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    James NEAL, Director, Committee on Professional Conduct v. Perlesta Arthur HOLLINGSWORTH
    98-1456
    992 S.W.2d 771
    Supreme Court of Arkansas
    Opinion delivered June 24, 1999
    [Petition for rehearing denied September 9, 1999.]

      Everett & Mars, by: David D. Stills and John C. Everett, for appellant.

      Darrell F. Broum & Associates, by: Darrell F. Brown, for appellee.
   Annabelle Clinton Imber, Justice.

The appellant, James A. Neal, in his capacity as Executive Director of the Committee on Professional Conduct, filed a complaint for disbarment against the appellee, Perlesta A. Hollingsworth, alleging numerous violations of the Model Rules of Professional Conduct. The trial court dismissed certain allegations contained in Paragraph 10(b) of the complaint due to lack of notice and then proceeded to conduct a bifurcated hearing on the remaining allegations in Mr. Neal’s complaint. The first phase of the hearing pertained to the issue of whether Mr. Hollingsworth had violated any of the Model Rules and the second phase pertained to the issue of sanctions. Based upon the evidence presented during the hearing, the trial court found that Mr. Hollingsworth violated the Model Rules of Professional Conduct and ordered that Mr. Hollingsworth be suspended from the practice of law for a period of six months. Mr. Neal now appeals the trial court’s decision, asserting that disbarment was the appropriate sanction and that the trial court erred in dismissing certain allegations in the complaint. We reverse and remand.

In January, 1987, Mr. Hollingsworth commenced the representation of the Estate of Samuel S. Sparks, deceased, in a probate proceeding in Woodruff County, Arkansas. On June 1, 1987, Mr. Hollingsworth sent a letter to Mrs. Joyce Sparks, Mr. Sparks’s widow and the executrix of his estate, that confirmed the fee arrangement for representing the estate. Specifically, Mr. Hollingsworth’s law firm would charge for services to the estate in accordance with the schedule set forth in the Arkansas Probate Code “unless special or unusual services to the estate are required” and would bill the estate periodically for costs and out-of-pocket expenses. In connection with probating the Sparks estate, Mr. Hollingsworth undertook to “prepare and present to the probate court all necessary notices, petitions, orders, appraisals, bills of sale, deeds, leases, contracts, agreements, inventories, financial accounts, reports, and all other proper and necessary legal instruments during the entire six (6) months, or longer when necessary, while said estate is required by law to remain open.” The letter also referenced the collection of certain notes receivables due to the estate as involving “special or unusual services anticipated in connection with administering the estate” and established a special contingency-fee arrangement, which was twenty-five percent of any funds collected on the notes. No other special matters or fees were noted, and there was no reference to hourly billing for any matters.

At the time Mr. Hollingsworth negotiated the fee arrangement for representing the estate, he was aware that other matters existed in connection with his representation of the estate. These included a determination-of-heirship claim and claims by creditors on two promissory notes that were endorsed or guaranteed by Samuel Sparks. Mr. Hollingsworth also instituted a wrongful death action against Dave’s House of Guns in 1988. No fee arrangements were reduced to writing for any of these matters.

After commencing representation of the Sparks estate, Mr. Hollingsworth successfully defended the determination-of-heir-ship claim by Ms. Shirley Hodges and represented the estate in two lawsuits filed in federal district court by the Small Business Administration and Planters Bank and Trust Company to recover $144,809.38 and $119,498.16, respectively, on the promissory notes guaranteed by Mr. Sparks. Mr. Hollingsworth also filed several lawsuits on behalf of the estate. He obtained a judgment against Mr. Warren Barge for $10,000.00 and represented the estate in an unsuccessful claim against Mr. Bobby Smith. The estate’s wrongful death action against Dave’s House of Guns went to trial but ultimately culminated in a directed verdict in favor of the defendant. Finally, with regard to the notes receivables that were the subject of the special fee arrangement, Mr. Hollingsworth filed two separate lawsuits in federal district court in 1997. In the first lawsuit, the Sparks estate sued Mr. James M. Griffin to collect $100,000.00 that Mr. Griffin owed Mr. Sparks on a promissory note. In the second lawsuit, the estate sued Mr. Griffin and the United National Bank of Washington, D.C., to secure the release of a $100,000.00 certificate of deposit that Mr. Sparks had given as collateral on a loan to Mr. Griffin by United National Bank.

While representing the estate, Mr. Hollingsworth collected various funds belonging to the estate. When the $100,000.00 certificate of deposit was released by United National Bank in 1988, Mr. Hollingsworth deducted his twenty-five percent contingency-fee of $25,000.00 and gave the balance of $75,000.00 to Mrs. Sparks. All other estate funds collected by Mr. Hollingsworth were deposited into his firm’s trust account. Those funds included $5000.00 for a retainer fee, $1,640.60 for expenses, $8,500.00 derived from the sale of a Lincoln automobile and $136,235.77 recovered over a two-year period (May 1987 — May 1989) on the Griffin promissory note. Mr. Hollingsworth maintained that these monies were placed in his firm’s trust account in order to facilitate the payment of litigation expenses incurred by the estate. Some of those expenses were in fact paid out of the firm’s trust account. Although Mr. Hollingsworth suggested that Mrs. Sparks agreed to this arrangement, she testified otherwise. For several years, Mrs. Sparks thought that the estate’s funds were being held in a separate estate account. Only after she began to make persistent inquiries about the estate’s account did Mrs. Sparks learn from Mr. Hollingsworth that the estate’s funds were being held in his firm’s trust account.

Mrs. Sparks’s inquiries about an accounting of the estate’s funds began in 1992. On February 10, 1992, she wrote a letter to Mr. Hollingsworth requesting a statement of expenses incurred by the estate for the year 1991 and a statement of the money being held in the “Estate trust account.” When no accounting was forthcoming after several months, Mrs. Sparks wrote another letter in November of 1992. In fact, the record reflects that Mrs. Sparks wrote almost twenty letters between 1992 and 1994 asking for an accounting. Mr. Hollingsworth never directly responded to her request for an accounting. Rather, his letters to Ms. Sparks during that time period were merely status reports on the litigation being pursued by the estate. Mrs. Sparks’s letters also reflect that Mr. Hollingsworth made repeated excuses for failing to provide an account of the estate’s funds. For instance, when Ms. Sparks visited his office in November 1992, he informed her that the estate files were not on his computer because the estate was opened before his office acquired computers. On another occasion in 1993, he told Mrs. Sparks that his former secretary destroyed part of the estate’s files when she quit working for him. Mr. Hollingsworth also told Mrs. Sparks that the accounting was “in the mail.”

Ms. Sparks continued to request, and then to demand, access to the records for the estate’s trust account. Finally, in May, 1993, when Mrs. Sparks discovered that the estate funds were being held in the law firm’s trust account and not in a separate account, she expressed concern “especially since you have admitted to me that you have not kept accurate records.” Mrs. Sparks’s letters also reflect that Mr. Hollingsworth never sent her an itemized fee statement and that he unilaterally and without notice charged her hourly rates. She repeatedly asked Mr. Hollingsworth for some indication of when the estate could be closed, noting in her letters that the estate had been open for over five years.

Mrs. Sparks never denied that Mr. Hollingsworth performed valuable services for the estate. Nor did she ever accuse him of stealing. However, the many letters she wrote to Mr. Hollingsworth vividly conveyed her building frustration with the manner in which he was handling the estate’s affairs. On July 15, 1994, Ms. Sparks terminated Mr. Hollingsworth’s services as the attorney for the estate. She further advised him that she had filed a formal complaint against him with the Supreme Court’s Committee on Professional Conduct.

Even before his services were terminated in July 1994, Mr. Hollingsworth had been notified by letter dated March 7, 1994, that Mrs. Sparks had contacted the Committee’s office. Mr. Hollingsworth filed a response in the form of an affidavit on May 19, 1994. The Committee then began to investigate Mr. Hollingsworth’s representation of the Estate of Samuel Sparks. During the two-year investigation, Mr. Hollingsworth provided the Committee with canceled checks, deposit slips, correspondence, explanations of expenses, and a computer printout of bank statements on his firm’s trust account, all in response to the Committee’s requests for all documents and information pertaining to the Sparks estate.

The Committee’s investigation revealed that Mr. Hollingsworth failed to keep accurate records on the estate’s funds and expenditures. Specifically, the trust account checks that Mr. Hollingsworth produced to document estate expenses were made payable either to third parties or to the Hollingsworth law firm’s operating account. Other than Mr. Hollingsworth’s written explanations in a letter to the Committee, there was little, if any, documentary proof, such as invoices or receipts, that the canceled checks were for expenses attributable to the Sparks estate. Some checks, especially those made payable to a court clerk, process server, court reporter, or expert, contained a specific reference to the Sparks estate. However, other checks made payable to credit card companies, common carriers, or the firm’s operating account, contained no specific reference to the Sparks estate. Although Mr. Hollingsworth testified at the disbarment proceeding that his attorney’s fees were paid out of the firm’s trust account, he admitted that he could not locate or produce any trust account checks to support that assertion. He also conceded during the disbarment proceeding that checks were written on the firm’s trust account to make other clients “whole” when his firm suffered serious shortfalls after a former partner misappropriated substantial funds from the law firm’s accounts. Although Mr. Hollingsworth did not produce canceled checks to document this testimony, it is clear from a compilation of bank statements on the firm’s trust account that the canceled checks provided to the Committee by Mr. Hollingsworth were a mere fraction of the checks written on the firm’s trust account between 1987 and 1994.

Based upon the documentation provided by Mr. Hollingsworth, the Committee made ■ a comparison of balances in the Sparks estate with balances in the firm’s trust account beginning in February 1987 and ending in November 1994. Beginning in late 1987, the trust account balance was consistently below the balance in the estate. By November 1989, the estate’s balance reached $107,888.07 and stayed at that level through November 1994. However, the trust account balance for that five-year period always remained well below the estate’s balance. In fact, the balance in the trust account went as low as $186.21 in October, 1991, when the Sparks estate should have had a balance in the trust account of $107,888.07.

