Stoltz v. Friday

J. Michael STOLTZ, as Special Administrator
of the Estate of James Patrick Stoltz,
Deceased v. Nancy Elizabeth FRIDAY, et al.

94-1235                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered July 15, 1996


1.   Judgment -- summary judgment -- standard of review. -- The
     standard for review of a summary judgment is whether the
     evidentiary items presented by the moving party in support of
     the motion left a question of material fact unanswered and, if
     not, whether the moving party is entitled to judgment as a
     matter of law; the appellate court views all proof in the
     light most favorable to the party opposing the motion,
     resolving all doubts and inferences against the moving party;
     the supreme court held in the present case that, even assuming
     that the facts alleged in the complaint were true, appellee
     law firm was entitled to summary judgment as a matter of law
     on all of the claims properly advanced by appellant as special
     administrator of the decedent's estate.

2.   Limitation of actions -- appellant's action against appellee
     law firm barred -- when statute begins to run for malpractice.
     -- The supreme court held that the statute of limitations
     barred appellant's action against appellee law firm and its
     attorneys; the applicable statute of limitations for legal
     malpractice is the three-year period provided in Ark. Code
     Ann.  16-56-105 (1987); the statute of limitations for fraud
     and breach of fiduciary duty actions is also three years under
     Ark. Code Ann.  16-56-105; the statute of limitations
     applicable to malpractice actions begins to run, in the
     absence of concealment of the wrong, when the negligence
     occurs, and not when it is discovered.

3.   Limitation of actions -- attorney's acts during probate of
     estate -- separate and distinct transactions -- traditional
     limitations rule upheld. -- The supreme court, noting that the
     probate of an estate can last for a number of years and that
     the acts complained of in the present case concerned separate
     and distinct transactions that occurred over the course of ten
     years, distinguished the probate of an estate from a business
     reorganization (in which the statute of limitations had been
     held not to commence until the date of the last act performed
     by an attorney) and declined to adopt an alternative to the
     traditional limitations rule; even if the tolling agreements
     were effective, the general statute of limitations had run
     with respect to all claims asserted by appellant except one.

4.   Limitation of actions -- dispute over running of statute
     irrelevant with respect to appellant's claim. -- Where
     appellant represented only the decedent's estate, not the
     heirs or trust beneficiaries, and had not demonstrated any
     injury to the estate resulting from the transfer of certain
     stock to the stock trust, the supreme court concluded that the
     dispute over the running of the statute of limitations was
     irrelevant with respect to appellant's claim.

5.   Pleading -- amendments -- trial court vested with broad
     discretion in allowing or denying -- trial court did not abuse
     discretion. -- The trial court is vested with broad discretion
     in allowing or denying amendments to pleadings; where
     appellant's amended complaint was filed nearly one year after
     the original complaint was filed; where appellee law firm's
     motion for summary judgment was pending; and where the trial
     court's ruling on the motion for summary judgment would also
     have been dispositive of the claims asserted in the amended
     complaint, the supreme court could not say that the trial
     court abused its discretion in striking appellant's amended
     complaint.

6.   Motions -- motion to dismiss -- trial court did not err in
     granting appellee bank's motion -- statute of limitations had
     run -- estate not damaged by inaction of bank. -- The trial
     court did not err in granting appellee bank's motion to
     dismiss where appellee bank stated that it had been named as
     trustee of the residuary trust but had never been contacted to
     serve in that capacity, had never accepted the role of
     trustee, and would decline to serve if so requested; where the
     beneficiaries had notice of the bank's repudiation of the
     trust; where appellee bank was sued more than five years after
     its answer, and the statute of limitations had run with
     respect to any action against appellee bank in this instance;
     where the trust beneficiaries were not parties to the action,
     and the estate was in no way damaged by the inaction of the
     bank; and where only the individual beneficiaries of the trust
     could claim damages resulting from the mismanagement of trust
     funds or the breach of the trustee's fiduciary duty.


     Appeal from Pulaski Circuit Court; David Bogard, Judge;
affirmed.
     Davidson Law Firm, Ltd., by: Charles Darwin Davidson and
Charles Phillip Boyd, Jr., for appellant.
     Huckabay, Munson, Rowlett & Tilley, P.A., by:  Mike Huckabay
and Beverly A. Rowlett, for appellees.
     
