Stilley v. James

• Decision Date: 28 June 2001
• Docket Number: 00-1463
• Parties: OSCAR STILLEY, APPELLANT, VS. MARGARET JAMES, RICK GRINNAN, LINDA VARNADO, AND ALBAN VARNADO, APPELLEES, VS. JOHN SPEED, APPELLEE. 00-1463 Arkansas Supreme Court
• Court: Arkansas Supreme Court

OSCAR STILLEY, APPELLANT VS MARGARET JAMES, RICK GRINNAN, LINDA VARNADO, AND ALBAN VARNADO, APPELLEES VS JOHN SPEED, APPELLEE.

00-1463

Arkansas Supreme Court

June 28, 2001

APPEAL FROM THE SEBASTIAN COUNTY CIRCUIT COURT, NO. CV 2000-96 G, HON. JAMES R. MARSCHEWSKI, JUDGE, AFFIRMED.

W.H."Dub" Arnold, Chief Justice

Appellant Oscar Stilley appeals the Sebastian County Circuit Court's order granting appellees Margaret James, Rick Grinnan, Linda Varnado, and Alban Varnado's motion for summary judgment. For reversal, appellant argues that it was error for the trial court to grant appellees' motion for summary judgment. As this matter involves an issue involving an attorney in the practice of law, this Court's jurisdiction is pursuant to Ark. Sup. Ct. R. 1-2(a)(5). We affirm the trial court.

Appellees filed the present action under the Arkansas Declaratory Judgment Act, codified at Ark. Code Ann. § 16-111-101 (Repl. 1987), in an effort to collect a $200,000 judgment from appellant. Appellees asked the trial court to determine the rights and responsibilities of various parties under an indemnification agreement executed between appellant Oscar Stilley and cross-appellee John Speed. The trial court granted the appellees' motion for summary judgment and ruled that the appellees were entitled to judgment against Mr. Stilley in the amount of $200,000, which was the amount of their original judgment against Mr. Speed.

This was the third of three related cases. In the first case, Mr. Speed had retained Mr. Stilley as counsel to prosecute claims for nonpayment of vacation pay and other compensatory time after he was fired from the employment of the Western Arkansas Chapter of the American Red Cross in 1996. He also made a claim for defamation against the RedCross and others. The suit was dismissed without prejudice as to certain individual plaintiffs. The remaining claims went to trial.

The Red Cross counterclaimed, alleging that certain items were purchased for John Speed personally on Red Cross credit cards. Mr. Stilley, asserting that the counterclaim was meritless, orally promised to pay any judgment taken against Mr. Speed. Mr. Speed lost his direct claims and lost on the counterclaim, as well. The jury awarded the Red Cross almost $4,000, which was paid by Mr. Stilley.

On July 21, 1997, the appellees filed a lawsuit alleging a claim of malicious prosecution against both Mr. Speed and Mr. Stilley. Although Mr. Stilley was a co-defendant in this matter, he represented himself, as well as Mr. Speed. The malicious prosecution claim was scheduled for trial on February 14, 2000.

Sometime in January of 2000, Mr. Speed apparently began to be concerned about the representation being provided to him by Mr. Stilley. Mr. Speed spoke with Mike Spades, Jr., an attorney friend. Mr. Spades informed Mr. Speed that he felt there was a conflict of interest with Mr. Stilley representing him in the malicious prosecution case in which they were co-defendants and that Mr. Speed should hire his own, separate lawyer. This possibility was obviously communicated to Mr. Stilley, along with the fact that a continuance would be necessary. As Mr. Stilley did not want either of those two things to happen, he agreed to sign an indemnity agreement if he could continue representing Mr. Speed. As a result, an indemnity agreement was forwarded to Mr. Stilley.

In the cover letter to that indemnity agreement, Mr. Spades stated that Mr. Speed was willing to continue with Mr. Stilley as his attorney, as long as the indemnification agreement was signed. Mr. Spades went on to specifically state that if the indemnity agreement was not returned immediately, he and Mr. Speed would have to revisit the issue of whether Mr. Speed should retain Mr. Spades as counsel.

On February 7, 2000, one week before trial, Mr. Stilley executed the indemnity agreement. Because he signed the indemnity agreement, Mr. Speed allowed Mr. Stilley to continue to represent both of them at trial. The indemnity agreement specifically referenced the malicious prosecution lawsuit and stated that Mr. Stilley received ten dollars, as well as"other good and valuable consideration." Mr. Stilley went on to say that he agreed to "indemnify and hold harmless the defendant, John Speed, for any damages assessed, apportioned, or otherwise charged to the co-defendant, John Speed, whether such damages are assessed, apportioned, or charged individually, or jointly and severally against John Speed and the co-defendant Oscar Stilley." The agreement even recognized the fact that such judgment should be paid in a speedy manner, as Mr. Stilley specifically stated that he would pay any such damages "in a timely manner within a reasonable period of time, to avoid collection action against John Speed so as to protect his credit rating and dignity."