On September 20, 1996, Mr. Neal filed a complaint for disbarment against Mr. Hollingsworth in which he alleged numerous violations of the Model Rules of Professional Conduct. The complaint not only included allegations concerning Mr. Hollingsworth’s handling of the Sparks estate, but also added a charge concerning another client in a separate matter. With regard to the added charge, Mr. Neal alleged that Mr. Hollingsworth failed to disclose his relationship with an attorney who had been appointed guardian ad litem for the minor child in a divorce proceeding in which he was representing the child’s father. The trial court granted Mr. Hollingsworth’s motion to dismiss this added charge on grounds of lack of notice.

The hearing on Mr. Neal’s complaint for disbarment was held on August 6-8, 1998. During the violations phase of the bifurcated hearing, Mr. Neal presented his case-in-chief through the testimony of Ms. Leslie Fryxell, staff attorney for the Committee, Mrs. Joyce Sparks, and Mr. Hollingsworth and through the introduction of several exhibits. Mr. Hollingsworth’s defense included his own testimony and that of his associate, Michéle Strauss.

During the sanction phase of the bifurcated hearing, Mr. Hollingsworth presented mitigating evidence through the testimony of Judge Marion Humphrey, Judge Robert Faulkner, Senator William L. Walker, Jr., and Rev. Steven Arnold, with each witness attesting to Mr. Hollingsworth’s reputation for integrity and good character. Mr. Hollingsworth testified that in almost thirty years of practice he had never- been cited for a violation of the Model Rules. He also expressed his intention to make complete restitution to Mrs. Sparks. While conceding only a “technical violation” of the Model Rules, he expressed remorse and regret, stating that he was sorry this had happened. Mr. Neal rested on the evidence of aggravating factors already contained in the record.

By order entered on August 24, 1998, the trial court found that Mr. Hollingsworth violated Rules 1.1, 1.3, 1.4(a), 1.5(a) (b), 1.15(a)(b)(c), 3.2, 4.1, and 8.4(c)(d) of the Model Rules of Professional Conduct. In connection with its duty to determine the appropriate sanction for the listed violations, the trial court made specific findings regarding the aggravating and mitigating circumstances before concluding that Mr. Hollingsworth should be suspended from the practice of law for a period of six months. The trial court also required that Mr. Hollingsworth reapply with the Committee for reinstatement to the practice of law. Mr. Neal now appeals the trial court’s decision, asserting that the sanction should have been disbarment and that the trial court erred when it dismissed the added charge against Mr. Hollingsworth involving another client in a separate matter. Neither party appeals the trial court’s specific findings regarding rule violations or aggravating and mitigating circumstances.

I. Whether the Trial Court Erred When It Imposed a Six-Month Suspension From the Practice of Law in a Bifurcated Disbarment Proceeding.

A. Determination of Proper Standard of Review

Disciplinary proceedings are neither civil nor criminal but are sui generis, meaning of their own kind. See Procedures of the Ark. Sup. Ct. Regulating Prof. Conduct of Attorneys at Law, Section 1(C); Black’s Law Dictionary 851 (6th ed. 1990). The standard of review that governs appeals from disbarment proceedings is clearly articulated in Section 5(L)(4) of the Procedures of the Arkansas Supreme Court Regulating Professional Conduct of Attorneys at Law:

(4) Appeals from any judgment of a Circuit court in a disbarment proceeding shall be heard in accordance with the rules governing appeals in civil cases.

These Procedures were originally adopted by the Supreme Court by per curiam order dated July 1 of 1990. They have been amended by per curiam order dated January 8, 1998, and effective January 15, 1998. The language in Section 5(L)(4) is identical in both versions of the Procedures, although Section 5(L)(4) was formerly numbered Section 5(H)(4).

Disbarment proceedings are tried by the circuit court without a jury. Procedures, Section 5(K)(1), formerly Section 5(G)(1). Under the Arkansas Rules of Civil Procedure, the standard of review on appeals from bench trials is whether the trial judge’s findings were clearly erroneous or clearly against the preponderance of the evidence. See Ark. R. Civ. P 52(a); McQuillan v. Mercedes-Benz Credit Corp., 331 Ark. 242, 961 S.W.2d 729 (1998); Ford Motor Credit Co. v. Ellison, 334 Ark. 357, 974 S.W.2d 464 (1998). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Wade v. Arkansas Dept. of Human Servs., 337 Ark. 353, 990 S.W.2d 509 (1999); AD-Razorback Ltd. Partnership v. B.G. Coney Co., 289 Ark. 550, 713 S.W.2d 462 (1986). The court must view the evidence in a light most favorable to the appellee, resolving all inferences in favor of the appellee. Id. Disputed facts and determinations of the credibility of witnesses are within the province of the fact-finder. Id.

Applying the clearly erroneous standard of review mandated by Section 5(L)(4) of the Procedures, we now consider Mr. Neal’s assertion that the trial court erred when it imposed a six-month suspension from the practice of law instead of disbarment.

B. Appropriateness of Trial Court’s Sanction.

The purpose of disciplinary actions is to protect the public and the administration of justice from lawyers who have not discharged their professional duties to clients, the public, the legal system, and the legal profession. See American Bar Association Model Standards for Lawyers Sanctions § 1.1 (1991). In Arkansas disbarment proceedings, if the trial court finds that an attorney has violated the Model Rules of Professional Conduct, then the trial court “shall caution, reprimand, suspend or disbar such attorney as the evidence may warrant.” Procedures, Section 5(K)(2), formerly 5(G)(2). With regard to whether the evidence warrants suspension or disbarment, Section 7 of the Procedures divides violations of the Model Rules into two separate categories of misconduct: serious misconduct and lesser misconduct. Procedures, Section 7(B) and (C). Serious misconduct warrants a sanction terminating or restricting the lawyer’s license to practice law, whereas lesser misconduct does not. Id. Conduct will be considered serious misconduct if any of the following considerations set forth in Procedure Section 7(B) apply:

(1) The misconduct involves the misappropriation of funds;
(2) The misconduct results in or is likely to result in substantial prejudice to a client or other person;
(3) The misconduct involves dishonesty, deceit, fraud, or misrepresentation by the lawyer;
(4) The misconduct is part of a pattern of similar misconduct;
(5) The lawyer’s prior record of public sanctions demonstrates a substantial disregard of the lawyer’s professional duties and responsibilities; or
(6) The misconduct constitutes a “serious crime” as defined in the Procedures.

Likewise, when the trial court finds that the Model Rules have been violated by either serious or lesser misconduct, the trial court must proceed to the penalty phase during which the defendant attorney and the Committee’s Executive Director are allowed to present evidence and arguments regarding aggravating and mitigating factors in order to assist the trial court in making its determination of the appropriate sanction. Wilson v. Neal, 332 Ark. 148, 964 S.W.2d 199 (1998). Those factors developed by the American Bar Association Joint Committee on Professional Standards and adopted by this Court in Wilson are:

Aggravating Factors:
(a) prior disciplinary offenses;
(b) dishonest or selfish motive;
(c) a pattern of misconduct;
(d) multiple offenses;
(e) bad faith obstruction of the disciplinary proceedings by intentionally fading to comply with the rules or orders of the disciplinary agency;
(f) submission of false evidence, false statements, or other deceptive practices during the disciplinary process;
(g) refusal to acknowledge [the] wrongful nature of [the] conduct;
(h) vulnerability of [the] victim;
(i) substantial experience in the practice of law;
(j) indifference to making restitution;
(k) illegal conduct, including that involving the use of controlled substances;
Mitigating factors:
(a) absence of prior disciplinary record;
(b) absence of dishonest or selfish motive;
(c) personal or emotional problems;
(d) timely good faith effort to make restitution or to rectify [the] consequences of [the] misconduct;
(e) full and free disclosure to [the] disciplinary board or cooperative attitude towards [the] proceedings;
(f) inexperience in the practice of law;
(g) character or reputation;
(h) physical disability;
(i) mental disability or chemical dependency including alcoholism or drug abuse when
(1) there is medical evidence that the respondent is affected by a chemical dependency or mental disability;
(2) the chemical dependency or mental disability caused the misconduct;
(3) the respondent’s recovery from the chemical dependency or mental disability is demonstrated by a meaningful and sustained period of successful rehabilitation;
(4) the recovery arrested the misconduct and recurrence of that misconduct is unlikely.
(j) delay in [the] disciplinary proceedings;
(k) impositions of other penalties or sanctions;
(l) remorse;
(m) remoteness of prior offenses.

Wilson, supra. Additionally, the Procedures now identify the following factors as appropriate for the Committee’s consideration in determining the sanction to be imposed:

• The nature and degree of the misconduct.
• The seriousness and circumstances surrounding the misconduct.
• The loss or damage to clients.
• The damage to the profession.
• The assurance that those who seek legal services in the future will be protected from the type of misconduct found.
• The profit to the lawyer.
• The evidence of reputation.
• Whether the conduct was deliberate, intentional, or negligent.
• The deterrent effect on others.
• The maintenance of respect for the legal profession.
• Matters offered by the lawyer in mitigation or extenuation.

See Procedures, Section 7(F) adopted by per curiam Order dated January 8, 1998.. While these factors are not classified as either aggravating or mitigating circumstances, we believe they are harmonious in their objectives and their focus with the factors adopted in Wilson II.

