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

The Arkansas Court of Appeals affirmed creation of a tacit contract in Crown Custom Homes, Inc. v. Buchanan Services, Inc., No. 09-20 (5/27/09).

 

The parties had a long history where Crown would send a request for work via fax. Buchanan would perform the work and then send a bill. The parties had conducted over $100,000 of business in this manner. Crown brought Cunningham to a meeting at Buchanan's office regarding some work. Cunningham faxed a work order to Buchanan from Crown's office. Buchanan performed the work, but Crown refused to pay, arguing the contract for that work was with Cunningham.

 

The trial court held a contract existed between the parties and entered judgment for Buchanan. The court of appeals affirmed, stating that course of dealing is properly considered to determine if a tacit contract is created.

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The Arkansas Court of Appeals affirmed rescission of contract based on unilateral mistake in T-1 Construction, Inc. v. Tannenbaum Development Co., LLC, No. 08-889 (March 11, 2009).

 

Tannenbaum signed a contract to sell five lakefront lots to T-1. The total value of the lots was $325,000 - $400,000. However, the contract stated the total price for all five lots was $70,000; Tannenbaum believed this was the price per lot. Tannenbaum noticed the mistake the day before closing and backed out of the deal. When T-1 sued for breach of contract, the trial court rescinded the contract due to the unilateral mistake.

 

The court of appeals affirmed, stating that no one would knowingly sell this property for $70,000. As to Tannenbaum's reasonable care in reviewing the contract, the court just held that T-1 failed to prove the trial court's finding was clearly erroneous.

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The Arkansas Court of Appeals affirmed a $1.3 million judgment in L.F. Brands Marketing, Inc. v. Dillard's, Inc., No. 07-1210 (March 11, 2009).

 

L.F. Brands sold clothing to Dillard's. When Dillard's would make a purchase, it would submit a purchase order that included an integration clause saying the purchase order represented the entire agreement. However, for years the parties agreed on a gross margin for Dillard's to achieve each fashion season. During the season, L.F. would process allowances and chargebacks so Dillard's would achieve this margin.

 

L.F. Brands filed suit, claiming the terms of the purchase orders were the final terms and course of dealing evidence was inadmissible. The trial court  disagreed and admitted the course of dealing evidence. The jury rendered a verdict for Dillard's. On appeal, the court of appeals held the course of dealing evidence supplemented rather than contradicted the parties' agreement. The court also said that merger clauses do not apply to subsequent modifications. The judgment was affirmed.

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The Eastern District of Arkansas denied a motion to dismiss or transfer in Agri-Process Innovations, Inc. v. Greenline Industries, LLC, 2008 WL 4126909 (E.D. Ark. 9/4/08).

 

Agri-Process Innovations (API) designs and sells biodiesel plants. They worked on several projects with Greenline Industries, but after a falling out, API filed a lawsuit in Arkansas state court. Greenline responded by filing suit in California for trade secret misappropriation, false advertising, and declaration to establish copyright ownership.

 

The California court deferred to the Eastern District of Arkansas to determine which court is the appropriate form. Judge Miller found no red flags to depart from the first-filed rule, and the dispute will proceed in Arkansas.

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The Arkansas Court of Appeals affirmed an award of attorney's fees in Meyer v. CDI Contractors, LLC, No. 07- (5/21/08).

 

CDI hired Meyer as a subcontractor to perform earthwork a project for the Church at Rock Creek. After CDI canceled the contract, Meyer filed suit for fraudulent inducement to contract. CDI later learned that Meyer submitted false information when he applied for his contractor license. CDI moved for summary judgment under Ark. Code Ann. § 17-25-103(d), which prohibits any action to enforce a contract that violates the Arkansas Contractors Licensing Law. The trial court granted summary judgment and also awarded CDI attorney's fees of $40,000.

 

The court of appeals affirmed, although it did say a fraud claim could potentially survive this statute. However, Meyer's fraudulent inducement claim was linked entirely to the illegal contract, and he sought breach of contract damages. The court also found the attorney's fee award was reasonable.

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The Arkansas Supreme Court reversed a grant of attorney's fees in Hanners v. Giant Oil Co. of Arkansas, Inc., 07-1314 (5/15/08) (previously posted 3/21/07).

 

Giant Oil filed a declaratory action to decide the parties' rights under a contract. There were no claims for damages. The trial court entered judgment for Giant Oil and granted attorney's fees and costs pursuant to Ark. Code Ann. § 16-22-308.

