author: Annabelle Clinton Imber, Justice.

text:
    Edward A. MOORY, Edward E. Coit, Ruth Moory, Kay Moory Buford & Ruth Ione Mushrush v. QUADRAS, INC., First National Bank of DeWitt, Arkansas & Arkansas County Broadcasters, Inc.
    98-117
    970 S.W.2d 275
    Supreme Court of Arkansas
    Opinion delivered June 18, 1998
    [Petition for rehearing denied July 16, 1998.]

      Pike & Bliss, by: George E. Pike, Jr. and Deborah Pike Bliss, for appellants.

      Russell D. Berry, for appellee.
   Annabelle Clinton Imber, Justice.

The question presented in this case is whether a court has jurisdiction to issue writs of garnishment based solely on a registered judgment rendered from a court in another county. The trial court answered the question in the negative, and granted appellee’s motion to quash various writs of garnishment issued at the request of appellants. We agree and affirm.

The relevant facts in this case are undisputed. A judgment entered in Lonoke County Circuit Court on July 14, 1993, reflects that Quadras, Inc., defaulted on a promissory note held by appellants, and that the court entered a judgment in appellants’ favor. It appears that this judgment was registered in Arkansas County Circuit Court on March 7, 1997. During March and April of 1997, the Arkansas County Circuit Clerk issued a number of writs of garnishment directed to Arkansas County Broadcasters, Inc., at the request of appellants. According to appellants’ allegations and interrogatories, Arkansas County Broadcasters was indebted to First National Bank as the receiver of Quadras. While Arkansas County Broadcasters denied the alleged indebtedness in its answers to interrogatories, First National Bank later moved to quash the writs, arguing that the Arkansas County Circuit Court had no jurisdiction over the “principal cause of action” given that the judgment upon which the garnishment was based was obtained in Lonoke County Circuit Court, “the only court with authority to issue a garnishment.” The trial court quashed the writs, resulting in the present appeal.

For reversal, appellants argue that the registration of the Lonoke County judgment was all that was necessary to confer the Arkansas County Circuit Court with subject-matter jurisdiction to issue the writs. This does not mark the first time that this court has been confronted with similar arguments. In The McGehee Bank v. Charles W. Greeson & Sons, Inc., 223 Ark. 18, 263 S.W.2d 901 (1954), the appellant obtained a judgment in Desha County Chancery Court and then registered that judgment in Calhoun County. The appellant obtained a writ of execution and had the Calhoun County clerk issue a writ of garnishment. The trial court enjoined the execution and quashed the writ, and this court affirmed.

With respect to garnishment, this court explained that “the writ can issue only out of the Court which rendered the judgment unless Statutes empower some other authority to issue the garnishment.” Id. That being said, the McGehee Bank court attempted to locate a statute which would authorize a court other than the rendering court to issue the writs, and could find none. With respect to garnishment, the court noted that Ark. Stat. Ann § 31-513 (currently codified at Ark. Code Ann. § 16-110-412 (1987)) provided that “Writs of garnishment may be issued from the Circuit Court of one County to any other County in the State.” Id. In that garnishment was a purely statutory remedy, the statute had to be strictly construed. “Thus it is the court in which the suit is pending or the judgment was rendered that has authority to issue the garnishment. We find no Statute providing otherwise in a situation like the one here existing.” Id.

Similarly, at issue in Hervey v. The Farms, Inc., 252 Ark. 881, 481 S.W.2d 348 (1972) was whether the Baxter County Circuit Court erred in vacating a default judgment entered on a garnishment in a proceeding instituted solely by the filing of allegations and interrogatories. The Hervey court could find nothing in the record to indicate that any action was ever commenced in Baxter County Circuit Court. While the appellant argued that it was error to vacate the default judgment given that appellee never alleged or proved a meritorious defense, the Hervey court rejected this argument because the trial court lacked subject-matter jurisdiction. Where a court does not have subject-matter jurisdiction over the “principal cause of action,” a garnishee “cannot be held upon a garnishment[.]” Id. Appellant admitted that the judgment upon which the garnishment was based had been obtained in Garland County. “In the absence of a statute providing otherwise, only the court in which the judgment was rendered has authority to issue a garnishment thereon.” Id. (citing McGehee Bank, supra). While Ark. Stat. Ann. § 31-513 authorized the issuance of a garnishment by the circuit court of one county to another county, the Hervey court was unaware of any statute authorizing any other court to issue a garnishment after judgment.

In the present case, appellants primarily rely on Act 202 of 1967, codified at Ark. Code Ann. § 16-66-102 (1987), as authority heretofore unconsidered by this court for the proposition that a court may issue a writ of garnishment under the circumstances of this case. The statute provides as follows:

The circuit or chancery court of any county in this state in which a judgment rendered by a court of competent jurisdiction in another county of this state has been registered in accordance with the provisions of 16-65-117(a)-(c) shall have power to issue writs of execution upon any such judgment.

Id. Appellants’ theory is that the statute’s plural reference to “writs of execution” is a general or generic reference to all forms of executing on a judgment, including a writ of garnishment. To further support this argument appellants cite us to various cases and provisions of the Arkansas Code which, in their estimation, use the terms “garnishment” and “execution” interchangeably.

We must reject appellants’ argument. While it may be said that a writ of garnishment is a form of “execution” in the general sense as a postjudgment collection remedy, see Sharum v. Dodson, 264 Ark. 57, 568 S.W.2d 503 (1978) (“Garnishment after judgment, rather than before judgment is, in effect, a form of execution.”), a writ of garnishment is certainly not a writ of execution. Compare Campbell v. White, 294 Ark. 656, 746 S.W.2d 42 (1988) (defining a “writ of execution” as a formal process issued by a court generally evidencing the debt of the defendant to the plaintiff and commanding the officer to take the property of the defendant in satisfaction of the debt) with Sharum, supra (defining “garnishment” as a proceeding whereby a plaintiff seeks to subject to his claim property of the defendant in the hands of a third person or money owed by such person to the defendant). A writ of execution is in the form of a command to the sheriff to take into possession property of the judgment debtor, see Ark. Code Ann. § 16-66-104 (Supp. 1997), while a writ of garnishment is a suit directed to a third party to determine whether the garnishee is indebted to the judgment debtor, and to obtain a judgment that such money or property be paid to the judgment creditor. See Ark. Code Ann. § 16-110-401 (Supp. 1997).

Reading the plain language of section 16-66-102, we do not interpret the statute’s plural phrase “writs of execution” to be some generic designation of all forms of execution. Rather, it is plainly a reference to one form of collecting on a judgment, a writ of execution. Because a writ of garnishment is not a writ of execution, the trial court was correct in quashing appellants’ writs of garnishment due to lack of jurisdiction. See Hervey, supra; McGehee Bank, supra. With respect to writs of garnishment, section 16-66-102 does not represent a change in the statutory landscape considered at the time of either Hervey or McGehee Bank.

Affirmed.

       Among other statutes, appellants direct our attention to Ark. Code Ann. § 16-66-114 (1987) as an independent basis for the trial court’s jurisdiction. However, it does not appear that the appellants ever availed themselves of this statute. The record does not show that they first attempted to obtain a writ of fieri facias, or that the executing officer returned the writ showing “that no goods and chattels and lands and tenements can be found whereon to levy.” See Ark. Code Ann. § 16-66-114(a)-(b).


source: Caselaw Access Project

author: Ray Thornton, Justice. Robert L. Brown, Justice,

license: Public Domain

text:
    Lois M. BLACK and Marlin Black v. Linda VAN STEENWYK
    97-1096
    970 S.W.2d 280
    Supreme Court of Arkansas
    Opinion delivered June 18, 1998
    [Petition for rehearing denied September 10, 1998.]

      Anthony W. Black and Steven D. Durand, for appellants.

      William H. McKim, for appellee.
   Ray Thornton, Justice.

This is a dispute between sisters about the right to use a roadway connecting appellee Linda Van Steenwyk’s home to a county road. The roadway crosses land owned by her sister, Lois M. Black, and Marlin Black, appellants. From the chancellor’s decree granting appellee an easement to use the roadway as established, appellants bring this appeal, asserting also that the chancellor should have recused. We find no reversible error and affirm.

In the early 1950s, W.D. and Lura Gaston, the parents of the sisters, obtained the county’s assistance in building a “new road” across their 160-acre farm, connecting their home place to a county road. The new road was maintained and improved with the assistance of Montgomery County road crews. Its construction led to the abandonment of an old access road to the home place, which crossed the South Fork of the Ouachita River at an unimproved ford and which could be traversed only at times of low water. From the time of its construction until the Gastons divided the farm between their sons and daughters, this new road was used by the public, visitors, and others who called on the Gastons at their home place.

