Rebecca Nichols v. James Swindoll and Chuck Gibson ( 2022 )


Menu:
  •                                  Cite as 
    2022 Ark. App. 233
    ARKANSAS COURT OF APPEALS
    DIVISION II
    No. CV-21-417
    Opinion Delivered May   18, 2022
    REBECCA NICHOLS
    APPELLANT APPEAL FROM THE PULASKI
    V.                             COUNTY CIRCUIT COURT, FIFTH
    DIVISION
    JAMES SWINDOLL AND CHUCK       [NO. 60CV-21-1321]
    GIBSON
    HONORABLE WENDELL GRIFFEN,
    APPELLEES JUDGE
    AFFIRMED
    N. MARK KLAPPENBACH, Judge
    Appellant Rebecca Nichols appeals the dismissal of her legal-malpractice lawsuit that
    she filed against her attorneys, appellees James Swindoll and Chuck Gibson. The circuit
    court granted the attorneys’ motion to dismiss, which asserted that any negligence claim was
    barred by the applicable three-year statute of limitations and that Nichols failed to adequately
    plead that the attorneys fraudulently concealed their malpractice. Nichols argues that it was
    erroneous to dismiss her complaint because her attorneys fraudulently concealed their
    malpractice from her, which tolled the statute of limitations. We affirm.
    Nichols was injured in a tractor-trailer rollover accident in November 2014. The
    three-year statute of limitations would expire in November 2017 on any tort action
    concerning that accident. Nichols hired appellees to file a negligence lawsuit, which they
    filed in September 2017, but the attorneys did not accomplish service on the proper
    defendants within 120 days or obtain an extension in which to serve the proper defendants.
    Thus, the statute of limitations expired on Nichols’s negligence lawsuit. Her lawsuit against
    the potential tortfeasors was dismissed in January 2021.
    Nichols identified the alleged legal malpractice as having occurred on January 19,
    2018, the date that the attorneys were required to have the defendants served or to have the
    court grant them an extension to obtain service.1 Using the date of the alleged malpractice
    (January 2018), Nichols had until January 2021 to file a legal-malpractice lawsuit against her
    attorneys. Nichols filed her complaint against her lawyers in February 2021 and filed an
    amended complaint in April 2021, both of which were beyond the three-year statute of
    limitations to sue the attorneys for malpractice. Nichols alleged in her complaint that on
    March 22, 2018, her attorneys realized they had committed malpractice; the attorneys failed
    in their fiduciary duty to inform her that their malpractice would result in the termination
    of her negligence lawsuit; and the attorneys did not inform Nichols until March 2020 of any
    legal mistakes and then revealed only a different legal mistake they had made in 2019.
    Swindoll filed a motion to dismiss. He argued that the statute of limitations on the
    underlying action expired in November 2017 and that Nichols’s February 2021 complaint
    1
    Nichols’s amended complaint refers to March 22, 2018, not January 19, 2018, as the
    date of the legal malpractice. However, in response to the attorneys’ motions to dismiss,
    Nichols stated that January 19, 2018, was the initial act of malpractice. The order dismissing
    Nichols’s complaint referred to the January 2018 date, and in her reply brief, Nichols
    confirms that January 2018 was the correct date of the legal malpractice.
    2
    alleging legal malpractice and her April 2021 amended complaint were filed beyond the
    three-year statute of limitations. Swindoll also contended that Nichols’s allegations of
    fraudulent concealment were conclusory and without a factual basis. Gibson, pro se, filed a
    similar motion to dismiss.
    Nichols alleged that her attorneys failed to inform her that it was their malpractice that
    caused her negligence lawsuit to be forever barred. Nichols alleged that their wrongful
    silence constituted fraudulent concealment of their legal malpractice. Nichols made
    conclusory allegations that her attorneys were acting with intent to drag out pointless
    litigation in the underlying case in the hopes that her right to sue them for legal malpractice
    would expire before she figured out what happened. Nichols contended that the statute of
    limitations had been tolled until March 2020 (when her attorneys admitted a different legal
    misstep), so she had until March 2023 to file a legal-malpractice lawsuit against her attorneys.
