Sexton Law Firm, P. A. v. Milligan

SEXTON LAW FIRM, P.A., and Sam Sexton, Jr. v.
Phillip J. MILLIGAN

97-52                                              ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered June 30, 1997


1.   Master & servant -- employment at will -- handbook provisions may become
     part of employment contract. -- If the language in an employer's
     handbook is sufficiently definite to constitute an offer, and
     the offer has been communicated by dissemination of the
     handbook to the employee, the next question is whether there
     has been an acceptance of the offer and consideration
     furnished for its enforceability; in the case of unilateral
     contracts for employment, where an at-will employee retains
     employment with knowledge of new or changed conditions, the
     new or changed conditions may become a contractual obligation;
     in this manner, an original employment contract may be
     modified or replaced by a subsequent unilateral contract; the
     employee's retention of employment constitutes acceptance of
     the offer of a unilateral contract; by continuing to stay on
     the job, although free to leave, the employee supplies the
     necessary consideration for the offer.

2.   Evidence -- trial court erred in excluding appellant's handbook --
     appellant entitled to new trial on breach-of-contract claim. -- The
     supreme court concluded that appellant had laid a foundation
     that appellee, whether deemed an employee or independent
     contractor, received appellant law firm's handbook in April
     1993 and remained on the job and continued to retain the
     benefits of his association with the law firm until November
     1, 1995; the court held that the trial court erred in
     excluding the handbook from evidence and that appellant was
     entitled to a new trial on his breach-of-contract claim. 

3.   Evidence -- testimony of former and present attorneys at law firm regarding
     agreements not cumulative -- trial court abused discretion in excluding. -
     - Although a trial court may act within its discretion in
     excluding cumulative evidence, the supreme court concluded
     that the testimony of former and present attorneys at
     appellant law firm was not cumulative and that the testimony
     of the other attorneys would have been highly probative of
     appellee's agreement with appellant; without the testimony,
     the jury was left to determine only whether to believe the
     testimony of appellant or appellee; the supreme court held
     that the attorney contracts were admissible and that the trial
     court abused its discretion in excluding them.

4.   Motions -- directed verdict -- review of order granting. -- In reviewing
     an order granting a motion for directed verdict, the appellate
     court views the evidence in the light most favorable to the
     party against whom the verdict was directed; if any
     substantial evidence exists that tends to establish an issue
     in favor of that party, it is error for the trial court to
     grant the motion for directed verdict.
5.   Duty -- determination of fiduciary duty is matter of law. -- The
     determination of a fiduciary duty is a matter of law.

6.   Election of remedies -- trial court erred in refusing to submit claim of
     breach of fiduciary duty to jury -- election-of-remedies doctrine does not
     limit number of causes of action to be submitted to jury. -- The trial
     court erred in refusing to submit appellant's claim of breach
     of fiduciary duty to the jury on the basis that the claim was
     included within appellant's claim for breach of contract;
     appellant was entitled to have the two claims of breach of
     contract and breach of fiduciary duty considered by the jury
     if both were supported by substantial evidence; while the
     doctrine of election of remedies bars more than one recovery
     on inconsistent remedies, it does not limit the number of
     causes of action asserted by a plaintiff to be submitted to
     the jury.

7.   Duty -- claims for breach of fiduciary duty and breach of contract are not
     identical -- liability distinguished. -- Claims for breach of
     fiduciary duty and breach of contract are not identical causes
     of action; a person may be liable for breach of contract if
     the complaining party can prove the existence of an agreement,
     breach of the agreement, and resulting damages; but a person
     standing in a fiduciary relationship may be held liable for
     any conduct that breaches a duty imposed by the fiduciary
     relationship; regardless of the express terms of an agreement,
     a fiduciary may be held liable for conduct that does not meet
     the requisite standards of fair dealing, good faith, honesty,
     and loyalty; the guiding principle of the fiduciary
     relationship is that self-dealing, absent the consent of the
     other party to the relationship, is strictly proscribed.

