Nichols v. Swindoll

• Decision Date: 05 October 2022
• Docket Number: CV-21-417
• Citation: 2022 Ark.App. 399
• Parties: REBECCA NICHOLS APPELLANT v. JAMES SWINDOLL AND CHUCK GIBSON APPELLEES
• Court: Arkansas Court of Appeals

2022 Ark.App. 399

REBECCA NICHOLS APPELLANT
v.
JAMES SWINDOLL AND CHUCK GIBSON APPELLEES

No. CV-21-417

Court of Appeals of Arkansas, Divisions II and III

October 5, 2022

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, FIFTH DIVISION [NO. 60CV-21-1321]; HONORABLE WENDELL GRIFFIN, JUDGE

N. MARK KLAPPENBACH, JUDGE

In May 2022, we affirmed the circuit court's dismissal of the legal-malpractice lawsuit that was filed by appellant Rebecca Nichols against her attorneys, appellees James Swindoll and Chuck Gibson. See Nichols v. Swindoll, 2022 Ark.App. 233. The circuit court had granted the attorneys' motion to dismiss, which asserted that any negligence claim was barred by the applicable three-year statute of limitations and that Nichols failed to adequately plead that the attorneys fraudulently concealed their malpractice. Nichols filed a petition for rehearing following our original opinion.

We issue this supplemental opinion only to respond to the dissenting opinions. Chief Judge Harrison contends that we used the wrong standard of review in this appeal and

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that a litany of cases from a multitude of federal and state courts show that the standard of review must be "de novo." We applied the "abuse of discretion" standard, which has been recited numerous times over the years from this court, and more importantly, our supreme court. See, e.g., Steinbuch v. Univ. of Ark., 2019 Ark. 356, 589 S.W.3d 350; Rhodes v. Kroger Co., 2019 Ark. 174, 575 S.W.3d 387. We are bound by Arkansas Supreme Court precedent and are powerless to overturn it. Nichols herself alleged in her point on appeal that the standard of review is "abuse of discretion." While we appreciate the research presented by our dissenting colleague, his dissent presents arguments vigorously researched for the appellant and presented for the first time on petition for rehearing. This is not a proper basis for rehearing.

Both Chief Judge Harrison and Judge Hixson take issue with the level of duty placed on lawyers to communicate potential legal errors and whether this complaint should have survived the motion to dismiss. Chief Judge Harrison goes so far as to suggest that we revisit Rice v. Ragsdale, 104 Ark.App. 364, 292 S.W.3d 856 (2009), because it "overstepped" and needs "correction." Nichols cited Rice in her appellate brief and did not question its validity as precedent. The Rice holding rejected the notion that an attorney's fiduciary duty extended to requiring disclosure of potential legal malpractice and rejected the idea that failure to disclose that negative information was evidence of an intent to conceal for purposes of tolling the statute of limitations. This court's majority opinion followed Arkansas law as it stands today. Again, while we appreciate the scholarly and informative dissenting opinions, they make arguments for the appellant that were never raised by the appellant herself.

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Arkansas law requires an appellant's complaint to contain facts sufficient to support the application of fraudulent concealment to toll the statute of limitations. Floyd v. Koenig, 101 Ark.App. 230, 274 S.W.3d 339 (2008). We held that the circuit court did not err, and we stand by that decision for the reasons previously stated. The dissenting judges simply disagree with the majority's assessment.

Abramson, Whiteaker, and Brown, JJ., agree.

Harrison, C.J., and Hixson, J., dissent.

Gruber, J., not participating.

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DISSENTING OPINION ON GRANT OF PETITION FOR REHEARING

KENNETH S. HIXSON, JUDGE

I concur with Chief Judge Harrison's conclusion that an attorney's duty to disclose his^[1] malpractice and a client's independent duty to investigate the accuracy of his attorney's assurances needs to be revisited. These two concepts have a twisted and intertwined history that has led us to the predicament we face in the case at bar. Unknown to the client^[2] and through no fault of the client, the client's attorneys simply allowed a statute of limitations to expire and yet, without explanation, continued to file pleadings for two more years. As a

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result of the client's unquestioned lack of knowledge that her lawsuit was dead beyond resuscitation and the continued filing of these ineffectual pleadings, the client failed to timely file her lawsuit for attorney malpractice within the general three-year statute of limitations. The circuit court granted an Arkansas Rule of Civil Procedure 12(b)(6) motion to dismiss, finding that the statute of limitations for attorney malpractice had expired, and this court has affirmed the dismissal in the majority opinion.