     Andree Layton Roaf, Justice.*ADVREP*SC12*








J. MICHAEL STOLTZ, AS SPECIAL
ADMINISTRATOR OF THE ESTATE OF
JAMES PATRICK STOLTZ, DECEASED,
                    APPELLANT,

V.

NANCY ELIZABETH FRIDAY, ET AL.,
                    APPELLEE,




July 15, 1996

94-1235


APPEAL FROM THE PULASKI COUNTY
CIRCUIT COURT,
NO. 93-2813,
HON. DAVID BOGARD, JUDGE,




AFFIRMED.

              Andree Layton Roaf, Associate Justice


     The appellant, J. Michael Stoltz, as special administrator,
sued the appellees, Friday, Eldredge, & Clark, certain of its
partners, and First Commercial Bank, for negligence and breach of
fiduciary duty in connection with the probate of the estate of
James Patrick Stoltz.  The Friday firm provided legal services in
connection with the probate of the estate; the bank was designated
trustee of a trust created under the will of the decedent.  The
trial court entered summary judgment in favor of Friday, Eldredge,
& Clark and the individual attorneys and granted First Commercial
Bank's motion to dismiss.  In this appeal, the special
administrator contends that the trial court erred in granting the
motions for summary judgment and dismissal and in granting the
Friday firm's motion to strike an amended complaint.  We find no
error and affirm.   
     J.P. Stoltz (Stoltz) died on December 18, 1977, at the age of
53.  His will was prepared by the Friday firm and was executed on
May 9, 1977.  Stoltz's heirs were his wife, Judy, whom he married
in 1974 after the execution of an antenuptial agreement prepared by
the Friday firm, nine children from a previous marriage, and two
sisters and their husbands.  J. Stephen Stoltz (Stephen), the
oldest son, was named executor in the will.
     The primary asset of the estate was Polyvend, Inc., a metal-
stamping company established by Stoltz.  Additionally, in 1976,
Stoltz had obtained two life insurance policies with a face value
of $2,000,000 from First Pyramid Life Insurance Company (First
Pyramid).  Stoltz's will provided that after certain specific
bequests, the majority of his estate would be placed in two trusts. 
The stock of Polyvend was to be placed in a "stock trust" of which
Stephen was the sole beneficiary and trustee.  The corpus of this
trust, Polyvend, was to be distributed to Stephen if he was
successful in operating the company for ten years.  The remaining
estate assets were to be placed in a "residuary trust" for the
benefit of the other eight Stoltz children and other named trust
beneficiaries.  The residuary trust would also receive one half of
the proceeds from any sale of Polyvend if it were sold within ten
years of the establishment of the stock trust.  The will named
First Commercial Bank (First Commercial) as trustee of the
residuary trust.
     Stoltz's will was filed for probate on January 4, 1978. 
Stephen was appointed as executor, and the Friday firm served as
his attorneys.  Stephen applied for and received the $2,000,000 in
life insurance proceeds in his individual capacity on January 19,
1978.     
     In 1987, certain of the residuary trust beneficiaries,
including J. Michael Stoltz (Michael), became concerned about the
lack of progress being made in the probate of the estate and the
fact that no distributions had been made to them in nearly ten
years.  They hired an attorney who filed a petition in September
1987 seeking to remove Stephen as executor of the estate.  In
connection with the prosecution of this petition, the heirs
obtained copies of the estate files being maintained by the Friday
firm and discovered, among other matters, that the estate had a
potential claim to the life insurance proceeds paid in 1978 to
Stephen and that the Friday firm had advised Stephen upon his
appointment in January 1978 about potential conflicts of interest
involved in his service as executor of the estate.  In June 1988,
the Friday firm was replaced as attorneys for the estate; however,
Stephen continued to serve as executor.      
     A number of lawsuits have been filed in connection with the
handling of this estate.  Three are relevant to this appeal.  In
October 1988, six of the residuary trust beneficiaries, including
Michael, filed suit in Faulkner County Chancery Court against
Stephen, alleging that he breached his fiduciary duty to them while
serving as executor of the estate and acting as trustee of the
residuary trust created for their benefit.  That action was
concluded in June 1993 with the execution of a settlement agreement
which released Stephen from liability both individually and as
executor of the estate.  On April 20, 1989, some of the same
residuary trust beneficiaries filed suit in Pulaski County Circuit
Court against First Pyramid for negligence, breach of contract, bad
