Hamilton v. Villines

Larry HAMILTON, on Behalf of Himself and All
Others Similarly Situated v. Floyd G. "Buddy"
VILLINES, III, et al.

95-191                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 19, 1996


1.   Civil procedure -- class actions -- notice. -- Arkansas Rule
     of Civil Procedure 23(c) provides, in part, that "[i]n any
     class action in which monetary relief is sought, including
     actions for damages and restitution, the court shall direct to
     the members of the class the best notice practicable under the
     circumstances, including individual notice to all members who
     can be identified through reasonable effort."

2.   Attorney's fees -- illegal exaction -- may not be recovered
     absent statute or rule permitting recovery -- attorney's fees
     not allowed in illegal-exaction case where no refund is
     sought. -- Arkansas Code Annotated  26-35-902(a) (Supp. 1995)
     permits the award of attorney's fees from funds recovered when
     an illegal exaction is held to have occurred and a "refund" is
     ordered to the taxpayers; the statute, however, does not
     address attorney's fees in a case in which no refund is
     sought; attorney's fees may not be recovered absent a statute
     or rule permitting such a recovery; attorney's fees are not to
     be allowed in an illegal-exaction case in which no refund is
     sought.
3.   Civil procedure -- class actions -- notice -- purpose of
     requiring. -- The purpose of requiring notice to class members
     who may have a monetary recovery in prospect is to allow them
     to decide whether to participate as members of the class; in
     a case in which a prospective class member has no individual
     claim to relief, there is no purpose in the notice requirement
     that would not obtain anytime a city or county is sued; it is
     not the purpose of Ark. R. Civ. P. 23(c) to require notice
     anytime a suit is brought against a public entity in which a
     "detriment" to it may occur.

4.   Civil procedure -- class actions -- notice -- chancellor's
     notice requirement improper -- matter reversed and remanded. -
     - The supreme court determined that it was improper for the
     chancellor to hold that "monetary relief" was in prospect and
     thus that Ark. R. Civ. P. 23(c) required individual notice to
     taxpayers; the matter was reversed and remanded.


     Appeal from Pulaski Chancery Court; Annabelle C. Imber,
Chancellor; reversed and remanded.
     Kelly Law Firm, PLC, by: A.J. Kelly and A. Shawn K. Sibley,
for appellants.
     Nelwyn Davis, Pulaski County Att'y, and Hilburn, Calhoon,
Harper, Pruniski & Calhoun, Ltd., by: David M. Fuqua, for
appellees.

     David Newbern, Justice. 2-19-96 *ADVREP4*

                                   95-191
LARRY HAMILTON, on Behalf          Opinion Delivered:
of Himself and All Others
Similarly Situated                 Appeal from Pulaski Chancery
                                   Court (93-6504)
          Appellants
                                   Honorable Annabelle C. Imber,
     v.                            Chancellor

FLOYD G. "BUDDY" VILLINES,
III, et al.
          
          Appellees                Reversed and Remanded




                     David Newbern, Justice.
                                