In 1969, the Gastons divided their farm among their children. Forty-three acres, which included the old home place, was conveyed to appellee and her husband. A brother, Billy Gaston, was given forty acres on which part of the new road was situated, and appellants were given thirty-seven acres. Another brother was given a share of the farm, which is not involved in this proceeding. In 1970, appellants bought the forty-acre tract, which had been conveyed to Billy Gaston. The new road, which continued to serve the home place, crossed the property owned by appellants. Since the time both parties have lived on their respective properties, appellee has used the new road to access her home and property.

The present dispute arose in 1993, when the appehee listed her property for sale. Appellants objected to appellee’s representation to the realtor that access to her property was to be gained by the new road. Appellants claimed that the road was their “private driveway,” that appellee used the road with their permission, and that appellee had no rights in the road that could be conveyed with her property.

On March 21, 1994, appellee filed a petition to quiet title to the portion of the roadway that runs across appellants’ land. Appellee alleged that she was entitled to an easement by necessity, an easement by implication, and an easement by prescription over the roadway. Appellants defended the suit, claiming that the Gas-tons conveyed the properties simultaneously without reserving or granting an easement, that appellee’s property is not landlocked but is serviced by and fronts onto a county road, that a secondary road, located entirely on the appellee’s property, connects her land to a county road, and that they gave appellee permission to use the roadway.

Chancellor Gayle Ford held a bench trial on April 19, 1996. On June 5, 1996, prior to the entry of a judgment in this matter, appellants filed a motion asking Chancellor Ford to recuse from the case. Appellants alleged there was an appearance of impropriety based on the existence of an undisclosed landlord-tenant relationship between Chancellor Ford and Mr. McKimm, attorney for appellee. By letter opinion dated December 26, 1996, Chancellor Ford, without holding a hearing on the motion, declined to recuse and announced his ruling granting appellee an easement in the existing roadway across appellants’ property. On May 5, 1997, the court entered judgment in favor of appellee.

On appeal, appellants argue that appellee is not entitled to an easement over the roadway under any theory, that the chancellor should have held a hearing on their motion to recuse, and that the chancellor should have recused.

I. Easement

For their first point on appeal, appellants challenge the chancellor’s decree granting appellee an easement over the roadway by asserting that the evidence is insufficient to support an easement under any of the theories alleged by appellee. In her petition to quiet title, appellee pled that she was entitled to an easement over the roadway by necessity, by implication, and by prescription. The chancellor did not enter specific findings of fact or conclusions of law but simply granted appellee’s petition establishing an easement over the roadway where it is presently located. However, statements that the chancellor made in his letter opinion, which seem to imply a finding of necessity, together with the fact that he granted the easement where the roadway was already located, suggest that his decree must have been predicated upon the finding of an easement by implication. From our de novo review, we conclude that such finding would not be clearly erroneous or contrary to a preponderance of the evidence. Maroney v. City of Malvern, 320 Ark. 671, 899 S.W.2d 476 (1995). Therefore, we need only address the arguments raised by appellants against an implied easement.

Appellants contend that the appellee should not be granted an easement by implication over the roadway because the Gastons simultaneously conveyed the property to appellee and appellants’ predecessor in title, did not retain any interest in the land, and failed to specifically grant or reserve an easement in favor of appellee. They also argue that an easement is not essential nor an absolute necessity because there are other ways to gain access to appellee’s property from the county road.

In Manitowoc Remanufacturing, Inc. v. Vocque, 307 Ark. 271, 819 S.W.2d 275 (1991), we explained that when an owner of a single parcel of land uses one part of his land for the benefit of another part, it is often said that a quasi-easement exists. The land benefitted is referred to as the quasi-dominant tenement, and the land used for the benefit of the other is referred to as the quasiservient tenement. Id. at 276, 819 S.W.2d at 278 (citing 3 Tiffany, The Law of Real Property § 781 (1920)). Upon a conveyance of the quasi-dominant tenement, an easement corresponding to the preexisting quasi-easement or, simply, an easement by implication is vested in the grantee. Id.; Patterson v. Buffalo National River, 76 F.3d 221, 226 (8th Cir. 1996).

In Greasy Slough Outing Club, Inc. v. Amick, 224 Ark. 330, 274 S.W.2d 63 (1954)), we stated the general rule relating to implied easements as follows:

Where, during the unity of tide, an apparently permanent and obvious servitude is imposed on one part of an estate in favor of another, which at the time of the severance is in use, and is reasonably necessary for the fair enjoyment of the other, then, upon a severance of such ownership, whether by voluntary alienation or by judicial proceedings, there arises by implication of law a grant or reservation of the right to continue such use. In such case, the law implies that with the grant of the one an easement is also granted or reserved, as the case may be, in the other, subjecting it to the burden of all such visible uses and incidents as are reasonably necessary to the enjoyment of the dominant heritage, in substantially the same condition in which it appeared and was used when the grant was made.

Id. at 337, 274 S.W.2d at 67 (internal quotes omitted). See also Manitowoc Remanufacturing, 307 Ark. at 277, 819 S.W.2d at 278-79; Kennedy v. Papp, 294 Ark. 88, 93-94, 741 S.W.2d 625, 628 (1987).

Thus, the finding of an easement by implication does not depend upon whether the Gastons made an express grant or reservation of an easement in the conveyance. Rather, an easement by implication may be found if appellee met her burden of proving the elements as outlined in Greasy Slough Outing Club and subsequent cases. In addition, the fact that appellee and appellants acquired title to their properties through a simultaneous conveyance does not preclude the finding of an implied easement. On the contrary, implied easements are most readily inferred when the easement is claimed by one simultaneous conveyee against another. See Restatement of Property § 476, comment f (1944). (“It is reasonable to infer that a conveyor who has divided his land among simultaneous conveyees intends that very considerable privileges of use shall exist between them. Commonly, in such cases, the conveyance constitutes a family distribution, and, where this is true, the probability of a desire that existing conveniences shall continue to be operative is greater than the probability that a conveyor would desire them continued as against himself.”)

From the foregoing, we must now decide if appellee presented sufficient evidence to show that she is entided to an implied easement over the roadway in question. Several witnesses testified that the new roadway was in existence and used for ingress and egress to the Gastons’ home site for many years prior to the 1969 conveyances. Billy Gaston testified that when the new roadway was built around 1951, it became the main route of access to the home. He further testified that at the time the property was divided, there was no other practical, reasonable or regularly useable means of access to the Gastons’ home. Appellee also testified that since the time of its construction, the new road was used in order to gain access to the home. Finally, appellant Lois Black testified on cross-examination that the new roadway was in use when the land was divided.

The testimony below also indicated that the use of the roadway was open and continuous, and that there was no other reasonable means of access to the property. Although several witnesses testified that an original road leading to the home was used occasionally over the years, the testimony also reflected that the original road was all but abandoned after the new road was built because the original roadway crosses the South Fork of the river and its flood plain at an unimproved ford. Billy Gaston testified that he stopped using the old roadway because he got stuck going across the stream. Appeflee testified that after the new road was built, the original roadway was used a few times; however, she further testified that the original roadway was becoming impassable and that people using it would get stuck or their vehicles would drown out while crossing the stream.

Notwithstanding the testimony about the difficulties associated with gaining access to appellee’s land by way of the original roadway, appellants maintain that the easement is not necessary because the property is not landlocked. The testimony below revealed that the eastern portion of appellee’s property shares a 1300 foot boundary with a county road. However, accessing appellee’s home and the majority of her property from the county road is made difficult because of the existence of the stream, which runs through the eastern portion of her land. The witnesses testified that the land lying between the county road and the South Fork of the river is a flood plain, several hundred feet wide and constituting a minor portion of appellee’s property. In order to gain access to appellee’s home and the bulk of her property from the county, road, one must travel across the flood plain and the stream, which has no bridge.

Whether an easement is necessary is a question of fact. Greasy Slough Outing Club, Inc., 224 Ark. at 338, 274 S.W.2d at 68. We have held that “necessary” means there could be no other reasonable mode of enjoying the dominant tenement without the easement. Manitowoc Remanufacturing, 307 Ark. at 277, 819 S.W.2d at 279. In this case, the chancellor viewed the property in question and concluded that the old road was impassable and would be impassable during a portion of the year because of the stream unless a large bridge was constructed. We are unable to say, from this record, that the chancellor’s finding with respect to element of necessity is clearly erroneous or against a preponderance of the evidence. Accordingly, we conclude that the evidence before the trial court was sufficient to support the chancellor’s decree granting the easement.

II. Recusal

Appellants’ final point of appeal is that the chancellor committed reversible error by failing to hold a hearing on their motion for recusal and by declining to recuse. We disagree that the action or inaction of the chancellor reflects an abuse of discretion requiring reversal and a new trial.

