Madden v. Aldrich

Clinton Imber, Justice, dissenting. I dissent from the majority opinion because the majority’s interpretation of Arkansas’s lawyer-immunity statute, codified at Ark. Code Ann. §§ 16-22-310 (Repl. 1999), 16-114-303 (Supl. 2001), fails to grant immunity to Ms. Madden as required by the plain language of the statute. In determining the meaning of a statute, the first rule is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. Ford v. Keith, 338 Ark. 487 , 996 S.W.2d 20 (1999); Kildow v. Baldwin Piano & Organ, 333 Ark. 335 , 969 S.W.2d 190 (1998). The statute must be construed so that no word is left void or superfluous, and in such a way that meaning and effect is given to every word therein if possible. Id.

The clear meaning of Arkansas’s lawyer-immunity statute is apparent upon examining the statute’s plain language, one clause at a time. The statute begins by identifying those who may be eligible to benefit from the statutory immunity: “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. . . .” Ark. Code Ann. §§ 16-22-310 (a), -114-303(a). This plainly identifies two classes who may benefit from immunity — an attorney and a partnership or corporation including its employees, members, or officers. Id. The instant case does not involve a partnership or corporation because the Madden Law Firm is a sole proprietorship. Therefore, this first phase of the analysis considers only Ms. Madden’s actions as an individual attorney and owner of a sole proprietorship.

Next, the statute identifies the class of persons against whom immunity may be asserted — “shall [not] be liable to persons not in privity of contract with the person, partnership, or corporation. . . .” Ark. Code Ann. §§ 16-22-310 (a), -114-303(a). The majority correctly concludes that the Aldriches are not in privity with Mr. Humphrey, Ms. Madden, or the Madden Law Firm. Because the Aldriches lack privity, Mr. Humphrey, Ms. Madden, and the Madden Law Firm have immunity to the extent provided by the statute.

Finally, the statute sets out what an attorney and a partnership or corporation, including its employees, members, or officers, are immune from: “civil damages resulting from acts, omissions, decisions, or other conduct in connection with professional services performed by the person, partnership, or corporation, except for . . . fraud.” Ark. Code Ann. §§ 16-22-310 (a), -114-303(a) (emphasis added).

We first examine the impact of Arkansas’s lawyer-immunity statute on Ms. Madden as an individual attorney and as the owner of the Madden Law Firm, a sole proprietorship. The performance of professional services by a sole proprietor necessarily includes the performance of professional services by the sole proprietor’s attorney-employees. The majority correctly concludes that Mr. Humphrey was an employee of Ms. Madden and that his actions were within the scope of his employment. Thus, when Mr. Humphrey performed professional services as an employee of the Madden Law Firm, professional services were being performed by the sole proprietor of the firm, Ms. Madden, even though the firm was excused from liability due to the fraudulent nature of Mr. Humphrey’s acts.

Considering Mr. Humphrey’s performance of professional services to be those of the Madden Law Firm’s sole proprietor, Ms. Madden, and substituting her name in the appropriate places, the statute would read as follows: Ms. Madden (as sole proprietor of the Madden Law Firm) shall not be liable to the Aldriches, who are not in privity of contract with her, for civil damages resulting from her supervisory acts, omissions, decisions, or other conduct in connection with professional services performed by her through her employee, Mr. Humphrey. Clearly, the trial court below and the majority in affirming have failed to extend immunity to Ms. Madden as required by Arkansas’s lawyer-immunity statute.

The majority goes to great lengths in describing the “acts, omissions, decisions, and other conduct” that Ms. Madden performed or failed to perform while supervising Mr. Humphrey’s performance of professional services. The majority then concludes by stating that “[i]t does not require an attorney’s professional skills to suspect that another attorney may be stealing money. ...” The majority confiases the issue. While I agree that Ms. Madden’s suspicions did not require an attorney’s professional skills, her suspicions alone could not and did not constitute facts that could serve as the basis for a claim of negligent supervision. It was not her suspicions, but her “acts, omissions, decisions, and other conduct” taken as a result of her suspicions that formed the basis of a negligent supervision claim, and those “acts, omissions, decisions, or other conduct” are exacdy the type of activity for which the lawyer-immunity statute provides immunity.

If the Madden Law Firm were a partnership or corporation, Arkansas’s lawyer-immunity statute would also grant Ms. Madden immunity as a “partner, member, [or] officer” of the firm. Under these circumstances, the employee actually performing the acts would be immune from civil damages for the professional services the employee provided unless the acts constituted fraud or intentional misrepresentations. Furthermore, a member or officer of the law firm would be immune from civil liability for supervisory “acts, omissions, decisions, or other conduct,” if the supervisory acts were in connection with professional services provided by the employee-attorney.

