Sturgis v. Skokos

• Decision Date: 05 November 1998
• Docket Number: No. CR,CR
• Citation: 977 S.W.2d 217,335 Ark. 41
• Parties: Andrew STURGIS and Vanessia Sturgis, Appellants, v. Theodore C. SKOKOS and Randy Coleman, Appellees. 98-299.
• Court: Arkansas Supreme Court

Page 217

977 S.W.2d 217

335 Ark. 41

Andrew STURGIS and Vanessia Sturgis, Appellants, v. Theodore C. SKOKOS and Randy Coleman, Appellees.

No. CR 98-299.

Supreme Court of Arkansas.

Nov. 5, 1998.

Timothy O. Dudley, Little Rock, Kent J. Rubens, West Memphis, for Appellants.

Glenn W. Jones, G. Spence Fricke, D. Keith Fortner, David M. Powell, Little Rock, for Appellees.

NEWBERN, Justice.

This appeal concerns an action for attorney malpractice. The appellants, Andrew and Vanessia Sturgis, alleged that the appellees, Theodore C. Skokos and Randy Coleman, mishandled the Sturgises' defense and counterclaim in a Jefferson County foreclosure action that originated in 1988. The Sturgises filed their malpractice action in the Pulaski County Circuit Court in 1995. With one exception, all of the acts of negligence were alleged to have occurred more than three years earlier. The exception was an allegation of failure to timely lodge the record in the foreclosure action with this court, resulting in dismissal of the appeal. Although the Sturgises argued that a five-year contracts statute of limitations applied, the Trial Court applied the three-year malpractice statute of limitations and, in addition, held that the failure to perfect the appeal was of no avail as there was no showing that an appeal in the foreclosure case would have succeeded. We affirm the summary judgments.

The 1988 action was brought against the Sturgises by National Bank of Commerce ("NBC") to foreclose on loans that were secured by real property. The Sturgises, at that time represented by other counsel, denied liability and counterclaimed against NBC, asserting various theories of lender liability. The Sturgises discharged their original counsel, and on April 29, 1989, entered into a written representation agreement with Skokos, Coleman, and Rainwater, P.A. The Sturgises had been referred to Mr. Skokos, with whom they had their initial lawyer-client interview, but Randy Coleman acted as the primary attorney representing them, entering an appearance on their behalf on May 19, 1989. On July 26, 1989, Mr. Skokos also entered an appearance on their behalf. NBC's motion for partial summary judgment on the Sturgises' counterclaim of lender liability was granted. The remaining issues were tried to Chancellor Fred Davis on June 6 and June 23 through June 26, 1991. More than two years later, on August 25, 1993, a decision favorable to NBC was rendered. Mr. Coleman filed a timely notice of appeal to the decision but failed to file the record in a timely manner, and the appeal was dismissed.

On April 14, 1995, the Sturgises filed suit in Pulaski County Circuit Court, alleging that Mr. Coleman and Mr. Skokos were negligent in their representation of the Sturgises because they did not tell them to pay the bank and then file suit in circuit court in order to get a jury trial on their lender-liability claims and did not tell them that they could ask that their counterclaim in chancery court be transferred to circuit court. The Sturgises also alleged that the attorneys were negligent because they failed to obtain affidavits to oppose NBC's summary-judgment motion, and failed to move for the recusal of the Chancellor who had financial ties to NBC. Finally, they alleged that the attorneys were negligent in failing to perfect their appeal. The Sturgises asserted that, due to the negligence of the attorneys, they had sustained damages in the form of attorney fees, interest on the bank debt, and loss of the lender-liability claim against NBC.

The defendants answered that the complaint was barred by the statute of limitations applicable to negligence actions. Defendant Skokos filed an affidavit stating that he had performed only 11.6 hours of work on the case up until May 8, 1990, and had not provided any legal services thereafter. He further stated that all trial preparations were done in the first half of 1991, when he was out of the country on military duty and not participating in the law practice.

The Sturgises amended their complaint to include a breach of contract claim, alleging that the lawyers contracted to represent them diligently but failed to do so. They incorporated the allegations made in the negligence count as the breach-of-contract allegations. They also alleged that they would not have entered into the contract but for the representations made by the lawyers. The amended complaint stated a third count of breach of fiduciary duty, alleging that Mr. Coleman had ties to Worthen Bank, which owned NBC, at the time he represented the Sturgises in their suit against NBC, thus creating a conflict of interest that he did not reveal.

