Rogers v. Tudor Ins. Co.

Decision Date01 July 1996
Docket NumberNo. 96-177,96-177
Citation325 Ark. 226,925 S.W.2d 395
PartiesBarbara ROGERS, Appellant, v. TUDOR INSURANCE COMPANY, Appellee.
CourtArkansas Supreme Court

Harry S. Hurst, Little Rock, for appellee.

BROWN, Justice.

Two points are raised in this appeal. The first is one of jurisdiction and concerns whether appellant Barbara Rogers effected her appeal in timely fashion. We believe that she did, and we deny the motion to dismiss by appellee Tudor Insurance Company. The second point is raised by Rogers and concerns alleged error by the trial court in granting summary judgment in favor of Tudor Insurance on the issue of whether the liability coverage carried by Tudor Insurance permitted a direct action against that carrier. We conclude that the trial court did err, and we reverse the judgment and remand the matter for trial.

On June 29, 1995, Rogers sued Tudor Insurance as the insurance carrier for PEOPL, Inc., a cooperative nonprofit corporation known as Personal Empowerment of the Psychiatrically Labeled, Inc. (PEOPL). 1 The suit was brought under the Direct Action statute, which is codified at Ark.Code Ann. § 23-79-210 (Repl.1992). The complaint asserted that Rogers was employed by PEOPL from February of 1994 through January 21, 1995. She received a letter of termination dated January 21, 1995, and signed by PEOPL's president and treasurer. Prior to that letter, she alleged that she had no knowledge of any problems with her employment. She further asserted that the letter implied financial irregularities on her part but did not invite her to present a response to any charges, which was in violation of the organization's rules.

As a result of her termination, Rogers claimed that she was subjected to public embarrassment because the agents, directors, and employees of PEOPL made public comments "about alleged irregularities and financial misdealings on the part of the Plaintiff." According to her complaint, the stories were reported in the Arkansas Democrat-Gazette newspaper and on television broadcasts, and the public allegations and unfounded stories damaged her reputation. She sought to recover from Tudor Insurance for the negligence of the "officers, directors and agents" of PEOPL as well as for an intentional infliction of emotional distress. She further claimed a breach of her employment contract.

On August 3, 1995, Tudor Insurance filed a motion to dismiss under Ark.R.Civ.P. 12(b)(6) for failure to state facts upon which relief could be granted. In that motion, Tudor Insurance argued that the Direct Action statute was inapplicable to the facts as set forth in the complaint. According to the carrier, the statute allows direct actions against the insurer of a non-profit entity and does not authorize direct actions against carriers which provide coverage for officers and directors of non-profit organizations. Thus, because PEOPL was not insured, Tudor Insurance maintained that a direct action could not survive.

The trial court treated the motion as one for summary judgment and on October 13, 1995, it entered its order of dismissal. Rogers then filed her notice of appeal on November 13, 1995. 2 Her notice of appeal, however, did not designate the record on appeal or state that a transcript of testimony had been ordered. Tudor Insurance filed a motion to dismiss the appeal in the trial court on grounds that Rogers's notice of appeal was ineffective. On November 27, 1995, which was two weeks after the notice of appeal was filed, Rogers filed a "Designation of Record on Appeal." In that filing, she stated that no transcript was ordered because no testimony was taken and the appeal was only based on a record which included the pleadings, motions, and order on file with the circuit clerk. In an order entered on January 3, 1996, the trial court denied the motion to dismiss for lack of jurisdiction.

I. Notice of Appeal

We first address Tudor Insurance's contention that Rogers's notice of appeal is defective for her failure to designate the record and order a transcript as required by Ark.R.App.P. 3(e). As a corollary point, Tudor Insurance notes that when the Designation of Record was filed, it was outside the 30-day period for filing the notice of appeal and consequently was ineffective.

Rule 3(e) of the Rules of Appellate Procedure states that a notice of appeal:

[S]hall designate the judgment, decree, order or part thereof appealed from and shall designate the contents of the record on appeal. The notice shall also contain a statement that the transcript, or specific portions thereof, have been ordered by the appellant.

Tudor Insurance concedes that the November 13, 1995 notice of appeal does name the parties and the order appealed from, but the carrier contends that the notice was fatally deficient nonetheless because of its omissions relating to the transcript and record. Rogers, on the other hand, argues that there was substantial compliance with Appellate Rule 3(e) because the record in this case was obvious and, in any event, a Designation of Record was filed, albeit two weeks after the notice of appeal.

