Jones-Blair Co. v. Hammett

JONES-BLAIR COMPANY v. Lucy HAMMETT, d/b/a
Conway Carpets and Interiors

95-1359                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
              Opinion delivered September 30, 1996


1.   Attorney & client -- withdrawal of counsel -- ARCP Rule 64(b)
     not complied with. -- There was no question that ARCP Rule
     64(b), which provides for the withdrawal of counsel for good
     cause upon a showing of compliance with enumerated
     requirements, was not complied with in this case.

2.   Attorney & client -- withdrawal of counsel -- purpose of ARCP
     Rule 64(b) -- findings of fact evidenced misunderstanding of
     concept. -- It is crucial for a trial court to understand that
     ARCP Rule 64(b) is aimed at protecting the client's interests;
     the trial court must look at the proposed withdrawal from the
     point of view of the client, not the attorney; in the present
     case, the trial judge's findings of fact evidenced a
     misunderstanding of this concept, focusing on whether counsel
     committed any wrongdoing; the focus should have been whether
     appellant's interests were protected.

3.   Attorney & client -- withdrawal of counsel -- trial court's
     responsibility. -- The trial court must play an active role in
     determining whether the requirements of ARCP Rule 64(b) have
     been met; a bare assertion by an attorney that a client is
     uncooperative does not justify granting a motion to withdraw; 
     even if a client is uncooperative or hard to communicate with,
     neither the attorney nor the court is relieved from insuring
     that Rule 64 is followed.

4.   New trial -- counsel's withdrawal prevented fair trial --
     party must be diligent in protecting own interests. -- Where
     appellant contended that the judgment against it should have
     been set aside pursuant to ARCP Rule 60(c)(1), which allows
     relief in cases where grounds for a new trial are not
     discovered for more than ninety days after entry of judgment,
     and asserted, as a ground for new trial under ARCP Rule
     59(a)(1), an irregularity that prevented a fair trial, the
     supreme court held that counsel's withdrawal prevented
     appellant from having a fair trial; however, a party is not
     entitled to relief under Rule 60(c) if he has not been
     diligent in protecting his own interests.

5.   New trial -- appellant displayed misunderstanding rather than
     lack of diligence. -- Appellant displayed something more in
     the nature of a misunderstanding rather than a callous lack of
     diligence where it hired an attorney to appear at trial; it
     responded when notified of the trial setting; it might well
     have thought that there would be no trial, since it had
     dropped its own claim; and it had no knowledge that its
     attorney had withdrawn.

6.   New trial -- trial court erred in denying ARCP Rule 60 relief
     -- case reversed and remanded for new trial. -- The supreme
     court held that the trial court erred in concluding that
     appellant was negligent to the extent that ARCP Rule 60 relief
     should be denied; the case was reversed and remanded for a new
     trial.


     Appeal from Faulkner Circuit Court; Andre McNeil, Judge; On
Petition from the Arkansas Court of Appeals; reversed and remanded.
     Jeffrey Hines Moore, for appellant.
     Charles Edward Clawson, for appellee.
     
