Title: Rogers v. Tudor Ins. Co.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

Barbara ROGERS v. TUDOR INSURANCE COMPANY

96-177                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered July 1, 1996


1.   Appeal & error -- notice of appeal -- filing is jurisdictional
     -- only substantial compliance with procedural rule required.
     -- The filing of a notice of appeal is jurisdictional, but
     irregularities in the other procedural steps are merely
     grounds for such action as the appellate court deems
     appropriate; the procedural steps outlined in Ark. R. App. P.
     Rule 3(e) require only substantial compliance, provided that
     the appellee has not been prejudiced by the failure to comply
     strictly with the rule.

2.   Appeal & error -- substantial compliance with Ark. R. App. P.
     3(e) -- motion to dismiss denied. -- Where the supreme court
     discerned no intent on appellant's part to disregard Ark. R.
     App. P. 3(e); where there was no prejudice to appellee
     occasioned by appellant's failure to designate the record or
     to state that the transcript had been ordered within the
     thirty-day period; where the Designation of the Record, which
     designated the pleadings, motions, and order, was filed two
     weeks after the notice of appeal; and where the appeal was
     from an order of summary judgment and no testimony was
     involved, the supreme court held that there was substantial
     compliance with Ark. R. App. P. 3(e) and denied the motion to
     dismiss.

3.   Appeal & error -- order reviewed as one for summary judgment.
     -- Although appellee insurance company moved to dismiss the
     case under Ark. R. Civ. P. 12(b)(6), the trial court correctly
     treated the motion as one for summary judgment, having made
     its decision based in part on the language of the insurance
     policy that was attached to appellee's reply to its motion to
     dismiss; as a consequence, the supreme court reviewed the
     order as one for summary judgment even though it was styled
     "Order of Dismissal."

4.   Statutes -- construction -- ascertaining legislative intent. -
     - The basic rule of statutory interpretation, to which all
     other interpretative guides must yield, is to give effect to
     the intent of the General Assembly; in ascertaining
     legislative intent, the supreme court looks to the statutory
     language, subject matter, object to be accomplished, purpose
     to be served, remedy provided, legislative history, and other
     appropriate matters.

5.   Statutes -- direct-action statute -- elements necessary for
     application. -- Under Ark. Code Ann.  23-79-210 (Repl. 1992),
     which provides for a direct cause of action against a
     liability insurer where the insured is not subject to a tort
     suit, the following elements must exist for the statute to
     apply: (1) liability insurance must be carried by a nonprofit
     corporation; (2) a person must suffer injury or damage on
     account of negligence or wrongful conduct; and (3) the damage
     or injury must be on account of the negligence or wrongful
     conduct of "servants, agents, or employees" of the nonprofit
     corporation acting within the scope of their agency or
     employment.

6.   Statutes -- direct-action statute -- General Assembly did not
     equate "carrying" liability insurance with "covering"
     corporation -- liberal construction. -- Where there was no
     dispute concerning the fact that appellant's former employer,
     a nonprofit corporation, "carried" liability insurance on its
     officers and directors, the issue was whether the General
     Assembly equated "carrying" liability insurance with
     "covering" the corporation itself, and the supreme court
     declined to give Ark. Code Ann.  23-79-210 such a narrow
     interpretation; direct-action statutes are remedial in nature
     and are liberally construed for the benefit of injured parties
     and to effectuate the intended purposes.

7.   Statutes -- direct-action statute -- officers and directors of
     nonprofit corporation were "servants, agents, or employees"
     under statute. -- The supreme court held that the officers and
     directors of appellant's former employer fell within the broad
     category of "servants, agents, or employees" of the nonprofit
     corporation under Ark. Code Ann.  23-79-210; officers and
     directors who are also employees of the nonprofit corporation
     qualify.

8.   Corporations -- nonprofit corporation -- corporate entity can
     act only through directors and officers. -- Arkansas Code
     Annotated  4-33-801(b) (Repl. 1996) makes it clear that the
     powers of a nonprofit corporation are exercised through its
     directors; it is the officers of a nonprofit corporation who
     perform the duties fixed by the corporation's by-laws and
     prescribed by its directors; officers and directors routinely
     act as agents for a corporation; indeed, a corporate entity
     can only act through its directors and officers; in the
     present case, it was the action of the president and the
     treasurer of the nonprofit corporation that gave rise to the
     litigation.

9.   Statutes -- direct-action statute -- appellee insurance
     company subject to direct cause of action -- reversed and
     remanded. -- Where the direct-action statute did not require
     that the nonprofit corporation itself be the named insured
     under the policy, which would have been an easy matter for the
     General Assembly to have required, but only mandated that the
     coverage be carried by the nonprofit corporation, and where
     the nonprofit corporation in question carried the coverage,
     and the corporation's officers and directors were the named
     insureds, the supreme court concluded that appellee insurance
     company was subject to a direct cause of action; the matter
     was reversed and remanded.


     Appeal from Pulaski Circuit Court; David B. Bogard, Judge;
reversed and remanded.
     Karr & Hutchinson, by: W. Asa Hutchinson, for appellant.
     Wright, Lindsey & Jennings, by: Harry S. Hurst, Jr., for
appellee.