During the penalty phase in this disbarment proceeding, Mr. Neal presented no evidence, opting instead to rest on the evidence already in the record from the first phase of the hearing. This is reflected in the following colloquy between the trial court and counsel:

The Court: The burden is on the court for me to consider whatever evidence you gendemen want to put on in regard to those two [sets of] factors. I’m not sure who has the burden.
Mr. Brown: It’s my position that the Committee has the burden. The standards address two [sets of] factors, that is, aggravating and mitigating .... [I] t seems to me that they have the burden of proof of establishing the violation, they would have the burden of proof of trying to convince the court what the appropriate sanction is.
The Court: Any aggravating factors they wanted me to consider that are not already in the record, I’m not sure anything further is necessary in a case, it’s whatever you lawyers feel.
Mr. Everett: If I have the burden, I do not offer evidence as the offeror in Phase Two. I may do some cross-examination, if I have the burden, I yield.
The Court: You are resting in both phases?
Mr. Everett: Except, as the Court said, whatever evidence is in the record, yes, sir, I’m resting in both phases.

Mr. Hollingsworth proceeded with the presentation of mitigating evidence. In that regard, Mr Hollingsworth testified that he had been in practice for almost thirty years without any prior caution or reprimand by the Committee. He also testified that he was deeply sorry for what had happened, and that he had no dishonest or deceitful motive in his actions with regard to the Sparks case. However, he conceded only to committing a “technical” violation of the rules and continued to assert that his actions had been undertaken in the belief that he was acting in the best interest of his clients. He testified that he had made restitution of all sums due to Mrs. Sparks, except for some interest which he intended to pay Mrs. Sparks and thereby make her whole again. Mr. Hollingsworth also admitted that he made payments out of the firm’s trust account to make other clients “whole.” Mr. Hollingsworth testified to his full cooperation with the Committee and to his promptness in responding to discovery requests. This was corroborated by Ms. Leslie Fryxell in her testimony during the first phase of the hearing.

With regard to his character and reputation in the community, Mr. Hollingsworth presented the testimony of several witnesses. Judge Marion Humphrey testified that he had known Mr. Hollingsworth for over twenty years and that during that time he had formed the opinion that Mr. Hollingsworth was a diligent servant of the law with a good reputation in the community. Judge Humphrey also testified that Mr. Hollingsworth had taken on causes which contributed to the advancement of African-Americans within the judicial system in this state. Judge Robert Faulkner of the United States District Court, Eastern District of Texas, testified that he had known Mr. Hollingsworth for over thirty years. Mr. Hollingsworth was working as Governor Rockefeller’s legal representative to the prison system when Judge Faulkner first became acquainted with him. Judge Faulkner testified that he was familiar with Mr. Hollingsworth’s reputation for truthfulness and veracity and that his employment history with Governor Rockefeller corroborated that reputation because the position of legal representative to the prison system required someone with a good reputation for honesty. Judge Faulkner testified that Mr. Hollingsworth took on unpopular causes and that he was known as a champion for causes and an outstanding attorney. Judge Humphrey and Judge Faulkner both testified that Mr. Hollingsworth was still able to make a contribution to the community as an attorney in light of his reputation and character. Mr. Hollingsworth’s pastor, Rev. Stephen Arnold, and Mr. Sparks’s godson, Senator William L. Walker, Jr., both testified to Mr. Hollingsworth’s reputation for honesty and integrity and to his sincerity.

By order entered on August 21, 1998, the trial court made the following findings pertaining to aggravating factors:

• That [Mr. Hollingsworth] entered into a written fee agreement regarding his representation of the estate of Sam Sparks, deceased, then pending in the Probate Court of Woodruff County, Arkansas. At the time of the agreement, three (3) claims had been filed against the Estate. Generally, the fee agreement called for the statutory fee plus a twenty-five percent (25%) contingency fee for the collection of notes and monies receivable by the Estate. The defendant was also to bill the Estate periodically for named costs.
• That the defendant did not file required annual accountings in the probate action nor did he send notices to interested parties appropriately. That, in the representation of the Estate of Sam. Sparks, the defendant acted almost entirely without obtaining the Probate Court’s authority, treating the assets of the trust funds owned by the Estate as if they were his own.
• That, between November, 1989, and November, 1994, the Estate of Sam Sparks should have had a balance in the defendant’s trust account of $107, 888.07 but the account had only a fraction of that sum and, at one point, in October 1991, the account had only $186.21.
• That the Court finds that the defendant knowingly diverted the funds of the Estate of Sam Sparks for his own use and did so over a period of time exceeding five (5) years. Further, the Court finds that his failure to file annual accountings in the probate action were due to the fact that his diversion of funds would have been discovered had such accountings been filed.
• That there is no basis in the evidence for the defendant’s claim that the shortage of funds in his trust account was based on his belief that he could bill the Estate for hourly work on certain matters and the Court finds that the defendant’s assertion to the contrary was an attempt to explain away the shortages in the account.
• At least by 1992, the Executrix of the Estate of Sam Sparks began to repeatedly ask the defendant for an accounting of the trust account funds but that the defendant stonewalled those requests. Only at the time he was fired did the defendant make an attempt to make restitution by sending Seventy Thousand 00/100 Dollars ($70,000.00) to the attorney substituting him.
• That the defendant was subsequently ordered by the Probate Court to pay the Estate of Sam Sparks the sum of Thirty Thousand and 00/100 Dollars ($30,000.00) and has now paid such sum in full excepting only for the accrued interest on such sum of money.

After listing these findings, the trial court found that, as a mitigating factor, Mr. Hollingsworth had “been in practice for almost thirty (30) years [sic] and has no prior disciplinary offense.” Further, the trial court found that the evidence of extenuation and mitigation represented by the community leaders who testified on Mr. Hollingsworth’s behalf was impressive and that the acts complained of were not a pattern of conduct.

The trial court considered the aggravating and mitigating factors before concluding that Mr. Hollingsworth should be suspended from the practice of law for six months. By imposing the sanction of suspension from the practice of law, the trial court recognized that Mr. Hollingsworth’s conduct was serious and warranted “a sanction terminating or restricting . . . [his] license to practice law.” Procedures, Section 7(B). Mr. Neal, however, strongly contends that the trial court’s limited sanction does not match the seriousness of the misconduct committed and that the only appropriate sanction is disbarment.

In order to determine whether the trial court’s imposition of a six-month suspension instead of disbarment was clearly erroneous, we review the trial court’s specific findings regarding rule violations and aggravating and mitigating factors. First, the trial court found that Mr. Hollingsworth had treated the assets of the trust funds owned by the Sparks Estate as if they were his own and that Mr. Hollingsworth “knowingly diverted the funds of the Estate of Sam Sparks for his own use and did so over a period of time exceeding five (5) years.” The trial court also found that between November 1989 and November 1994 the Sparks Estate should have had a balance of $107,888.07 in the trust account, but the trust account only had a fraction of that sum and at one point dipped as low as $186.21. Mr. Hollingsworth admitted that he used the estate’s funds to pay claims against his law firm by other clients. When asked whether he would characterize his use of the estate’s money as dishonest or selfish, Mr. Hollingsworth testified as follows:

Q: Let me ask you, sir, if you would agree with me that if what you did was to take money out of your trust account, owned by the Estate of Sam Sparks, and used that money to pay claims of other clients, as you have described that you had done, don’t you agree that is dishonest to use the estate’s money to pay claims against your law firm by other clients, do you agree with that?
A: I cannot characterize it as dishonest.
‡ ^ ^
Q: Do you think it is selfish to use funds belonging to one client to pay claims lodged by another client, do you think that’s selfish to the extent that you are protecting your own self against those claims from other clients, do you think that’s selfish?
A: I do not consider it selfish, I cannot characterize that by using that adjective.

Next, the trial court found that Mr. Hollingsworth did not file required annual accountings in the probate action because “his diversion of funds” would have been discovered. Similarly, when Mrs. Sparks, as executrix of the Sparks Estate, began to ask Mr. Hollingsworth in 1992 for an accounting of the trust account funds, he “stonewalled” her requests. The letters Mrs. Sparks wrote to Mr. Hollingsworth are particularly poignant. Mrs. Sparks was the victim of the misuse and clearly was kept in the dark about what was happening. What follows is a sampling from some of her many letters:

November 26, 1992:

If there is a reason you can’t provide me with this information please let me know. I have requested this information several times in the past three years and have not received it and I am uncomfortable with your reluctance to provide me with an accounting of the money you are holding in trust for the Estate of Sam Sparks.

December 18, 1992:

There is still a misunderstanding regarding my concerns about the estate. When I met with you on October 6th, I left with the idea that you would give me a statement of the amount that is in the trust account the following week. When I didn’t receive the statement I felt I needed to remind you that I was expecting one. Since I have not had a statement I can only guess at the amount and since I don’t know how much the expenses were from the gun suit my estimate will be unenlightened. All I want is a bank statement or something similar.

February 6, 1993:

I am still waiting for the statement of the amount you are holding in the Estate of Sam Sparks .... I want access to all bank statements and canceled checks written on the Estate of Sam Sparks. Please have copies of these files available for me so I can pick them up on Thursday February 11th.

February 15, 1993:

Your letter was disturbing to me because in November when I saw you in your office, after I had purchased a computer, you told me that the Estate files weren’t on your computer since the Estate of Sam Sparks was opened before you got your office computers. Now you tell me that your former secretary destroyed part of the files when she quit working for you. The latest bank statement that you have received on the Estate of Sam Sparks trust account will be sufficient for now. I expect the rest of the bank statements, receipts for expenses and any other information concerning the trust account and other funds collected on the behalf of the Estate within the week following your receipt of this letter. If you cannot provide this information by Friday, please understand that I plan to make a claim against the law firm for negligence and malpractice.

February 21, 1993:

I have been trying to get a statement from you of how much cash is in the account you are supposed to be holding in trust. I can’t understand how this request is so difficult to fulfill when bank statements showing balances and debits should be easy for you to obtain.
* * *
What I want from you is a bank statement showing the balance in the Estate account and when your records are complete, I expect a full accounting of your expenditures. I expect this by March 5th.