     Bradley D. Jesson, Chief Justice.
     Jones-Blair Company appeals from a $39,819.90 judgment entered
against it in Faulkner County Circuit Court.  It seeks a new trial
on the ground that its attorney was allowed to withdraw from the
case in violation of ARCP Rule 64(b).  We agree that a new trial is
warranted and therefore reverse and remand.  
     This appeal was originally filed in the Arkansas Court of
Appeals.  See Jones-Blair Co. v. Hammett, 51 Ark. App. 112, 911 S.W.2d 263 (1995).  We granted review of the case pursuant to
Arkansas Supreme Court Rules 1-2(f)(1) and 1-2(a)(3).  Three issues
are presented on appeal:  1) whether Jones-Blair may receive a new
trial on the ground that its attorney withdrew in violation of ARCP
64(b);  2) whether the trial judge should have granted Jones-
Blair's motion to extend time to file its notice of appeal;  and 3)
whether the evidence is sufficient to support the judgment.  We
agree with Jones-Blair that it is entitled to a new trial due to
the circumstances under which its attorney was allowed to withdraw. 
We reverse and remand on that ground, making discussion of the
other issues unnecessary.
     This case has its genesis in a 1982 contract entered into
between Jones-Blair, a Texas paint and wall-covering supply
company, and Lucy Hammett, doing business as Conway Carpets and
Interiors.  The business relationship between the parties was,
apparently, never a smooth one.  In November of 1988, Jones-Blair
contacted Faulkner County attorney David Reynolds for the purpose
of collecting a $6,779.34 delinquency on Hammett's account. 
Reynolds filed suit on Jones-Blair's behalf on January 3, 1989. 
Hammett answered, denying the allegations in the complaint.  She
also filed a counterclaim in which she alleged Jones-Blair had
committed certain accounting errors, had failed to reimburse her
for promotional materials, and had tortiously interfered with her
customer contracts.
     In the course of his representation, Reynolds took Hammett's
deposition and forwarded it to Jones-Blair on May 15, 1989.  In a
letter accompanying the deposition, Reynolds asked Jones-Blair to
conduct a review and advise on how to proceed.  Five months later,
Reynolds received a letter from credit analyst James Holt.  Holt
said he had inherited the account from the previous credit manager
and noticed there was no correspondence in the file regarding the
status of the case.  He requested an update and a recommendation on
how to proceed.
     The record is bereft of any further activity in the case for
nearly a year.  Then, in August of 1990, David Reynolds was
appointed circuit/chancery judge for Faulkner County.  He filed a
motion to withdraw from the case and asked that his law partner,
Richard W. Atkinson, be named attorney of record.  Atkinson was so
named on October 5, 1990, and the case was set for nonjury trial on
February 11, 1991.  The record gives no indication that Jones-Blair
was notified of this trial setting or of Atkinson's entry of
appearance.
     For reasons not revealed on the court's docket sheet, the
February 11, 1991 trial did not take place.  In October of 1992,
the case was reset for trial on January 27, 1993.  Upon learning of
the trial setting, Atkinson wrote to Jones-Blair for the first
time.  His October 22, 1992 letter reads as follows:

     This appears to be a case which I inherited from a former
     law partner, David Reynolds.  Please find enclosed a copy
     of a transfer order and a copy of [Hammett's attorney's]
     letter informing me that the case has been set for trial
     on January 27, 1993 at 9:00 a.m.

     My file indicates no correspondence with you on this
     case.  I am undertaking at this time a review of the file
     and a discussion with Judge [David] Reynolds to find out
     exactly what's going on in this case.  Please contact me
     as soon as possible and let me know how you wish to
     proceed.


     Larry Steele, a credit analyst at Jones-Blair, responded to
Atkinson's correspondence by the following letter dated November
10, 1992:

     According to our records, we charged off the [Hammett]
     account in the amount of $7222.14 in 1990.

     As for further litigation, we would like to have the
     particulars in regard to fees, court costs, etc...Thank
     you.



     After reading the above correspondence, Atkinson feared that
Jones-Blair did not understand that Hammett's counterclaim was
still active.  He composed the following letter, dated December 3,
1992:

     I am in receipt of your letter of November 10.  I am not
     sure you are aware of the fact that this is still an
     active case in Faulkner County Circuit Court.  Mrs.
     Hammett has a counterclaim against your company that is
     still pending.  Even if you dismiss your suit against
     Mrs. Hammett, she is not willing to dismiss the
     counterclaim.  If you do not authorize me, or retain
     other counsel and appear on the 27th day of January, the
     judge will enter a default judgment against Jones-Blair.

     My fee is $100 per hour.  If I do not hear from you
     within a reasonably short period of time, I will ask the
     court for permission to withdraw as attorney of record in
     this case.  Looking forward to hearing from you.