This petition to quiet tide was filed in March of 1994, and resulted in a bench trial before Chancellor Gayle Ford on April 19, 1996. Following the trial, but before the entry of a judgment, appellants filed on June 5, 1996, a motion asking the chancellor to recuse. The motion to recuse alleged that appellants had learned that the office building in which appellee’s attorney, Mr. McKimm, had his law offices belonged to Chancellor Ford and his wife, and stated: “While the Respondents (appellants) do not allege any impropriety on the part of the Court, judicial canons mandate that a judge shall avoid the appearance of impropriety . . . The motion further stated that the ownership of the building in which appellee’s counsel’s law offices are located “gives rise to an appearance of impropriety and serves as the basis for which the Court’s impartiality might reasonable be questioned.”

Appellee’s response to the motion asserted that appellants had known of the location of his office throughout the proceedings, and the motion was untimely after evidence had been presented at trial and briefs had been provided to the court. Appellants replied and agreed they had known the location of McKimm’s office, but had not known the building belonged to Chancellor Ford and his wife. Appellants attached to this pleading a Real Estate Record Card from the Tax Assessor’s office indicating ownership of the property by the Chancellor and his wife, and a diagram of the parcel, showing the names ofU.S. Dept, of Agriculture, Ouachita Production Credit Association, and William H McKimm.

The chancellor entered no official order disposing of appellants’ motion. However, in his letter opinion dated December 26, Chancellor Ford stated that he had previously concluded that there was no reason requiring him to recuse in the matter, which had previously been tried.

Appellants contend that the chancellor’s failure to hold a hearing on their motion for recusal requires reversal of his decree granting appellee an easement. In support of this contention, appellants cite City of Jacksonville v. Venhaus, 302 Ark. 204, 788 S.W.2d 478 (1990) and Westbrook v. State, 265 Ark. 736, 580 S.W.2d 702 (1979), wherein we held that it was error not to hold a hearing on a motion for recusal. However, we have also affirmed a chancellor’s decision not to recuse where no hearing was held on the motion. In Dolphin v. Wilson, 328 Ark. 1, 5, 942 S.W.2d 815, 818 (1997), we said:

[N]o hearing was held on the issue of recusal, and none was requested. The decision on the part of a judge not to recuse is affirmed when there is no abuse of discretion. Reed v. State, supra. Mrs. Dolphin did nothing more on this issue than file a motion making the assertions described above [alleging the recent existence of a law partnership between the chancellor and a party to the litigation], and the chancellor denied the motion without comment, so we have little information in the record. Because Mrs. Dolphin has not met her burden of proving that [the chancellor] was biased, we must conclude that the chancellor did not abuse her discretion in failing to recuse from the case.

While the chancellor’s failure to provide a hearing would cause serious concern if appellants had sought a hearing, there is no showing or allegation in the record that such a hearing was requested. In this respect, we note that appellants have endeavored to call to our attention copies of letters addressed to the chancellor and his staff in which they inquired about the status of their motion and what action would be appropriate or necessary in addressing the motion. However, these letters are not part of the record or supplemental record filed in this case, and we have consistently refused to consider on appeal matters outside of the record. Burkhalter v. State, 330 Ark. 684, 956 S.W.2d 171 (1997). Under the facts of this case, we cannot say that the chancellor’s decision on the merits of this case should be reversed because appellants did not get a hearing on their motion for recusal.

We next consider appellants’ contention that Chancellor Ford erred in failing to recuse to avoid the appearance of impropriety. Canon 2(a) of the Arkansas Code of Judicial Conduct provides that a judge shall avoid impropriety and the appearance of impropriety. Canon 3(e) requires a judge to disqualify himself in a proceeding in which his impartiality might reasonably be questioned, including where the judge has a personal bias or prejudice concerning a party or a party’s lawyer. However, a judge’s decision not to recuse is a discretionary one and that decision will not be reversed on appeal absent a showing of an abuse of discretion. Beshears v. State, 329 Ark. 469, 947 S.W.2d 789 (1997). To decide whether there was an abuse of discretion, we review the record to determine if any prejudice or bias was exhibited. Dolphin, 328 Ark. at 4, 942 S.W.2d at 817. The question of bias is usually confined to the conscience of the judge. Id. Judges are presumed to be impartial, and the party seeking disqualification has the burden of showing otherwise. Id.

We have carefully reviewed the record for showings of bias, and have looked at the charge that bias was demonstrated by the chancellor’s grant of a second motion for continuance requested on the basis of Mr. McKimm’s assertion of health problems. Counsel for appellants would take us outside the record to show a newspaper article reporting that Mr. McKimm was attending a conference during part of this continuance.

We do not rely upon newspaper articles that have not been made a part of the record for a showing of bias, but we observe that even if the granting of the continuance may have been lenient, it does not rise to the level of bias or prejudice required for us to reverse a decision on the merits and disqualify a trial judge for abuse of his discretion in declining to recuse. In Noland v. Noland, 326 Ark. 617, 932 S.W.2d 341, (1996) we stated that absent some objective demonstration of prejudice, it is a communication of bias which will cause us to reverse a judge’s decision on disqualification. Id. at 620, 932 S.W.2d at 343 (citing Matthews v. Rodgers, 279 Ark. 328, 331, 651 S.W.2d 453, 455 (1983)).

Appellants also suggest that Chancellor Ford issued his adverse decision only after they had forwarded a complaint against him to the Judicial Discipline and Disability Commission. The record before the court does not support this contention. The record does not contain any evidence concerning appellants’ complaint to the Commission; further, there is nothing in the record to show that appellants had referred the matter to the Commission when Chancellor Ford issued his letter opinion on December 26, or that he was aware of such complaint when he issued his decision. Accordingly, we do not consider this alleged evidence of bias because it is based on matters not contained in the record. Burkhalter, 330 Ark. 684, 956 S.W.2d 171.

From our review of the record before us, we find no evidence of the communication of bias or prejudice. While we have concerns about the assertion of a landlord-tenant relationship, we have found no evidence of bias or prejudice in the record that would lead us to conclude that the chancellor’s decision not to recuse was an abuse of discretion requiring his disqualification and a reversal of the case on the merits.

For the reasons above, we affirm the decision.

Newbern, Brown, and Imber, JJ., dissent.

Robert L. Brown, Justice,

dissenting. This case highlights the issue of whether a trial judge should disqualify from hearing a matter when the trial judge is in an ongoing business relationship with one of the attorneys appearing before him. Here, that business relationship was one of landlord/tenant as shown by a real estate tax record attached to the Blacks’ reply to Van Steenwyk’s response to the motion to disqualify. I believe the trial judge should have disclosed his business relationship with opposing counsel, and, because the landlord relationship with counsel apparently existed, he should have disqualified. Moreover, I believe that moving counsel was entitled to a prompt decision on his motion suggesting that the trial judge recuse, and that that was denied him.

The Blacks’ motion to recuse was filed on June 5, 1996. The trial judge’s letter opinion was dated December 26, 1996. No discussion of the issue was included in the trial judge’s letter opinion, much less any admission that the trial judge was opposing counsel’s landlord. The trial judge simply said: “Having previously concluded that there is no reason requiring me to recuse in the matter which has previously been tried, I now must make the distasteful decision regarding Mrs. Van Steenwyk’s ingress and egress to her property.” The record does not reflect that the trial judge previously made public his conclusion on disqualification in any written form or by ruling. Certainly, no order to that effect is included in the record. Thus, the motion was denied almost 7 months after the request to disqualify was made by passing reference in a letter opinion issued by the trial judge in which he disposed of the merits of the case.

The Arkansas Code of Judicial Conduct requires that a judge disqualify in any proceeding where his or her impartiality might reasonably be questioned. Ark. Code Jud. Conduct, Canon 3E(1). The Commentary to that Section reads:

A judge should disclose on the record information that the judge believes the parties or their lawyers might consider relevant to the question of disqualification, even if the judge believes there is no real basis for disqualification.

Here, that was not done. The Code further mandates that a judge “shall not engage in financial and business dealings that: . . . (b) involve the judge in frequent transactions or continuing business relationships with those lawyers or other persons likely to come before the court on which the judge serves.” Ark. Code Jud. Conduct 4D(1)(b). The Code, in addition, requires that the judge’s financial interests that might cause frequent disqualification should be divested. Ark. Code Jud. Conduct 4D(4). One treatise on judicial conduct makes the point succinctly: “Similarly, a judge must disqualify himself or herself when he or she has a business relationship with an attorney appearing before the court.” Shaman, Lubet & Alfini, Judicial Conduct and Ethics, (2nd ed. 1995) § 4.19, p. 135.

