Opinion ID: 2277806
Heading Depth: 1
Heading Rank: 2

Heading: William's Appeal against Benson

Text: In William's third-party complaint against Benson, he first alleged that Benson, acting with full authority and on behalf of Deborah, misrepresented orally and by letter that the case was settled under William's terms that Deborah pay him $61,500 and, in return, he would sign a quit-claim deed to the house and real estate. However, William then alleged that when Deborah refused to honor the settlement agreement, Benson became personally liable because he was not acting at the direction and control of the plaintiff and with specific authority to settle all of the parties' property issues ... even though at all times he represented he was. As such, Benson breached his implied promise to the defendant ... that he had the specific authority to bind the plaintiff and was attempting to contractually bind the plaintiff to a settlement agreement ... pursuant to her instructions. William claimed damages in the amount of $1,000 plus attorney's fees and costs resulting from the plaintiff's failure to honor said agreement. It should be noted that William never sued Benson for breach of contract in that he acknowledges that Benson did not have the authority to contract for Deborah. In addition, William never followed through on his breach of contract claim against Deborahhe nonsuited it so there is no finding that there was a breach of contract here. Although the trial court dismissed William's claim against Benson because there was no written contract for the sale of property and Benson was not in privity of contract with William to be liable on the contract, we will only address this second finding by the trial court. We hold that Benson cannot be liable to William for this breach of implied promise claim under Ark.Code Ann. § 16-22-310, an attorneyimmunity statute. Arkansas Code Annotated § 16-22-310, titled Liability for civil damages, states: (a) No person licensed to practice law in Arkansas and no partnership or corporation of Arkansas licensed attorneys or any of its employees, partners, members, officers, or shareholders shall be liable to persons not in privity of contract with the person, partnership, or corporation for civil damages resulting from acts, omissions, decisions, or other conduct in connection with professional services performed by the person, partnership, or corporation, except for: (1) Acts, omissions, decisions, or conduct that constitutes fraud or intentional misrepresentations; or (2) Other acts, omissions, decisions, or conduct if the person, partnership, or corporation was aware that a primary intent of the client was for the professional services to benefit or influence the particular person bringing the action. For the purposes of this subdivision, if the person, partnership, or corporation: (A) Identifies in writing to the client those persons who are intended to rely on the services, and (B) Sends a copy of the writing or similar statement to those persons identified in the writing or statement, then the person, partnership, or corporation or any of its employees, partners, members, officers, or shareholders may be held liable only to the persons intended to so rely, in addition to those persons in privity of contract with the person, partnership, or corporation. (b) This section shall apply only to acts, omissions, decisions, or other conduct in connection with professional services occurring or rendered on or after April 6,1987. This immunity statute for attorneys protects them from civil liability for actions they take during the course of their employment as an attorney. This court has held that [t]he plain language of Ark. Code Ann. § 16-22-310 requires the plaintiff to have direct privity of contract with `the person, partnership, or corporation' he or she is suing for legal malpractice. McDonald v. Pettus, 337 Ark. 265, 271, 988 S.W.2d 9, 12 (1999). Similarly, this court has held that Ark.Code Ann. § 16-22-310 enunciates the parameters for litigation by clients against attorneys[.] Clark v. Ridgeway, 323 Ark. 378, 388, 914 S.W.2d 745, 750 (1996). In Madden v. Aldrich, 346 Ark. 405, 58 S.W.3d 342 (2001), the plaintiffs sued an attorney under a claim of negligent hiring and supervising of another attorney-employee who defrauded the plaintiffs in an adoption case. The attorney defendant argued in part that she was immune from suit under Ark.Code Ann. § 16-22-310 because the plaintiffs's claims arose from a legal-malpractice action. The plaintiffs argued that Ark.Code Ann. § 16-22-310 provided immunity to attorneys only when they are sued for legal malpractice or professional negligence, and since that claim was neither, the attorney was not immune. This court agreed that the plain language of the provision demonstrates that the immunity provided is limited to suits based on conduct in connection with professional services rendered by the attorney. As such, because the claim was for negligent hiring and supervising of an employee, as opposed to malpractice in the adoption action itself, the attorney defendant was not immune under the statute. In contrast, however, this court in McDonald, supra , found that a decedent's attorney was not liable to the decedent's children individually or as third-party beneficiaries of the estate for alleged negligence in the drafting of the decedent's will. We determined that the children were not in privity of contract with the attorney and, thus, the attorney was immune from suit under Ark.Code Ann. § 16-22-310 for his alleged negligence in