     Jones-Blair claims it never received this letter.
     On January 27, 1993, the day of trial, Atkinson appeared and
asked the court for permission to withdraw.  He told the court he
had had "sparse and uncooperative communication" with Jones-Blair
and that he didn't believe he had actually been authorized to act
on Jones-Blair's behalf.  He further noted that he had sent a
letter to Jones-Blair explaining the need to defend the
counterclaim and that "up until yesterday afternoon, they didn't
return my phone calls, and I've had no further communication with
them, and I would ask for leave to withdraw."  The court summarily
relieved Atkinson from representation, based on Atkinson's claim
that Jones-Blair was uncooperative.  Atkinson left the courtroom
and a nonjury trial proceeded on Hammett's counterclaim.  At the
close of the hearing, Hammett was awarded $36,191.99 in damages,
plus attorney fees.  Judgment was entered of record on January 28,
1993.  
     Jones-Blair did not learn of the January 28 judgment until it
received a letter from Hammett's attorney dated May 14, 1993.  At
Jones-Blair's request, Atkinson filed a motion to set aside the
judgment.  The motion recited that Jones-Blair believed the only
issue to be tried on January 27 was its original action.  The
motion was denied on August 6, 1993.  Over the next few weeks,
Jones-Blair obtained new counsel and filed two motions:  a motion
for extension of time to file an appeal and a motion to set aside
the judgment.  In the motion to set aside, Jones-Blair asked for a
new trial on the ground that Atkinson's withdrawal from the case
violated ARCP Rule 64(b).  At a hearing on the motions, Atkinson
candidly testified that he took no steps to contact Jones-Blair
between December 3, 1992, and January 27, 1993 (despite his earlier
implication to the court that he had tried to contact Jones-Blair
by phone), that he did not move for a continuance, did not stay for
the trial, did not notify Jones-Blair that he had withdrawn, and
did not send Jones-Blair a copy of the judgment.  He further said
that, although he remembered typing the letter of December 3, he
had no specific recollection of mailing it.  The trial judge denied
the motion to set aside and made the following pertinent findings,
which we summarize below:

     Although there was "some question" whether Jones-Blair
     received the letter dated December 3, 1992, Jones-Blair
     was aware of the pending counterclaim.

     There were no communications between Jones-Blair and
     Atkinson other than the letters of October 22, 1992,
     November 10, 1992, and the letter of December 3, 1992,
     "which Jones-Blair did not receive."

     Considering Jones-Blair's November 10 letter and no
     response to the December 3 letter, Atkinson was well
     within his rights to think Jones-Blair did not want him
     to defend them at trial.

     Jones-Blair was negligent in failing to show up for trial
     and this negligence continued until it became aware of
     the judgment and took some action to set it aside.

     Considering the November 10, 1992 letter and Atkinson's
     December 3, 1992 letter, Atkinson was not required to
     take any more reasonable steps to comply with Rule 64.


     
     Jones-Blair appeals from that order. 
     We begin our analysis of this case with a discussion of ARCP
Rule 64(b).  It provides as follows:

     A lawyer may not withdraw from any proceeding or from
     representation of any party to a proceeding without
     permission of the court in which the proceeding is
     pending.  Permission to withdraw may be granted for good
     cause shown if counsel seeking permission presents a
     motion therefor to the court showing he (1) has taken
     reasonable steps to avoid foreseeable prejudice to the
     rights of his client, including giving due notice to his
     client, allowing time for employment of other counsel; 
     (2) has delivered or stands ready to tender to the client
     all papers and property to which the client is entitled;
     and (3) has refunded any unearned fee or part of a fee
     paid in advance, or stands ready to tender such a refund
     upon being permitted to withdraw.