In the trial of this case, Mr. Stilley, over appellees' objection, was allowed to take the witness stand and testify. At the end of the trial, the jury returned a verdict in favor of the appellees, and against Mr. Speed in the amount of $200,000. A directed-verdict was granted in Mr. Stilley's favor. Mr. Speed made demand upon Mr. Stilley to honor the indemnity agreement and pay the judgment to appellees, but Mr. Stilley refused. During post-judgment discovery, the appellees learned of the existence of the indemnity agreement and also made demand upon Mr. Stilley for payment of the judgment. Once again, Mr. Stilley refused to honor the indemnity agreement. No surety bond was ever posted in this matter. Mr. Stilley continued to refuse to honor the agreement.

On May 9, 2000, appellees filed a declaratory judgment action, seeking to have the court determine that Mr. Stilley was indebted to them for payment of the judgment which they had obtained against Mr. Speed. In light of the language of the written contract, and the undisputed facts of a judgment, with no surety bond having been posted, appellees moved for summary judgment on their claim. Mr. Stilley filed his own motion for summary judgment, stating that there was no consideration given for the indemnity agreement.

The trial court held a hearing on these motions. At the end of the hearing, the court determined that Mr. Speed's decision to allow Mr. Stilley to represent both co-defendants, and thereby control the litigation stage of the lawsuit, constituted consideration. The court also was aware of no legal requirement that Mr. Speed had to personally pursue an appeal in order for Mr. Stilley to have to pay the judgment, especially since no such requirement was contained in the indemnity agreement. Finally, the court found that appellees were clearly third-party beneficiaries of this indemnity agreement, since they were the individuals to whom Mr. Stilley had promised to pay the judgment. Consequently, the court granted appellees' motion for summary judgment and entered judgment in favor of the appellees and against Mr. Stilley for the amount of the judgment which the appellees had obtained against Mr. Speed in the malicious prosecution trial. It is from these rulings that Mr. Stilley now appeals.

On appeal, appellant asserts the following:

The trial court erred in ruling that the failure to fire appellant as counsel constituted consideration for a contract with appellant, where there was no promise not to fire counsel, and where counsel was in fact fired shortly after the trial, without legal repercussions;

The trial court erred in ruling that one who claims indemnification is not obligated to cooperate with an appeal as a condition of the right to claim for indemnification;

The trial court erred in ruling that one who is found by a jury to have committed an intentional tort is entitled to indemnification despite the fact that he was found to have lied to the purported indemnitor, and tacitly concedes that he did in fact lie to the purported indemnitor to obtain the purported indemnity contract;

The trial court erred in ruling that a third party is entitled to a direct action against a claimed indemnitor, where neither the claimed indemnitee nor the claimed indemnitor intended by their conduct to confer any benefit on the third party.

We affirm.

I. Standard of Review

This court recently summarized the appropriate standard or review to be employed when determining whether a trial court erred in granting a motion for summary judgment in Worth v. City of Rogers, 341 Ark. 12, 14 S.W.3d 471 (2000):

We have repeatedly held that summary judgment is to be granted by a trial court only when it is clear that there are no genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter of law. George v. Jefferson Hosp. Ass'n, Inc., 337 Ark. 206, 987 S.W.2d 710 (1999); Pugh v. Griggs, 327 Ark. 577, 940 S.W.2d 445 (1997). Once a moving party has established a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Id. On appellate review, we determine if summary judgment was appropriate based on whether the evidentiary items presented by the moving party in support of its motion leave a material fact unanswered. Id. This court views the evidence in a light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party. Adams v. Arthur, 333 Ark. 53, 969 S.W.2d 598 (1998); Pugh, 327 Ark. 577, 940 S.W.2d 445. Our review is not limited to the pleadings, as we also focus on the affidavits and other documents filed by the parties. Wallace v. Boyles, 331 Ark. 58, 961 S.W.2d 712 (1998); Angle v. Alexander, 328 Ark. 714, 945 S.W.2d 933 (1997). After reviewing undisputed facts, summary judgment should be denied if, under the evidence, reasonable men might reach different conclusions from those undisputed facts. George, 337 Ark. 206, 987 S.W.2d 710.

Id. at 20, 14 S.W.3d at 475.

II. Consideration

The argument raised...