April 5, 1993:

In your letter to me dated February 23, 1993, you said that the attorney client relationship had deteriorated to a point of complete distrust and breakdown, this is true because you have not provided me with the account of the Estate that I am entitled to and you have been telling me it is in the mail when no such report exists. Throughout our attorney-client relationship you have been telling me one thing when I meet with you and the complete opposite the next time we meet, as a result the question of credibility, trust and confidence has been lost.
* * *
I want the name of the bank or banks and the account numbers of all accounts where you have placed money belonging to the Estate of Sam Sparks immediately.

April 19, 1993:

There was no bank statement and canceled checks included in the information I received. I want to be provided with a copy of the latest bank statement for the account and copies of the canceled checks from the account used to pay expenses.

May 3, 1993:

I regret that my correspondence has caused you concern, however I have been concerned over the length of time you required to give me any form of accounting. None of this would have taken place if you had provided me with a statement following our meeting on October 6, 1992, as promised. If our roles were reversed I feel that you would not have been as patient as I have been.
Our phone conversation on Sunday also concerned me since I assumed the Estate of Sam Sparks account was separate from any others. When you told me that the account was in your firm’s trust account and not in a separate account, I was very bothered, especially since you have admitted to me that you have not kept accurate records.

November 29, 1993:

In my letter to you dated October 21, 1993, I requested that you send my accountant all the expenses and fees you have deducted from the money you are holding that belongs to the estate. We have not received that information from you. I would like the balance of the money that belongs to the Estate of Sam Sparks placed in a separate account from your firm’s trust account in a different bank.
I feel that you have taken advantage of our friendship ignoring my requests, making promises to me that you had no intention of keeping and charging me by either percentage or hourly whichever suited you best. I don’t like the feeling of having to fight with the person I hired to protect my interests.

January 18, 1994:

I think we must have different concepts of a full accounting because I haven’t received what I would call one. I think a full accounting includes all expenses along with receipts and canceled checks, monies collected and interest earned.

February 4, 1994:

... I don’t know the amount of my entitlement or the value of the estate. The only way that can be accomplished is to do a final inventory and accounting, which I have been requesting for over a year. In your letter dated January 7, 1994, you stated that you had already given me a full accounting. Please send me a copy of that accounting.

April 4, 1994:

I still want the accounting you said you were recapitulating sent to Holda Ward.

April 18, 1994:

I want only the full accounting and the location of the bank where the estate funds are kept sent to Holda Ward.

When asked why he did not respond to Mrs. Sparks’s letters, Mr. Hollingsworth testified as follows:

A: I did respond to her letters, obviously, I did not give her the information that she wanted. How I missed that, I don’t know .... I just didn’t get the point that she was asking for an accounting until she hit me in the face with it.

With regard to restitution, the trial court found that no attempt to make restitution was made by Mr. Hollingsworth until after he was fired by Mrs. Sparks, which according to the record was in July 1994. Mr. Hollingsworth actually sent a cashier’s check in the amount of $70,244.51 to her new attorney in February 1995, several months after the Committee began its investigation. The trial court also found that Mr. Hollingsworth was subsequently ordered by the probate court to pay the Estate an additional $30,000. The probate court’s order was entered on August 26, 1997. At the time of the disbarment hearing in August, 1998, Mr. Hollingsworth had paid the sum ordered by the probate court except for some accrued interest.

Finally, the trial court found that Mr. Hollingsworth violated the following Model Rules:

Rule 1.1 — Competence
Rule 1.3 — Diligence
Rule 1.4(a) — Communication
Rule 1.5 (a)(b) — Fees
Rule 1.15 (a)(b)(c) — Safekeeping Property-
Rule 3.2 — Expediting Litigation
Rule 4.1 — Truthfulness in Statements to Others
Rule 8.4(c) (d) — Misconduct

Mr. Hollingsworth admitted on direct examination that he was “in a technical violation of one of the professional rules.” When cross-examined about this testimony, Mr. Hollingsworth testified as follows:

Q: Mr. Hollingsworth, you have described your misconduct as being in technical violation of the rules, that’s the words you used early on in your testimony, and I want to know from you, if you believe that your misconduct is only technically in violation of the rules, or do you believe and can you tell the court that your conduct impacted the underpinnings of this profession, that it was much greater than a technical violation, that it was a substantive and egregious violation of the rules.
A: I don’t agree my conduct with [sic] an egregious violation of the rules, if I understand what the word egregious means.
Q: It means awful bad, Mr. Hollingsworth, that’s what I think it means.
A: I don’t think my conduct was awful bad.
Q: Do you think it’s fair to say that your conduct was only technically in violation of the rules, that it’s a technicality you’ve been called in on?
A: No, I’m saying that there’s a violation of the rules, I have violated the rules, I did not intend to violate the rules.
Q: I’m going to get to that. I just wonder why, when you were being examined by your lawyer, you described your conduct as a technical violation of the rules, I want to know if that was a misstatement or do you agree that it was much more than technical, it was substantial.
A: I don’t agree with you it was substantial or egregious.

The trial court’s findings with regard to mitigation include the fact that Mr. Hollingsworth had been in practice for almost thirty years without any prior disciplinary offense. The trial court found other evidence of extenuation and mitigation to be impressive. A number of community leaders came forward to attest to Mr. Hollingsworth’s contributions to the advancement of African-Americans within the State’s judicial system and to his reputation for integrity and good character.

Based upon our review of the evidence and the trial court’s findings, we conclude that the record in this case supports the following aggravating factors:

(1) dishonest or selfish motive;
(2) a pattern of misconduct with respect to Mrs. Sparks;
(3) multiple offenses over more than five years;
(4) refusal to acknowledge the wrongful nature of the conduct;
(5) vulnerability of Mrs. Sparks;
(6) substantial experience in the law practice; and
(7) indifference to making restitution until fired and disciplinary investigation instituted.

We also conclude that the evidence supports the following mitigating factors:

(1) absence of prior disciplinary record;
(2) full cooperation with the Committee’s investigation;
(3) character and reputation; and
(4) expression of remorse.

When these mitigating factors are compared to the trial court’s findings that Mr. Hollingsworth knowingly diverted more than $100,000.00 of the Sparks Estate’s funds to his own use over a period of five years and that he attempted to postpone discovery of that misconduct by fading to account to the probate court and by stonewalling Mrs. Sparks’s requests for an accounting, we are left with a firm and definite conviction that the trial court committed a mistake when it imposed a short period of suspension from the practice of law. Mr. Hollingsworth’s actions of misusing and misappropriating funds from the Sparks estate clearly come within four out of six considerations for “serious misconduct” under Section 7(B) of the Procedures. Notwithstanding ample proof that he violated numerous provisions of the Model Rules, the record unequivocally reflects that Mr. Hollingsworth does not recognize or appreciate the gravity and seriousness of his misconduct. The evidence in this case demonstrates a pattern of misconduct over the course of several years in which Mr. Hollingsworth misappropriated his client’s funds and concealed his wrongdoing from the client and the court. This type of misconduct can only be characterized as serious, substantial, and egregious. Under these circumstances, we hold that the trial court clearly erred when it imposed a mere six-month suspension from the practice of law. The only appropriate sanction commensurate with Mr. Hollingsworth’s actions is disbarment. The misconduct in Weems v. Supreme Court Committee on Professional Conduct, 257 Ark. 673, 523 S.W.2d 900 (1975), which involved less than $12,000.00 and lasted less than one year, certainly pales in comparison to the long-term pattern of misconduct here.

Other jurisdictions have also held that the intentional misappropriation of a client’s funds and the misrepresentation of that fact to the client warrants disbarment. See, e.g., People v. Torpey, 966 P.2d 1040 (Col. 1998); In the Matter of Barlow, 140 A.2d 1197 (N.J. 1995); In Matter of Wilson, 409 A.2d 1153 (N.J. 1979); In the Matter of Lake, 236 S.E.2d 812 (S.C. 1977); In the Matter of Nicholas Addams, 579 A.2d 190 (D.C. Ct. App. 1990).

We conclude that Mr. Perlesía A. Hollingsworth should be, and hereby is, disbarred from the practice of law in the State of Arkansas. Accordingly, we reverse and remand for entry of judgment consistent with this opinion.

II. Whether The Trial Court Erred When It Dismissed The Added Charge Against Mr. Hollingsworth

For his second point on appeal, Mr. Neal asserts that the trial court erred when it dismissed the allegation concerning Mr. Hollingsworth’s failure to disclose his relationship with an attorney who had been appointed guardian ad litem for the minor child in a divorce proceeding in which he was representing the child’s father, Mr. Ted Skokos. In view of our holding that the only appropriate sanction commensurate with Mr. Hollingsworth’s actions is disbarment, we need not address Mr. Neal’s second point on appeal.

Reversed and remanded.

       Section 7(B) and (C) were added to the Procedures in the amendments adopted by per curiam order dated January 8, 1998, and effective January 15, 1998.

       “Serious crime” is defined in Procedure Section 1(E)(8) as follows:
      (8) “SERIOUS CRIME” means any felony or any lesser crime that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects, or any crime a necessary element of which, as determined by the statutory or common law definition of the crime, involves interference with the administration of justice, false swearing, misrepresentation, firaud, deceit, bribery, extortion, misappropriation, theft or an attempt, conspiracy or solicitation of another to commit a “serious crime.”


source: Caselaw Access Project

author: Ray Thornton, Justice.

license: Public Domain

text:
    Kenneth Joel RUSHING v. STATE of Arkansas
    CR 98-1312
    992 S.W.2d 789
    Supreme Court of Arkansas
    Opinion delivered June 24, 1999

      Jim Pedigo, Public Defender, for appellant.

      Mark Pryor, Att’y Gen., by: Mac Golden, Ass’t Att’y Gen., for appellee.
   Ray Thornton, Justice.

