FROM THE PHILLIPS COUNTY CIRCUIT COURT [NO. 54CV-15-226]
HONORABLE CHRISTOPHER W. MORLEDGE, JUDGE
Halbert Law Office, by: Charles E. Halbert, for appellant.
Lewis Law Firm, by: Donald E. Knapp, Jr., and Michael C.
Lewis, for appellee.
COURTNEY HUDSON GOODSON, Associate Justice.
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.
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
("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.
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.
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 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
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.
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 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
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 ...