SMG 1054, Inc. v. Thompson

Cite as 2014 Ark. App. 524

ARKANSAS COURT OF APPEALS
DIVISION I
No.CV-13-703

Opinion Delivered October 1, 2014
SMG 1054, INC.
APPELLANT APPEAL FROM THE RANDOLPH
COUNTY CIRCUIT COURT
V. [No. CV-2013-6]

HONORABLE KEVIN KING, JUDGE
JAMES E. THOMPSON
APPELLEE REVERSED AND REMANDED

LARRY D. VAUGHT, Judge

Appellant SMG 1054, Inc. (SMG), appeals the order of foreclosure entered by the

Randolph County Circuit Court in favor of appellee James E. Thompson. On appeal, SMG

contends that the trial court abused its discretion in denying its motion for continuance and in

refusing to admit certain documentation into evidence.1 We reverse and remand, holding that

the trial court abused its discretion in denying SMG’s motion for continuance. SMG’s second

point on appeal is moot.

Thompson filed a complaint for foreclosure against SMG on January 10, 2013. The

complaint alleged that on December 30, 2010, Thompson loaned $47,500 to Cedar Break LLC,

1
This is SMG’s second appeal. In the first, SMG failed to abstract the contents of a
foreclosure hearing held on April 8, 2013, or include in the addendum a copy of the order
disposing of the matters raised at that hearing. SMG 1054, Inc. v. Thompson, 2014 Ark. App. 149,
at 5–6. There, we held that the facts and circumstances surrounding the April 8 hearing might
have been relevant to our review of whether the trial court abused its discretion in denying
SMG’s motion for continuance; therefore, we remanded the case to settle and supplement the
record and ordered rebriefing. Id. at 7. SMG has corrected the deficiency in this second appeal.
Cite as 2014 Ark. App. 524

and in return he received a promissory note signed by T.V. Wallis (agent of Cedar Break—now

deceased), who promised to repay the loan on or before March 31, 2011. The complaint also

alleged that Wallis, on behalf of Cedar Break, signed a mortgage in favor of Thompson,

securing the indebtedness of Cedar Break by conveying to him a lien that was first in priority

on property located on Highway 62 in Randolph County, Arkansas (the property). The

mortgage was filed December 30, 2010. The foreclosure complaint further alleged that Cedar

Break failed and refused to make payments due under the note; therefore, Thompson was

exercising his right to declare the entire debt due and payable. The complaint continued,

alleging that on May 3, 2011, Cedar Break conveyed to SMG, by warranty deed,2 the property

secured by the mortgage and that SMG had failed to make payments on the loan. Thompson

prayed for judgment in rem against SMG in the amount of $47,500, plus interest, attorney’s

fees, and costs, and further prayed that should the judgment not be paid within a reasonable

time the property be sold.

On February 14, 2013, Shirley Matthews, a nonlawyer, on behalf of SMG filed an

“answer to summons,” disputing all claims made in the foreclosure complaint. Matthews

further responded by stating that Cedar Break, along with Wallis, unlawfully obtained the deed

to the property and made the agreement with Thompson without her permission.

A foreclosure hearing was held on April 8, 2013. Matthews appeared on behalf of SMG.

The Honorable Philip G. Smith presided over the hearing. Upon learning that the foreclosure

2
SMG’s warranty deed was filed May 4, 2011.

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Cite as 2014 Ark. App. 524

was contested, the trial judge stated that he had a conflict with Thompson and refused to hear

the case. The case was transferred to another judge.

Two weeks later, on April 22, 2013, a second foreclosure hearing was held. Again,

Matthews appeared on behalf of SMG. At the onset of the hearing, she requested a continuance

to retain an attorney. She stated that she initially believed that she was capable of representing

SMG but ultimately concluded that there were matters involved that she did not know how to

handle, e.g., SMG’s potential claims against Cedar Break and Wallis. She advised the court that

she had talked to three different attorneys, but they had conflicts. Counsel for Thompson

objected to the motion for continuance, contending that Matthews had had sufficient time to

hire an attorney. The trial court denied the motion for continuance, focusing on the fact that

this was the second time that the foreclosure hearing had been set.

The hearing proceeded, and both Thompson and Matthews testified.3 During

Matthews’s testimony, she again requested additional time to hire an attorney. Once all of the

evidence had been submitted, Matthews requested additional time “to get this sorted out.” The

trial court denied these requests and found in favor of Thompson, ordering foreclosure if SMG

failed to redeem the property in thirty days. The trial court’s order of foreclosure was entered

on April 25, 2013.