8.   Duty -- trial court erred in granting appellee's directed-verdict motion
     on breach-of-fiduciary-duty claim. -- Where appellant testified that
     appellee engaged in self-dealing to appellant law firm's
     detriment; that, without knowledge and consent, appellee used
     firm resources to achieve settlements and attorney fees in two
     cases; and that the fees then provided appellee with the
     resources to finance a settlement in another case, which
     resulted in substantial legal fees to the exclusion of
     appellant law firm; and where the evidence was buttressed by
     proof that appellee misrepresented the removal of open and
     closed files to appellant on the night of the removal, the
     supreme court held that, under these unique circumstances and
     without deciding the issue of whether a fiduciary duty was
     owed by appellee to appellant, the trial court erred in
     granting appellee's directed-verdict motion on appellant's
     claim for breach of fiduciary duty.

9.   Fraud -- elements required to establish claim. -- Under Arkansas law,
     the following elements must be established by a preponderance
     of the evidence in order to present a claim for fraud: (1) a
     false representation, usually of 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. 

10.  Fraud -- substantial evidence that appellee's conduct constituted fraud --
     issue should have gone to jury. -- Where appellant had acquired a
     fifty percent interest in any attorney's fees acquired from
     the open files taken by appellee; where appellant testified
     that appellee had misrepresented his actions with the intent
     that they be relied upon by appellant for the purpose of
     acquiring a 100 percent interest in attorney's fees that would
     soon thereafter be achieved; and where appellant further
     testified that he relied on the misrepresentation and was
     severely damaged, the supreme court concluded that there was
     substantial evidence that appellee's conduct was the type of
     misfeasance that constituted fraud and that the issue should
     have gone to the jury.

11.  Witnesses -- expert testimony -- decision to allow within trial court's
     discretion -- trial court correctly excluded law professor's testimony. --
     The decision whether to allow expert testimony is a matter
     within the trial court's discretion, and the trial court will
     not be reversed absent an abuse of that discretion; where
     appellant attempted to elicit testimony from a legal ethics
     professor on what is customarily done in the legal profession
     by an attorney when he plans to leave a law firm, the supreme
     court concluded that what is customary or usual within the
     legal profession had no bearing where the parties disagreed
     about whether appellee had agreed to pay fifty percent of fees
     after leaving the firm and held that the trial court correctly
     excluded the testimony of the legal ethics professor.

12.  Evidence -- admission of correspondence concerning expense audits within
     trial court's discretion. -- Rule 408 of the Arkansas Rules of
     Evidence does not provide a blanket protection against the
     admission of all evidence concerning offers of compromise; for
     example, the rule does not prohibit evidence when it is
     offered for reasons other than proving liability for, the
     invalidity of, or the amount of the claim or any other claim;
     the decision on whether the probative value of admitting 
     correspondence pertaining to settlement negotiations is
     substantially outweighed by its prejudicial effect is left to
     the sound discretion of the trial court; the supreme court
     held that, absent a manifest abuse of that discretion, the
     trial court's decision will not be disturbed.

13.  Evidence -- no abuse of discretion by trial court in receiving expense
     audits. -- Where appellee contended that the trial court
     properly admitted correspondence concerning expense audits
     because it was relevant to appellant's credibility since he
     made no demand at that time for 50 percent of the attorney's
     fees appellee was to receive from files he took, the supreme
     court held that appellee's contention presented "another
     purpose" under Ark. R. Evid. 408 for admitting the expense
     audits into evidence; there was no abuse of discretion by the
     trial court in receiving them.


     Appeal from Sebastian Chancery Court; John Lineberger, Judge;
reversed and remanded.
     Matthew Horan, for appellants.
     John Everett, for appellee.

