client in December 1995. According to Madden, the client told her that he had paid Humphrey $1,500, but that Humphrey was not doing anything on his case. She said that she was concerned because the fee had not been deposited in the firm's bank account. She stated that she never felt comfortable with Humphrey's explanation that he must have stuck the money in his pocket and left it at his house. She stated that she believed that it was highly probable that Humphrey had taken the client's money for himself and that he only brought it back because he had been caught.

Madden also stated that during the first half of 1996, she had become concerned about Humphrey's depressed mental state, which included suicidal thoughts, and his bad financial situation. Regarding the former concern, she stated that she was afraid that he would miss a court date or other deadline. She then began to closely monitor his mail, and she started taping his office telephone calls. She indicated that she had a question about whether Humphrey might have been pocketing fees for himself, rather than bringing them through the firm, but that she was never able to catch him at it. For all her concerns, Madden stated that she had thought about firing him, but she decided not to because she needed his cooperation and testimony in a lawsuit that had been filed against her.

Based on Madden's statements, the Aldriches argue that she is not immune from their negligence claim. They contend that sections 16-22-310 and 16-114-303 provide immunity to attorneys only when they are sued for legal malpractice or professional negligence. We agree that the plain language of these provisions demonstrates that the immunity provided is limited to suits based on conduct in connection with professional services rendered by the attorney.

Here, the actions or omissions upon which this negligence claim is based do not fall within the parameters of professional services. Madden admitted that she was concerned that Humphrey might have been taking fees from clients and not sharing them with the firm. She also expressed concerns that he was taking money from clients and not providing any services for them. At a minimum, she admitted concerns that Humphrey's mental state during 1996 was such that she was afraid that he would miss important deadlines or court dates. These concerns and Madden's subsequent actions, or inactions, were not connected with the performance of professional services. It does not require an attorney's professional skills to suspect that another attorney may be stealing money, either from the firm or from clients. Accordingly, we hold that the immunity provided in sections 16-22-310 and 16-114-303 is not available under the facts and circumstances of this case. It is thus irrelevant that there was no direct privity of contract between Madden and the Aldriches. We will affirm the trial court when it has reached the right result, even though it may have announced the wrong reason. See Ouachita Trek & Dev. Co. v. Rowe, 341 Ark. 456, 17 S.W.3d 491 (2000); Malone v. Malone, 338 Ark. 20, 991 S.W.2d 546 (199...