The majority opinion accurately sets forth the general rule regarding the three-year statute of limitations for attorney malpractice and further that Arkansas follows the "occurrence" rule. However, in the case at bar, the client alleged and argued that her attorneys fraudulently concealed their collective malpractice and that their fraudulent concealment tolled the statute of limitations. Citing Hutcherson v. Rutledge, 2017 Ark. 359, 533 S.W.3d 77, the majority also accurately explains that "[t]he statute is tolled only when the ignorance [of the malpractice] is produced by affirmative and fraudulent acts of concealment. . . . Therefore, to rebut a limitations defense, a plaintiff must describe specific fraudulent acts committed for the purpose of concealing a cause of action." Nichols v. Swindoll, 2022 Ark.App. 233, at 5.

Below is an excerpt from the circuit court's order of dismissal.

7. There are no facts contained in the Plaintiff's Complaint or Amended

Complaint sufficient to toll the running of the statute of limitation based on fraudulent concealment. There are no facts stated showing the elements of fraud, and there are no facts stated showing the alleged fraud was furtively planned and secretly executed.

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While this is elementary, for purposes of a Rule 12(b)(6) motion to dismiss, we treat only the facts alleged in a complaint as true but not a plaintiff's theories, speculation, or statutory interpretation. Jenkins v. Mercy Hosp. Rogers, 2021 Ark. 211, 633 S.W.3d 758. The majority opinion concludes, "The allegations made in Nichols's complaint do not describe any overt act to hide information from Nichols or any fraudulent concealment of the alleged malpractice. Instead, the allegations make sweeping conclusions about what Nichols believed her attorneys' intentions were as they proceeded with litigation in the underlying case." Nichols, 2022 Ark.App. 233, at 6 (emphases added). Note the three italicized words. The majority relies on the client's description of the lack of overt conduct, the lack of hidden information, and the lack of evidence of the attorneys' intentions. That should raise red flags leading one to inquire: How does a client determine whether the attorneys' concealment was overt or covert without the benefit of discovery? Are we suggesting that fraudulent concealment must be overt to be actionable? That is an oxymoron in itself. Fraudulent concealment by its very nature and definition is covert. Further, how does a client determine that information was hidden from her by her attorney without the benefit of discovery? Finally, how does a client ever determine the intent of her attorney's concealment without the benefit of discovery? Intent is, by its very nature and definition, subjective.

Recall our standard of review in these cases. In testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be liberally construed. Jenkins, supra. Even in criminal cases, our supreme court has often stated that a defendant's intent or state of mind is seldom

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capable of proof by direct evidence and must usually be inferred from the circumstances. Wright v. State, 2022 Ark. 103, 644 S.W.3d 236. Moreover, our supreme court has explained that because intent cannot be proved by direct evidence, the jurors can draw upon their common knowledge and experience to infer it from the circumstances. Id. The only way for a client to gather indirect evidence (or direct evidence) and to shed discriminating light on overt or covert concealment, hidden information, or the subjective intent of her attorneys is to conduct meaningful discovery. However, because the circuit court granted the attorneys' Rule 12(b)(6) motion to dismiss, the client's ability to participate in meaningful discovery was foreclosed.

A cursory review of the seventy-five-paragraph amended complaint reveals that the client alleged sufficient facts to survive a Rule 12(b)(6) motion to dismiss under our standard of review. Some excerpts from the amended complaint are set forth below.

42. Defendants maliciously, willfully, and purposefully attempted to keep Rebecca from knowing she could no longer successfully litigate against the John Doe defendants in order to preclude her from suing them for malpractice on or before November 23, 2020. Defendants willfully and maliciously and purposefully committed fraud and deceit by not informing her that she could no longer successfully litigate against the John Does defendants as of March 22, 2018.

. . . .

58. After March 13, 2020, Defendant Swindoll informed Rebecca that he and Defendant Gibson had committed malpractice be failing to serve her complaint along with the summons of Precoat Metals Corp.; however, Defendant Swindoll assured Rebecca there was still a possibility the judge would excuse the malpractice and allow her to continue with the lawsuit because they had technically served Precoat Metals Corp. with notice of the lawsuit. Rebecca did not know or should have known acting with reasonable diligence that Defendants had committed malpractice until after

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March 13, 2020, or that they could have been fraudulently hiding their malpractice from her.

(Emphasis added.) In paragraphs 59-61, the...