     There is no question that Rule 64 was not complied with in
this case.  The appellee concedes as much.  However, we detect a
misunderstanding of the rule's purpose, and we take this
opportunity to address it.  It is crucial for a trial court to
understand that Rule 64(b) is aimed at protecting the client's
interests.  The trial court must look at the proposed withdrawal
from the point of view of the client, not the attorney.  The trial
judge's findings of fact evidence a misunderstanding of this
concept.  The findings focus on whether Atkinson committed any
wrongdoing.  The focus should have been whether Jones-Blair's
interests were protected.
Further, the trial court must play an active role in determining
whether the requirements of the rule have been met.  A bare
assertion by an attorney that a client is uncooperative does not
justify granting a motion to withdraw.  Even if a client is
uncooperative or hard to communicate with, neither the attorney nor
the court is relieved from insuring that Rule 64 is followed.  
     We turn now to the question of whether the violation of Rule
64(b) entitles Jones-Blair to a new trial.  Jones-Blair contends
that the judgment against it should have been set aside pursuant to
ARCP Rule 60(c)(1).  That rule allows relief in cases where grounds
for a new trial are not discovered for more than ninety days after
entry of judgment.  The ground for new trial asserted in this case
is contained in ARCP Rule 59(a)(1): "any irregularity in the
proceedings or any order of court or abuse of discretion by which
the party was prevented from having a fair trial."  We have no
hesitancy in holding that Atkinson's withdrawal in this case
prevented Jones-Blair from having a fair trial.  However, we have
said that a party is not entitled to relief under Rule 60(c) if he
has not been diligent in protecting his own interests.  Diebold v.
Myers General Agency, Inc., 292 Ark. 463, 731 S.W.2d 183 (1987). 
When the court of appeals decided this case, it concluded that
Jones-Blair's lack of diligence precluded a new trial:

     The appellant had been aware of the pending counterclaim
     against it since 1989 and was aware of the trial date as
     early as Mr. Atkinson's letter of October 22, 1992.  The
     appellant responded to the October 22 letter but made no
     further attempts to contact its attorney or inquire about
     the status of the litigation.  The appellant did not
     appear for trial nor did it inquire regarding the results
     of the trial.


51 Ark. App. 112 at 118; 911 S.W.2d 263 at 266.

     In Diebold v. Myers General Agency, supra, we held that the
appellant could not obtain Rule 60 relief because she had not been
diligent in protecting her own interests.  Mrs. Diebold signed a
promissory note to repay money her son Lloyd had stolen.  When she
defaulted on the note, the holder brought suit against her.  She
turned the complaint and summons over to Lloyd and Lloyd hired an
attorney named Hickman.  After that, neither she nor Lloyd had
anything more to do with the case.  On the day trial was scheduled,
Hickman was allowed to withdraw and judgment was entered against
Mrs. Diebold.  She tried to set the judgment aside pursuant to Rule
60(c).  We said that Mrs. Diebold was not entitled to a new trial
because her failure to keep tabs on her case was in large measure
responsible for the entry of judgment against her. 
     The Diebold case exemplifies the type of conduct which will
prevent a litigant from obtaining relief under Rules 60 and 64. 
Mrs. Diebold did not take a single step to protect her own
interests, other than turning the suit papers over to her son, a
non-attorney and a person she knew to be irresponsible.  She made
not one inquiry regarding her case and had no communications
whatsoever with her attorney.  By contrast, Jones-Blair hired an
attorney and kept in contact with him, although somewhat
intermittently.  When notified of the trial date via Atkinson's
October 22 letter, Jones-Blair responded in a timely fashion,
saying it had written off Hammett's debt.  Upon receipt of that
response, Atkinson realized that Jones-Blair did not appreciate the
fact that a counterclaim was still pending, so he wrote the
December 3 letter.  There is no finding from the trial court that
Jones-Blair received the December 3 letter;  in fact, the court's
findings indicate that Jones-Blair's receipt of the letter was
doubtful.  Thus, after November 10, Jones-Blair was probably
laboring under the false impression that no trial would occur. 
What we have on Jones-Blair's part is not a callous lack of
diligence, but more in the nature of a misunderstanding.  This is
the crucial difference between this case and Diebold.  Jones-Blair
hired an attorney to appear at trial;  it responded when notified
of the trial setting;  it might well have thought that there would
be no trial, since it had dropped its own claim; and it had no
knowledge that its attorney had withdrawn.  Jones-Blair's failure
to follow up on its case, while ill-advised in retrospect, cannot
be equated with the type of apathetic behavior that was exhibited
in Diebold.  
     We are mindful that a trial court's findings of fact should
not be set aside unless clearly erroneous.  ARCP Rule 52(a). 
Actually, we agree with the factual determinations made by the
court.  However, the court erred in concluding that Jones-Blair was
negligent to the extent that Rule 60 relief should be denied.  We
therefore reverse and remand the case for a new trial.
     Reversed and remanded.