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SUPREME COURT OF ARKANSAS
No. CV-16-697
Opinion Delivered: April 27, 2017
HELENA COUNTRY CLUB
APPELLANT APPEAL FROM THE PHILLIPS
COUNTY CIRCUIT COURT
[NO. 54CV-15-226]
V.
HONORABLE CHRISTOPHER W.
BILLY RAY BROCATO D/B/A SPLASH MORLEDGE, JUDGE
POOL AND SPA
APPELLEE
REMANDED TO SETTLE THE
RECORD.
COURTNEY HUDSON GOODSON, Associate Justice
This is an interlocutory appeal from the Phillips County Circuit Court’s
disqualification of Charles E. Halpert, Jr., as counsel for appellant, the Helena Country Club
(“the Club”). For reversal, the Club argues that (1) the circuit court erred in its conclusion
that evidence of an alleged statement made during settlement negotiations was admissible to
allow appellee, Billy Ray Brocato d/b/a Splash Pool and Spa (“Brocato”), to call the Club’s
attorney as a witness; and (2) the circuit court erred in disqualifying the Club’s attorney
based solely on opposing counsel’s statement that the attorney would be called as a witness.
Our jurisdiction is pursuant to Arkansas Rule of Appellate Procedure−Civil 2(a)(8) (2016).
We are unable to address the merits of this appeal on the record before us, and we therefore
remand to settle the record.
On September 22, 2015, Brocato filed a complaint against the Club, alleging claims
of breach of contract and a violation of the Arkansas Deceptive Trade Practices Act
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(“ADTPA”). The facts as alleged in the complaint indicated that Brocato had been
providing pool maintenance and cleaning services to the Club for the previous five years
pursuant to the parties’ oral agreement. Brocato stated that the parties had a course of
dealing wherein he would perform the services he deemed appropriate and then bill the
Club for those services. Brocato indicated that he was contacted by the Club in April 2015
and that he was instructed to prepare the pool for the upcoming summer season. He claimed
that he conducted maintenance, repairs, and cleaning on the pool in April and May 2015,
that he submitted invoices to the Club for the work, and that the Club had since refused to
remit payment to him. Brocato alleged that he had suffered damages in the amount of
$11,505.48, plus interest and costs, and he also requested $25,000 in punitive damages.
The Club, through its attorney, Halpert, filed an answer to the complaint and a
counterclaim. In its counterclaim, the Club alleged that Brocato had been notified that all
work must be approved in advance and that he had failed to ask for approval for certain
extra work. The Club denied that this extra work had been performed, and even if it had
been, the Club indicated that it was not authorized. In addition, the Club claimed that
Brocato had knowingly placed excessive orders for pool chemicals and that he had allegedly
installed a new pump but had failed to produce an invoice for it. The Club asserted that
these actions constituted both fraud and a violation of the ADTPA and requested damages
in excess of $11,000, as well as punitive damages.
On June 16, 2016, the Club filed a motion to exclude evidence, claiming that
Brocato had recently notified Halpert that he intended to call him as a witness at trial, which
was scheduled for July 11, 2016. According to the Club’s motion, Brocato intended to
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introduce a statement allegedly made by Halpert during a telephone conversation during
which the possibility of settlement was discussed with Brocato and his counsel, and Halpert
had responded, “We aren’t paying him a fucking thing.” The Club claimed that both
Halpert and Brocato’s counsel denied this event. The Club further argued that Arkansas
Rule of Evidence 408 prevented the introduction of this evidence and that admission of this
alleged statement at trial might require the disqualification of Halpert.
Brocato filed a response to the motion and a brief in support in which he asserted
that the statement made by Halpert was not made during settlement negotiations but was
instead made in response to a demand by Brocato’s counsel for payment. Even if it was
found to have been made during settlement negotiations, Brocato argued that the statement
was not inadmissible under Rule 408 because it would be used to prove the Club’s intent
and bias in relation to the ADTPA claim, not to prove the liability for, invalidity of, or
amount of the claim. In addition, Brocato contended that Halpert would “undoubtedly”
be called to testify as a witness at trial because he was on the board of directors of the Club
when the decision was made to not pay Brocato. Brocato thus argued that this evidence
was relevant to Halpert’s credibility and that the Club’s motion should be denied.
On July 6, 2016, the circuit court apparently held a telephone hearing on the Club’s
motion to exclude evidence. However, both parties agree that this hearing was not
transcribed, and there is no record of what occurred during the hearing. The circuit court
then entered an order on July 8, 2016, disqualifying Halpert from representing the Club.
The court found that “the potential for Mr. Halpert being called as a witness is imminent
and it could be construed that the purpose of the evidence and/or testimony presented by
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Mr. Halpert would be for some other reason than the introduction of settlement
negotiations.” The court thus concluded that “[i]t appears that Mr. Halpert has a conflict
and as such he is disqualified from representing Defendant in this matter.” The Club filed
a timely notice of interlocutory appeal from the order of disqualification.
