The Supreme Court of Arkansas has affirmed a summary judgment granted for an attorney in a legal malpractice case. In Evans v. Hamby, a client claimed that his former attorney negligently represented him during a case brought by a creditor seeking to collect on a promissory note against the client’s company.
The client lost the collection suit and then brought a legal malpractice claim against the attorney. The trial court granted summary judgment for the attorney and the client appealed. In order to prove legal malpractice a client must show that the attorney’s improper conduct resulted in loss of the underlying case. In this case, the client alleged that his attorney’s failure to assert the defense of usury and failure to advise him to reinstate the company’s charter amounted to negligence.
Usury laws protect borrowers from lending agreements with excessive interest rates. Here, while the interest rate charged was higher than the limit allowed by law, the court ruled that the client was estopped from raising the defense because there was evidence that he had suggested the rate, preventing a claim that the attorney negligently failed to raise the defense.
The client also claimed that his attorney negligently failed to advise him to reinstate his company’s charter, which would have limited his personal exposure on the note. However, the court found that the Arkansas statute, permitting reinstatement of the charter, had been enacted after the promissory note was executed.
In Arkansas, an attorney cannot be found liable for a ‘mistaken opinion’ on a point of law that has not been adjudicated by the highest court in the jurisdiction, and about which reasonable attorneys might differ. Since the Arkansas Supreme Court had not ruled on the retroactive application of the reinstatement statute, the attorney in this case could not be negligent for failing to argue its application.
Thus, the Arkansas Supreme Court upheld the trial court’s granting of summary judgment for the Defendant attorney.
Decision: Evans v. Hamby