 

The supreme court reversed, holding that Ark. Code Ann. § 16-22-308 only applies to a breach of contract. It does not apply to a declaratory action. However, the Arkansas Declaratory Judgment Act does provide for costs. The case was remanded for the trial court to enter an award of costs.

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The Arkansas Court of Appeals affirmed the trial court's decision in Glenn Mechanical, Inc. v. South Arkansas Regional Health Center, Inc., No. 06-1473 (3/5/08).

 

Glenn obtained a contract to perform dirt work at SARHC. Glenn insisted on writing the contract, which provided that any work changes could only be performed with a written amendment. Soon after they began work, SARHC asked Glenn to undercut the parking lot. They did so without a written amendment, and SARHC refused to pay them for the extra work. The trial court held the contract applied to the undercutting and entered judgment for SARHC.

 

The court of appeals affirmed, holding that Glenn is bound by the contract it wrote. Glenn assumed the risk by performing additional work without a written agreement when it was required by the contract.

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The Arkansas Supreme Court affirmed dismissal in City of Dardanelle v. City of Russellville, No. 07-195 (2/28/08).

 

This case involves a long-standing dispute about where Russellville can build a sewage pipeline. They originally chose a location near Dardanelle City Park. Dardanelle protested and proposed a location further downstream that would have cost an additional $6 million to build (which Russellville did not have). On May 10, 2002, after years of disagreement, the parties signed a Joint Resolution where they agreed to work together to get funding to build the pipeline at Dardanelle's suggested location.

 

The parties worked together until 2006, but they were unable to obtain additional funding. Russellville then obtained its permit to build the pipeline at the original location. Dardanelle filed suit, claiming the Joint Resolution was a binding contract that Russellville breached. The trial court dismissed the claim, finding the Joint Resolution was not a contract. The supreme court affirmed, stating the Joint Resolution was too vague to be a contract.

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The Arkansas Court of Appeals reversed enforcement of a settlement agreement in Roberts v. Green Bay Packaging, No. 07-60 (1/23/08).

 

This case was a dispute over use of an easement that involved the Robertses, Mr. Rhodes and Green Bay Packaging. A week before trial, the Robertses sent a letter to the other parties proposing settlement. Rhodes and Green Bay claim they accepted it. However, Green Bay presented an "agreed decree" that differed from the terms of the letter. The trial court entered the "agreed decree" on grounds that the parties had reached settlement.

 

The court of appeals reversed, holding there was no evidence the parties had come to mutual agreement of final terms of settlement. Even if Rhodes and Green Bay had accepted the letter offer, the order entered did not match terms. The case will now proceed to trial.

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The Arkansas Court of Appeals affirmed judgment in Bull Motor Company v. Murphy, No. 07-183 (12/19/07). A thief stole a truck from Bull Motor Company (BMC), but the police recovered it an hour later. The truck  had been driven 40 miles, and it had sustained no damage. BMC later sold the truck as new for $33,495 to Murphy. When he learned the truck was stolen, Murphy filed this suit.

 

BMC asked  the trial court to adopt the definition of "new" in the Arkansas Motor Vehicle Commission Act. That law defines a "new" vehicle as one whose title has not been transferred to a purchaser. See A.C.A. § 23-112-103(22). Using this definition, the truck was new. Murphy argued this was not the definition the parties used, and the trial court let the jury decide the definition of "new."

 

At trial, Murphy claimed his damages were $8,000 - $10,000 because the vehicle had been stolen. There was no damage to the truck, and he offered no expert testimony regarding damages. The jury decided the truck was not new and returned a verdict for Murphy for $7,000.

 

The court of appeals held that the generally understood definition of "new" did not comply with the AMVCA definition. The court noted that the AMVCA governs car dealers; it was not drafted to control automobile transactions. Additionally, the court held it is well established that the owner of personal property can give testimony as to the value of the property without having any professional qualifications. The court affirmed the jury award.

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The Eastern District of Arkansas issued two decisions in a construction case involving work at Arkansas State University.  Building Construction Enterprises, Inc. v. Meadows. BCE claims certain work was part of the contract; Meadows claims this work was not part of the contract.

 

Meadows submitted untimely discovery requests to BCE on June 26, 2007. BCE responded with blanket objections and claimed it did not have sufficient knowledge to admit or deny the requests for admission. Frustrated with both parties, the court ordered BCE to provide 125,000 pages of documents and to make a reasonable investigation into the matters addressed in the requests for admission. The court will decide later if the requests for admission should be deemed admitted. See 2007 WL 2570514 (E.D. Ark. 8/31/07).