faith, and fraudulent concealment in connection with the payment of
the $2,000,000 in insurance benefits to Stephen, rather than to the
estate.  Michael was appointed special administrator on January 30,
1990, for the limited purpose of pursuing this action against First
Pyramid, and he was substituted as plaintiff.  The jury award to
the special administrator of $3,666,666 was reversed on appeal,
based on the running of the statute of limitations on an action to
recover on a life insurance policy.  First Pyramid Life Ins. Co. v.
Stoltz, 311 Ark. 313, 843 S.W.2d 842, cert. denied, 114 S. Ct. 290
(1992).  While the case against First Pyramid was pending, the
Friday firm attorneys agreed to allow the statute of limitations to
be tolled against them as of January 9, 1990, in a tolling
agreement signed on behalf of Michael, both individually and as
special administrator, and other of the trust beneficiaries.
     On May 3, 1993, Michael, as special administrator, filed the
action against the Friday firm which gives rise to the present
appeal.  His complaint asserted that the Friday firm and certain of
its partners served as attorneys for the estate until June 30,
1988, and that they breached their fiduciary obligation to the
estate, the heirs, and the trustees of the trusts created by the
will of the deceased when they jointly represented entities with
conflicting interests for a period of approximately ten years.  
These entities included Stephen, both in his individual capacity
and as executor of the estate; First National Bank of Little Rock,
both as the largest creditor of the estate and as the trustee of a
trust created by the will of the decedent; First Pyramid; Polyvend
Corporation, the largest asset of the estate; and Diversified
Financial Services, Inc., the insurance agency which sold the First
Pyramid life insurance policies to Stoltz.  
     The special administrator further contended that the estate
suffered damages and loss of assets as a result of the undisclosed
conflicts and the actions of the Friday firm, including: (a) the
wrongful payment of $2,000,000 in life insurance proceeds to
Stephen, (b) an over payment to the surviving spouse, despite a
binding antenuptial agreement drafted by the Friday firm to prevent
Stephen's removal as executor, (c) the making of personal loans to
pay the estate's debts by heirs of the estate in order to avoid an
otherwise necessary sale of Polyvend, which would have benefited
the residuary trust heirs, (d) transactions which avoided funding
the stock trust as directed by the will, but which artificially
commenced the running of the ten-year term of the stock trust to
the benefit of Stephen, (e) repayment of voluntary personal loans
to the executor with virtually all of the residuary assets of the
estate, and (f) the transferring of assets other than Polyvend
stock to the stock trust.
     The Friday firm defendants filed a motion for summary
judgment, asserting that:  (a) the plaintiff had no cause of action
against the defendants because of the absence of contractual
privity, (b) the release of Stephen, individually and as executor
of the estate, in connection with the Faulkner County Chancery
Court action  constituted a release of the defendants, (c) the
plaintiff's action was barred by the statute of limitations, and
(d) the plaintiff's action was barred because he failed to file
suit on or before May 1, 1993, the date specified in the tolling
agreement.
     First Commercial was added as a defendant by an amended
complaint filed on December 29, 1993.  First Commercial filed a
motion to dismiss and asserted that any claim against it was barred
by the statute of limitations.  The bank also contended that the
special administrator lacked standing to bring an action against it
because the estate was not a beneficiary of the residuary trust.
     In granting the Friday firm's motion for summary judgment, the
trial court found that: (1) no privity existed between the
plaintiff and the defendants justifying a claim of breach of duty,
the defendants, as attorneys for the estate, owed no fiduciary duty
to the heirs and beneficiaries in the absence of fraud and
misrepresentation, and no allegations of fraud on the part of the
defendants had been made; (2) the release of Stephen in the
Faulkner County lawsuit filed by the individual trust beneficiaries
also specifically released his agents and employees and therefore
served as a release of the Friday firm as his attorneys; and (3)
the statute of limitations barred the action.  
     The trial court granted First Commercial's motion to dismiss,
finding that the bank had repudiated the trust, and that, in any
event, the statute of limitations had also run on the plaintiff's
complaint against the bank.  
