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     Before May 9, 2000, the bench and the bar seemed to have a firm grasp on how to proceed in a case in which the defendant was a charitable or non-profit entity. One would simply invoke what is typically termed the "Direct-Action Statute"¹ and sue the insurer of the defendant directly. While this approach would limit recovery to the amount of the policy, it provided certainty and was a sensible approach.
     On that day, however, the Arkansas Supreme Court told us that we didn't know what we always thought we knew. Charitable and non-profit entities, it seems, are not and never were immune from suit. Rather, they are merely immune from execution on a judgment against them.² Thus, they can be sued, but a prevailing plaintiff can not execute on his judgment and the Direct-Action Statute is of no use in a case involving a charitable entity.
     This head-spinning ruling had predictable fallout. Indeed, that fallout may still be raining down. Many have been left to question where we are in this area of the law, and how we proceed now. This article attempts a brief explanation of those questions, beginning with the opinion that started all of this confusion.

The First Nail: Clayborn
     While picking up Kathleen Clayborn's two older children, a van owned by Forrester-Davis Development Center, Inc. ran over and severely injured Kathleen's younger child, Meranda.³ Ms. Clayborn sued Forrester-Davis' insurance carrier, Bankers Standard Insurance Company, asserting that Forrester-Davis was immune from suit as a non-profit entity. Later, Kathleen added the driver of the van and Forrester-Davis as parties, but eventually dismissed them voluntarily.
     Bankers Standard moved to dismiss the case arguing that it was not a proper party because Forrester-Davis was not immune from suit. The trial court agreed, and the Arkansas Supreme Court affirmed. That affirmation and its reasoning are the first nail in charitable immunity's coffin.
     According to the Court, its charitable-immunity doctrine never held that a charity or non-profit was immune from suit altogether.⁴ Rather, the charitable-immunity doctrine is a mere "rule of property" that only insulates the assets of a charitable entity. Thus, while an entity could be sued in tort, a prevailing plaintiff could not execute on the assets of the entity to satisfy a judgment.⁵ As a result, the Direct-Action Statute did not apply, and the case against Bankers Standard had to be dismissed.
     It is somewhat extraordinary that the Court even reached this question. Ms. Clayborn's first argument was that Forrester-Davis was immune from suit pursuant to an Arkansas statute that made its directors and officers immune.⁶ The Court rejected that argument with the use of straightforward tools of statutory construction because another part of the chapter specifically excluded the entity itself from the scope of the immunity.⁷ Moreover, other portions of the Arkansas Code provide that non profit entities may be sued.⁸ Without Forrester-Davis being immune from suit, the Direct-Action Statute did not apply.
     Ms. Clayborn's secondary argument was that Forrester-Davis was a charity entitled to charitable immunity from suit. The Court initially held, however, that Ms. Clayborn's pleadings did not include any allegations of that kind.⁹ Notions of judicial restraint would seem to dictate that the case should end there. Instead, the Court went further and set forth the limitations on charitable immunity discussed above. The Court's insistence on addressing the issue when the case did not require it for resolution could be read as a strong desire on the part of the Court to send the message that the doctrine has eroded to the point of inconsequence.

