Opinion ID: 1716353
Heading Depth: 1
Heading Rank: 2

Heading: Negligence and Fraud

Text: Mary Clark's first contention in this appeal is that the trial judge erroneously dismissed the case on the basis of the immunity statute for certain lawyers (§ 16-22-310(a)). According to Clark, that statute is inapplicable to this case because privity of contract existed between Ridgeway and her. The privity of contract asserted was based on an oral agreement that Ridgeway could serve as Master for Clark Industries, if he represented neither party in the divorce action. Clark attached Ridgeway's affidavit, which she contends memorializes the contract, and her own affidavit to support her contention. The apposite statute relating to privity of contract and lawyer immunity reads: (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.... Ark.Code Ann. § 16-22-310(a) (Repl.1994). The language of this section 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. Here, taking the affidavits submitted at face value and the allegations of a contract to be true, the asserted contract did not relate to Ridgeway's performance of professional services rendered to Mary Clark. Rather, the alleged breach appears to relate to Ridgeway's representation of Harvey Clark in matters concerning the divorce, which he agreed not to do. We admit to having some doubt about whether the 1989 affidavit bound Ridgeway not to represent Harvey Clark after the divorce decree, but even assuming it did, the alleged contract still does not involve Ridgeway's legal representation of Mary Clark. If privity of contract is held to be lacking, Clark asserts that § 16-22-310(a)(1) still provides for a cause of action against attorneys for intentional misrepresentations or fraud. That is true. To establish fraud, the following elements must exist: (1) a false representation, usually of a material fact; (2) knowledge or belief by the defendant that the representation is false; (3) intent to induce reliance on the part of the plaintiff; (4) justifiable reliance by the plaintiff; and (5) resulting damage to the plaintiff. Wiseman v. Batchelor, 315 Ark. 85, 864 S.W.2d 248 (1993). Clark alleges in her complaint that Ridgeway knew or should have known that his representations were false when made. She then goes forward and asserts that Ridgeway later served as legal counsel for Harvey Clark in child custody matters which were part of the divorce proceedings. This legal work occurred after the divorce decree as witnessed by Mary Clark's affidavit attached to her response to motion to dismiss: After the divorce, Mr. Ridgeway represented my ex-husband, Harvey Clark, in a custody fight between me and Mr. Clark and also represented Mr. Clark in a court case in which the terms of the settlement agreement reached in the divorce were at issue. It is clear to us that a promise or averment cannot be made false by subsequent events and still fall under the umbrella of intentional fraud unless the party making the promise knew it would not be kept at the time of the promise. See Anthony v. First Nat'l Bank of Magnolia, 244 Ark. 1015, 431 S.W.2d 267 (1968); Undem v. First Nat'l Bank, 46 Ark.App. 158, 879 S.W.2d 451 (1994). In the Undem case, the Court of Appeals considered an appeal from summary judgment entered in favor of First National Bank of Springdale. An affidavit of the appellant averred that an agent of First National Bank had advised him that he would be relieved of liability on a promissory note he made to the bank when he went off the board of a second bank. He went off the board of the second bank but was then sued by First National Bank on the promissory note. He alleged fraud by the bank's agent but the trial court entered summary judgment against him, apparently on the basis that representations relating to future events cannot afford a basis for actionable fraud. The Court of Appeals reversed and held that a genuine issue of material fact existed on fraudulent inducement. The instant case is different from Undem v. First Nat'l Bank, supra . Here, Clark points to Ridgeway's legal representation of Harvey Clark after the divorce decree in the foreclosure action and the change-of-custody battle. Unlike the liability on the promissory note in the Undem case, neither lawsuit could have been foreseen with any degree of certainty when the 1989 affidavit was made by Ridgeway. Both developed from circumstances arising after the divorce decree. We find no factual basis for the conclusory allegation in Clark's amended complaint that Ridgeway intentionally misrepresented his statement of neutrality in the divorce case on August 11, 1989. See Evans Indus. Coatings, Inc. v. Chancery Court, Union County, 315 Ark. 728, 870 S.W.2d 701 (1994). Thus, we conclude that no genuine issue of material fact has been presented on the immunity question with respect to negligence and fraud and that the court's finding and conclusion that Ridgeway was immune from Clark's complaint under § 16-22-310 was correct. Nor do we view § 16-22-310 as usurping this court's authority to regulate the practice of law. See Ark. Const. amend. 28. The statute enunciates the parameters for litigation by clients against attorneys and does not conflict with any rule or decision by this court. The arguments of legislative usurpation and violation of the separation of powers are meritless.