drafting the decedent's will. This court stated: The plain language of Ark.Code Ann. § 16-22-310 requires the plaintiff to have direct privity of contract with the person, partnership, or corporation he or she is suing for legal malpractice. Likewise, we have narrowly construed the privity requirement to require direct privity between the plaintiff and the attorney or entity to be held liable for legal malpractice. See Clark v. Ridgeway, 323 Ark. 378, 914 S.W.2d 745 (1996); Wiseman v. Batchelor, 315 Ark. 85, 864 S.W.2d 248 (1993). In particular, in Clark we said that the language of this section [Ark.Code Ann. § 16-22-310(a)] is precise and clear and reveals that the contract contemplated by the statute relates to a contract for professional services performed by the attorney for the client. Clark, supra . McDonald, 337 Ark. at 271-272, 988 S.W.2d 9. This court did, however, remand the case to the trial court for further proceedings in the tort and breach-of-contract claims filed by the personal representatives of the estate against the attorney. We did so because the personal representatives brought the claims on behalf of the decedent, because the estate stood in the shoes of the decedent, who was in privity of contract with the attorney. These cases define the parameters of the statute by showing that an attorney may not be sued by a third party for his nonfraudulent acts committed during the course of his representation of his client because he was not in privity with the third party. This is what the trial court found here where the trial court determined that Benson was not in privity of contract with William and, thus, could not be liable to him for his professional dealings on that contract. Regarding privity, William argues that general agency law in Arkansas allows this lawsuit. He cites the case of Hart v. Bridges, 30 Ark.App. 262, 786 S.W.2d 589 (1990), for the proposition that Arkansas recognizes the liability of an agent for contracts created outside his authority for a disclosed principal. In Hart , the court of appeals determined that a school principal was personally liable on a contract that he had a prospective teacher sign, despite the fact that the principal did not have the authority to hire the teacher without the school board's approval. The teacher, relying on this signed contract, incurred debt by buying a car and other items, believing that he had a job. The school board, however, refused to hire the teacher. The teacher sued the school principal on a breach of contract claim, arguing that the principal was personally liable on the contract. While the court of appeals recognized that the statutes clearly indicate that only a school board can hire a teacher, and that the teacher was charged as knowing these laws, the court determined that Arkansas's general agency law still bound the principal to the contract. The court of appeals stated: Appellant is correct in his assertion that, generally, an agent who contracts in the name of his principal without authority, so that the principal is not bound, may be personally liable to the other contracting party. See Lasater v. Crutchfield, 92 Ark. 535, 538, 123 S.W. 394, 395 (1909). In such cases, the law may imply a contract between the injured party and the agent upon the agent's implied warranty of his authority. Dale v. Donaldson Lumber Co., 48 Ark. 188, 192, 2 S.W. 703, 704 (1887). Hart, 30 Ark.App. at 268, 786 S.W.2d 589. Based on this general premise, the court of appeals reversed the trial court's grant of summary judgment finding that questions of fact remained. Hart is different from this case, however, for the specific reason that while the court of appeals held that the principal was subject to general agency provisions despite the statutes that stated that only the school board could approve a contract, here Benson, as an attorney, is specifically immune from liability absent fraud or intentional misrepresentation. In other words, there is a specific statute that protects Benson from liability here, whereas in Hart the principal had no such protection and was subject to general agency principles. This conclusion, however, does not end the analysis because the lawyer-immunity statute contains two exceptions to the privity requirement. First, no privity is required for [a]cts, omissions, decisions, or conduct that constitutes fraud or intentional misrepresentations. Ark.Code Ann. § 16-22-310(a)(1). However, constructive fraud, for example, is not included in this exception because the exception is one for intentional acts. Wiseman v. Batchelor, 315 Ark. 85, 864 S.W.2d 248 (1993). This section is clearly inapplicable because William did not assert fraud or intentional misrepresentations in his third-party complaint, but instead asserts an amorphous breach of implied promise claim, which necessarily had to arise from Benson's conduct as Deborah's attorney. Therefore, because Benson was only in privity of contract with Deborah for attorney services rendered in connection with her divorce claim, William cannot assert a claim against Benson without some showing of fraud or intentional misrepresentation, which he never alleges in this case. In looking at the trial court's order, the judge effectively applied the immunity statute by finding that there were no facts to show that Benson was in privity of contract with William. As such, regardless of general Arkansas agency law and in the complete absence of any allegations of intentional misrepresentation or fraud, Ark.Code Ann. § 16-22-310 applies to shield Benson in this lawsuit.