Appellant, Kenneth Joel Rushing, was convicted of murder in the first degree for stabbing William Jack Allen to death in rural Miller County. Appellant was sentenced to life imprisonment and brings this appeal asserting that the trial court erred in denying his motion to suppress his inculpatory statements because the State did not meet its burden of proof that he made a knowing and intelligent waiver of his right to remain silent. We find no reversible error, and affirm.

Appellant makes no challenge to the sufficiency of the evidence; however, a review of pertinent facts will be helpful in understanding the case. Following an afternoon of heavy drinking on Saturday, March 15, 1997, appellant and Jack Allen pulled appellant’s red pickup truck over to the shoulder of Highway 134. A fight began in the ditch beside the road and continued into an adjoining field. Allen was stabbed more than twenty-five times, and his body was left in the field. Sheriff H. L. Phillips was driving on Highway 134 about dusk that evening when a red pickup truck passed him. The Sheriff lost sight of the vehicle near Bryan Thompson’s home.

The following morning, Sunday, a driver notified the police that a body was in the field near Highway 134, and the police began their investigation. Based on information that the victim and appellant had been drinking together on the previous day, Officer McWhirter of the Arkansas State Police went to appellant’s house to see if he knew anything about the victim’s death or if he had seen the victim. Appellant said that he had been with the victim Saturday afternoon, and that some guys in a four-wheel-drive pickup pulled up behind them. Appellant said the men looked like they were from New York City and that the victim had left with them in their truck. Appellant continued, saying that his truck had broken down and was left at Mr. Thompson’s house.

At this point, the officers returned to the murder scene. Soon after their return, appellant sped by the scene driving his wife’s car. The police followed appellant to Mr. Thompson’s home, where appellant’s red pickup truck was parked. There was an abundance of mud and blood inside the cab of the truck as well as on the left side of the vehicle. Appellant consented to a search of his truck. Captain Toby Giles, of the Miller County Sheriffs Office, told investigator Nicholas to read appellant his Miranda rights and appellant was arrested. Later, DNA comparisons showed that the blood found inside the truck cab was one trillion times more likely to belong to the victim than any other person.

The reading of appellant’s Miranda rights and his response that he understood those rights was witnessed by Sheriff Phillips, Captain Giles, Deputy Thomas Clay, and Officer McWhirter. All of the officers testified that they witnessed investigator Nicholas reading appellant his Miranda rights, that he said that he understood the rights, and that he appeared to understand his rights. Appellant was then transported to the sheriffs department.

After arriving at the department, Captain Giles explained the nature of the charges, asked appellant if he had any questions, and whether he wanted an attorney. The reading of his Miranda rights was not repeated. Appellant replied that he did not want an attorney, and again acknowledged that he understood his rights. Appellant declined to have his statement recorded but agreed to give a written statement. Officer McWhirter wrote down the statement, read it to appellant, and allowed appellant to look over the statement. Appellant then signed the statement, which was witnessed by Captain Giles and Officer McWhirter.

Whether appellant knowingly and intelligently waived his rights must be determined by the totality of the circumstances. Mauppin v. State, 309 Ark. 235, 831 S.W.2d 104 (1992); Smith v. State, 286 Ark. 247, 691 S.W.2d 154 (1985). Our standard of review is whether the circuit court’s finding that the waiver of rights was knowingly and intelligently made was clearly against the preponderance of the evidence. Mauppin, supra; Ryan v. State, 303 Ark. 595, 798 S.W.2d 679 (1990).

The burden is on the State to show that a defendant’s confession was made after a voluntary, knowing, and intelligent waiver of the right to remain silent. Cagle v. State, 267 Ark. 1145, 594 S.W.2d 573 (1980). As was the case in Cagle, appellant’s confession was given without counsel. The test is whether appellant was effectively warned of his rights and knowingly and willingly decided to waive them. Id. (citing United States v. Harden, 480 F.2d 649 (8th Cir. 1973)). The Cagle court noted that while obtaining a written waiver of rights is desirable, the failure to do so does not invalidate a voluntary confession where there is no contention that the rights were not explained or understood. Id. at 1148. As was the case in Cagle, here appellant does not claim that he did not understand his rights, but argues that the State did not prove that he waived them. Again, we note that a signed waiver form is not required to have a voluntary confession. Id.

In Clay v. State, 318 Ark. 122, 883 S.W.2d 822 (1994), we reiterated that there are two separate issues regarding the waiver of Miranda rights:

Only if the ‘totality of the circumstances surrounding the interrogation’ reveals both an uncoerced choice and the requisite level of comprehension may a court properly conclude that the Miranda rights have been waived.

Id. (citing Moran v. Burbine, 475 U.S. 212 (1986)).

We then stated that the “totality of the circumstances” review mandated an inquiry into an evaluation of “age, experience, education, background, and intelligence, and into whether he has the capacity to understand the warnings given him, the nature of his Fifth Amendment rights, and the consequences of waiving those rights. A court must look at the totality of the circumstances to see if the State proved that a defendant had the requisite level of comprehension to waive his Fifth and Sixth Amendment rights.” Clay, supra (citations omitted).

Relying on Clay, we pointed out in Lammers v. State, 330 Ark. 324, 955 S.W.2d 489 (1997), that there is indeed a difference between the contention that a statement was made involuntarily and the contention that an accused did not knowingly and voluntarily waive his right to remain silent. Appellant does not argue that his statement was involuntary. Rather, he argues that he did not waive his right to remain silent. This argument focuses upon whether the waiver was made with a full awareness of both the nature of the right being abandoned and the consequences of the decision to abandon it, as well as whether the accused made the choice, uncoerced by police, to waive his rights. Lammers, supra, (citing Clay v. State, 318 Ark. 122, 883 S.W.2d 822 (1994)).

Appellant is thirty-seven years old, has a ninth-grade education, and an I.Q. of 80. Appellant argued that a head injury received several years earlier had reduced his mental capacity. We have previously held that while mental capacity is a factor we consider, it alone is not sufficient to suppress a confession. Misskelley v. State, 323 Ark. 449, 915 S.W.2d 702 (1996). Likewise, a low score on an intelligence-quotient test does not mean that a suspect is incapable of voluntarily making a confession or waiving his right. Id. (citing Oliver v. State 322 Ark. 8, 907 S.W.2d 706 (1995); Hart v. State, 312 Ark. 600, 852 S.W.2d 312 (1993); Hill v. State, 303 Ark. 462, 798 S.W.2d 65 (1990)). Appellant was questioned three hours after receiving the Miranda warnings and gave his statement in forty-five minutes. We note that appellant was familiar with criminal procedures, having previously received three D.W.I. convictions. He was coherent while giving his statement and there was no allegation that he was coerced, threatened, or promised anything for giving a statement. Officer McWhirter stated that he had participated in several hundred interviews and that it appeared appellant was making his statement voluntarily. He further testified that appellant said he understood his rights.

The totality of the circumstances leads us to conclude that the trial court’s finding that appellant voluntarily waived his right to remain silent was not clearly against the preponderance of the evidence. Therefore, the trial court is affirmed.

Rule 4-3 (h)

As required by Ark. Code. Ann. § 16-91-113(a) and Rule 4-3(h) of the Rules of the Arkansas Supreme Court, the entire record has been reviewed for other reversible errors and, finding none, the Court affirms the verdict and sentence of the jury.

Affirmed.


author: Per Curiam.

text:
    James KIRBY v. STATE of Arkansas
    CR 98-1442
    992 S.W.2d 803
    Supreme Court of Arkansas
    Opinion delivered June 24, 1999

      James O. Clawson, for appellant.

      No response.
   Per Curiam.

In accordance with our per curiam entered on May 20, 1999, James O. Clawson appeared before the court to show cause why he should not be held in contempt for failing to appeal appellant James Kirby’s case. Upon denying any fault, Mr. Clawson stated that, after the court previously remanded this case to the trial court for a hearing to determine if Mr. Kirby had requested counsel Clawson to appeal his case, Clawson was never given notice of such a hearing. As a result, Mr. Clawson asserts that he was never afforded the opportunity to be heard on the belated-notice-of-appeal issue. Our review of the transcript of the trial court’s February 8, 1999 hearing fails to reflect that notice was given Mr. Clawson, and the record also confirms Mr. Clawson made no appearance.

Before we continue further in this show-cause proceeding, it is necessary that a determination be made by the trial court as to whether Mr. Clawson was given notice of the February 8 hearing, and, if not, afford him the opportunity to present his testimony. Obviously, Mr. Kirby’s and his new counsel’s presence will be required to assure a complete record can be made for return to this court. After the trial court’s hearing, findings, and return of the record, this court will then decide if a motion for belated appeal should be granted and whether a special master is needed.


text:
    John SLAUGHTER v. STATE of Arkansas
    CR 99-655
    992 S.W.2d 802
    Supreme Court of Arkansas
    Opinion delivered June 24, 1999

      John W. Cone, for appellant.
    No response.
   Per Curiam.

Appellant John Slaughter has filed a motion for rule on the clerk. The motion reflects that the judgment and commitment order was entered on October 21, 1998, and the notice of appeal was filed on November 19, 1998. The record was not tendered until June 3, 1999, more than seven months from the date the judgment was entered. See Ark. R. App. P.—Civ. Rule 5(b).

We will grant a motion for rule on the clerk when the attorney admits that the record was not timely filed due to an error on his or her part. Pack v. State, 335 Ark. 374, 983 S.W.2d 125 (1998) (per curiam); Turner v. State, 334 Ark. 240, 973 S.W.2d 480 (1998) (per curiam). Here, Appellant’s attorney, John W. Cone, admits responsibility for tendering the record late. We find that such error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See Davis v. State, 335 Ark. 136, 983 S.W.2d 122 (1998) (per curiam); Harkness v. State, 264 Ark. 561, 572 S.W.2d 835 (1978). A copy of this per curiam opinion will be forwarded to the Committee on Professional Conduct. See In Re: Belated Appeals in Criminal Cases, 265 Ark. 964 (1979) (per curiam).


text:
    IN RE: Timothy D. WILLIAMS
    99-426
    992 S.W.2d 803
    Supreme Court of Arkansas
    Opinion delivered June 25, 1999
   Per Curiam.