     Robert L. Brown, Justice.
     Appellants Sexton Law Firm, P.A., and Sam Sexton, Jr.
(Sexton), appeal a judgment in favor of appellee Phillip J.
Milligan on Sexton's claim of breach of contract, claiming error by
the trial court in excluding certain evidence.  Sexton further
claims that the trial court erred in directing a verdict in favor
of Milligan on his claims of fraud and breach of fiduciary duty. 
We agree that the trial court erred in excluding evidence of the
Firm Handbook as well as evidence of the arrangements with other
attorneys associated with the Sexton Law Firm.  We further agree
that the trial court erred in directing a verdict on the fraud and
breach-of-fiduciary-duty counts.  We reverse the trial court on
these points and remand the matter for further proceedings.
     This litigation arose out of the arrangement struck between
Sexton and Milligan relating to Milligan's practice of law between
April 1, 1992, and November 1, 1995.  Certain facets of that
arrangement are not in dispute.  Sexton was to provide Milligan
with office space, utilities, telephone services, advertising,
library facilities, stationery, clerical and secretarial services,
and other expenses necessary to the practice of law.  Milligan
would receive 50 percent of all attorney fees generated by cases
assigned to him minus expenses incurred in the preparation and
trial of such cases.  For cases that were either dismissed or
unsuccessfully tried, Milligan and Sexton would equally divide the
costs incurred during representation.  Milligan would be assigned
cases based on a rotation system set up by Sexton for all attorneys
working at the law firm with similar arrangements.
     On Saturday night, November 1, 1995, Sam Sexton was advised
that Milligan was loading case files from the law firm into his
Ford Explorer.  Sexton called Milligan and was assured that he was
merely moving closed files that were taking up space in his office
to storage.  The following Monday Sexton learned that Milligan had
cleared out his office and had removed multiple closed and open
case files from the law firm premises.  Milligan does not deny
taking the files but has contended throughout that the clients
involved were his clients -- not Sexton's.
     On February 27, 1996, Sam Sexton and the professional
association of which he was sole shareholder filed an amended
complaint against Milligan and alleged that Milligan, an
independent contractor, had breached his agreement with the law
firm.  Sexton further alleged that commencing in February 1995,
Milligan devised a scheme where Sexton would incur substantial
expense for the preparation of certain cases assigned to Milligan
only to have Milligan leave and open his own law firm with the
intent to keep all fees generated.  Sexton sought an accounting for
moneys owed and injunctive relief to prevent the destruction of
files taken and to require their return based on claims of breach
of fiduciary duty and interference with contractual relations.  He
also asserted a claim for fraud and deceit and asked for both
compensatory and punitive damages.
     Milligan answered and admitted that he entered into an oral
contract with Sexton that established his relationship as an
independent contractor.  He denied that the agreement encompassed
the terms of the law firm's handbook on procedure ("Firm
Handbook").  He asserted that his relationship with the law firm
was one of independent contractor and that he had formed a
professional association known as "Phillip J. Milligan, Inc."
     Sexton moved for a jury trial on the fraud count.  He urged
that the chancery court decide the issues of equitable relief (the
accounting and the restraining order) but empanel a jury and accept
its recommendation for the claims for compensatory and punitive
damages.  Both sides agreed to this, and the trial court approved
submission of the breach of fiduciary duty and fraud counts for a
binding verdict.  Sexton then filed a second amended complaint that
added a claim for breach of contract, which was also agreed to be
submitted to the jury.
     At trial, Milligan was called by Sexton as a witness and
testified about his arrangement with Sexton, as already described. 
He testified that this arrangement remained the same throughout his
experience with Sexton, and that the agreement was the same as that
for the other attorneys who were with the firm when he joined. 
Because Milligan was new to the practice of law and had yet to
achieve a client base, part of the agreement included a six-month
probationary period, where Sexton agreed to advance Milligan $2,000
per month for living expenses.  According to Milligan, the
agreement was waived after three months because 50 percent of the
fees he had generated at that time exceeded the $2,000 per month
advance.  He testified that he received assistance from members of
the firm on cases and offered assistance to other attorneys in
return.  He testified about occasional meetings of attorneys headed
by Sexton for the discussion of cases and admitted that on at least
one occasion attorneys were required to submit a memorandum on the
number of open cases and possible fees to be recovered.  He
testified about several forms used in the firm and particularly
about the attorney-client form, which listed individual attorneys
like Milligan as well as "Sexton Law Firm, P.A." 
     Three case files taken by Milligan were focal points in this
litigation. First, there was the Watson case.  Milligan testified
that he met John Watson on March 1, 1993, in the firm's offices and
represented him on an IRS matter.  During the course of this
representation, Watson and his wife were involved in an automobile
accident and suffered serious physical injury.  Milligan testified
that, per Watson's request, he entered into an attorney-client
agreement naming himself individually as the attorney on the
personal-injury claim and reduced his contingency fee from 33 1/3
percent, which was the customary amount at the Sexton Law Firm, to
25 percent.  He admitted that he did not inform Sexton that he
signed the attorney-client agreement in his individual name because
he did not believe it was necessary to do so.  Milligan testified
that, at the time he entered into the agreement, he was still bound
to share 50 percent of his fees with the Sexton Law Firm.  He
testified, however, that if his client received a recovery after he
left the firm, the law firm had no claim to a share of his fees. 
Milligan admitted that he started making plans to leave the Sexton
Law Firm in the late summer or early fall of 1995.  He settled the