Two advisory opinions have issued from the Judicial Ethics Advisory Committee on whether the judges requesting advice should disqualify when those judges have a landlord/tenant relationship with one of the attorneys appearing before them. In both instances, the Ethics Advisory Committee answered “yes.” See Advisory Opinion #97-03 requested by Hon. Charles A. Yeargan (May 6, 1997); Advisory Opinion #97-05 requested by Hon. Lance Hanshaw (January 5, 1998). In each opinion, the Ethics Advisory Committee concluded that the judge should either recuse or, alternatively, ask the parties and their lawyers whether they wish to waive the judge’s disqualification under Canon 3F. Though those advisory opinions are not binding on this court, they illustrate the serious perception problem by any reasonable person when a lawyer who has ongoing business dealings with the trial judge argues a case before that same judge.

The majority opinion effectively guts those advisory opinions and places an interpretive gloss on the Code of Judicial Conduct without even discussing the two Canons involved or the advisory opinions themselves. Under these facts, the trial judge should have advised opposing counsel of the landlord/tenant relationship and disqualified, subject to the parties and attorneys waiving disqualification under Canon 3F.

The majority opinion is further delinquent in never really coming to grips with and discussing the ongoing landlord relationship itself between the trial judge and counsel as a basis for disqualification. Rather, the majority hangs its decision on the Blacks’ failure to request a hearing on their motion to recuse and the absence of proof of bias in the record. The Blacks presented the trial judge with a real estate tax record, and the trial judge certainly knew the status of the landlord/tenant relationship. Having this matter turn on whether the Blacks asked for a hearing seems to be an unnecessary technicality under these circumstances. With regard to proof of bias, the Michigan Court of Appeals has held that actual bias need not be shown when the judge had a joint-ownership interest in land on which the main office of the law firm of one of the trial attorneys was located. See In Re Disqualification of Fiftieth District Court Judge, 483 N.W.2d 276 (Mich. App. 1992). I question whether proof that the trial judge was actually biased is required in a case where the judge is doing business with one of the trial attorneys.

Moreover, the trial judge should have made the recusal decision expeditiously and not delayed the matter for 7 months. It is axiomatic that recusal decisions should be acted on promptly. See 48A C.J.S. Judges, § 145, p. 842. Indeed, some jurisdictions provide that so long as the issue of disqualification remains undecided, the judge is without jurisdiction to hear any matter affecting the substantive rights of the parties. People v. Bell, 658 N.E.2d 1372 (Il. App. Ct. 1995); Greenberg, Benson, Fisk and Fielder, P.C. v. Howell, 685 S.W.2d 695 (Tex. Ct. App. 1984); Johnson v. The District Court, 674 P.2d 952 (Colo. 1984). Here, though, there is nothing in the record to show that he made an earlier ruling or advised moving counsel of his prior decision.

This is all made especially troublesome because the Van Steenwyk’s counsel, who was the judge’s tenant, initially responded to the Blacks’ motion for recusal by denying the paragraph of the motion where the landlord/tenant relationship was asserted. The Blacks replied with the tax record showing that the trial judge owned the building where the trial attorney had his office. In the Van Steenwyk’s brief in this appeal, she states that the landlord/tenant relationship between the trial judge and counsel was admitted. However, no such admission appears in the record. Indeed, no where is the relationship defined by the trial counsel or the trial judge or explained in either the trial judge’s letter opinion, his judgment, or in any other document in the record. Van Steenwyk also contends in her brief that the Blacks should have obtained a ruling on their motion to recuse. The Blacks’ counsel responds that he tried. And, again, this was a matter for the trial judge’s prompt consideration and decision.

These issues go to the heart of the perception of judicial independence and impartiality. The decision in this case should not turn on whether the Blacks’ attorney requested a hearing on the recusal motion. It should turn on the merits of whether the trial judge abused his discretion (1) in refusing to disclose a landlord/ tenant relationship with counsel or even to discuss whether it existed after the motion to recuse was filed, (2) in refusing to disqualify due to his ongoing landlord relationship with trial counsel under the Code of Judicial Conduct or, alternatively, in failing to obtain a waiver from counsel and their clients, and (3) in not considering the recusal motion and promptly disposing of it, giving reasons for his decision. I conclude that for all these reasons there was an abuse of discretion by the trial judge in this case. I respectfully dissent.

Newbern and Imber, JJ., join.

       The Judicial Ethics Advisory Committee was established by procedural rule adopted by the Arkansas Judicial Discipline and Disability Commission pursuant to Section 5 of Act 791 of 1991.


author: Ray Thornton, Justice.

text:
    Robert A. NORMAN v. Josephine L. NORMAN
    97-759
    970 S.W.2d 270
    Supreme Court of Arkansas
    Opinion delivered June 18, 1998
    [Order denying Motion for Clarification July 16, 1998.  ]

      T.B. Patterson, Jr., P.A., for appellants.

      Bachelor, Newell & Oliver, by; C. Burt Newell, for appellee.
   Ray Thornton, Justice.

This action arose in September 1995, when appellee Josephine Norman, by her attorney C. Burt Newell, filed a petition to enforce an alimony provision contained in a 1978 divorce decree dissolving the marriage between herself and appellant Robert Norman. Shortly after appellee filed her petition, Mr. Norman moved to disqualify Mr. Newell and the firm of Bachelor, Newell & Oliver, from representing Ms. Norman, alleging a conflict of interest because Latt Bachelor, a current partner of Mr. Newell, was also a former associate of George M. Callahan, who had represented Mr. Norman during the divorce proceeding. Mr. Norman asserted that Mr. Bachelor would be prohibited from representing Ms. Norman because the current litigation involved the same matter in which Mr. Bachelor’s former firm had represented him, and he had not consented to the representation. He alleged further that Mr. Newell was also prohibited from representing Ms. Norman under the rule of imputed disqualification.

The 1978 divorce decree incorporated a property-settlement agreement approved by Mr. Callahan, as attorney for Mr. Norman. The settlement agreement included the following provision for alimony: “Husband shall pay to .Wife for her support and maintenance, the sum of $3,600.00 per year or the sum of 22% of his gross income, whichever is greater .... Husband covenants and agrees to annually provide wife with such documentation as may be necessary to evidence his income.” In her petition, Ms. Norman alleged that Mr. Norman had not provided her with documentation of his income since the divorce, and she requested that the court compel Mr. Norman to provide proof of his income in order to determine whether there was an arrearage.

On January 19, 1996, the chancery court held a hearing and denied the motion to disqualify appellee’s counsel. The court ruled that it should not disqualify an attorney or his firm except on a basis which would mandate a mistrial, but should instead defer to the individual lawyer to determine his conflicts and ethical duties in accordance with his judgment.

The case proceeded to trial where, upon the conclusion of the testimony and evidence, the chancery court found that Mr. Norman was in arrearage in the amount of $14,260.33. The court also awarded attorney’s fees plus court costs for a total judgment in favor of Ms. Norman in the amount of $15,716.36.

On appeal to this court appellant contends that the chancery court erred in refusing to disqualify counsel for appellee and in refusing to allow parol evidence as to whether there is a latent ambiguity surrounding the term “gross income,” contained in the property settlement agreement. Appellant also contends that the chancery court erred in its computation of “gross income,” in the proper application of social security benefits, and in other judgments that the court entered. We agree with appellant’s first point and reverse and remand for a new trial.

We first address the chancery court’s ruling on the motion for disqualification. The record reflects that at the hearing on the motion to disqualify, Mr. Newell stipulated that during the time his current partner, Mr. Bachelor, was a partner with Mr. Callahan, no special security measures were employed to restrict access to the firm’s files and that when a case was closed, the case file was moved to a common area where all the attorneys’ files were kept. The record further reveals that before the formation of the law firm of Bachelor, Newell & Oliver, in June 1994, Mr. Newell himself was associated with Mr. Callahan. However, Mr. Newell argued that the Rules of Professional Conduct were irrelevant because the issue before the court simply concerned the interpretation and enforcement of a written provision of the divorce decree and property-setdement agreement, entered into over seventeen years ago, when he was still in college. Mr. Newell therefore contended that the instant action did not constitute the same matter as the initial divorce and property settlement. He further argued that even if confidential information existed, such information was irrelevant and could not be presented because the statute of limitations precluded enforcement of the provision for more that five years preceding the date appellee filed her petition. Mr. Newell also asserted that the parol-evidence rule would bar the introduction of testimony as to what the parties or the attorneys meant by the term “gross income.” He thus concluded that there was no risk of disclosing confidential information.

After hearing the arguments of counsel, the chancery court denied the motion to disqualify. The chancellor explained his ruling in part as follows:

I have always taken the approach that unless a violation of the canons of the Code of Professional Responsibility and/or an alleged violation, rises to the level that it would constitute a mistrial, that questions of ethics are questions for the attorneys and not for the Court. I’m not here to give you an advisory opinion about ethical questions; I’m not here to suggest or — I mean I can off the — you know, I would, if somebody asked off the record, but as far as my purpose as judge, ethical questions are your decisions, not my decisions, unless they raise [sic] to the level of creating a mistrial. And it is for that reason that this motion will be denied.