On appeal, the Club argues that the circuit court erred in concluding that evidence
of an alleged statement made during settlement negotiations was admissible to allow Brocato
to call Halpert as a witness at trial. The Club further contends that the circuit court erred
by disqualifying Halpert based solely on opposing counsel’s statement that he would be
called as a witness.
Arkansas Rule of Evidence 408 (2016) states as follows:
Evidence of (1) furnishing, offering, or promising to furnish, or (2) accepting,
offering, or promising to accept, 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.
Also, according to Model Rule of Professional Conduct 3.7 (2016),
(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a
necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal services rendered in the case;
or
(3) disqualification of the lawyer would work substantial hardship on the client.
In Weigel v. Farmers Insurance Co., 356 Ark. 617, 621-22, 158 S.W.3d 147, 150-51
(2004), we discussed the principles applicable to a circuit court’s disqualification of counsel:
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We note at the outset that disqualification of an attorney is an absolutely necessary
measure to protect and preserve the integrity of the attorney-client relationship; yet
it is a drastic measure to be imposed only where clearly required by the circumstances.
Craig v. Carrigo, 340 Ark. 624, 12 S.W.3d 229 (2000); Burnette v. Morgan, 303 Ark.
150, 794 S.W.2d 145 (1990). This court reviews a trial court’s decision to disqualify
an attorney under an abuse-of-discretion standard. Wilburn v. State, 346 Ark. 137, 56
S.W.3d 365 (2001); Craig, 340 Ark. 624, 12 S.W.3d 229. An abuse of discretion may
be manifested by an erroneous interpretation of the law. Id. The Model Rules of
Professional Conduct are applicable in disqualification proceedings. Id. However, a
violation of the Model Rules does not automatically compel disqualification; rather,
such matters involve the exercise of judicial discretion. Norman v. Norman, 333 Ark.
644, 970 S.W.2d 270 (1998).
We stated that Rule 3.7 applies to situations in which the opposing party seeks to call counsel
as a witness, and we adopted a test used by other jurisdictions in analyzing whether
disqualification is proper under those circumstances. Id. at 625, 158 S.W.3d at 153. We
held that the opposing party must demonstrate three things: (1) that the attorney’s testimony
is material to the determination of the issues being litigated; (2) that the evidence is
unobtainable elsewhere; and (3) that the testimony is or may be prejudicial to the testifying
attorney’s client. Id.
We stated that this test is necessary to prevent Rule 3.7 from being used as a sword
or a tactical measure to hinder the other party’s case and that it strikes a reasonable balance
between the potential for abuse and those instances in which the attorney’s testimony may
be truly necessary to the opposing party’s case. Id. We further held that this test takes into
consideration many of the reasons for prohibiting an attorney from being both advocate and
necessary witness: (1) an advocate who becomes a witness may be in the unseemly position
of arguing his own credibility; (2) the roles of advocate and witness are inconsistent and
should not be assumed by one individual; and (3) the attorney should not act as both trial
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counsel and a material witness because of the appearance of impropriety. Id., 158 S.W.3d
at 625−26.
Citing the foregoing factors, the Club argues that the circuit court in this case
“summarily” concluded that the potential for its counsel to be called as a witness was
imminent and that there was a conflict of interest requiring disqualification. The Club
contends that the evidence sought by Brocato was invented solely for the purpose of
disqualifying its counsel and that the court heard no proof on the issue and failed to apply
the test sought out in Weigel.
Unfortunately, we are unable to address the merits of the Club’s arguments at this
time because we are unable to determine from the record before us the arguments and
evidence on which the circuit court based its decision to disqualify Halpert. While both
parties agree that a telephone hearing was held on the Club’s motion to exclude evidence,
and the circuit court’s order also refers to a hearing having been held, there is no transcript
of this hearing in the record.
Pursuant to Arkansas Supreme Court Administrative Order No. 4 (2016), “[u]nless
waived on the record by the parties, it shall be the duty of any circuit court to require that
a verbatim record be made of all proceedings, including any communications between the
court and one or more members of the jury, pertaining to any contested matter before the
court or the jury.” In Robinson v. State, 353 Ark. 372, 108 S.W.3d 622 (2003), we held that
it was error for the circuit court not to make a verbatim record of an in-chambers
conference. We stated that it puts this court at a considerable disadvantage in reviewing
points on appeal pertaining to unrecorded hearings when a verbatim record is not before
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us, and we put the bench and bar on notice that “henceforth, this court will strictly construe
and apply Administrative Order No. 4.” Id. at 378, 108 S.W.3d at 625.
Citing Robinson, we remanded to the trial court to settle the record in Williams v.
State, 362 Ark. 416, 208 S.W.3d 761 (2005), where the court conducted an off-the-record,
in-chambers review of a videotaped statement that the defendant had sought to suppress at
trial. See also George v. State, 356 Ark. 345, 151 S.W.3d 770 (2004) (remanding where
suppression hearing was not transcribed on the record). We have further held that
compliance with Administrative Order No. 4 is mandatory, not discretionary. Thompson v.