    The circuit court conducted a hearing on the motion to dismiss. After hearing
    extensive arguments and reading the amended complaint, the circuit court remarked that
    nowhere in the complaint could it find “when the allegedly fraudulently hiding of their
    malpractice occurred.” The circuit court stated that there were plenty of assertions in the
    complaint about what the attorneys should have done or should have told Nichols but that
    there was nothing in the complaint to demonstrate acts of fraudulent concealment or other
    furtive conduct intended to deceive Nichols. The circuit court read the paragraph alleging
    that the attorneys maliciously, willfully, and purposefully attempted to keep Nichols from
    knowing that her underlying lawsuit was time-barred, but that was a conclusory statement
    3
    with no facts. The circuit court read the complaint’s allegation that the attorneys committed
    “fraud and deceit by not informing her” that her underlying lawsuit was time-barred. The
    circuit court announced at the conclusion of the hearing that it was granting the attorneys’
    motion to dismiss because the malpractice lawsuit was not filed within the statute of
    limitations, and Nichols failed to plead facts sufficient to toll the running of the statute of
    limitation. The order of dismissal included these findings:
    3. A plaintiff seeking to toll a statute of limitation must plead facts showing
    the fraud is “furtively planned and secretly executed” so as to keep the fraud
    concealed. See Delanno v. Peace, 
    366 Ark. 542
    , 545, 237, S.W.3d 81 (2006). “[I]n the
    context of legal malpractice cases, it is clear that not only must there be fraud but the
    fraud must be furtively planned and secretly executed so as to keep the fraud
    concealed.” Rice v. Ragsdale, 
    104 Ark. App. 364
    , 373, 
    292 S.W.3d 856
     (2009).
    ....
    7. There are no facts contained in the Plaintiff’s Complaint or Amended
    Complaint sufficient to toll the running of the statute of limitations based on
    fraudulent concealment. There are no facts stated showing the elements of fraud,
    and there are no facts stated showing the alleged fraud was furtively planned and
    secretly executed.
    The statute of limitations for legal-malpractice negligence actions is three years, and
    absent concealment, it begins to run upon the occurrence of the wrong. Goldsby v. Fairley,
    
    309 Ark. 380
    , 
    831 S.W.2d 142
     (1992). Fraud suspends the running of the statute of
    limitations, and the suspension remains in effect until the party having the cause of action
    discovers the fraud or should have discovered it by the exercise of reasonable diligence.
    Martin v. Arthur, 
    339 Ark. 149
    , 
    3 S.W.3d 684
     (1999). In order to toll the statute of
    limitations, the fraud perpetrated must be concealed. Shelton v. Fiser, 
    340 Ark. 89
    , 
    8 S.W.3d
                                                  4
    557 (2000). Fraudulent concealment consists of “some positive act of fraud, something so
    furtively planned and secretly executed as to keep the plaintiff’s cause of action concealed,
    or perpetrated in a way that conceals itself.” Shelton, 
    340 Ark. at 96
    , 
    8 S.W.3d at 562
    .
    Accordingly, not only must there be fraud, but the fraud must also be furtively planned and
    secretly executed so as to keep the fraud concealed. 
    Id.
     In Rice v. Ragsdale, 
    104 Ark. App. 364
    , 
    292 S.W.3d 856
     (2009), we rejected the argument that two attorneys had a fiduciary
    duty to advise their clients that the statute of limitations was running on any claims the
    clients had against the attorneys after the attorneys’ legal malpractice came to light. When
    there is no evidentiary basis for a reasonable difference of opinion, a circuit court may resolve
    the question as a matter of law. Delanno, Inc. v. Peace, 
    366 Ark. 542
    , 545, 
    237 S.W.3d 81
    ,
    84 (2006).
    We review a circuit court’s decision on a motion to dismiss a complaint by treating
    the facts alleged in the complaint as true and by viewing them in the light most favorable to
    the plaintiff. Hutcherson v. Rutledge, 
    2017 Ark. 359
    , 
    533 S.W.3d 77
    . To prevail on a motion
    to dismiss a complaint on the basis of a statute-of-limitations defense, it must be barred on
    its face. 
    Id.
     The statute of limitations begins to run when the injury occurs, not when it is
    discovered, but affirmative actions of concealment of a cause of action will toll the statute of
    limitations. 
    Id.
     Ignorance of a right to pursue a cause of action, however, does not prevent
    the operation of the statute of limitations. 
    Id.
     The statute is tolled only when the ignorance
    is produced by affirmative and fraudulent acts of concealment. 
    Id.
     Therefore, to rebut a
    5
    limitations defense, a plaintiff must describe specific fraudulent acts committed for the
    purpose of concealing a cause of action. 
    Id.
    Our standard of review for the granting of a motion to dismiss is whether the circuit
    court abused its discretion. Steinbuch v. Univ. of Arkansas, 
    2019 Ark. 356
    , 
    589 S.W.3d 350
    .