Watson case in July 1996 for $1,314,000.
     Milligan also discussed the Mary Jane Wood case, which was
assigned to him by Sexton after the departure of another attorney
from the law firm.  He admitted that on September 19, 1995, while
he was still associated with the firm, he caused a letter to be
sent to opposing counsel offering a settlement for $150,000 that
was written on the letterhead of "Milligan Law Offices."  That
letterhead contained the address of a Fort Smith post-office box. 
On October 5, 1995, Milligan sent a letter recognizing a $140,000
settlement of the case, which stated: "PLEASE TAKE NOTE OF MY NEW
ADDRESS AND FIRM NAME."  Subsequently, the settlement payment was
sent to Milligan's post-office box address.  Both the September 19
and October 5, 1995 letters were prepared by a secretary provided
by the Sexton Law Firm, with the use of firm stationery and
postage.  Milligan agreed that the Mary Jane Wood settlement sheet,
dated November 9, 1995, reflected that he received attorney fees in
the amount of $46,666.20 but disagreed that the Sexton Law Firm had
any entitlement to 50 percent of that amount.  The funds from the
settlement were distributed eight days after his departure from the
firm.
     Milligan settled another case involving Bonnie Scandrett. 
Using his personal letterhead, a settlement was effected during his
association with the Sexton Law Firm.  The Scandrett settlement
sheet, dated November 15, 1995, reflected an attorney fee of
$18,750.  Milligan acknowledged that the Sexton Law Firm paid some
of the expenses associated with the case but admitted that none of
these funds were paid to the law firm.  Milligan admitted that the
settlements from the Mary Jane Wood and Scandrett cases allowed him
to spend approximately $30,000 in expenses associated with the
Watson case.
     Milligan testified that he departed from the Sexton Law Firm
at approximately 10:00 p.m. on Saturday night, November 1, 1995,
with the files and told Sam Sexton that he was moving closed files. 
He did not inform Sexton at that time that he was leaving the firm. 
Eventually, Milligan removed all of his files and ordered his
secretary to download associated information from the firm's
computer onto floppy disks.
     On cross-examination by his own counsel, Milligan stated that
he believed his status with the Sexton Law Firm to have been that
of an independent contractor.  He pointed to the allegations in
Sexton's own complaint and to the fact that Sexton treated him as
an independent contractor for income-tax purposes.  He denied that
his oral contract was governed by the Firm Handbook but admitted
that other attorneys, who joined the firm after he did, signed a
written contract and were likely subject to the handbook's
provisions.
     Milligan also believed that Sexton was not performing pursuant
to contractual obligations.  At the time he left the firm, he had
only been reimbursed for $800 of the $2,000 worth of expenses he
had incurred during his work on the Watson case.  He also explained
that he was not receiving his equal share of cases under the firm's
rotation system.
     He testified that although he received the Mary Jane Wood case
from an attorney in the firm, he was the attorney responsible for
effecting the settlement.  As to the Scandrett case, he stated that
he was the only attorney who worked on the file.  With respect to
the Watson case, he explained that the bulk of the work performed
which resulted in the settlement occurred after his departure.  He
testified that in the months leading up to the July 1996
settlement, he devoted 50 to 75 percent of his private practice to
the case.
     Sam Sexton testified that Milligan joined the firm under the
same conditions as did all other attorneys that he had associated
with the law firm.  Sexton testified that he regularly met with
attorneys in the firm to review the status of open cases and that
he established policies for attorneys to follow while associated
with the firm.  He testified that on April 9, 1993, he sent a 41-
page memorandum, or handbook on procedure, to all attorneys and
that Milligan acknowledged receipt of the Firm Handbook.  Sexton
also testified that he was not aware of unpaid expenses to Milligan
because they were not properly requested pursuant to the firm's
billing system.
     Sexton stated that he had no idea Milligan was leaving the law
firm on Saturday night, November 1, 1995.  When he spoke to
Milligan that evening, Milligan told him that he was moving a
number of closed files to storage because they were taking up space
in his office.  Sexton then learned the following Monday that
Milligan had cleared out his entire office and left with over 260
closed and 69 open files.  He testified that he relied on
Milligan's representation that he was not absconding with the files
and said he suffered because he was unable to take an inventory of
the files before Milligan's departure.  He testified that he would
have prevented Milligan from taking the files of long-standing
clients and that he would have retained certain files as evidence
had he known that Milligan had already effected settlements without
intending to share 50 percent of the fees received.
     Sexton stated that he had two meetings with Milligan during
the week following his departure.  He further stated that he
presented Milligan that week with three separate audits of funds
Milligan owed the firm for expenses incurred during litigation. 
The first audit represented a sum due in the amount of $30,432.26;
the second reflected $23,902.11; and the third was for the sum of
$22,258.12.  Sexton testified that repayment of the expenses was
due at that time, rather than at the time the cases were ultimately
settled, because the firm was not going to finance him at his new 
location.  Sexton asserted that he made no demand for fees received
from the Mary Jane Wood and Scandrett cases, again because he did
not know that they had already been settled from his office.
     Sexton testified that Milligan owed the firm $198,332 in fees
collected on open files that Milligan eventually settled, including
fees on the Mary Jane Wood, Scandrett, and Watson cases.  He
further stated that Milligan owed $18,129.29 for expenses on cases
that he had taken with him and for cases that he had lost while he
was at the firm.  After Sexton's case-in-chief, Milligan moved for
a directed verdict on the claim for breach of fiduciary duty and on
the fraud count.  The trial court granted both motions.
     The jury returned a verdict for Milligan on the contract
claim, and judgment was entered accordingly.

