Hughes v. Gibbs

P. A. Hollingsworth, Justice.

Edward E. Hughes, appellant, was the owner and operator of the Lighthouse and the Fiesta Club, two nightclubs in Hot Springs. In May 1977, Hughes was having severe cash flow problems with the two operations and approached Gary R. Gibbs, an attorney and the appellee, about a $5,000 loan. Hughes and Gibbs had been friends for a number of years, and Gibbs had represented Hughes on legal matters. Gibbs refused to consider a loan and referred Hughes to a bank which also was not interested in making a loan.

Hughes returned to Gibbs and the decision was then made to form…