Ark. SC dismisses AG's case against Utah law firm

Danielson

McDaniel

LITTLE ROCK, Ark. (Legal Newsline) - The Arkansas Supreme Court ruled this month that the state's Deceptive Trade Practices Act has no application to the practice of law by attorneys.

The Court, in its March 15 opinion, reversed a circuit court's order granting the State partial summary judgment and dismissed the case against Bennett and DeLoney PC and its shareholders, Michael Bennett and Richard DeLoney.

Attorney General Dustin McDaniel brought a consumer protection action against the Utah law firm and Bennett and DeLoney in April 2008 to "redress and restrain" alleged violations of the ADTPA.

In particular, McDaniel alleged that the firm violated the ADTPA by trying to collect penalties on dishonored checks greater than those amounts permitted under Arkansas Code.

The State sought an injunction, restitution and the imposition of civil penalties for each violation of the ADTPA, as well as the State's costs and fees.

Bennett and DeLoney denied the allegations.

The Pulaski County Circuit Court ruled that the collection of amounts in excess of those set forth in state code by a holder of a dishonored check violated the ADTPA.

The lower court also found that a section of state code provides an "exclusive remedy" for recovery on dishonored checks and that the use of remedies set forth in state code, relating to a seller's incidental damages, was not permitted.

Bennett and DeLoney appealed, arguing, among other things, that the ADTPA does not apply to their provision of legal services.

Justice Paul E. Danielson, who authored the Court's eight-page opinion, agreed that the ADTPA has no application in the case.

"Here, Bennett & DeLoney was a law firm that was practicing law, while engaged in the practice of debt collecting. Neither Bennett & DeLoney, nor Bennett or DeLoney, dispute the fact that they were practicing law; to the contrary, they concede that they were and the State does not contest their concession," the justice wrote.

"Because the firm and its attorneys were attorneys engaged in the practice of law at the time of the alleged acts, the ADTPA had no applicability to their actions under our decisions in
Stoops, Born, and Campbell."

The State argued that the fact that the action was brought by the attorney general precludes any application of the foregoing case law.

The Court disagreed.

"The allegations made by the State against Bennett & DeLoney were brought under the context of the ADTPA, which we have clearly held has no application to the practice of law by attorneys," Danielson wrote.

"For these reasons, the circuit court erred in concluding otherwise, and we reverse and dismiss."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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