Substituting the designations “employee-attorney” and “firm member” in the appropriate places, the statute would read as follows: Neither the employee-attorney nor any firm member shall be liable to the Aldriches, who are not in privity of contract with employee-attorney or firm member, for civil damages resulting from the firm member’s supervisory acts, omissions, decisions, or other conduct in connection with professional services performed by the employee-attorney. As demonstrated by this analysis, if the Madden Law Firm were included within the category of a “partnership or corporation of Arkansas licensed attorneys,” Arkansas’s lawyer-immunity statute would immunize Ms. Madden, as the firm member, from liability for damages resulting from her supervisory acts in connection with professional services performed by the employee-attorney, Mr. Humphrey.

While the intent of the General Assembly is clear from the statute’s plain language, a further examination of the General Assembly’s intent, as expressed in the emergency clause of the enactment and by the codification of the statute in two different chapters of the code, demonstrates the inconsistency between the majority’s opinion and the intent of the General Assembly.

The first question is whether the Madden Law Firm, a sole proprietorship, should be granted the same immunity as a partnership or corporation. Applying the statutory construction maxim “inclusio unius est exclusio alterius” (inclusion of one in a fist is to exclude all others) the sole proprietor of the Madden Law Firm would seem to be excluded from immunity for negligent supervision claims because her law firm is not a partnership or corporation. This interpretation would also exclude many, if not all, of the newer forms of business organizations, such as Limited Liability Companies. Such an interpretation leads to the absurd consequence that immunity would turn more on the type of business organization than on the specific factors identified in the statute, such as contractual privity. However, as the majority points out, “statutes will not be given a literal interpretation if it leads to absurd consequences that are clearly contrary to legislative intent.” See majority opinion (Citing Barclay v. First Paris Holding Co., 344 Ark. 711 , 42 S.W.3d 496 (2001)). The intent of the General Assembly appears to have been to limit the liability of attorneys, regardless of business organizational form. See 1987 Ark. Acts 661 , § 5 (emergency clause) (“the liability of. . . attorneys to persons not in privity of contract with them should be specifically outlined by legislative enactment . . .”). To interpret the statute otherwise would lead to absurd consequences the majority seeks to avoid.

An indication of the General Assembly’s intent may be reflected in a statute’s emergency clause. See, e.g, Dinkins v. Department of Human Services, 344 Ark. 207 , 40 S.W.3d 286 (2001); Haase v. Starnes, M.D., 323 Ark. 263 , 915 S.W.2d 675 (1996); Martin v. Frazier, 291 Ark. 120 (1987). The lawyer-immunity statute was enacted by Act 661 of 1987. The emergency clause in the Act provided in pertinent part:

It is hereby found and determined by the General Assembly that the liability of accountants and attorneys to persons not in privity of contract with them should be specifically outlined by legislative enactment; that this Act establishes the limits of such liability; and that this Act should go into effect as soon as possible. . . .

1987 Ark. Acts 661 , § 5 (emergency clause). This emergency clause clearly sets out the General Assembly’s intent to immunize attorneys from civil liability to those not in contractual privity with them unless specifically exempted by fraud or where the suing party is an intended and notified third-party beneficiary.

The majority appears to limit the immunity provided by the statutes to cases of legal malpractice; however, the enactment was codified in two separate chapters of the code. Section 16-114-303 is under a chapter entitled “Malpractice Actions,” and a subchapter entitled “Accountants and Attorneys;” whereas, section 16-22-310 appears under a chapter entitled “Attorneys at Law,” and a sub-chapter entitled “Rights and Liabilities.” Codifying the Act in both the general chapter governing attorneys at law, as well as the specific malpractice chapter may be indicative of the General Assembly’s intent to extend immunity to attorneys in cases of general civil liability as well as malpractice. Thus, the majority’s attempt to limit the protections of the Act to only direct legal professional services, i.e., malpractice, is inconsistent with the General Assembly’s intent.

Furthermore, the immunity granted by the General Assembly extends not only to professional services, but also to “acts, omissions, decisions, or other conduct in connection with professional services.” The majority’s attempt to narrow the impact of Arkansas’s lawyer-immunity statute to only professional services is clearly at odds with the immunity contemplated by the General Assembly’s use of such a broad phrase. Had the General Assembly intended to limit the grant of immunity to only professional services, they could have easily done so.

Finally, the effect of the majority’s decision is to open the floodgates to law suits against partners, members, and officers of legal business organizations by imposing liability on them for negligent or fraudulent actions taken by even the most junior attorney in the firm where the plaintiffs lack contractual privity with anyone in the firm. Ironically, under the majority’s interpretation, a first-year associate who performs a negligent professional act would be immunized from civil liability while any other member, partner, or officer who had any kind of supervisory authority over the associate would be subject to suit for negligent supervision, even though the supervisor only suspected negligent acts by the associate. Such a result was clearly neither the purpose nor the intent of the General Assembly when enacting Act 661 of 1987.

For these reasons, I respectfully dissent. The judgment should be reversed, and the case against Ms. Madden should be dismissed pursuant to Arkansas’s lawyer-immunity statute.

BROWN, J., joins in this dissent.