This court has held that "[t]he filing of a notice of appeal is jurisdictional but irregularities in the other procedural steps ... are merely grounds for such action as this court deems appropriate." Brady v. Alken, Inc., 273 Ark. 147, 151, 617 S.W.2d 358, 360 (1981), quoting Davis v. Ralston Purina Co., 248 Ark. 14, 449 S.W.2d 709 (1970). The procedural steps outlined in Appellate Rule 3(e) require only substantial compliance, provided that the appellee has not been prejudiced by the failure to comply strictly with the rule. Hudson v. Hudson, 277 Ark. 183, 641 S.W.2d 1 (1982).

For example, in Hudson v. Hudson, the appellant filed a timely notice of appeal but failed to include a statement that the transcript had been ordered. We recognized the appellant's responsibility in this regard and held that because this rule was totally ignored, the appeal must be dismissed. However, in Johnson v. Carpenter, 290 Ark. 255, 718 S.W.2d 434 (1986), appellant's notice of appeal did contain a statement that the transcript had been ordered. Nevertheless, there was a misunderstanding between appellant's counsel and the court reporter about whether the transcript had been requested. Because the attorney had not totally ignored Rule 3(e), we held that there was substantial compliance with the rule. Our holding in Carpenter further turned on the absence of any prejudice to the appellee even though there was a minor delay in ordering the transcript.

There is, too, a line of cases where this court has examined situations where language was omitted from the notice of appeal about the designation of the record even though the requirements of the rule were actually met. This court has held that it was not fatal to an appeal when the notice of appeal did not state that the transcript had been ordered, but when in actuality it had been ordered. See Phillips v. LaValle, 293 Ark. 364, 737 S.W.2d 652 (1987); Wise v. Barron, 280 Ark. 202, 655 S.W.2d 446 (1983); see also Johnson v. Carpenter, supra. In these cases, we also hinged our holding on the fact that there had been substantial compliance with the rule. We observed that the purpose of the rule had not been frustrated and that the appellee had not been prejudiced by any delay. On the other hand, both this court and the Court of Appeals have held that there is no substantial compliance when the transcript is not actually ordered or when the notice of appeal declares that the transcript has been ordered when, in fact, it has not been. See DeViney v. State, 299 Ark. 471, 772 S.W.2d 607 (1989); McElroy v. American Medical Int'l, Inc., 297 Ark. 527, 763 S.W.2d 89 (1989); Daffin v. Seymore, 14 Ark.App. 163, 685 S.W.2d 539 (1985); Hudson v. Hudson, supra.

The case before us is most closely akin to Wise v. Barron, supra, and to Phillips v. LaValle, supra, because we discern no intent on Rogers's part to disregard Rule 3(e). Moreover, there was no prejudice to Tudor Insurance occasioned by the failure to designate the record or to state that the transcript had been ordered within the 30-day period. The absence of prejudice, of course, does not automatically determine the substantial-compliance question. But here, the Designation of the Record, which designated the pleadings, motions, and order, was filed two weeks after the notice of appeal. Under these circumstances, where the appeal was from an order of summary judgment and where no testimony was involved, we hold that there was substantial compliance with Ark.R.App.P. 3(e). The motion to dismiss the appeal is denied.

II. Direct Action Statute

We turn then to Rogers's sole point on appeal which is that the trial court misconstrued the Direct Action statute, Ark.Code Ann. § 23-79-210 (Repl.1992). We note initially that although Tudor Insurance moved to dismiss the case under Ark.R.Civ.P. 12(b)(6), the trial court treated the motion as one for summary judgment. This was correct because the court made its decision based in part on the language of the insurance policy which was attached to Tudor Insurance's reply to its motion to dismiss. See Ark.R.Civ.P. 12(b) and (c); see also Rankin v. Farmers Tractor & Equip. Co., 319 Ark. 26, 888 S.W.2d 657 (1994); Amalgamated Clothing & Textile Workers Int'l Union v. Earle Indus., Inc., 318 Ark. 524, 886 S.W.2d 594 (1994). As a consequence, we review the order as one for summary judgment though it is styled "Order of Dismissal."

The Direct Action statute reads in pertinent part:

(a)(1) When liability insurance is carried by any cooperative nonprofit corporation, association, or organization, ... and if any person, firm, or corporation suffers injury or damage to person or property on account of the negligence or wrongful conduct of the organization, association, municipality or subdivision, its servants, agents, or...

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