Mr. Norman filed a motion for reconsideration asserting that the deference of the court to the judgment and discretion of opposing counsel did not fulfill the court’s responsibility to supervise the conduct of attorneys and to protect litigants before the court. The chancery court denied the motion for reconsideration and clarified its ruling, stating in part that:

[vjiolations of the Code or allegations of such are administrative, not judicial. There exists a forum in which alleged violations are dealt with, investigated and resolved. Far from an abdication of responsibility is a recognition of the separate and distinct duties of the Court and the Committee on Professional Ethics, and the ability of each to implement sanctions. One could contrast contempt with revocation of one’s license to appreciate the distinction. Further, one could review the appellate process from the Committee’s decision to gain a perspective on who in the first instance has been vested authority for alleged ethical violations .... The Court, unless as the Order provides, leaves matters of conscience to those so bound unless it affects the trial process, the example used was to create a mistrial.

On appeal, appellant maintains that the chancery court erred in finding that, unless a violation or alleged violation of the Rules of Professional Responsibility rises to the level of constituting a mistrial or otherwise affects the trial process, disqualification is not required. He also contends that the chancery court had a duty to disqualify Mr. Newell under the circumstances of this case. We agree.

In Berry v. Saline Memorial Hosp., 322 Ark. 182, 907 S.W.2d 736 (1995), a case involving the disqualification of a law firm, we explained that:

The Model Rules of Professional Conduct are not really designed for disqualification trials; rather, they are designed for regulating conduct through the Committee on Professional Responsibility. The rules can be subverted when they are invoked by opposing parties as procedural weapons. The fact that a rule is a just basis for a lawyer’s self-assessment, or for sanctioning a lawyer under the Committee on Professional Conduct, does not imply that an antagonist in a collateral proceeding even has standing to seek enforcement of a rule.

Id. at 187, 907 S.W.2d at 739. Nevertheless, we affirmed the chancery court’s decision to disqualify appellant’s counsel on the basis of a conflict of interest under Model Rules 1.7(b) and 1.10. Id. at 186-87, 189, 907 S.W.2d at 739-40.

We have also applied the Model Rules to determine whether an attorney should be disqualified because of a conflict of interest on other occasions. See Saline Memorial Hosp. v. Berry, 321 Ark. 588, 906 S.W.2d 297 (1995) (noting that “primary reference in any modem day disqualification case is to Rule 1.7,” but concluding that disqualification was not required under the circumstances presented); Purtle v. McAdams, 317 Ark. 499, 879 S.W.2d 401 (1994) (citing Rule 1.7 of the Model Rules and concluding that the chancery court was correct in disqualifying attorney); Burnett v. Morgan, 303 Ark. 150, 794 S.W.2d 145 (1990) (determining that conflict of interest existed under Rules 1.9 and 1.10 and under appearance-of-impropriety standard requiring disqualification); First American Carriers, Inc. v. Kroger, 302 Ark. 86, 787 S.W.2d 669 (1990) (concluding that the violation of Rule 1.9 of the Model Rules and the “appearance of impropriety” required disqualification of firm).

These cases demonstrate that the Rules of Professional Conduct are applicable in disqualification proceedings. Indeed, “courts have the power, as well as the duty and responsibility, to disqualify counsel to act in the proceedings, where he is guilty of conduct which is unprofessional or otherwise improper.” 7 C.J.S. Attorney & Client § 58 (1980). Accordingly, by finding that it should not disqualify an attorney except on a basis that would mandate a mistrial, but that it should instead defer to the individual attorney to decide whether a conflict existed in accordance with the attorney’s own judgment, the chancery court erred.

Although the chancery court entered a final order denying the motion to disqualify, it is clear that the court did not properly consider whether, under the facts of this case, counsel for appellee should be disqualified. We could remand the case- for a proper determination of the conflict-of-interest issue. However, it is well settled that we have the power to hear chancery cases de novo, and we have said that we do not remand chancery cases when the facts have been developed fully in the record before us, as it would be pointless to remand for further evaluation. Lynch v. Brunner, 294 Ark. 515, 522, 745 S.W.2d 115, 119 (1988) (citing Potter v. Easley, 288 Ark. 133, 703 S.W.2d 442 (1986)). The facts with respect to this issue are developed fully in the record; therefore, it remains for us to decide whether disqualification was warranted.

Appellant asserts that Mr. Newell’s representation of Ms. Norman was a conflict of interest under Rules 1.9 and 1.10 of the Model Rules of Professional Conduct and that it also created the “appearance of impropriety.”

Rule 1.9(b) of the Model Rules provides:

A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client: (1) whose interests are materially adverse to that person; and (2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter; unless the former client consents after consultation.

Rule 1.10(a) of the Model Rules provides:

While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9, 2.2 or 3.7.

Under these rules, if Mr. Bachelor would be barred from representing Ms. Norman, then the same bar is imputed to all lawyers who are associated with him in the same firm, including Mr. Newell.

A violation of the Model Rules of Professional Conduct, however, does not automatically compel disqualification; rather, such matters involve the exercise of judicial discretion. We expressed this principle in Burnett v. Morgan, 303 Ark. 150, 155, 794 S.W.2d 145, 147-48 (1990), when we said:

In applying these rules of conduct to a particular situation, we must do so with caution when considering disqualification of counsel. Disqualification is an absolutely necessary measure to protect and preserve the integrity of the attorney-client relationship; yet it is a drastic measure to be imposed only where clearly required by the circumstances. We must never forget that a disqualification, though aimed at protecting the soundness of the attorney-client relationship, also interferes with, or perhaps destroys, a voluntary relationship by depriving a litigant of counsel of his own choosing — oftentimes affecting associations of long standing. The role of the court is to balance the current client’s right to counsel of choice with the former client’s right to protection of confidences transmitted, or likely to have been acquired, during the prior representation.

Applying the rules of conduct to the case at bar, we conclude that Mr. Bachelor would be prohibited from representing Ms. Norman under Rule 1.9(b) and that Mr. Newell shares the conflict-of-interest disability of Mr. Bachelor pursuant to Rule 1.10(a). It is clear that the present action to enforce the alimony provision of the divorce decree is substantially related to the initial divorce proceeding, in which Mr. Norman was represented by a former associate of Mr. Bachelor and Mr. Newell. It is equally clear that the interests of parties are materially adverse. However, an attorney must have acquired actual knowledge of information protected by Rules 1.6 and 1.9(c) during his former association before the attorney and his firm will be disqualified. See Comment to Rule 1.9, Model Rules of Professional Conduct. In such an inquiry, two presumptions are applicable: (1) the attorney is presumed to have all the confidential knowledge that any member of the first firm possessed; and (2) the attorney is presumed, despite Rule 1.6, to share that knowledge with all members of the second firm. Howard W. Brill, Arkansas Professional and Judicial Ethics 73 (3d ed. 1994). The first presumption is rebuttable, and the burden is on the second firm to rebut the presumption. The second is not rebuttable, and the court will not erect a Chinese wall or employ other institutional barriers to overcome the presumption. Id.

Maintaining confidentiality is “a question of access to information.” Comment Rule 1.9, Model Rules of Professional Conduct. The question of access to confidential information is to be resolved by examining the facts of the particular case under consideration, and “the burden of proving not only a lack of knowledge but also a lack of access to information should rest with the challenged attorney alleged to be disqualified.” Burnett, 303 Ark. at 155-56, 794 S.W.2d at 148.

In the case at bar, appellee’s counsel did not rebut this presumption. Instead, he stipulated that when Mr. Bachelor was associated with appellant’s former attorney, no measures were taken to restrict access to client information. Mr. Newell continues to assert, however, that even if confidential information exists, it is not relevant to this proceeding and, in fact, cannot be used because the statute of limitations prevents appellee from collecting arrearage beyond the last five years. He further maintains that the parol-evidence rule bars testimony as to what the parties intended by the term “gross income.”

We find this argument unpersuasive because the rules are concerned not only with the situation where an attorney has knowledge of protected information and uses that information, but also where an attorney has access to confidential information. Hence, we have said that the rules do not require a finding of prejudice in order for a conflict to exist under Rules 1.9 and 1.10. Burnett, 303 Ark. at 156, 794 S.W.2d at 148.

Because this issue may arise on retrial, we additionally address counsel’s parol evidence argument, without deciding whether there was an ambiguity with respect to the term “gross income.” We point out that ambiguities are both patent and latent. C&A Const. v. Benning Const., 256 Ark. 621, 509 S.W.2d 302 (1974). We have said that a latent ambiguity arises when the contract on its face appears clear and unambiguous, but collateral facts exist that make the contract’s meaning uncertain. Countryside Casualty Co. v. Grant, 269 Ark. 526, 601 S.W.2d 875 (1980). Parol evidence is admissible not only to bring out the latent ambiguity but also to explain the true intention of the parties. Id. at 530, 601 S.W.2d at 877-78. Therefore, it was entirely possible that the parties and the attorneys who represented them in the divorce action could have been called to testify as to the meaning of the term “gross income.”