     Before we consider the merits of Michael's arguments, we first
note that in reaching its decision, the trial court seemed to
confuse the fact that the special administrator of the estate filed
this action, not the individual heirs and trust beneficiaries. 
There is only one plaintiff in this case, as pointed out to the
trial court by the special administrator in a motion for
reconsideration.  That plaintiff is J. Michael Stoltz, as special
administrator of the estate.  The residuary trust beneficiaries are
not parties to this action.  The personal representative, in his
complaint, prayed for damages which he suffered.  Consequently, we
do not consider the allegations concerning damages suffered by
trust beneficiaries or heirs of the estate to be relevant, or to
provide a basis for preventing summary judgment.  Only two of the
plaintiff's allegations pertain to the harm suffered by the estate
and not the individual beneficiaries -- the loss to the estate of
the $2,000,000 in insurance benefits and the overpayment to the
surviving spouse.  The estate has not been damaged by the actions
which in effect resulted in estate assets being placed in one trust
rather than the other.
                       1. Summary judgment   
     The standard for review of a summary judgment is whether the
evidentiary items presented by the moving party in support of the
motion left a question of material fact unanswered and, if not,
whether the moving party is entitled to judgment as a matter of
law.  National Bank of Commerce v. Quirk, 323 Ark. 769, 918 S.W.2d 138 (1996).  We view all proof in the light most favorable to the
party opposing the motion, resolving all doubts and inferences
against the moving party.  Id.  In this case, even assuming the
facts alleged in the complaint are true, the Friday firm is
entitled to summary judgment as a matter of law on all of the
claims properly advanced by Michael as special administrator of the
estate.
     We agree that the statute of limitations bars the action
against the Friday firm and its attorneys.  The applicable statute
of limitations for legal malpractice is the three-year period
provided in Ark. Code Ann.  16-56-105 (1987).  Wright v. Compton,
Prewett, Thomas & Hickey, 315 Ark. 213, 866 S.W.2d 387 (1993). 
Further, the statute of limitations for fraud and breach of
fiduciary duty actions is also three years.  Alexander v. Flake,
322 Ark. 239, 910 S.W.2d 190 (1995); Ark. Code Ann.  16-56-105
(1987).   In Chapman v. Alexander, 307 Ark. 87, 817 S.W.2d 425
(1991), this court stated that it has been the rule since 1877 that
the statute of limitations applicable to malpractice actions begins
to run, in the absence of concealment of the wrong, when the
negligence occurs, and not when it is discovered.  See also Ford's
Inc. v. Russell Brown & Co., 299 Ark. 426, 773 S.W.2d 90 (1989). 
In Chapman, we noted that one "current trend" in such actions is
the "termination of employment" rule, which provides that the
statute of limitations does not begin to run until the attorney-
client, doctor-patient, or other professional-client relationship 
has ended.  However, we concluded that our traditional rule has a
countervailing fairness about it, and elected to maintain it.  
     In his letter opinion, the trial court found that the statute
of limitations had run for three reasons.  He first concluded that
Michael signed the tolling agreements prior to his appointment in
1993 as special administrator for the purpose of suing the Friday
firm, and the agreement was therefore of no effect.  The trial
court further found that because the attorney who primarily dealt
with the estate withdrew from the Friday firm before the signing of
the last tolling agreement, the agreement was not effective as to
him, and that any derivative action against the other members of
the firm would also be barred.  The trial court finally concluded
that the action was barred by the general running of the statute
because only one of the acts complained of by the plaintiff
occurred within three years of the effective date of the tolling
agreements, and this act, a transfer of assets to the stock trust
in February 1988, occurred at a time that the plaintiff was
represented by counsel.  He concluded that any fiduciary duty owed
by the Friday firm terminated when the plaintiff employed counsel.
     Michael argues that the action is not barred by the statue of
limitations for several reasons.  He contends that the Friday firm
is estopped from asserting the limitations as a defense because of
their fiduciary obligations to the estate beneficiaries.  He
further asserts that the last element essential to his cause of
action did not occur until either the discharge of the Friday firm