Mr. Skokos moved for summary judgment on the ground that, as a shareholder in a professional association, he could not be held liable for Mr. Coleman's negligence as he was protected by the Arkansas Professional Corporations Act. The Trial Court at first denied the motion, but upon its renewal, granted it. Mr. Coleman moved for summary judgment on the ground that all of the Sturgises' claims except the untimely attempt to lodge the record on appeal in the foreclosure action were barred by the statute of limitations. The motion was granted. The Trial Court also held that there was no showing that the failure to file the record proximately caused the injury to the Sturgises.

1. Breach of contract

Motions for summary judgment are governed by Ark. R. Civ. P. 56, which provides that a party may move with or without supporting affidavits for a summary judgment upon all or any part of a claim. A summary judgment should be granted only when it is clear that there is no issue of fact to be litigated. Ragar v. Brown, 332 Ark. 214, 964 S.W.2d 372 (1998); Dillard v. Resolution Trust Corp., 308 Ark. 357, 824 S.W.2d 387 (1992). The moving party has the burden of showing that there is no genuine issue of material fact; all proof submitted must be viewed in a light most favorable to the party resisting the motion, and any doubts and inferences must be resolved against the moving party. Tullock v. Eck, 311 Ark. 564, 845 S.W.2d 517 (1993). The movant must show entitlement to judgment as a matter of law. Keller v. Safeco Ins. Co. of America, 317 Ark. 308, 877 S.W.2d 90 (1994). Once the moving party has demonstrated prima facie that no material issue of fact remains, the defending party must respond, showing facts which would be admissible in evidence to create a factual issue. Dixie Ins. Co. v. Joe Works Chevrolet, Inc., 298 Ark. 106, 766 S.W.2d 4 (1989). On appeal, we view the evidence in the light most favorable to the one against whom summary judgment was granted, Young v. Paxton, 316 Ark. 655, 873 S.W.2d 546 (1994), and determine if summary judgment was proper based on whether the evidence presented by the movant left a material question of fact unanswered. Keller v. Safeco, supra.

The Sturgises argue that the Trial Court erred in applying the three-year statute of limitations, Ark.Code Ann. § 16-56-105 (1987), applicable to legal-malpractice claims, instead of the five-year statute of limitations, Ark.Code Ann. § 16-56-111 (1987), for breach of a written contract. It is well established that the three-year statute of limitations applies to legal malpractice actions. Ragar v. Brown, 332 Ark. 214, 219, 964 S.W.2d 372, 374 (1998). The Sturgises argued that, in the standard written fee agreement with the law firm, the lawyers promised that they would "proceed diligently" to represent them. They argue that the contract was breached when they acted negligently, that is, without diligence, and thus § 16-56-111 applicable to contracts should control.

The Sturgises rely on Lemon v. Laws, 313 Ark. 11, 852 S.W.2d 127 (1993), in which it was held that Ark. R. Civ. P. 18(a) permits a party to join as many claims as a party may have against an opposing party. Mr. Lemon's allegation of breach of contract was that his attorney, Mr. Laws, failed to put on proof to corroborate grounds for divorce. The same allegation supported his negligent-representation claim. We held it was error to have struck the breach of contract claim. No statute-of-limitations issue was involved.

In 2 R. MALLEN AND J. SMITH, LEGAL MALPRACTICE § 21.5 (4th ed.1996), the authors explain that "for a contract statute of limitations to apply, there must be a breach of a specific promise." To determine the cause of action, we look to the facts alleged in the complaint to ascertain the area of the law in which they sound. McQuay v. Guntharp, 331 Ark. 466, 963 S.W.2d 583 (1998). If two or more statutes of limitation apply, generally the statute with the longest limitations period will govern. Id. at 470, 963 S.W.2d 583; Loewer Farms v. National Bank of Ark., 316 Ark. 54, 870 S.W.2d 726 (1994).

The Sturgises' amended complaint reads as follows:

Count I--Negligence:

Defendants were negligent in their representation of the plaintiffs in advising plaintiffs not to immediately pay the debt to the bank and then sue the bank in circuit court, where plaintiffs would be entitled to a jury trial, or file a counterclaim in chancery court and have it transferred to circuit court for trial after paying the debt to the bank. Defendants were also negligent in failing to obtain affidavits to oppose the bank's motion for summary judgment, in failing to move for the recusal of the Chancellor who heard the case on the grounds that the Chancellor had financial ties to the bank, and in failing to properly perfect the appeal....

Count II--Breach of Contract:

Defendants contracted to represent the plaintiffs diligently and competently. Defendants breached their contract by failing to do so for the reasons set forth above. Additionally, defendant Skokos breached his contract by failing to handle and try the case as he had promised the plaintiffs he would do. Plaintiffs would not have entered into the contract but for the representations of defendant Skokos.

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