We conclude that Mr. Bachelor had a conflict of interest under Rule 1.9, which would prevent him from representing Ms. Norman, and this conflict is imputed to his partners, including Mr. Newell. When we balance Ms. Norman’s right to choose counsel against Mr. Norman’s right to protection of confidences transmitted, or likely to have been acquired, during the divorce proceeding, we conclude that disqualification of Mr. Newell and his firm is warranted.

In light of this determination, we do not reach appellant’s remaining assertions of error. This case must be reversed and remanded for a new trial.


author: W.H. “Dub” Arnold, Chief Justice.

text:
    LIBERTY MUTUAL INSURANCE COMPANY v. Cleophes THOMAS
    97-1134
    971 S.W.2d 244
    Supreme Court of Arkansas
    Opinion delivered June 25, 1998

      Friday, Eldredge & Clark, by: James C. Baker and R. Christopher Lawson, for appellant.

      Gary Eubanks and Associates, by: James Gerard Schulze and William Gary Holt, for appellee.
   W.H. “Dub” Arnold, Chief Justice.

Appellant, Liberty Mutual Insurance Company, brings the instant appeal challenging the Desha County Circuit Court’s denial of Liberty’s and grant of appellee’s, Cleophes Thomas’s, summary-judgment motion. Our jurisdiction is authorized pursuant to Ark. Sup. Ct. Rule 2-4 (1998). Liberty contends that the specific points raised on appeal involve issues of substantial public interest, which need clarification or development of the law or overruling of precedent. Finding no reversible error, we hold that the trial court correctly concluded that the initial-permission rule, as adopted by this Court in Commercial Union Ins. Co. v. Johnson, 294 Ark. 444, 745 S.W.2d 589 (1988), controls this case. Accordingly, we affirm the trial court’s grant of summary judgment in favor of appellee.

On June 6, 1994, James Austin drove his rental car, a 1994 Ford Probe owned by Trotter Ford/Lincoln/Mercury, Inc., of Pine Bluff, Arkansas, into the rear of Thomas’s car while Thomas was waiting at a red light on State Highway 65 in Desha County, Arkansas. Austin was legally intoxicated at the time of the accident, and his blood alcohol level was .18%. Austin was later charged with driving while intoxicated and leaving the scene of an accident.

Two distinct written agreements are of significance in this appeal. First, Trotter Ford insured the rental car via a business automobile insurance policy with the appellant, Liberty. The Liberty policy insured Trotter Ford and the car for liability purposes against all damages for bodily injury or property damage resulting from the use of the car by Trotter Ford or anyone else using the car with Trotter Ford’s permission. Second, Austin signed Trotter Ford’s rental agreement, which required him to use the car in conformity with federal, state, and local laws and to refrain from using the car under the influence of any intoxicants or drugs. The rental agreement recited that liability insurance coverage would be provided pursuant to the Liberty policy. However, the agreement purported to exclude coverage under the Liberty policy if Austin used the car in violation of the rental agreement’s terms.

Following the accident, Thomas sought recovery for his injuries and filed suit against Austin in circuit court. Ultimately, the trial court entered a default judgment in favor of Thomas on June 5, 1995. Subsequently, Thomas filed a subrogation action against Liberty for the amount of the judgment against Austin. Liberty denied liability, asserting that Austin’s violation of the rental agreement’s terms — specifically, driving under the influence of alcohol in violation of state law — excluded coverage under the Liberty policy.

Liberty moved for summary judgment on June 13, 1996, and Thomas filed a cross-motion for summary judgment on June 19, 1996. The trial court denied Liberty’s motion but granted Thomas’s, finding that (1) no facts were disputed; (2) Austin’s initial use of the car was permissive; (3) Austin’s driving the car while he was intoxicated was outside the scope of the initial permission; and (4) regardless of whether Austin’s use was outside the scope of his initial permission, pursuant to Commercial Union, Thomas was entitled to judgment as a matter of law. Additionally, the trial court concluded that Austin’s use of the car did not rise to the level of criminal conversion. In a judgment filed August 1, 1996, the trial court awarded Thomas damages, interest, a 12% penalty, and attorney’s fees.

Liberty then appealed the trial court’s decision to the Arkansas Court of Appeals. In Liberty Mutual Ins. Co. v. Thomas, 58 Ark. App. 289, 951 S.W.2d 564 (1997), the Court of Appeals affirmed the summary-judgment grant, relying on the authority of Commercial Union. Further, the appellate court determined that Austin’s technical conversion under tort law failed to provide an exception to the initial-permission rule and that public policy mandated affirmance. From this decision, we granted Liberty’s petition for review. When we grant a petition to review a case decided by the Court of Appeals, we review it as if it was originally filed in this Court. See Malone v. Texarkana Public Schools, 333 Ark. 343, 969 S.W.2d 644 (1998) (citing Williams v. State, 328 Ark. 487, 944 S.W.2d 822 (1997)). On appeal we consider the trial court’s disposition of the parties’ summary-judgment motions and its finding that Austin’s actions did not constitute conversion.

I. Liberty’s Summary-Judgment Motion

Liberty’s first point on appeal contests the trial court’s denial of its motion for summary judgment. However, as a general rule, the denial of a motion for summary judgment is neither reviewable nor appealable. Ozarks Unltd. Resources Coop., Inc. v. Daniels, 333 Ark. 214, 969 S.W.2d 169 (1998) (citing Nucor Holding Corp. v. Rinkines, 326 Ark. 217, 931 S.W.2d 427 (1996)). Moreover, even when the parties fail to address the issue of an order’s appealability we, nevertheless, must determine whether we have jurisdiction. Id. (citing Associates Fin. Servs. Co. v. Crawford County Mem. Hosp., 297 Ark. 14, 759 S.W.2d 210 (1988)). Here, this point does not reach us through any exception to the general rule barring review of denials of summary-judgment motions, and we must decline to reach the merits of this point.

II. Thomas’s Summary-Judgment Motion

Liberty’s second point, contesting the trial court’s grant of Thomas’s cross-motion for summary judgment, is properly before us on appeal. In reviewing summary-judgment cases, this Court need only decide if the trial court’s grant of summary judgment was appropriate based on whether the evidence presented by the moving party left a material question of fact unanswered. Further, the moving party always bears the burden of sustaining a motion for summary judgment. All proof must be viewed in the light most favorable to the resisting party, and any doubts must be resolved against the moving party. The moving party is entitled to summary judgment if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Ark. R. Civ. P. 56 (1998); Robert D. Holloway, Inc. v. Pine Ridge Add’n Resid. Prop. Owners, 332 Ark. 450, 966 S.W.2d 241 (1998) (citing McCutchen v. Huckabee, 328 Ark. 202, 943 S.W.2d 225 (1997)).

First, the parties agree that there are no disputed facts. Importantly, the parties agree that (1) Austin’s initial use of the car was permissive, and (2) Austin’s driving the car while he was intoxicated was outside the scope of the initial permission. Accordingly, our review must focus on the trial court’s application of the law to those undisputed facts. Specifically, Liberty disagrees with the trial court’s reliance on Commercial Union and its conclusion that Austin’s intoxication while driving the car is immaterial under the initial-permission rule. On the other hand, Thomas argues that Commercial Union is controlling precedent, dispositive of the issues, and compels us to affirm the instant case. We agree.

Appellant urges us to revisit our decision in Commercial Union and our adoption of the initial-permission rule. However, we are bound to follow prior case law under the doctrine of stare decisis, and that policy is designed to lend predictability and stability to the law. State of Arkansas Off., Child Sup. Enforce. v. Mitchell, 330 Ark. 338, 343, 954 S.W.2d 907 (1997), (citing Parish v. Pitts, 244 Ark. 1239, 1252, 429 S.W.2d 45, 52 (1968) (superseded by statute on other grounds)). In Parish v. Pitts, this Court held that “[precedent governs until it gives a result so patently wrong, so manifestly unjust, that a break becomes unavoidable.” Mitchell, 330 Ark. at 343 (quoting Parish, 244 Ark. at 1252). Our test is whether adherence to the rule would result in “great injury or injustice.” Mitchell, 330 Ark. at 343 (quoting Independence Fed. Bank v. Webber, 302 Ark. 324, 331, 789 S.W.2d 725, 730 (1990)). The instant facts do not warrant such a break from precedent.