    An abuse of discretion is a high threshold that requires not only error in the circuit court’s
    decision, but also that the ruling was made improvidently, thoughtlessly, or without due
    consideration. 
    Id.
     For purposes of a motion to dismiss, we treat only the facts alleged in a
    complaint as true and not a party’s theories or speculation. See Hutchinson v. McArty, 
    2020 Ark. 190
    , 
    600 S.W.3d 549
    . Conclusory statements are not sufficient under the Arkansas
    Rules of Civil Procedure, which identify Arkansas as a fact-pleading state. 
    Id.
    The allegations made in Nichols’s complaint do not describe any overt act to hide
    information from Nichols or any fraudulent concealment of the alleged malpractice.
    Instead, the allegations make sweeping conclusions about what Nichols believed her
    attorneys’ intentions were as they proceeded with litigation in the underlying case. We hold
    that Nichols filed her legal-malpractice lawsuit beyond the three-year statute of limitations
    and that Nichols failed to sufficiently plead affirmative acts of fraudulent concealment of the
    alleged January 2018 legal malpractice.
    We affirm the circuit court’s grant of the motion to dismiss and the order dismissing
    Nichols’s complaint.
    Affirmed.
    ABRAMSON and BROWN, JJ., agree.
    6
    SUPPLEMENTAL OPINION ON GRANT OF REHEARING
    OCTOBER 5, 2022
    2022 ARK. APP. 399
    In May 2022, we affirmed the circuit court’s dismissal of the legal-malpractice lawsuit
    that was filed by appellant Rebecca Nichols against her attorneys, appellees James Swindoll
    and Chuck Gibson. See Nichols v. Swindoll, 
    2022 Ark. App. 233
    . The circuit court had granted
    the attorneys’ motion to dismiss, which asserted that any negligence claim was barred by the
    applicable three-year statute of limitations and that Nichols failed to adequately plead that
    the attorneys fraudulently concealed their malpractice. Nichols filed a petition for rehearing
    following our original opinion.
    We issue this supplemental opinion only to respond to the dissenting opinions.
    Chief Judge Harrison contends that we used the wrong standard of review in this appeal and
    that a litany of cases from a multitude of federal and state courts show that the standard of
    review must be “de novo.” We applied the “abuse of discretion” standard, which has been
    recited numerous times over the years from this court, and more importantly, our supreme
    court. See, e.g., Steinbuch v. Univ. of Ark., 
    2019 Ark. 356
    , 
    589 S.W.3d 350
    ; Rhodes v. Kroger
    Co., 
    2019 Ark. 174
    , 
    575 S.W.3d 387
    . We are bound by Arkansas Supreme Court precedent
    and are powerless to overturn it. Nichols herself alleged in her point on appeal that the
    standard of review is “abuse of discretion.” While we appreciate the research presented by
    our dissenting colleague, his dissent presents arguments vigorously researched for the
    appellant and presented for the first time on petition for rehearing. This is not a proper
    basis for rehearing.
    7
    Both Chief Judge Harrison and Judge Hixson take issue with the level of duty placed
    on lawyers to communicate potential legal errors and whether this complaint should have
    survived the motion to dismiss. Chief Judge Harrison goes so far as to suggest that we revisit
    Rice v. Ragsdale, 
    104 Ark. App. 364
    , 
    292 S.W.3d 856
     (2009), because it “overstepped” and
    needs “correction.” Nichols cited Rice in her appellate brief and did not question its validity
    as precedent. The Rice holding rejected the notion that an attorney’s fiduciary duty extended
    to requiring disclosure of potential legal malpractice and rejected the idea that failure to
    disclose that negative information was evidence of an intent to conceal for purposes of tolling
    the statute of limitations. This court’s majority opinion followed Arkansas law as it stands
    today. Again, while we appreciate the scholarly and informative dissenting opinions, they
    make arguments for the appellant that were never raised by the appellant herself.
    Arkansas law requires an appellant’s complaint to contain facts sufficient to support
    the application of fraudulent concealment to toll the statute of limitations. Floyd v. Koenig,
    
    101 Ark. App. 230
    , 
    274 S.W.3d 339
     (2008). We held that the circuit court did not err, and
    we stand by that decision for the reasons previously stated. The dissenting judges simply
    disagree with the majority’s assessment.
    ABRAMSON, WHITEAKER, and BROWN, JJ., agree.
    HARRISON, C.J., and HIXSON, J., dissent.
    GRUBER, J., not participating.
    Harry McDermott, for appellant.
    8
    Barber Law Firm, PLLC, by: G. Spence Fricke and Adam D. Franks, for separate appellee
    James Swindoll.
    9