     The appellant, Larry Hamilton, sought certification of a class
consisting of Pulaski County taxpayers.  His claim against the
appellees, Pulaski County Judge Floyd G. "Buddy" Villines, III, and
the members of the Pulaski County Quorum Court, is of an illegal
exaction.  We will refer to the appellees collectively as "Pulaski
County."  The illegal exaction claim, brought under Ark. Const.
art. 16,  13, is that the County misapplied sales and use tax
proceeds and other funds in the construction of the Pulaski County
Regional Detention Facility.  This is an appeal of one aspect of
the Chancellor's order certifying a class for an action to be
brought in accordance with Ark. R. Civ. P. 23.  It is an
interlocutory appeal.  See Ark. R. App. P. 2(a)(9).    
     Mr. Hamilton's complaint seeks no refund to the taxpayers but
requests primarily injunctive relief requiring the transfer of
funds within the County coffers to keep the money from being
misapplied.  The Chancellor granted the class certification and
required individual notices to the taxpayers in accordance with
Ark. R. Civ. P. 23(c) because "monetary relief" was being sought in
the form of attorney's fees.  The appeal is from the notice
requirement imposed by the Chancellor's order.  We agree that the
notice requirement was improper, so we reverse and remand the case.
     In City of Little Rock v. Cash, 277 Ark. 494, 644 S.W.2d 229
(1982), an illegal exaction case, we said the Court should have
required the parties to abide by Rule 23 because an illegal
exaction claim is in the nature of a class action but that the
failure to have imposed the requirements of the rule resulted in no
prejudice in the circumstances of that case and was thus harmless
error.  In Union Nat'l. Bank v. Barnhart, 308 Ark. 190, 823 S.W.2d 878 (1992), Glaze, J., concurring, it was suggested that our
statement with respect to Rule 23 in the Cash case was but an
obiter dictum, that illegal exaction claims had, as an historical
proposition, not been governed by the restrictions imposed on class
actions, and that illegal exaction claims should not be subject to
Rule 23.
     Rule 23(c), in part, provides, "In any class action in which
monetary relief is sought, including actions for damages and
restitution, the court shall direct to the members of the class the
best notice practicable under the circumstances, including
individual notice to all members who can be identified through
reasonable effort."  In arguments before the Chancellor and before
this Court the focus has been upon whether Rule 23 should apply to
illegal exaction suits brought pursuant to article 16,  13, and if
so, whether a request for attorney's fees is a request for
"monetary relief," thus implicating Rule 23(c).
     As Pulaski County points out in its brief, Ark. Code Ann. 
26-35-902(a) (Supp. 1995) permits the award of attorney's fees from
funds recovered when an illegal exaction is held to have occurred
and a "refund" is ordered to the taxpayers; however, the statute
does not address attorney's fees in a case in which no refund is
sought.  Attorney's fees may not be recovered absent a statute or
rule permitting such a recovery.  Wynn v. Remet, 321 Ark. 227, 902 S.W.2d 213 (1995); Elliot v. Hurst, 307 Ark. 134, 817 S.W.2d 877
(1991).  In Munson v. Abbott et al., 269 Ark. 441, 602 S.W.2d 649
(1980), and again in City of Hot Springs v. Creviston, 288 Ark.
286, 705 S.W.2d 415 (1986), we specifically held that attorney's
fees are not to be allowed in an illegal exaction case in which no
refund is sought.  During oral argument, counsel for Pulaski County
reaffirmed his position that there is no authority to award
attorney's fees in this case.
     When questioned about authority for the granting of attorney's
fees in a case like this one, Mr. Hamilton's counsel could only
reply that fees might be available if the class were able to prove
a fact Pulaski County had refused to admit in response to a request
for admission.  Presumably he was referring to Ark. R. Civ. P.
37(c) and the sanctions provided for failure to admit.  We can
hardly say that reference to a sanction which may or may not become
necessary amounts to a request for "monetary relief" by a class as
contemplated in Rule 23(c).
     Apparently Pulaski County recognizes the infirmity of the
Chancellor's order caused by the fact that recovery of attorney's
fees is not available to Mr. Hamilton and the class.  Pulaski
County, therefore, asks that we affirm the order requiring notice
to individual taxpayers because taxpayers should have notice of
this lawsuit, which will cause a "detriment" and cost to the
County.  No authority is cited for that position, and we are not
convinced by the argument.  The purpose of requiring notice to
class members who may have a monetary recovery in prospect is to
allow them to decide whether to participate as members of the
class.  In a case in which a prospective class member has no
individual claim to relief, there is no purpose in the notice
requirement that would not obtain anytime a city or county is sued. 
We can assuredly say it is not the purpose of Rule 23(c) to require
notice anytime a suit is brought against a public entity in which
a "detriment" to it may occur.
     The issue whether Rule 23 applies to illegal exaction claims
is not before us.  Both parties argue from the position that it
does apply.  We do not decide that issue.  The issue we do decide
is whether, assuming the Rule applies, it was proper for the
Chancellor to hold that "monetary relief" was in prospect and thus
Rule 23(c) required individual notice to the taxpayers.  We need
not, however, go so far as to decide whether attorney's fees
constitute "monetary relief" because we simply cannot ignore the
fact that attorney's fees are not to be recovered in this case. 
The General Assembly may wish to extend the language of  26-35-902
to make some provision for attorney's fees to encourage citizens to
point out illegal exactions even though no refund is to be had.  We
may not do so.  
     Reversed and remanded.
     Special Justice Edmund M. Massey joins the opinion.
     Corbin, J., not participating.