Mr. Timothy D. Williams appeared on June 24, 1999, in response to this court’s per curiam order of May 20, 1999, wherein the court requested Mr. Williams to show cause why he should not be held in contempt. The per curiam referenced the petition of the Professional Conduct Committee, which stated Mr. Williams’s license to practice law had been suspended on February 2, 1999, and the Committee further alleged that Mr. Williams had failed to comply with the procedures required of an attorney during his suspension. Mr. Williams entered a plea of not guilty to the specified charges and requested a hearing. The court hereby appoints attorney at law Scott Stafford as master in this matter and directs that he set an early hearing date to permit the Professional Conduct Committee and Mr. Williams the opportunity to present their respective charges and defenses. The court further requests that the master file his findings on or before Tuesday, July 13, 1999. The parties may file simultaneous briefs on or before Friday, July 16, 1999, and reply briefs, if desired, on or before 5:00 p.m., Monday, July 19, 1999.


author: Tom Glaze, Justice.

text:
    GOULD PUBLIC SCHOOLS v. Gloria DOBBS
    99-69
    993 S.W.2d 500
    Supreme Court of Arkansas
    Opinion delivered July 1, 1999

      John L. Kearney, for appellant.

      Howard M. Holthoff, for appellee.
   Tom Glaze, Justice.

Appellee Gloria Dobbs was a full-time, nonprobationary employee of the Gould Public Schools (hereafter Gould School Board or Board), and worked under written contract as a cook beginning on August 18, 1994. The Board, through its school superintendent, sent a letter dated July 27, 1995, terminating Dobbs’s employment, and Dobbs later filed suit, claiming the Board’s action was invalid because the Board failed to comply with the notice and hearing requirements of the Arkansas Public School Employee Fair Hearing Act (Act), codified at Ark. Code Ann. §§ 6-17-1701 to 1705 (Repl. 1993 and Supp. 1997). Subsections 6-17-1703(b), (c), and (d) provide in relevant part that the nonrenewal of a full-time, nonprobationary employee’s contract shall be made no later than thirty days prior to the beginning of the employee’s next contract, provide the reasons for the termination, and inform the employee that he or she is entitled to a hearing. The Board rejoined that the notice and hearing provisions of the Act were not applicable here because the reason for non-renewal of Dobbs’s contract was that her position was being eliminated because of budget constraints and a general reduction in the work force. The trial court rejected the Board’s argument and granted Dobbs’s summary judgment.

In this appeal, the Gould School Board continues its argument made below that it had the right to terminate Dobbs at will without cause or a hearing. In support of its argument, the Board cites Kimble v. Pulaski County Special Sch. Dist., 53 Ark. App. 234, 921 S.W.2d 611 (1996), but in doing so, the Board simply misreads that decision. The Board does correctly relate that the Kimble court concluded that the Public School Employee Fair Hearing Act did not modify Arkansas’s well-established employment-at-will doctrine. Even so, the court of appeals further held that, while public employee Kimble could be terminated at will for any reason, the school district still was required to provide Kimble notice and an opportunity for a hearing under the Act before the school district terminated Kimble. Indeed, Kimble was given notice and a hearing, but here, Dobbs was denied those procedures.

In conclusion, because Dobbs was denied timely notice and an opportunity to be heard, we affirm the trial court’s decision.

       If the court of appeals’ reference in Kimble to the termination-at-will doctrine was in any way misleading or interpreted to infer employees under the Public School Employee Fair Hiring Act could be at-will employees, that idea was removed by the General Assembly when, after the Kimble decision, it enacted Act 1199 of 1997, which added subparagraph (e) to § 6-17-1703. That subparagraph reads as follows:
      It is the public policy of the State of Arkansas that employees, as defined herein, shall not be considered ‘at will’ employees with regard to the termination of their employment, notwithstanding any contractual provision to the contrary.


author: Robert L. Brown, Justice.

text:
    ST. PAUL FIRE & MARINE INSURANCE COMPANY v. GRIFFIN CONSTRUCTION COMPANY
    98-990
    993 S.W.2d 485
    Supreme Court of Arkansas
    Opinion delivered July 1, 1999
    [Petition for rehearing denied September 9, 1999.]

      Bassett Law Firm, by: Curtís L. Nebben\ and Barrett & Deacon, by: D.P. Marshall Jr., for appellant.

      Rush, Rush, & Cook, by: R. Gunner DeLay, for appellee.

       Brown, J., not participating.

   Robert L. Brown, Justice.

Appellant St. Paul Fire & Marine Insurance Company appeals a judgment in favor of appellee Griffin Construction Company in the amount of $1,213,426.33. Griffin Construction sued under a builders risk policy issued by St. Paul following the total loss by fire of a building that Griffin Construction was renovating. St. Paul now appeals the judgment and contends that the trial court misapplied the valued policy law, which is set out at Ark. Code Ann. § 23-88-101 (Repl. 1992). We agree, and we reverse the judgment and dismiss.

In 1996, Griffin Construction entered into a contract with the Griffin Family Trust to renovate the Josiah Foster Building, a historic building in downtown Fort Smith. The Trust was the owner of the building. On or about September 9, 1996, Griffin Construction purchased a contractor’s and owner’s property protection policy from St. Paul for multiple projects with an overall policy limit of $3 million. This policy was titled a “builders risk policy” and covered Griffin Construction’s financial interest as a contractor in the various buildings. Griffin Construction reported the estimated value of its interest in the Josiah Foster Building project as $1.5 million. It paid $4,000 to St. Paul as a deposit for the insurance coverage with $938 of that amount being allocated as the premium for the first quarter.

On December 20, 1996, about four months into the work, the Josiah Foster Building was totally destroyed by fire. The renovation project was about twenty percent completed. Griffin Construction filed a claim for losses under its policy, and St. Paul paid $286,573.67. This amount represented the full claim less two items — a custom elevator and iron staircase — which St. Paul refused to pay. The reason for the refusal was that the two items were not destroyed in the fire. Because of the refusal to pay, Griffin Construction filed suit against St. Paul and alleged breach of contract. Griffin Construction sought $61,793.77 in damages plus the 12% penalty and attorney’s fees under Ark. Code Ann. § 23-79-208 (Repl. 1992). St. Paul answered that the disputed items were not destroyed by the fire because they were not in the building at the time of the fire. St. Paul then moved for summary judgment. Griffin Construction responded with a cross motion for a summary judgment and a second amended complaint. In its amended complaint, it asked for $2,713,426.37 (the $3,000,000 policy limit minus the paid amounts) or, alternatively, for $61,793.77. Griffin Construction later filed a third amended complaint which deleted any reference to the $61,793.77 and proceeded solely on the claim for the full reported amount of the destroyed project — $1.5 million, which was the reported limit for the Josiah Foster Building project, less the amount already paid by St. Paul. The amount claimed was $1,213,426.33 plus the 12% penalty, attorney’s fees, and prejudgment interest.

The trial court denied both parties’ motions for summary judgment without comment, and a jury trial followed.

At trial after Griffin Construction put on its case, St. Paul moved for a directed verdict on the basis that the valued policy law did not apply to this coverage and further that the builders risk policy involved was an “open” policy with a weighted premium which did not insure buildings against fire loss. The motion was denied. St. Paul renewed its motion for a directed verdict at the close of all the evidence and added that there was no way to inspect the building to fix its value because prior to renovation, there was nothing to inspect. Again, the motion was denied.

The trial court instructed the jury on the valued policy law as follows:

There was in force in the State of Arkansas at the time the contract of insurance was entered into between Griffin Construction Company and St. Paul Fire & Marine Insurance Company, a statute, which provided:
(a) A fire insurance policy, in case of a total loss by fire of the property insured, shall be held and considered to be a liquidated demand and against the company taking the risk, for the full amount stated in the policy, or the full amount upon which the company charges, collects, or receives a premium.
Griffin Construction Company claims damages from St. Paul Fire & Marine Insurance Company pursuant to this statute and has the burden of proving each of three essential elements:
First, that there was a fire insurance policy in force on December 20, 1996, which insured its real property located at 222 Garrison Avenue in Fort Smith, Arkansas.
Second, that there was total loss by fire to the insured building, and
Third, that St. Paul failed to pay Griffin Construction Company the full amount stated in the policy, or the amount the company received and collected a premium on.
If you find from the evidence in this case that each of these propositions has been proved, then your verdict should be for Griffin Construction Company.

The jury returned a verdict for Griffin Construction in the amount claimed of $1,213,426.33. St. Paul filed a motion for judgment notwithstanding the verdict and a motion for a new trial. In both motions, St. Paul again argued that the trial court erred in instructing the jury on the valued policy law, which was inapplicable to the policy involved. The trial court denied both motions.

On appeal, St. Paul urges that the trial court erred in ruling that the valued policy law applies to this case. The valued policy law provides:

(a) A fire insurance policy, in case of a total loss by fire of the property insured, shall be held and considered to be a liquidated demand and against the company taking the risk, for the full amount stated in the policy, or the full amount upon which the company charges, collects, or receives a premium
(b) However, the provisions of this section shall not apply to personal property.

Ark. Code Ann. § 23-88-101 (Repl. 1992).