in June 1988 or until the estate was later closed and the executor
discharged, and his action would be timely under either
alternative.  He analogizes the Friday firm's continued
representation of the estate and its alleged repetitive tortious
conduct to the "continuous treatment" doctrine of medical
negligence cases.  He finally contends that the limitations period
as to the life insurance proceeds was tolled while the verdict in
the action against First Pyramid was on appeal to the Supreme
Court.  
     We do not agree that we should depart from the holding of
Chapman and its predecessors simply because the acts complained of
by Michael occurred during the probate of an estate.  The probate
of an estate can last for a number of years.  Here, the acts
complained of concern very separate and distinct transactions which
occurred over the course of ten years.  We can readily distinguish
the probate of an estate from the holding in Wright v. Compton,
Prewett, Thomas & Hickey, 315 Ark. 213, 866 S.W.2d 387 (1993),
where we determined that the statute of limitations did not
commence until the date of the last act performed by an attorney in
a business reorganization which took several months to complete. 
In Wright, we said that to require a plaintiff to bring suit
against an attorney before a lengthy transaction is completed could
deny the attorney the chance to effectuate the proper result. 
Clearly, the probate of an estate does not involve a single
transaction.  Based on our holding in Chapman, even if the tolling
agreements are effective, the general statute of limitations has
run as to all claims asserted by Michael except one.  The trial
court found, and it is undisputed, that the transfer of Stocco
stock to the stock trust in February 1988 was the only alleged
negligent act occurring within three years of January 9, 1990, the
effective date of the first tolling agreement.  Michael does not
contest this finding; he in essence argues against the application
of our traditional limitations rule and asks that we adopt an
alternative to the traditional rule; we decline to do so.
     The insurance proceeds were paid to Stephen in January of
1978.  The settlement with the widow of Stoltz was entered into in
September 1978.  All other acts Michael complains of except the
transfer of Stocco stock occurred prior to January 9, 1987.  The
three-year statute of limitations had thus run as to all of these
claims before the effective date of the tolling agreements.
     As to the transfer of the Stocco stock from the estate to the
stock trust, the trial court determined that this occurred within
three years of the first tolling agreement.  However, he determined
that the statute of limitations had run on this claim because the
tolling agreements were of no effect; he also concluded that the
Friday firm had no duty to beneficiaries of the estate.
     The substance of this claim is as follows.  Michael asserts
that a substantial portion of Polyvend stock was placed in Stocco,
Inc., a company created for the purpose of holding the Polyvend
stock.  He contends that the Polyvend stock was pledged as
collateral for a $1.5 million debt owed to First Commercial and
that the transfer of Polyvend stock to the holding company allowed
the estate to appear solvent and thus facilitated the transfer of
Polyvend to the stock trust, to the benefit of Stephen, prior to
closing of the estate.  Michael asserts in his complaint that the
transfer of Stocco stock to the stock trust occurred after the
petition to remove Stephen as executor had been filed and without
notice to either the probate court or the trust beneficiaries. 
Again, Michael Stoltz represents only the estate, not the heirs or
trust beneficiaries.  He has not demonstrated any injury to the
estate resulting from the transfer of Polyvend (Stocco) stock to
the stock trust.  The dispute over the running of the statute of
limitations is thus irrelevant with respect to this claim.
     Because we determine that the trial court was correct in
holding that the statute of limitations barred the action against
the defendants, we do not reach the issues raised by Michael
regarding privity and the duty owed by the attorneys for the
executor to the estate and its beneficiaries, or regarding the
effectiveness of the tolling agreements and the release of Stephen
executed by the individual trust beneficiaries.
                      2. Amended Complaint
     Michael also contends that the trial court erred by granting
the Friday firm's motion to strike the amended complaint filed on
February 25, 1994.  On February 15, 1994, the trial court entered
an order directing that the plaintiff file a more definite and
certain amended complaint and directing that the complaint