SMG’s first point on appeal is that the trial court abused its discretion in denying its

motion for continuance. It argues that the trial court (and opposing counsel) knew or should

3
For purposes of our review, a summary of their testimony is not relevant; therefore,
those facts are not recited here.

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Cite as 2014 Ark. App. 524

have known that SMG was a corporation, that a corporation must be represented by an

attorney, and that Matthews was not an attorney.4 SMG also argues that the trial court abused

its discretion when it denied the motion for continuance based on the finding that the matter

had already been continued. It argues that the first setting was continued because the first trial

judge recused.

A motion for continuance shall be granted only upon a showing of good cause. Hill v.

Ark. Dep’t of Human Servs., 2013 Ark. App. 760, at 3. We will not reverse the denial of a motion

for continuance absent an abuse of discretion amounting to a denial of justice. Id. A trial court

abuses its discretion when it acts improvidently and without due consideration. Id. The

appellant bears the burden of showing that the trial court’s denial of a continuance was an

abuse of discretion, and, in order to show an abuse of discretion, the appellant must show that

she was prejudiced by the denial. Id. at 3–4.

As stated in our prior opinion, Matthews, at the trial-court level,5 was a nonlawyer

representing a corporation, which constituted the unauthorized practice of law. SMG, 2014 Ark.

App. 149, at 7 (citing Ark. Bar Ass’n v. Union Nat’l Bank, 224 Ark. 48, 51, 273 S.W.2d 408, 410

(1954) (holding that a corporation may represent itself in connection with its own business or

4
We acknowledge Thompson’s argument that Matthews did not make this specific
argument below and cannot raise it for the first time on appeal. We disagree. As set forth above,
Matthews made multiple requests for a continuance to hire an attorney on behalf of SMG,
advising the court that she was not capable of representing the corporation. This was effective
to alert the circuit court to this issue.
5
SMG hired counsel to file its notice of appeal from the trial court’s order, and SMG is
represented by that counsel on appeal.

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Cite as 2014 Ark. App. 524

affairs provided it does so through a licensed attorney); Ark. Code Ann. § 16-22-206 (Repl.

1999); Ark. Code Ann. § 16-22-211(a) (Repl.1999)). There is no question that both Thompson’s

counsel and the trial court were aware that SMG was a corporation and that Matthews was not

an attorney. She made multiple pleas to the trial court throughout the second hearing stating

that she did not understand the legal issues, and several times she requested that she be given

a continuance to retain counsel for the corporate defendant. Nevertheless, at one point, the trial

court advised Matthews, “–my concern is . . . to protect your rights, you have to go get an

attorney or you can defend it yourself.” She cannot.

Our supreme court has been resolute in strictly enforcing the rule that a corporation

through its nonlawyer officers cannot engage in the practice of law. Nisha, LLC v. Tribuilt Constr.

Grp., LLC, 2012 Ark. 130, at 12, 388 S.W.3d 444, 451. Our court had stated that the

unauthorized practice of law by a corporation is a serious matter that should not be

countenanced. Roma Leathers, Inc. v. Ramey, 68 Ark. App. 1, 6, 2 S.W.3d 82, 85 (1999). An error

of law in itself can constitute an abuse of discretion. See Ford Motor Co. v. Nuckolls, 320 Ark. 15,

894 S.W.2d 897 (1995); Crowder v. Flippo, 263 Ark. 433, 565 S.W.2d 138 (1978); Downum v.

Downum, 101 Ark. App. 243, 274 S.W.3d 349 (2008). The trial court erred as a matter of law in

advising Matthews that she could defend SMG and permitting her to do so under these

circumstances. We hold that this error of law constitutes an abuse of discretion.

Moreover, the trial court stated that the primary reason it was denying the motion was

because the case had been continued once before. The inference was that Matthews was

responsible for the first continuance. However, the April 8 hearing was continued because the

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Cite as 2014 Ark. App. 524

trial court recused. Matthews never spoke at the first hearing. We also note that the first trial

judge did not advise Matthews that, as a matter of law, she could not represent SMG.

For these reasons, we hold that the trial court abused its discretion in denying SMG’s

motion for continuance, and we reverse and remand. SMG’s second point on appeal is moot.

Reversed and remanded.

GRUBER and WHITEAKER, JJ., agree.

Stanley & Woodard, PLC, by: Bill Stanley, for appellant.

Don R. Brown, for appellee.

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