The basic rule of statutory construction is to give effect to the intent of the General Assembly. See Ford Motor Credit Co. v. Ellison, 334 Ark. 357, 974 S.W.2d 464 (1998). In construing a statute, it is the court’s duty to construe it just as it reads. Heard v. Payne, 281 Ark. 485, 665 S.W.2d 865 (1984); City of North Little Rock v. Montgomery, 261 Ark. 16, 546 S.W.2d 154 (1977). When we construe a statute, we look first at the plain language of the statute and give the words their plain and ordinary meaning. See ERC Contractor Yard & Sales v. Robertson, 335 Ark. 63, 977 S.W.2d 212 (1998); Ford Motor Credit Co. v. Ellison, supra. If the language of a statute is plain and unambiguous, and conveys a clear and definite meaning, there is no need to resort to rules of statutory construction. See Office of Child Support Enforcement v. Harnage, 322 Ark. 461, 910 S.W.2d 207 (1995). Even so, statutes will not be given a literal interpretation if it leads to absurd consequences that are clearly contrary to legislative intent. See Thomas v. State, 315 Ark. 79, 864 S.W.2d 835 (1993).

As an initial matter, we do not consider this statute to be anything other than plain and unambiguous. See In re: Adoption of Martindale, 327 Ark. 685, 940 S.W.2d 491 (1997). A literal reading of the valued policy law shows that it applies to “fire insurance” policies where there has been a total loss of the property insured. The loss to be paid is the full amount stated in the policy or the amount on which premiums are paid. A valued policy is one where the value of the insured property is agreed to by the parties in the contract in advance, and, as a consequence, the insured does not have to prove the actual value of the destroyed property. See Houston Fire and Cas. Ins. Co. v. Nichols, 435 S.W.2d 140 (Tex. 1968); 6 J. Appleman, Insurance Law and Practice § 3827 (1972). It is the uncertainty of the value of the insured property that distinguishes an “open” policy from a “valued” policy. See Borden v. General Ins. Co. of America, 59 N.W.2d 141 (Neb. 1953). In the treatise, Couch on Insurance, a valued policy is described as “one in which the parties have agreed upon the value of the properties insured in the event of future loss,” while an open or unvalued policy is one in which the value is not set but is left to be determined in case of loss. See Lee R. Russ and Thomas F. Segalla, Couch on Insurance § 1.5 (3d ed. 1997).

This court has stated that the purpose behind the valued policy law is to prevent insurance companies from overvaluing real property for premium purposes and then repudiating those values after a fire loss. See Tedford v. Security State Fire Ins. Co., 224 Ark. 1047, 278 S.W.2d 89 (1955). We added in Tedford:

Statutes of this sort are passed for the purpose of avoiding the uncertainty of determining the value after the fire. The manifest policy of the statute is to guard against over-insurance of the property. The agents of the company have the opportunity to inspect the property fully before taking the insurance and fixing the amount of the premiums. It is the valuation fixed in advance by the parties by way of liquidated damages in case of a total loss by fire of the property insured without the fault of the insurer.

Tedford, 224 Ark. at 1049, 278 S.W.2d at 91 (emphasis added).

Griffin Construction first contends that the issue of misapplying the valued policy law is not preserved because St. Paul failed to object to the valued policy instruction. We disagree. Not only did St. Paul move for a directed verdict on this legal issue as well as file posttrial motions, but it objected to an instruction making the valued policy law a part of every fire insurance policy in the state and defining real property to include improvements. We conclude that the issue is sufficiently preserved.

We turn then to the coverage provided in the insurance policy at issue. The Insurance Binder issued to Griffin Construction on September 10, 1996, described the type of coverage as “Builders Risk.” According to Ida C. Hunter, chief financial officer for Griffin Construction, her company reported a value of $1.5 million to St. Paul on the Josiah Foster Building renovation project. This value was confirmed by a Reporting Form introduced into evidence by Griffin Construction. Ida Hunter explained that the $1.5 million figure was an estimate based on the materials to be used in the project plus overhead, including labor. The actual insurance policy was processed on September 17, 1996, and described as an “open” Builders Risk policy.

Under the terms of the policy, it covered Griffin Construction’s financial interest in the Josiah Foster Building project plus two other projects. Specifically, it covered the cost of excavation, temporary structures, equipment, and “labor and materials as well as reasonable profit and overhead costs necessary to restore the project to its condition before the loss.”

The relevant policy language relating to premiums and payment for losses follows:

Limits of coverage. The most we’ll pay for a covered loss is the applicable limit of coverage shown in the Coverage Summary. The project limit and the catastrophe limit are explained below.
The project limit is based on your estimate. We estimate your premium based on what you tell us the full completed value of your project will be. This estimated amount becomes the project limit.
However, the amount we’ll pay is not the project limit. The amount we’ll pay is determined by the actual cost of the labor and materials you’ve expended, plus your profits, as determined at the time of the loss. So the actual limit of coverage on any date will be a percentage of the estimated value.
Your premium. You agree to tell us, at the starting date of this agreement, what you know to be the full estimated value of the project so that we can estimate your premium. We estimate your premium because the final completed value of the project may differ from the original estimate of the project costs.
When coverage under this agreement ends, we’ll figure the premium we’ve actually earned based on the length of time this agreement was in effect and the actual completed value of the project. If this final premium is more than you’ve paid, you’ll owe us the difference. If it’s less, we’ll return the difference.

What is clear to us from the policy language is that the project limit of $1.5 million was an estimate and that the premiums paid are based on that estimate and then adjusted at the time of the project’s completion. Moreover, the premium paid was tied to a rate given to Griffin Construction by St. Paul. According to the testimony of David Loveless, the underwriter for St. Paul, the builders risk policy was an “open” policy and involved “completed value reporting,” which meant that the premium rate varied with the project’s status of completion. The rate is further divided in half by St. Paul at the beginning of the project because no work would have begun on the project, and it would be unfair, Loveless testified, to charge a contractor the rate St. Paul would charge for a completed building. The premium is averaged, said Loveless, in the sense that the contractor is paying a little bit more in premiums at the beginning of the project and a little bit less for the exposure after the project passes its midpoint. Thus, not only is the project value an estimate but the premiums paid are based on a rate which is tied to the status of the project.

We conclude that this builders risk policy is categorically different from the fixed value on fire coverage contemplated by our valued policy law. Far from being a closed policy with an agreed-to value in the event of fire loss, this policy was open with premiums calculated in part based on periodic reporting. In considering our prior cases, we have only applied the valued policy law where the insurance is issued for a fixed amount. See, e.g., Sphere Drake Ins. Co. v. Bank of Wilson, 312 Ark. 540, 851 S.W.2d 430 (1993); Hensley v. Farm Bureau Mut. Ins. Co., 243 Ark. 408, 420 S.W.2d 76 (1967); Tedford v. Security Fire Ins., supra.

Other jurisdictions are of a similar mind when it comes to the applicability of the valued policy statute to a builders risk policy. See, e.g., Jones v. State Farm Fire and Cas. Co., 740 S.W.2d 708 (Mo. Ct. App. 1987) (under similar statute, Missouri court refused to allow recovery of face amount of policy before building was completed where amount insured depended on percentage of completion); American General Fire and Cas. Co. v. Buford, 716 S.W.2d 86 (Tex. Ct. App. 1986) (builders risk policy where amount of coverage was based on completion cost and not agreed-upon value was not a valued policy); Century Corp. v. Phoenix of Hartford, 482 P.2d 1020 (Mont. 1971) (policy was intended only to cover remodeling work done on building and not a fixed value; valued policy law not applicable); White v. New Hampshire Ins. Co., 390 N.W.2d 313 (Minn. Ct. App. 1986) (policy covering actual value of budding at time of destruction was a builders risk policy and insured not entitled to estimated limit of loss under valued policy law).

Griffin Construction relies on two Arkansas cases to support its argument that the policy involved is a valued policy. See Farm Bureau Mut. Ins. Co. v. Parks, 266 Ark. 454, 585 S.W.2d 936 (1979); Phoenix Assurance Co. v. Loetscher, 215 Ark. 23, 219 S.W.2d 629 (1949). In Parks, the insurer issued a policy with $45,000 in coverage for the insured’s home. After a total loss of the home, the insurer defended, arguing that the insured fraudulently represented the value of his home. The insured bought the home and ten lots for $23,000, and a realtor appraised the property at $33,500. The $45,000 figure was based on the insured’s plans to remodel the home. Our court affirmed the verdict of $45,000 in favor of the insured and noted that the insurance agent had the chance to inspect the property prior to issuing the policy but had failed to do so. We view this case as distinguishable because in the instant case there was no completed, renovated building for St. Paul to inspect. Furthermore, the $1.5 million was an estimated amount for the project limit and not the actual value of the project at the time of the fire.

The same holds true with regard to the Loetscher decision. In Loetscher, the insureds obtained a $12,000 policy which insured their construction of a garage to repair automobiles against fire, tornado, and lightning. The insurance was needed in order to obtain a construction loan. The building was almost complete when it was destroyed by rain and a thunderstorm. This court affirmed the jury’s verdict of $12,000, the face amount of the policy, and held that it was unnecessary to consider the contribution clause in the insurance policy. The contribution clause provided that the company was “liable for no greater proportion of the loss than the amount of insurance bore to 100% of the actual value of the building when fully completed and ready for occupancy.” The value of the building at time of loss was alleged to be $20,000. We applied our valued policy law and did so because the value for total loss was set in the policy, and the jury had found that a total loss occurred. Those facts differ from the facts before us in the instant case.

We hold that the trial court erred in refusing to direct a verdict on the inapplicability of the valued policy law and further in instructing the jury that the valued policy law applied.

Reversed and dismissed.

       The insurance coverage was on the construction work by Griffin Construction and did not include coverage on the existing building, which Griffin Construction did not own. Thus, the “Renovation Work” provision of the policy which included a “covered loss to a structure that existed before an insured project began” does not appear to be applicable.


author: Annabelle Clinton Imber, Justice.

text:
    EMPLOYERS SURPLUS INSURANCE COMPANY v. MURPHY OIL USA, INC.
    98-1505
    993 S.W.2d 481
    Supreme Court of Arkansas
    Opinion delivered July 1, 1999

      James & Carter, PLC, by: Daniel R. Carter; Of Counsel: Rogers, Towers, Bailey, Jones & Gay, by: G. Kenneth Norrie and Cheryl L. Woman; and Christie, Pabarue, Mortensen & Young, P.A., by: James W. Christie, for appellant.