                        I. Contract Claim
     Sexton raises several points for reversal, but we first
address his claim that the trial court erred in excluding the Firm
Handbook.  At trial, Sam Sexton testified at length about the
agreement he struck with Milligan and how Milligan's conduct, as
well as the conduct of all attorneys at the firm, was to be
governed in part by the Firm Handbook.  He specifically testified
that on April 9, 1993, he circulated the handbook to all attorneys
in the firm and testified that Milligan acknowledged its receipt. 
The trial court excluded the handbook because Milligan did not
specifically testify that his agreement was subject to change by a
handbook and because the change by the handbook was not supported
by consideration.
     The case of Crain Industries, Inc. v. Cass, 305 Ark. 566, 810 S.W.2d 910 (1991), is instructive on this point.  In that case,
this court cited with approval the following language from the
Supreme Court of Minnesota's decision in Pine River State Bank v.
Mettille, 333 N.W.2d 622 (Minn. 1983):                       
          If the handbook language [is sufficiently definite
     to constitute] an offer, and the offer has been
     communicated by dissemination of the handbook to the
     employee, the next question is whether there has been an
     acceptance of the offer and consideration furnished for
     its enforceability.  In the case of unilateral contracts
     for employment, where an at-will employee retains
     employment with knowledge of new or changed conditions,
     the new or changed conditions may become a contractual
     obligation.  In this manner, an original employment
     contract may be modified or replaced by a subsequent
     unilateral contract.  The employee's retention of
     employment constitutes acceptance of the offer of a
     unilateral contract; by continuing to stay on the job,
     although free to leave, the employee supplies the
     necessary consideration for the offer.  [Footnotes
     omitted.]
Crain Industries v. Cass, Inc., 305 Ark. at 573, 810 S.W.2d  at 914. 
See also Childs v. Adams, 322 Ark. 424, 909 S.W.2d 641 (1995) (a
party's manifestation of assent to a contract is judged objectively
and may be proved by circumstantial evidence).
     We conclude that in the present case Sexton laid a foundation
that Milligan, whether deemed an employee or independent
contractor, received the handbook in April 1993 and remained on the
job and continued to retain the benefits of his association with
the law firm until November 1, 1995.  Using the rationale of our
holding in Crain Industries, Inc. v. Cass, supra, we hold that the
trial court erred in excluding the handbook from evidence and that
Sexton is entitled to a new trial on the breach-of-contract claim. 
     Also at trial, Sexton attempted to introduce the testimony of
former and present attorneys at the Sexton Law Firm regarding their
agreements with the law firm.  The point was to establish that
these attorneys were required to remit 50 percent of the fees they
achieved from open files that they took with them, as Milligan was
also required to do.  At one point during trial, Milligan admitted
that he had the same arrangement with Sexton as did those attorneys
who were at the law firm when he joined.
     Milligan correctly contends that Morrow v. McCaa Chevrolet
Co., 231 Ark. 497, 330 S.W.2d 722 (1960), stands for the
proposition that a trial court may act within its discretion in
excluding cumulative evidence.  See also Hicks v. State, 327 Ark.
727, 940 S.W.2d 855 (1997); Elk Corp. of Arkansas v. Jackson, 291
Ark. 448, 725 S.W.2d 829 (1987), reh'g denied, 291 Ark. 458-A, 727 S.W.2d 856 (1987).  Nevertheless, in this case, the testimony of
the other attorneys would have been highly probative of Milligan's
agreement with Sexton; without the testimony, the jury was left to
determine only whether to believe the testimony of Sexton or
Milligan.  We fail to agree that the testimony would have been
merely cumulative.  Cf. Childs v. Motor Wheel Corp., 164 Ark. 149,
261 S.W. 28 (1924) (reversing trial court's decision to exclude the
terms of a written contract to prove the terms of a subsequent oral
contract embodying the same agreement).  We conclude that the
attorney contracts were admissible and that the trial court abused
its discretion in excluding them.