The Second Nail: Scamardo
     In the months that followed, litigants began to grapple with Clayborn's holding. Some plaintiffs found themselves simply unable to prosecute their case because the alleged tortfeasor had been dismissed under the prior understanding of charitable immunity and the limitations period had run.¹⁰ Others started to maneuver cases in such a manner that they could ask the Court if it really meant what it said in Clayborn. That opportunity came with Scamardo v. Jaggers.¹¹
     June Scamardo developed complications after she underwent a popliteal artery bypass at Sparks Hospital. She alleged that negligence by her doctor and Sparks caused those complications and sued. While she included Sparks as a party, her complaint also alleged that Sparks might claim charitable immunity and included Sparks' insurance carrier, Steadfast Insurance Company, as a party.
     Sparks answered, admitting that it was immune from execution but denying that it was immune from suit. Steadfast then moved to be dismissed pursuant to the ruling in Clayborn. The trial court agreed, and the avenue was clear for a head-on challenge to Clayborn.
     On appeal, Ms. Scamardo asked the Court to overturn its opinion in Clayborn. In essence she argued that the Clayborn Court misconstrued prior precedent and therefore reached the wrong result. The Court disagreed and strongly affirmed its prior opinion. In other words, the Court really meant what it said in Clayborn.
     Once again, the Court went the extra mile by even addressing the arguments in Scamardo. Unlike in Clayborn, the alleged tortfeasors, the doctor and Sparks, remained in the case. Ms. Scamardo was able to obtain an order pursuant to Rule 54(b) of the Arkansas Rules of Civil Procedure that the "language in Clayborn" could cause hardship and injustice if an immediate appeal were not allowed. Thus, while a live controversy remained in the trial court justifying rejecting the appeal as not ripe, the Supreme Court chose to address these arguments on an interlocutory-type basis. Once again, this insistence by the Court to address the issues seems to send a message regarding the strength of the Court's view. The second nail has been firmly driven.

The Fallout: How We Proceed Now
     Any opinion that changes the legal landscape has the potential to cause fallout. Clayborn and Scamardo are no exception. Clearly, the manner in which cases against non-profit and charitable entities are prosecuted and defended must change. Those changes may result in inefficiencies the Court did not expect.
     In the past, when an entity claimed charitable immunity the first step in the litigation was to determine whether it was entitled to such protection. An eight-part analysis was created by the Court for that purpose. That analysis now seems irrelevant for purposes of the tort suit. Whether the entity is entitled to "immunity" has no bearing on the suit prior to an attempt to execute on a judgment.
     Instead, this inquiry will now become relevant when and if a victorious plaintiff attempts to collect his judgment or any part of it against the tortfeasor. Upon execution, presumably the entity would claim immunity and refuse to pay the judgment.¹³ Thus, at the collection stage of a case, a second trial would be required in order to determine whether the elements establishing charitable status exist so as to prevent execution on the judgment. This fallout may be inefficient; however, it is precisely what the Court suggests in Scamardo.¹⁴
     Clayborn and Scamardo also create the possibility for other collateral litigation. While the insurer cannot be sued in place of the tortfeasor under the typical Direct-Action Statute, section 23-89-101 of the Arkansas Code provides that if a judgment remains unpaid 30 days after a demand, the plaintiff may sue an insurer of the tortfeasor directly for the policy limit. In such a case, the plaintiff in the tort suit would stand in the shoes of the insured tortfeasor under the policy.¹⁵ Thus, the insurer would have available any defense against its insured as well as defenses peculiar to the plaintiff in the tort suit. In some cases, the prevailing plaintiff can find himself litigating issues all over again.¹⁶
     A concern expressed by the plaintiff in Scamardo was that the Court's ruling would leave a prevailing plaintiff at the mercy of the "good will" of a charity to pay a judgment. Ms. Scamardo foresaw a situation where the insurance company would claim that "immunity from liability" means that the charity is not "legally obligated" to pay damages, and thus the insurer does not have to honor its policy. In other words, insurance companies would use this language to their advantage and avoid any payment at all.
     The Court was not impressed with this argument. Justice Glaze wrote that it was a "misunderstanding" regarding what the Court meant by "immune from liability." A losing party's insurance company could be bound to pay a judgment even though the charity cannot be executed upon. Apparently the message is that liability alone, rather than the ability to collect, is enough to trigger section 23-89-101.
     Nevertheless, one can foresee that insurance companies will raise this issue in future litigation filed pursuant to section 23-89-101. The argument will serve to slow recovery and congest dockets with collateral litigation. The litigation will be even more complicated because it will force prevailing plaintiffs to join the insured tortfeasor in the suit and litigate whether charitable immunity even applies based on the eight factors identified earlier. In short, in at least some cases it is realistic to expect a second lawsuit that is as involved as the initial litigation.