In Commercial Union we noted that the “liberal or initial-permission rule,” applied in the context of interpreting omnibus clauses in insurance policies, such as the one in this case, permits recovery once the user initially has been given permission, regardless of the manner in which the car is used thereafter. See Commercial Union, 294 Ark. at 448 (quoting Arndt v. Davis, 183 Neb. 726, 163 N.W.2d 886 (1969)). Significantly, once permission has been given, any deviation in operation is immaterial. Id.

Although Liberty raises several public policy arguments against the initial-permission rule, those issues were addressed in Commercial Union, after considering our state statutes and ample secondary authority. The Commercial Union opinion examined the options and held that the initial-permission rule applies in Arkansas and that any deviation from the permitted use is immaterial. See Commercial Union, 294 Ark. at 454.

Here, Austin had initial permission to use the rental car, and his deviation in operation was immaterial. Based upon the controlling authority of Commercial Union, there are no grounds to reverse the trial court’s grant of summary judgment. Viewing the evidence in the light most favorable to Liberty, resolving any doubts against Thomas, and acknowledging that there is no genuine issue as to any material fact, the trial court did not err in finding that Thomas was entitled to a judgment as a matter of law. Accordingly, we affirm on this point.

III. Conversion

Liberty argues that Austin’s driving the rental car while he was intoxicated was a conversion that operates as an exception to the initial-permission rule. In dicta, the Commercial Union opinion agreed that “an insurer should not be liable to a thief or a person who has no permission to use a vehicle and who converts it to his or her own use.” Commercial Union, 294 Ark. at 454. Austin was neither “a thief” nor “a person who has no permission to use a vehicle and who converts it to his . . . own use.” It is undisputed that Austin had Trotter Ford’s permission to use the rental car.

In sum, the trial court did not err in finding that, after Trotter Ford gave Austin initial permission to use the car, his deviation from the permitted use, by driving the car while intoxicated, was immaterial.

Affirmed.


author: David Newbern, Justice.

text:
    Delores ROBINSON v. Kenneth LANGDON
    97-1451
    970 S.W.2d 292
    Supreme Court of Arkansas
    Opinion delivered June 25, 1998

      Frank Gobell, for appellant.

      Evans, Farrar, Reis & Associates, by: Bryan J. Reis, for appellee/ cross-appellant.

      Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Byron Freeland and Leigh Anne Yeargan, for cross-appellees Delores Robinson, Doug Shuffield, Elizabeth Smith, and The General Council of the Assemblies of God d/b/a Hillcrest Children’s Center.
   David Newbern, Justice.

Kenneth and Tammy Langdon were houseparents at Hillcrest Children’s Center (“Hillcrest”), a residential facility operated by the General Council of the Assemblies of God. Mr. Langdon disciplined a thirteen-year-old female resident by paddling her. She sustained a bruise on her hip. A complaint by her mother precipitated an investigation by Doug Shuffield and Delores Robinson, employees of the Department of Human Services (“DHS”). As a result of the incident and investigation, Mr. and Ms. Langdon were assigned to new duties at Hill-crest where they would have no supervisory responsibility with the resident children. The Langdons ultimately resigned from their employment at Hillcrest.

Mr. Langdon’s name was placed in a registry of child abusers maintained by DHS. He appealed through administrative channels. A DHS hearing officer, Elizabeth Smith, determined that the allegations against him were “founded.” Her decision was overturned on appeal to the Circuit Court, and Mr. Langdon’s name was removed from the list. Thereafter, Mr. and. Ms. Lang-don sued Ms. Robinson, Mr. Shuffield, Ms. Smith, the State of Arkansas, and Hillcrest. A number of claims for relief were asserted.

The Langdons nonsuited their claim against the State. Motions by Ms. Robinson and Mr. Shuffield for summary judgment on the basis of their qualified immunity as state employees were denied. Ms. Smith’s motion for summary judgment on the basis of judicial and qualified immunity was granted as was Hill-crest’s motion for summary judgment on the civil rights and contract claims against it.

Summary judgment was entered with respect to Ms. Lang-don’s claims, and she has not appealed. Ms. Robinson and Mr. Shuffield appeal from the denial of their summary judgment motions. Mr. Langdon cross-appeals from the summary judgment rulings favorable to Hillcrest and Ms. Smith. We hold that it was error to have refused to grant summary judgments to Mr. Shuffield and Ms. Robinson, as they were entitled to qualified immunity from suit. We affirm the summary judgments awarded to Ms. Smith and to Hillcrest.

It is undisputed that Mr. Langdon paddled the thirteen-year-old resident with a paddle furnished by Hillcrest. It was done in the presence of a witness, following discipline guidelines established by Hillcrest.

Mr. Shuffield is assigned by DHS to investigate abuse claims, and Ms. Robinson is assigned to the DHS division concerned with licensing child-care facilities. Their conclusion, and the resulting conclusion of Ms. Smith was that the allegation of abuse be considered “founded,” based on interviews with persons who think Mr. Langdon has a short temper and the fact that the bruise resulting from the paddling remained evident some four or five days thereafter. It was also based on a DHS policy that required “founding” of an abuse claim if a bruise resulted from a disciplinary act. DHS no longer has such a policy.

At the conclusion of the investigation Ms. Robinson wrote to a Hillcrest official, stating that corrective action was required by the licensing agency and recommending that Mr. Langdon’s employment be terminated, recognizing that the final decision rested with the Hillcrest Board of Directors. Mr. Langdon was not dismissed; instead, Hillcrest offered Mr. Langdon a transfer to the maintenance section and Ms. Langdon a transfer to employment in the kitchen. They were told that if they refused the reassignments they would have a choice of resigning or being terminated. The Langdons chose to resign.

1. Immunity

a. Jurisdiction

We do not ordinarily allow appeals from denial of summary judgment. Direct Gen. Ins. Co. v. Lane, 326 Ark. 476, 944 S.W.2d 528 (1997); White v. Welsh, 327 Ark. 456, 939 S.W.2d 299 (1997). When, however, the issue is a claim of qualified immunity from suit, appeal is allowed, else the immunity from suit would be meaningless. Nucor Holding Corp. v. Rinkines, 326 Ark. 217, 931 S.W.2d 426 (1996); Virden v. Roper, 302 Ark. 125, 788 S.W.2d 470 (1990).

Mr. Langdon’s claims against Mr. Shuffield and Ms. Robinson are asserted on the basis of the Arkansas Civil Rights Act of 1993, Ark. Code Ann. §§ 16-123-101 through 16-123-108 (Supp. 1997) as well as 42 U.S.C. § 1983.

b. Arkansas Civil Rights Act qualified immunity

Section 16-123-105(a) provides:

Every person who, under color of any statute, ordinance, regulation, custom, or usage of this state or any of its political subdivisions subjects, or causes to be subjected any person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Arkansas Constitution shall be liable to the party injured in an action at law, a suit in equity, or other proper proceeding for redress.

Arkansas Code Ann. § 19-10-305(a) provides:

Officers and employees of the State of Arkansas are immune from liability from suit, except to the extent that they may be covered by liability insurance, for damages for acts or omissions, other than malicious acts or omissions, occurring within the course and scope of their employment.

Mr. Langdon does not contend that Mr. Shuffield and Ms. Robinson were acting other than in the scope of their employment by the State. Nor did he plead that they were covered by liability insurance or that their acts were malicious. In his argument to this Court, Mr. Langdon contends that the DHS employees did not act in “good faith.” As his authority for that argument, he cites Arkansas Dept. of Human Svcs. v. Caldwell, 39 Ark. App. 14, 832 S.W.2d 510 (1988), in which the Court of Appeals held that bruising alone should not be used as a “litmus test” to determine whether a disciplinary paddling administered by a teacher should be “substantiated” as abuse. Mr. Langdon argues that the DHS employees could not have been acting in good faith in view of that decision and that Ms. Smith, to whom they presented a copy of it, reached an illegal and unfair decision at the administrative hearing.

The Court of Appeals decision in the Caldwell case affirmed a trial court’s decision requiring the removal from the child abuse registry of the name of a teacher who had administered punishment to a student. Here is what the Court of Appeals wrote:

We do not believe that one factor, standing alone and applied as a litmus test, without consideration of all the attendant circumstances, is an appropriate measure to be used in all cases for determining whether an allegation of abuse is to be substantiated in all cases. There must be some exercise of judgment, as this is an area which does not lend itself to facile determination. On this record, we uphold the circuit court’s finding of no credible evidence of abuse, and its finding that the punishment was not excessive or abusive.

39 Ark. App. at 18-19, 832 S.W.2d at 513.

Although Mr. Shuffield testified that the “founding” of the abuse allegation was based upon the DHS bruise policy, he said it was also based upon the evidence concerning Mr. Langdon’s short temper and the duration of the bruise. The evidence in this case is not like that in the Caldwell case. If “good faith” were the issue, we could not say the recommendations made to Hillcrest and the placement of Mr. Langdon’s name in the registry were not done in “good faith.” Again, we note that Mr. Langdon has not pleaded or argued that the DHS employees acted with malice, and we assume that pleading and argument have been omitted with good reason.