             II. Breach of Fiduciary Duty and Fraud
     Sexton also claims that the trial court erred in directing a
verdict on his counts for breach of fiduciary duty and fraud.
     In reviewing an order granting a motion for directed verdict,
this court views the evidence in the light most favorable to the
party against whom the verdict was directed.  Lakeview Country
Club, Inc. v. Superior Prods., 325 Ark. 218, 926 S.W.2d 428 (1996);
Higgins v. General Motors Corp., 287 Ark. 390, 699 S.W.2d 741
(1985).  If any substantial evidence exists that tends to establish
an issue in favor of that party, it is error for the trial court to
grant the motion for directed verdict.  Lakeview Country Club, Inc.
v. Superior Prods., supra.
     When the trial court granted a directed verdict on Sexton's
claim for breach of fiduciary duty, it stated as follows:
     Well, there [have] been allegations of a breach of a
     fiduciary duty.  And I've explained to both of you my
     feelings on that.  Certainly both parties owed a
     fiduciary duty to each other.   And they owed fiduciary
     [duties] to their clients.  I don't see, though, a
     separate cause of action for breach of fiduciary duty for
     this reason.  If, in fact, Mr. Milligan did breach his
     contract, then that included breaching fiduciary duty, I
     think, to the Sexton Law Firm.  (Emphasis added.)
The trial court apparently ruled that Milligan owed a fiduciary
duty to Sexton, and we have held that that determination is a
matter of law.  See Long v. Lampton, 324 Ark. 511, 922 S.W.2d 692
(1996).  The court's ruling was not challenged by Milligan on
cross-appeal.  Accordingly, we do not decide the issue of whether
a fiduciary duty was owed by Milligan under these circumstances but
accept the unchallenged ruling of the trial court for purposes of
this discussion.
     After deciding that a fiduciary duty was owed, the trial court
went forward and refused to submit the claim to the jury on the
basis that the claim for breach of fiduciary duty was included
within Sexton's claim for breach of contract.  This was error. 
First, Sexton was entitled to have the two claims of breach of
contract and breach of fiduciary duty considered by the jury if
both were supported by substantial evidence.  While the doctrine of
election of remedies bars more than one recovery on inconsistent
remedies, the doctrine does not limit the number of causes of
action asserted by a plaintiff to be submitted to the jury.  Cater
v. Cater, 311 Ark. 627, 846 S.W.2d 173 (1993); Westark Specialties
v. Stouffer Family Ltd., 310 Ark. 225, 836 S.W.2d 354 (1992).  
     Additionally, claims for breach of fiduciary duty and breach
of contract are not identical causes of action.  A person may be
liable for breach of contract if the complaining party can prove
the existence of an agreement, breach of the agreement, and
resulting damages.  See Rabalaias v. Barnett, 284 Ark. 527, 683 S.W.2d 919 (1985).  But a person standing in a fiduciary
relationship may be held liable for any conduct that breaches a
duty imposed by the fiduciary relationship.  Long v. Lampton,
supra.  It follows that, regardless of the express terms of an
agreement, a fiduciary may be held liable for conduct that does not
meet the requisite standards of fair dealing, good faith, honesty,
and loyalty.  See Berry v. Saline Memorial Hosp., 322 Ark. 182, 907 S.W.2d 736 (1995); Texas Oil & Gas Corp. v. Hawkins Oil & Gas,
Inc., 282 Ark. 268, 668 S.W.2d 16 (1984); Yahraus v. Continental
Oil Co., 218 Ark. 872, 239 S.W.2d 594 (1951).  The guiding
principle of the fiduciary relationship is that self-dealing,
absent the consent of the other party to the relationship, is
strictly proscribed.  See Hosey v. Burgess, 319 Ark. 183, 890 S.W.2d 262 (1995).  
     Sexton testified that Milligan engaged in self-dealing to the
law firm's detriment.  Sexton further testified that without
knowledge and consent, Milligan used firm resources to achieve
settlements and attorney fees in the Mary Jane Wood and Scandrett
cases.  According to Sexton, these fees then provided Milligan with
the resources to finance a settlement in the Watson case, which
resulted in substantial legal fees to the exclusion of the Sexton
Law Firm.  The evidence is buttressed by proof that Milligan
misrepresented the removal of open and closed files to Sexton on
the night of Saturday, November 1, 1995.  Under these unique
circumstances, and, again, without deciding the issue of whether a
fiduciary duty was owed by Milligan to Sexton, we hold that the
trial court erred in granting Milligan's motion for directed
verdict on Sexton's claim for breach of fiduciary duty.
     The trial court also granted a directed verdict on the fraud
count because clients have "an absolute right to pick the lawyer
they want, and an absolute right to get their material." 
Unquestionably, the client owns his file.  However, as this case
makes clear, attorneys have an interest in files in connection with
potential fees, and Sexton claims that Milligan defrauded him of
his share of those fees.  Particularly, Sexton claims that
Milligan, as part of a larger scheme, intentionally misrepresented
to him on the night of November 1, 1995, that he was taking files
to storage as opposed to relocating them to his new practice. 
Sexton contends that the truth would have caused him to take action
to prevent settlement checks on the Mary Jane Wood and Scandrett
cases from being sent to Milligan's address.  Essentially, Sexton
asserts that Milligan's misconduct eliminated the possibility that
he could stop the resulting damage.
     Under Arkansas law, the following elements must be established
by a preponderance of the evidence in order to establish a claim
for fraud: (1) a false representation, usually of 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.  Calandro v. Parkerson, 327 Ark. 131, 936 S.W.2d 755 (1997); Clark v. Ridgeway, 323 Ark. 378, 914 S.W.2d 745 (1996).
     Viewing the evidence in the light most favorable to Sexton, as
we must do, Sexton had acquired a 50 percent interest in any
attorney fees acquired from the open files taken by Milligan. 
Sexton testified that on November 1, 1995, Milligan misrepresented
his actions with the intent that they be relied upon by Sexton for
the purpose of acquiring a 100 percent interest in attorney fees
that would soon thereafter be achieved.  Sexton further testified
that he relied on that misrepresentation and was severely damaged. 
We conclude that there was substantial evidence that Milligan's
conduct was the type of misfeasance that constituted fraud and that
the issue should have gone to the jury.  See Westark Specialties v.
Stouffer Family Ltd., 310 Ark. 225, 836 S.W.2d 354 (1992); L.L.
Cole & Sons, Inc. v. Hickman, 282 Ark. 6, 665 S.W.2d 278 (1984).

