Arkansas Business Litigation Lawyer & Attorney : Allen Law Firm : Serving Little Rock, Fort Smith, North Little Rock

The Arkansas Supreme Court affirmed summary judgment in Talbert v. U.S. Bank, N.A., No. 07-497 (1/17/08).

During the summer of 2005, Talbert lent $25,000 to a man she knew as David Smith. In mid-November 2005 Smith sent her a check for $85,000. The check was from Pelican Management, Inc., in New York. She deposited the check in her account at U.S. Bank and began disbursing the funds to other people. Additionally, she paid $75 for a special collections service. Not surprisingly, the check turned out to be a forgery. U.S. Bank put a temporary hold on the account, but Talbert withdrew all the remaining funds when the hold was lifted. U.S. Bank filed suit.

Talbert's main argument was that U.S. Bank agreed to assume the risk of loss. She made this argument from her payment for the special collections service. However, she failed to conduct adequate discovery to establish the existence of such an agreement, much less the terms. The trial court granted summary judgment to U.S. Bank. On appeal, the supreme court observed that Arkansas law prohibits anyone from contracting away transfer warranties. See A.C.A. § 4-4-207. Even if Talbert could prove the terms of the agreement as she argued, it would be void. The court affirmed summary judgment.

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The Western District of Arkansas granted summary judgment in Wilkins v. U.S. Bank, N.A., 2007 WL 2750689 (W.D. Ark. 9/19/07).

In 1974, Wilkins purchased a trunk at an estate sale. When he opened the trunk, he found bearer bonds with a face value of nearly $400,000. The bonds were secured by a mortgage and deed of trust which, because of various mergers throughout the years, eventually became the responsibility of U.S. Bank. The trust assets were liquidated in a bankruptcy proceeding in 1941. Wilkins brought various causes of action that U.S. Bank and its predecessors should have preserved the trust assets.

The court's opinion turned on Wilkins' actions. After discovering the bonds in 1974, he first contacted U.S. Bank's predecessor in 1984. He called them a few times a year for 5 years. Then he filed this action in 2003. The court found that Wilkins could not maintain any of his causes of action and granted summary judgment to U.S. Bank.

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The Arkansas Court of Appeals reversed summary judgment in Cavalry SPV, LLC v. Anderson, No. 06-1370 (6/27/07).

Cavalry SPV purchased Anderson's delinquent credit card account from Midfirst Bank. The trial court, misinterpreting Danner v. Discovery Bank (previously posted 5/17/07), held that Ark. R. Civ. P. 10(d) required Cavalry to produce actual charge slips. Cavalry did not have these slips, although it did have a signed application and other documents. The trial court granted summary judgment to Anderson.

The court of appeals reversed, clarifying that Danner does not require charge slips to prove authorized charges on credit card accounts.  

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The long dispute over Lee and Wilma Clark's failed farming venture finally came to a close in Searcy Farm Supply, LLC v. Merchants & Planters Bank, No. 06-892 (5/3/07).

In 2001, the Clarks obtained loans from Merchants & Planters Bank, which perfected its security interests in the Clarks' crops. In 2002, the Clarks purchased corn seed and materials from Searcy Farm Supply, which obtained a purchase money security interest. The Clarks defaulted on all their obligations, and this action was initiated in August 2002.

Searcy Farm Supply argued that, pursuant to A.C.A. § 4-9-324, the crops were proceeds from the seeds and materials. Under this theory, the PMSI extended to the crops, giving Searcy Farm Supply priority over Merchants & Planters.  The trial court disagreed and granted judgment to Merchants & Planters. The supreme court affirmed, readily dismissing this argument for lack of persuasive authority:

Appellants fail to cite any case law or statutory authority that defines crops as the identifiable proceeds of seeds, and without such authority, we decline to do so.

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The Arkansas Supreme Court affirmed judgment for two timber companies in Fordyce Bank & Trust Co. v. Bean Timberland, Inc., Case No. 06-734 (3/1/07).

Fordyce Bank provided several loans to Bean Timberland to purchase timber. Bean Timberland gave Fordyce Bank a security interest in the timber as well as proceeds, and the bank made the appropriate filings with the Secretary of State. However, Bean sold Timber to Potlatch Corp. and Idaho Timber Corp. without remitting the funds to Fordyce Bank.

Fordyce Bank brought suit against all 3 parties. At the bench trial, Potlatch and Idaho presented extensive evidence that they purchased the timber in the usual manner for the industry. The court agreed and held they were buyers in the ordinary course of business and took the timber free of Fordyce Bank's security interest. See § 4-9-320(a).  On appeal, Fordyce Bank argued that the cut wood was not inventory and not subject to the buyer in the ordinary course exception.

The court disagreed, finding that cut timber is inventory by process of elimination.  The parties agreed that timber, once cut, becomes a good. See Comment to A.C.A. §  4-9-501. The court concluded that, because cut timber does not fit into any of the other categories of goods in A.C.A. §  4-9-102, then cut timber must be inventory. The court affirmed the judgment and held the buyer in the ordinary course rule applies to cut timber.

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