specifically set out the acts or omissions of certain defendants. 
On February 25, 1994, the plaintiff filed an amended complaint in
response to this order.  Subsequently, the defendants, other than
First National Bank, moved to strike the complaint.
     The defendants asserted that the amended complaint went beyond
the trial court's order and should be stricken, because it
attempted to change the plaintiff's theory of recovery to the
prejudice of the defendants in view of the pending motion for
summary judgment.  They contended that the plaintiff's original
complaint did not sufficiently plead fraud and that the word fraud
was used for the first time in this amended complaint.  The trial
court granted the motion, noting that in view of its order granting
summary judgment, its order directing the plaintiff to file a more
definite complaint was withdrawn.
     Michael submits on appeal that a party may amend its pleading
at any time.  Ark. R. Civ. P. 15(a).  Rule of Civil Procedure 15(a)
provides in part:
     With the exception of pleading the defenses mentioned in
     Rule 12(h)(1), a party may amend his pleadings at any
     time without leave of the court.  Where, however, upon
     motion of an opposing party, the court determines that
     prejudice would result or the disposition of the cause
     would be unduly delayed because of the filing of an
     amendment, the court may strike such amended pleading or
     grant a continuance of the proceeding.
Michael does not argue that the trial court abused its discretion
in striking the amended complaint; his argument simply ignores all
but the first sentence of the rule.  However, Rule 15(a) clearly
contemplates that the opposing party may object and the court may
strike the amended pleading.  Further, the trial court is vested
with broad discretion in allowing or denying amendments to
pleadings.  Cawood v. Smith, 310 Ark. 619, 839 S.W.2d 208 (1992). 
Here, the amendment was filed nearly one year after the original
complaint was filed, and it was filed while the Friday firm's
motion for summary judgment was pending.  The trial court's ruling
on the motion for summary judgment would also be dispositive of the
claims asserted in the amended complaint, and we cannot say that
the trial court abused its discretion in striking this pleading .
                      3. Motion to dismiss
     For his final point, Michael argues that the trial court erred
in granting the motion to dismiss filed by First Commercial.  The
trial court stated in a letter opinion that the motion was granted
because the trust had been repudiated and, in any event, the
statute of limitations had run on the plaintiff's complaint.
     On appeal, Michael contends that a bank officer stated in a
deposition that the bank occupied a trustee relationship with the
Stoltz children in January 1990.  He also asserts that as special
administrator, he had standing to pursue this cause of action
against the bank on behalf of the trust beneficiaries.  However, he
does not explain how being in a fiduciary relationship with
beneficiaries in another trust affects the bank's repudiation.
     In a separate declaratory judgment action regarding the
administration of the estate, First Commercial was named a
defendant.  The beneficiaries of the trust in question were either
plaintiffs or defendants in that case.  In its answer served in
October 1988, First Commercial stated that it was named as trustee
of the residuary trust, but that it had never been contacted to
serve in such capacity.  First Commercial stated that it had never
accepted the role of trustee and would decline to serve if so
requested.  Michael simply does not dispute that the beneficiaries
had notice of the bank's repudiation of the trust.  First
Commercial was sued more than five years after the October 1988
answer, by amended complaint filed on December 29, 1993.  Further,
Michael and other trust beneficiaries asserted that Stephen, rather
than First Commercial, had acted as trustee of the residuary trust
in the action they filed against Stephen in Faulkner County
Chancery Court in October 1988.  Clearly, the statute of
limitations has run as to any action against First Commercial in
this instance.
     Moreover, we again note that the trust beneficiaries are not
parties to this action, and the estate was in no way damaged by the
inaction of the bank.  Only the individual beneficiaries of the
trust could claim damages resulting from the mismanagement of trust
funds or the breach of the trustee's fiduciary duty.  
     Affirmed.
     Special Chief Justice Henry Wilkinson and Special Justices
John Elrod, Sidney McCollum, and Henry Wilson join in this opinion.
     Jesson, C.J., Dudley, Glaze, Corbin, and Brown, J.J. not
participating.