                      III. Remaining Issues
     Because we remand this matter for further proceedings, we will
address two issues likely to arise on retrial.

a. Customs and Practices of the Legal Profession.
     Prior to trial, Milligan moved in limine to preclude Sexton
from introducing the testimony of Howard Brill, a professor at the
University of Arkansas School of Law, on the ground that the
application of the Model Rules of Professional Conduct had no
relevance to the litigation.  At trial, Sexton attempted to elicit
testimony from Brill on what is customarily done in the legal
profession by an attorney when he plans to leave a law firm.  The
trial court excluded Brill's testimony for the reason that custom
and usage was simply not relevant and stated that it believed you
could find law firms that had agreements "both ways."
     The trial court was correct.  In this case, there were two
interpretations of the agreement between Milligan and Sexton. 
Milligan asserted that he was absolutely not required to share fees
that were received after his departure from the firm, while Sexton
contended that Milligan did, in fact, bind himself to the payment
of such fees.  According to Sexton himself, the contract was
neither ambiguous nor silent on the relevant terms.  The decision
of whether to allow expert testimony is a matter within the trial
court's discretion, and the trial court will not be reversed absent
an abuse of that discretion.  Williams v. Ingram. 320 Ark. 615, 899 S.W.2d 454 (1995); Sims v. Safeway Trails, Inc., 297 Ark. 588, 764 S.W.2d 427 (1989).  What is customary or usual within the legal
profession has no bearing when the parties are at loggerheads over
whether Milligan had agreed to pay 50 percent of fees after leaving
the firm.  The trial court correctly excluded the testimony of
Professor Brill.