      Wright, Lindsey & Jennings LLP, by: M. Samuel Jones, III, and Claire Shows Hancock; James E. Baine; and Compton, Prewett, Thomas & Hickey, P.A., by: Robert C. Compton, for appellee.
   Annabelle Clinton Imber, Justice.

This is the second appeal in this case. Employers’ Surplus Lines Insurance Company (“ESLIC”) makes several arguments in support of its contention in this appeal that the trial court erred when it denied ESLIC’s motion for attorney’s fees. We find no merit in ESLIC’s arguments and affirm the trial court.

In the first appeal, we briefly summarized the history of this case as follows:

Murphy Oil USA, Inc., the appellee, filed suit in Union County against a number of its insurance carriers seeking a declaration that the carriers were obligated under certain general comprehensive liability (“CGL”) policies to indemnify Murphy Oil for a judgment for compensatory and punitive damages previously rendered against it in a federal district court in Alabama. Prior to trial in Union County, certain insurance carriers settled with Murphy Oil, and others, such as Lloyd’s of London and Century Indemnity Company (formerly California Union Insurance Company), won summary judgment and were dismissed from the case. The Union County jury returned a verdict in Murphy Oil’s favor on its indemnification claims against appellants Unigard Insurance Company and Employers Surplus Lines Insurance Company (“ESLIC”) but found against Murphy Oil on its indemnification claim against Associated International Insurance Company.

Unigard Sec. Ins. Co. v. Murphy Oil USA, Inc., 331 Ark. 211, 962 S.W.2d 735 (1998). After judgment was entered in favor of Murphy Oil but before this court’s decision in the first appeal, Murphy Oil, as the prevailing party, filed a motion for attorney’s fees pursuant to Ark. Code Ann. § 23-79-208 (Repl. 1992), and also pursuant to Ark. Code Ann. § 16-22-308 (Repl. 1994). In its motion for attorney’s fees, Murphy Oil asserted that the “action was commenced for damages for breach of contract and declaratory relief against certain of its insurance companies, including ESLIC and Unigard, which refused to provide insurance coverage for liabilities incurred by Murphy arising out of environmental damages.” The trial court conducted a hearing on Murphy Oil’s motion and entered an order on May 16, 1996, awarding Murphy Oil a net judgment for attorney’s fees in the amount of $1,714,000. Shortly thereafter, the trial court amended the May 16, 1996 judgment to reflect that the judgment for attorney’s fees in favor of Murphy Oil was against ESLIC and Unigard.

On January 29, 1998, this court held that none of the policies involved in this case covered Murphy Oil’s liability, and we reversed the judgment against Unigard and ESLIC and dismissed. See Unigard, supra. On March 19, 1998, Unigard and ESLIC, as the prevailing parties in an action for breach of contract, filed motions for attorney’s fees pursuant to Ark. Code Ann. § 16-22-308. Associated International filed a similar motion for reconsideration of its earlier request for attorney’s fees on June 17, 1998. Murphy Oil opposed these motions for attorney’s fees by the insurance companies on two grounds: 1) that the Insurance Code’s specific provision for attorney’s fees in § 23-79-208, which would take precedence over the general fee-shifting provision in § 16-22-308, did not provide for the award of fees to insurance companies; and 2) that this court’s determination that none of the insurance policies provided coverage was tantamount to a declaratory judgment.

On June 22, 1998, the trial court conducted a hearing on the motions for attorney’s fees filed by Unigard, ESLIC, and Associated International. The trial court awarded attorney’s fees totaling $1,200,000 to the insurance companies based upon a decision handed down by this court on June 11, 1998, in Village Market, Inc. v. State Farm Gen. Ins. Co., 333 Ark. 552, 970 S.W.2d 243 (1998) (Village Market I). In Village Market I, we held that where an insurance company is the prevailing party in a breach-of-contract action with an insured, it may be awarded an attorney’s fee under Ark. Code Ann. § 16-22-308. Id. At Murphy Oil’s request, the trial court withheld entry of an order until after this court ruled on a petition for rehearing in Village Market I. On July 16, 1998, we granted Village Market’s petition for rehearing and held that Ark. Code Ann. § 16-22-308 does not permit an insurer to recover attorney’s fees as the prevailing party in an action by an insured seeking recovery for a claim under his or her policy. Village Market, Inc. v. State Farm Gen. Ins. Co., 334 Ark. 227, 975 S.W.2d 86 (1998) (Village Market II). Based upon this court’s holding in Village Market II, the trial court entered an order on September 4, 1998, that vacated its original award of attorney’s fees and denied the motions for attorney’s fees filed by Unigard, ESLIC, and Associated International. Unigard, Associated International, and ESLIC all appealed. However, prior to submission we granted a motion to dismiss appeal filed by Unigard and Associated International. The sole remaining appellant, ESLIC, asserts several grounds for reversal.

First, ESLIC argues that Ark. Code Ann. § 16-22-308 allows the discretionary award of attorney’s fees to a prevailing insurer in an action for breach of contract. Section 16-22-308 provides that:

In any civil action to recover on an open account, statement of account, account stated, promissory note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services, or breach of contract, unless otherwise provided by law or the contract which is the subject matter of the action, the prevailing party may be allowed a reasonable attorney fee to be assessed by the court and collected as costs.

We rejected this argument in Village Market II, supra:

Because attorney’s fees are awarded only when expressly allowed by statute or rule, the silence of such fee awards to insurers in §§ 16-22-308 and 23-79-208 can only be interpreted to mean the General Assembly never intended that attorney’s fees be awarded to insurers when an insured has filed an action seeking recovery for a claim under his or her policy.

The trial court was therefore precluded by our ruling in Village Market II, supra, from awarding an attorney’s fee to ESLIC.

Moreover, on February 17, 1999, Governor Mike Huckabee approved and signed Act 135 of 1999, entitled “An Act To Amend Arkansas Code Annotated § 23-79-208 To Further Clarify The Existing Intent Of the General Assembly That Insurance Policy Holders Shall Not Be Liable For The Attorneys’ fees Incurred By Insurance Companies In the Defense of Cases In Which The Insurance Company Is Found Not Liable For The Loss; And For Other Purposes,” which added the following language to section 22-79-208(a):

In no event will the holder of the policy or his assigns be liable for the attorneys’ fees incurred by the insurance company, fraternal benefit society or farmers’ mutual aid association in the defense of a case where the insurer is found not liable for the loss.

Act 135 went into effect on the date of its approval by the Governor pursuant to an emergency clause. Furthermore, according to Section 2 of Act 135, it was “the express intent of the General Assembly that this Act be applied retroactively to pending cases as it is remedial and procedural in nature.” Although there is a presumption that the legislature intends statutes or amendments enacted by it to operate prospectively and not retroactively, this presumption is effectively rebutted where the intention of the legislature to make the statute retroactive is stated in express terms. Estate of Wood v. Dept. of Human Services, 319 Ark. 697, 894 S.W.2d 573 (1995). Likewise, the rule by which statutes are construed to operate prospectively does not ordinarily apply to procedural or remedial legislation. Gannett Rover States Publishing Co. v. Arkansas Industrial Development Commission, 303 Ark. 684, 799 S.W.3d 543 (1990). Thus, the trial court was without authority under both statutory and case law to award attorney’s fees to ESLIC as the prevailing party in Murphy Oil’s action for indemnification under the ESLIC policy.

Nevertheless, ESLIC argues that this case is distinguishable from Village Market II, supra. First, ESLIC suggests that its status as an excess liability insurer is not covered by Ark. Code Ann. § 23-79-208 because the statute does not specifically list umbrella, or excess, liability carriers within its provisions. However, section 23-79-208 does include casualty insurance within its provisions, and Ark. Code Ann. § 23-62-105 (Repl. 1994) broadly defines casualty insurance to include liability insurance “unless the context otherwise requires.” Contrary to ESLIC’s argument, nothing in the context of section 23-79-208 requires that excess liability insurance be excluded from the coverage of its provisions. Accordingly, we deem this argument to be without merit.

ESLIC also argues that Village Market II does not preclude a fee award in cases where the contract of insurance sued upon was negotiated on a “level playing field.” Village Market II, however, makes no distinction as to the type of insurance policy or the circumstances surrounding the issuance of the policy. As previously stated, we held in Village Market II, supra, that “the General Assembly never intended that attorney’s fees be awarded to insurers when an insured has filed an action seeking recovery for a claim under his or her policy,” thus ruling out any award of attorney’s fees to any insurer sued by an insured seeking recovery on any policy of insurance. In light of the breadth of the holding in Village Market II, supra, we reject ESLIC’s argument inviting us to restrict the application of Village Market II to situations involving adhesion insurance policies.

ESLIC’s final point on appeal involves the doctrine of judicial estoppel, by which a party may be prevented from taking inconsistent positions in successive cases with the same adversary. See Muncrief v. Green, 251 Ark. 580, 473 S.W.2d 907 (1971). ESLIC claims that Murphy Oil is judicially estopped from claiming that § 16-22-308 does not apply to the instant action in light of its earlier reliance on that statute as an alternate basis for an award of attorney’s fees when it was the prevailing party. We need not address the merits of this argument, for even if we were to conclude that Murphy Oil was judicially estopped, the trial court is still without authority to award ESLIC attorney’s fees under Ark. Code Ann. §§ 22-79-208 or 16-22-308 in light of Village Market II and Act 135 of 1999.

Affirmed.

Glaze and Corbin, JJ., not participating.