Guthrie, 373 Ark. 443, 284 S.W.3d 455 (2008).
Here, the issue of whether Brocato would be allowed to call Halpert as a witness at
trial, thereby causing the circuit court to enter an order disqualifying Halpert from
representing the Club, was clearly contested, as evidenced by the Club’s motion and
Brocato’s response. However, because the circuit court failed to comply with its duty to
record the hearing on the motion, we are unable to determine whether the court abused its
discretion in disqualifying Halpert under the facts in this case. We therefore remand this
case to settle the record in this matter. We note that Arkansas Rule of Appellate
Procedure−Civil 6(b) provides a method by which the parties may settle the record when
no transcript is available.
We order Brocato to file a certified, supplemental record containing the necessary
material within thirty days of this court’s opinion. Brocato shall then have fifteen days from
the date the supplemental record is lodged to file a substituted abstract, addendum, and brief
containing the relevant portions of the supplemental record. See Ark. Sup. Ct. R. 4-2(b)(3)
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(2016). After service of the substituted brief, the Club will have an opportunity to file a
responsive brief in the time prescribed by the Supreme Court Clerk, or it may rely on the
brief it has previously filed in this appeal.
Remanded to settle the record; appellant ordered to file supplemental record within
thirty days; substituted brief due within fifteen days from when supplemental record is filed;
appellee may then file responsive brief.
HART, WOOD, and WOMACK, JJ., dissent.
JOSEPHINE LINKER HART, Justice, dissenting. The majority=s decision to
remand this case to settle the record is troubling. There is no record to settle. Appellee did
not file a written motion to disqualify Attorney Halbert. Likewise, it is not disputed that
appellee did not even make an oral motion to disqualify Attorney Halbert. In fact, in his
brief, appellee confirms this fact and even goes so far as to distance himself from the circuit
court=s ruling. He states:
Appellee takes no position on the disqualification of Appellant=s attorney. Appellee
never asked for the trial court to disqualify Appellant=s counsel. Furthermore,
Appellee never made an argument for or against the disqualification of Appellant=s
counsel in the telephone hearing.
There was no verbatim record of the so-called Atelephone hearing.@ Neither party claims
that any evidence was taken.
However, what the majority perceives as the lack of a record in this case does not
prevent this court from making a decision; it facilitates it. The circuit court decided to
disqualify Attorney Halbert sua sponte. Although we review a circuit court=s decision to
disqualify an attorney under an abuse-of-discretion standard, Valley v. Phillips County Election
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Commission, 357 Ark. 494, 183 S.W.3d 557 (2004), which is extremely deferential to the
circuit court=s decision, this case shows a clear abuse of that discretion.
Under Arkansas law, disqualification of a lawyer is not favored because A[a] litigant,
of course, is entitled to counsel of its own choosing.@ Floyd v. State, 2016 Ark. 264, 495
S.W.3d 82 (quoting Saline Mem=l Hosp. v. Berry, 321 Ark. 588, 906 S.W.2d 297 (1995). We
have stated that disqualification is a drastic measure to be imposed only where clearly
required by the circumstances. Id. (citing Burnette v. Morgan, 303 Ark. 150, 794 S.W.2d 145
(1990)). In Burnette, this court stated, AWe must never forget that a disqualification, though
aimed at protecting the soundness of the attorney-client relationship, also interferes with, or
perhaps destroys, a voluntary relationship by depriving a litigant of counsel of his own
choosingCoftentimes affecting associations of long standing.@ 303 Ark. at 155, 794 S.W.2d
at 148.
In Weigel v. Farmers Insurance Co., Inc., this court adopted a three-part test that
requires the party seeking disqualification of an attorney-witness to prove (1) that the
attorneys testimony is material to the determination of the issues being litigated; (2) that the
evidence is unobtainable elsewhere; and (3) that the testimony is or may be prejudicial to
the testifying attorney=s client. 356 Ark. 617, 625, 158 S.W.3d 147, 153 (2004). Obviously,
appellee did not prove any of the elements in the Weigel test because appellee did not even
ask the circuit court to disqualify Attorney Halbert.
As noted previously, the circuit court=s decision is reviewed for an abuse of discretion.
Valley, supra. An abuse of discretion means a discretion improvidently exercised, which is
defined as thoughtlessly and without due consideration. Id. Acting without so much as an
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oral motion to disqualify Attorney Halbert and not considering the Weigel test is exercising
discretion thoughtlessly and without due consideration.
In making its decision to settle the record in this case, the majority has failed to
appreciate that an appeal is a costly endeavor for both parties. Furthermore, even though
this court hears appeals expeditiously, interlocutory appeals delay litigation. Creating an
unnecessary obstacle to appellant=s receiving the relief to which it is obviously entitled
thwarts justice. I therefore respectfully dissent.
WOOD and WOMACK, JJ., join.
Halbert Law Office, by: Charles E. Halbert, for appellant.
Knapp Lewis Law Firm, by: Donald E. Knapp, Jr., and Michael C. Lewis, for appellee.
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