     Robert L. Brown, Justice. Associate Justice Robert L. Brown
July 1, 1996   *ADVREP*SC6*






BARBARA ROGERS,
                    APPELLANT,

V.

TUDOR INSURANCE COMPANY,
                     APPELLEE,

96-177




APPEAL FROM THE PULASKI COUNTY
CIRCUIT COURT,
NO. 95-7081,
HON. DAVID B. BOGARD, JUDGE,

MOTION TO DISMISS BY TUDOR
INSURANCE COMPANY DENIED,


REVERSED AND REMANDED.






     Two points are raised in this appeal.  The first is one of
jurisdiction and concerns whether appellant Barbara Rogers effected
her appeal in timely fashion.  We believe that she did, and we deny
the motion to dismiss by appellee Tudor Insurance Company.  The
second point is raised by Rogers and concerns alleged error by the
trial court in granting summary judgment in favor of Tudor
Insurance on the issue of whether the liability coverage carried by
Tudor Insurance permitted a direct action against that carrier.  We
conclude that the trial court did err, and we reverse the judgment
and remand the matter for trial.
     On June 29, 1995, Rogers sued Tudor Insurance as the insurance
carrier for PEOPL, Inc., a cooperative nonprofit corporation known
as Personal Empowerment of the Psychiatrically Labeled, Inc.
(PEOPL).  The suit was brought under the Direct Action statute,
which is codified at Ark. Code Ann.  23-79-210 (Repl. 1992).  The
complaint asserted that Rogers was employed by PEOPL from February
of 1994 through January 21, 1995.  She received a letter of
termination dated January 21, 1995, and signed by PEOPL's president
and treasurer.  Prior to that letter, she alleged that she had no
knowledge of any problems with her employment.  She further
asserted that the letter implied financial irregularities on her
part but did not invite her to present a response to any charges,
which was in violation of the organization's rules.
     As a result of her termination, Rogers claimed that she was
subjected to public embarrassment because the agents, directors,
and employees of PEOPL made public comments "about alleged
irregularities and financial misdealings on the part of the
Plaintiff."  According to her complaint, the stories were reported
in the Arkansas Democrat-Gazette newspaper and on television
broadcasts, and the public allegations and unfounded stories
damaged her reputation.  She sought to recover from Tudor Insurance
for the negligence of the "officers, directors and agents" of PEOPL
as well as for an intentional infliction of emotional distress. 
She further claimed a breach of her employment contract.
     On August 3, 1995, Tudor Insurance filed a motion to dismiss
under Ark. R. Civ. P. 12(b)(6) for failure to state facts upon
which relief could be granted.  In that motion, Tudor Insurance
argued that the Direct Action statute was inapplicable to the facts
as set forth in the complaint.  According to the carrier, the
statute allows direct actions against the insurer of a non-profit
entity and does not authorize direct actions against carriers which
provide coverage for officers and directors of non-profit
organizations.  Thus, because PEOPL was not insured, Tudor
Insurance maintained that a direct action could not survive.
     The trial court treated the motion as one for summary judgment
and on October 13, 1995, it entered its order of dismissal.  Rogers
then filed her notice of appeal on November 13, 1995.  Her notice
of appeal, however, did not designate the record on appeal or state
that a transcript of testimony had been ordered.  Tudor Insurance
filed a motion to dismiss the appeal in the trial court on grounds
that Rogers's notice of appeal was ineffective.  On November 27,
1995, which was two weeks after the notice of appeal was filed,
Rogers filed a "Designation of Record on Appeal."  In that filing,
she stated that no transcript was ordered because no testimony was
taken and the appeal was only based on a record which included the
pleadings, motions, and order on file with the circuit clerk.  In
an order entered on January 3, 1996, the trial court denied the
motion to dismiss for lack of jurisdiction.

                       I. Notice of Appeal
     We first address Tudor Insurance's contention that Rogers's
notice of appeal is defective for her failure to designate the
record and order a transcript as required by Ark. R. App. P. 3(e). 
As a corollary point, Tudor Insurance notes that when the
Designation of Record was filed, it was outside the 30-day period
for filing the notice of appeal and consequently was ineffective.
     Rule 3(e) of the Rules of Appellate Procedure states that a
notice of appeal:
     [S]hall designate the judgment, decree, order or part
     thereof appealed from and shall designate the contents of
     the record on appeal. The notice shall also contain a
     statement that the transcript, or specific portions
     thereof, have been ordered by the appellant.
Tudor Insurance concedes that the November 13, 1995 notice of
appeal does name the parties and the order appealed from, but the
carrier contends that the notice was fatally deficient nonetheless
because of its omissions relating to the transcript and record. 
Rogers, on the other hand, argues that there was substantial
compliance with Appellate Rule 3(e) because the record in this case
was obvious and, in any event, a Designation of Record was filed,
albeit two weeks after the notice of appeal.
     This court has held that "[t]he filing of a notice of appeal
is jurisdictional but irregularities in the other procedural steps
. . . are merely grounds for such action as this court deems
appropriate."  Brady v. Alken, Inc., 273 Ark. 147, 151,