Mr. Langdon’s primary argument, rather, is that by enacting § 16-123-105 (a) the General Assembly intended to repeal § 19-10-305(a). No authority other than the language of the two statutes is cited. Repeal by implication is not a favored device in our interpretation of statutes, and we must construe all statutes relating to the same subject matter together. Waire v. Joseph, 308 Ark. 528, 825 S.W.2d 594 (1992). We have no difficulty in reading the two statutes in harmony. We might have a closer question if state employees were said to be liable for deprivations of rights under one law and absolutely immune from liability under another, but that is not the case. The immunity statute is qualified by the provision concerning acting with malice, and thus it may coexist with the Arkansas Civil Rights Act.

c. Judicial immunity

Ms. Smith was held to have qualified as well as judicial immunity. In his cross-appeal, Mr. Langdon argues that it was error to apply judicial immunity to Ms. Smith. Judicial immunity is absolute immunity. McCrory v. Johnson, 296 Ark. 231, 755 S.W.2d 566 (1988). We agree that Ms. Smith’s actions fell within judicial immunity, and thus we need not consider the application of qualified immunity to her.

Ms. Smith’s undisputed affidavit states that she was a DHS Fair Hearing Officer or Administrative Law Judge assigned to hear Mr. Langdon’s claim. Her job required her to administer oaths to witnesses, rule on evidentiary matters, rule on objections, and issue findings and conclusions of law in a final order.

In Butz v. Economou, 438 U.S. 478, 512-13 (1978), the United States Supreme Court held that “adjudication within a federal administrative agency shares enough of the characteristics of the judicial process that those who participate in such adjudication should also be immune from suits for damages.” The Supreme Court specifically noted that “federal administrative law requires that agency adjudication contain many of the same safeguards as are available in the judicial process,” and that the administrative law judge’s “powers are often, if not generally, compared to those of a trial judge.” Id. at 513. The Supreme Court also emphasized that “the process of agency adjudication is currently structured so as to assure that the hearing examiner exercises his independent judgment. . . .” Id. at 513. See also Jones v. Singer v. Career Systems, 584 F. Supp. 1253, 1257 (E.D. Ark. 1984) (“Just as federal agency hearing examiners and administrative law judges can claim absolute judicial immunity from damages when carrying out authorized adjudicatory functions, it appears that state agency hearing examiners and administrative law judges should enjoy similar insulation from liability when they carry out their adjudicatory functions.”) See also Cleavinger v. Saxner, 474 U.S. 193 (1985), in which the Supreme Court, citing the Butz case, noted the following factors as characteristics of the judicial process and to be considered in determining absolute immunity: “(a) the need to assure that the individual can perform his functions without harassment or intimidation; (b) the presence of safeguards that reduce the need for private damages actions as a means of controlling unconstitutional conduct; (c) insulation from political influence; (d) the importance of precedent; (e) the adversary nature of the process; and (f) the correctability of error on appeal.” Cleavinger v. Saxner, 474 U.S. at 202.

We adopt the Supreme Court’s test for judicial immunity, and we hold that Ms. Smith’s role as a DHS hearing officer meets the Supreme Court’s description of facts warranting judicial immunity.

d. Federal civil rights law qualified immunity

The federal statute, 42 U.S.C. § 1983, provides a cause of action against “every person who, under color of any statute . . . subjects or causes to be subjected any citizen ... to the deprivation of any rights . . . .” The DHS employees have a qualified immunity from suit under § 1983 similar to the immunity that applies to them with respect to the Arkansas law.

Under the standard of qualified immunity articulated in Harlow v. Fitzgerald, the [government official] will be entitled to immunity so long as his actions do not violate “clearly established statutory or constitutional rights of which a reasonable person would have known.”

Mitchell v. Forsyth, 472 U.S. at 524 (quoting Harlow v. Fitzgerald, 457 U.S. at 818 (1982). In Robinson v. Beaumont, 291 Ark. 477, 725 S.W.2d 8139 (1987), we adopted the Supreme Court’s test for qualified immunity in cases brought pursuant to § 1983.

Mr. Langdon argues that in U.S. v. Lanier, 117 S.Ct. 1219 (1997), the Supreme Court equated the “fair warning” standard in criminal cases with the standard for qualified immunity. He contends Mr. Shuffield had “fair warning” that he was violating a clearly established right in determining that the allegation of abuse was “founded.” As we discussed above with respect to the Arkansas Civil Rights Act, the Court of Appeals Caldwell decision held that bruising was only one fact to be considered. It did not give “fair warning” to Mr. Shuffield that he should not consider allegations to be “founded” when other circumstances indicate corporal punishment of a child may have been abusive.

Nor was Ms. Robinson guilty of violating an “established right” of Mr. Langdon as the result of her letter suggesting that he be terminated. Mr. Langdon had no property interest in his employment as he was an at-will employee. See Johnson v. City of West Memphis, 113 F.3d 842 (8th Cir. 1997). Mr. Langdon argues he was not an at-will employee because, according to the Hillcrest Employees Handbook he became a “permanent” employee after a probationary period.

If an employee handbook published by the employer provides that an employee may only be terminated for cause, the employee may have a right to continued employment. Gladden v. Arkansas Children’s Hospital, 292 Ark. 130, 728 S.W.2d 501 (1987). Mr. Langdon does not argue or demonstrate that the handbook he received from Hillcrest has any such provision. His right to employment was nonexistent.

Mr. Langdon argues without citation to authority that his right to procedural due process was violated by the fact that Ms. Robinson sent her letter to Hillcrest prior to giving him a hearing and that his reputation was injured by her act and those of Mr. Shuffield. Absent citation to authority or the rendition of convincing argument we do not reverse. Dixon v. State, 260 Ark. 857, 545 S.W.2d 606 (1977). We do note, however that, as to the claim of injury to reputation, we have recognized that the law does not support a claim that potential injury to reputation constitutes a deprivation of a property interest. Arkansas Dep’t of Human Svcs v. Heath, 312 Ark. 206, 848 S.W.2d 927 (1993).

Again, Mr. Langdon has demonstrated no violation of a clearly established right, and summary judgment against his claim for damages against the DHS employees under 42 U.S.C. § 1983 was proper.

2. Hillcrest

a. State actor color of state law

The Trial Court properly certified the “dismissal” of the claim against Hillcrest as a decision appropriate for appeal pursuant to Ark. R. Civ. P. 54(b). Mr. Langdon’s cross-appeal of that ruling, which we understand to have been a summary judgment favoring Hillcrest rather than a dismissal, must also fail. The argument is that, as a result of DHS coercion Hillcrest unjustifiably forced Mr. Langdon out of his job. We have strong doubts whether Hillcrest can be said to have been a “state actor” in the circumstances presented, but even if it were, we need only note again that Mr. Langdon had no protectable property interest in his employment.

b. Breach of contract

Mr. Langdon argues that the Trial Court erred in finding that there was no genuine issue of material fact with respect to his breach of contract claim against Hillcrest. First, Mr. Langdon argues that he was discharged in violation of a well-established public policy of the State. Public policy has been controverted “when the reason alleged to be the basis for a discharge is so repugnant to the general good as to deserve the label ‘against public policy.’” Marine Services Unlimited, Inc. v. Rake, 323 Ark. 757, 918 S.W.2d 132 (1996). Mr. Langdon cites no authority and makes no convincing argument for his position that he was discharged in violation of public policy.

Second, Mr. Langdon argues that summary judgment should have been denied because, pursuant to the Hillcrest Employees Manual, he was classified as a “permanent employee.” He cites Jackson v. Kenark Corp., 282 Ark. 548, 669 S.W.2d 898 (1984). In the Jackson case an employee, citing an employee handbook, contended he had a right to continued employment because the handbook provided for an “initial trial period” of three months. Summary judgment was awarded to the employer who had dismissed Mr. Jackson. We reversed and remanded the case so that the facts could be developed further. We did not hold that the little we knew of the employee handbook overcame the employment-at-will doctrine. We have since held that, to constitute a contract sufficient to overcome the employment-at-will doctrine, an employee handbook must expressly state that an employee can only be terminated for cause. See e.g., Gladden v. Arkansas Children’s Hospital, supra.

In his reply brief, Mr. Langdon stated that the employment manual provides a method of determining whether cause exists and outlines rehabilitative steps; however, the manual as abstracted, only states that termination can be expected upon receipt of a third disciplinary action. Mr. Langdon does not argue that Hillcrest breached the provisions of the manual guaranteeing that certain steps would be followed before termination occurs.

Affirmed in part; reversed and remanded in part.