The Consequences: A Third Nail?
     Reading the Court's opinions in these cases, one is left with the impression that the last word on charitable immunity has not been written. Recall that prior to Clayborn and Scamardo the bench and the bar were on fairly familiar ground in this area. The cases, however, have resulted in instability that will likely lead to a final shift either toward a complete abrogation of the doctrine or a total resurrection of it.
     Ms. Scamardo attempted to lead the Court to total abrogation. She asked the Court to take a final step and simply do away with the charitable immunity doctrine. The Court, however, did not address her argument, relying instead on the technical rule that the failure to obtain a ruling from the trial court is a procedural bar to appellate review. In all likelihood, this argument will be advanced in future cases. The dual litigation described above should be enough to keep the issue alive and ripe for decision. Whether the Court will take that final step is another matter. The fact that the Court reached so far in order to set forth its rulings in both Clayborn and Scamardo, then relied on a procedural technicality to avoid the final question, indicates that the Court has gone as far as it wished to go for the time being.
     The Court, it seems, would rather that the Legislature take this step. In the final sentence of the Scamardo opinion it specifically encouraged the Legislature to "consider whether the charitable immunity doctrine should be abolished. . . ." The Court noted that many other jurisdictions have done away with the doctrine over the years, and perhaps it is time for Arkansas to do the same. Thus, complete abrogation is a real possibility.
     On the other hand, a move in the opposite direction is also possible. One can conceive of the Legislature amending statutes to provide what the bench and the bar always thought existed before Clayborn and Scamardo. A certain level of comfort existed during that time, and reviving it has its merits. That step would eliminate the problems arising from the recent precedents every bit as much as total abrogation would.
     What is clear is that the Legislature or the Court should move in one direction or the other. A system where there is immunity from execution but not from suit creates something of a no-man's land for litigants. Collateral litigation is encouraged and parties are left to wonder what the correct approach to a case should be. Expenses are increased, dockets are clogged, and everyone is frustrated. The Legislature should heed the Court's request and complete the move in one direction or the other.

ENDNOTES
1. Ark. Code Ann. § 23-79-210.
2. Clayborn v. Bankers Standard Life Insurance Co., 348 Ark. 557, 75 S.W.3d     174 (2002).
3. Clayborn, 348 Ark. 557, 559-60, 75 S.W.3d 174, 175.
4. Id. at 566, 75 S.W.3d at 179-80.
5. Id. at 566-67, 75 S.W.3d at 180.
6. Ark. Code Ann. § 16-120-101.
7. Ark. Code Ann § 16-120-103.
8. Ark. Code Ann. § 4-33-302.
9. Clayborn, 348 Ark. at 565-66, 75 S.W.3d at 179.
10. See Stracener v. Williams, 2003 WL 22905102 (Ark. Ct. App. Dec. 10, 2003).
11. 2004 WL 352522 (Ark. Feb. 26, 2004).
12. Masterson v. Stambuck, 321 Ark. 391, 902 S.W.2d 803 (1995); Ouachita      Wilderness Institute, Inc. v. Mergen, 329 Ark. 405, 947 S.W.2d 780 (1997).
13. This scenario also applies where an insurer pays the policy limit but the       judgment exceeds that amount as well as where there is no willing insurance       payor.
14. Scamardo, 2004 WL 352522, n.2.
15. See, e.g., Equity Fire and Casualty Co. v. Coleman, 326 Ark. 100, 928       S.W.2d 796 (1996); Simmons v. Liberty Mutual Insurance Co., 282 Ark. 194,       667 S.W.2d 648 (1984).
16. See Great American Insurance Co. v. Ratliff, 242 F. Supp. 983 (E.D.Ark       1965).