b.   Evidence of Expense Audits.
     The record reflects that before trial, Sexton moved in limine
to preclude evidence of the three expense audits or accountings
issued to Milligan during the week following his departure in the
amounts of $30,432.26, $23,902.11, and $22,258.12, respectively. 
Sexton characterized this correspondence as having occurred during
the course of settlement negotiations and sought their exclusion
based on considerations of relevancy.
     Rule 408 of the Arkansas Rules of Evidence provides:
     Evidence of (1) furnishing, offering, or promising to
     furnish ... a valuable consideration in compromising or
     attempting to compromise a claim which was disputed as to
     either validity or amount, is not admissible to prove
     liability for, invalidity of, or amount of the claim or
     any other claim.  Evidence of conduct or statements made
     in compromise negotiations is likewise not admissible.
     This rule does not require exclusion if the evidence is
     offered for another purpose, such as proving bias or
     prejudice of a witness, negativing a contention of undue
     delay, or proving an effort to obstruct a criminal
     investigation or prosecution.
Id.  The first question becomes whether Sam Sexton by sending the
expense audits was "furnishing, offering, or promising to furnish
... a valuable consideration in compromising or attempting to
compromise a claim which was disputed as to either validity or
amount[.]"  
     This court has made it clear that Rule 408 does not provide a
blanket protection against the admission of all evidence concerning
offers of compromise.  For example, the rule does not prohibit
evidence when it is offered for reasons other than proving
"liability for, invalidity of, or amount of the claim or any other
claim."  Ozark Auto Transp., Inc. v. Starkey, 327 Ark. 227, 234,
937 S.W.2d 175, 178 (1997), quoting McKenzie v. Tom Gibson Ford,
Inc., 295 Ark. 326, 332-33, 749 S.W.2d 653, 657 (1988).  The
decision on whether the probative value of admitting the
correspondence is substantially outweighed by its prejudicial
effect is left to the sound discretion of the trial court, and
absent a manifest abuse of that discretion, the trial court's
decision will not be disturbed.  Ozark Auto Transp., Inc. v.
Starkey, supra; Swindle v. Lumbermens Mut. Casualty Co., 315 Ark.
415, 869 S.W.2d 681 (1993); McKenzie v. Tom Gibson Ford, Inc.,
supra.    
     Milligan asserts that the trial court properly admitted the
correspondence because it was relevant to Sam Sexton's credibility
because he made no demand at that time for 50 percent of the
attorney fees Milligan was to receive from files he took.  We hold
that Milligan's contention presents another purpose under Rule 408
for admitting the expense audits into evidence.  There was no abuse
of discretion by the trial court in receiving them.
     Reversed and remanded.