 

BCE filed two motions in limine to exclude (1) parole evidence regarding the contract; and
(2) statements by BCE's on-site superintendents. The court denied both motions, finding the contract is ambiguous and that statements by BCE's superintendents are admissions of BCE. See 2007 WL 2695493 (E.D. Ark. 9/10/07).

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The Eighth Circuit affirmed a motion to dismiss and motion for summary judgment in 168th and Dodge, L.P. v. Rave Reviews Cinemas, LLC, No. 06-3063 (8/31/07).

 

Plaintiffs purchased a plat in Omaha, Nebraska, to develop as a shopping center. Rave Cinemas approached them about building a theater complex in the center. The parties negotiated extensively and signed a letter of intent. Plaintiffs incurred additional expenses of nearly $600,000 to acquire more land, and a Rave official said the project was a "done deal." Rave backed out of the deal, and Plaintiffs brought this lawsuit for breach of contract, breach of implied contract and promissory estoppel.

 

The district court dismissed the breach of contract claim and later granted summary judgment on the other two claims. The Eighth Circuit affirmed and cautioned against this scenario where the losing party in a deal tries to give legal effect to a preliminary document. The letter of intent plainly states it is not a binding contract, and the court found that Plaintiffs could not have reasonably relied on representations that the matter was a done deal.

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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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Kim v. Leggett, No. CA-06-1244. The plaintiffs/appellants, the Kims, purchased a trailer park located in Pulaski County, Arkansas for $1.6 million from the defendants/appellees, the Leggetts.

The parties consummated the sale via an "Offer and Acceptance" drafted by the Kims; the Kims paid the sale price in exchange for the "real estate, fixtures, equipment, inventory, trade names, trademarks, leases, rental agreements, and other intangible assets." The contract also contained a warranty:

Seller warrants that the premises will pass inspections necessary to conduct such business at the time physical possession is delivered to the purchaser and all equipment will be in working order.

After the gas-line system servicing the entire park malfunctioned, the City shut off the gas line (and prosecuted the Kims for code violations), and the entire system had to be replaced, the Kims sued the Leggetts for breach of contract.

The Court of Appeals subsequently affirmed the Pulaski County Circuit Judge Barry Sim's grant of summary judgment in favor of the Leggetts, holding that the contract created no duty with respect to the gas-line system. More after the jump.

Continue Reading...

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The Arkansas Court of Appeals affirmed Union County Circuit Judge Carol Crafton Anthony in Glenn Mechanical, Inc. v. Lucy Gibney, No. CA 06-1169, an unpublished decision by Judge Miller.

In 1998, Lucy Gibney formed an oral contract with Glenn Mechanical, Inc. to perform "plumbing, heating, and air services for the new home she was constructing." Glenn finished the project on October 28, 1999.

Glenn sued Gibney in 2003 for breach, claiming that Lucy had stopped paying for the job. Judge Anthony presided over a bench trial and there was conflicting testimony as to the date of Lucy's last payment; various witnesses identified the date as (a) August 1, 2001, (b) October 4, 2000, or (c) September 4, 2002.

Judge Anthony found that the last payment had been made on October 4, 2000, and dismissed the case based on Arkansas's three-year statute of limitations for breach of an oral contract.

The Court of Appeals affirmed, citing the standard rule that, in a bench trial, "[w]e do not reverse on a factual issue as long as there is evidence to support the trial court's finding and the finding is not clearly against the preponderance of the evidence." The trial court's determination of the date of last payment fell well within the bounds of this rule.

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The Arkansas Court of Appeals affirmed judgment entered on an oral contract in Hodges v. John F. Jenkins Contracting, Inc., No. 06-591 (3/7/07).

 

The parties negotiated for Jenkins to remove 80,000 cubic yards of dirt from Hodges' land and Hodges to pay $2 per cubic yard. A written contract was never created. Jenkins claimed the parties had an oral contract; Hodges claimed the parties had never reached an agreement. The jury agreed with Jenkins, and the court entered judgment on the verdict.

 

Hodges appealed claiming the contract fell under the statute of frauds as either a contract for the sale of land or the sale of goods in excess of $500. The court disagreed, holding that the contract was one for services, and the statute of frauds did not apply. The court noted that, if the contract had been Jenkins paying Hodges to acquire the dirt, it would have been a contract for goods in excess of $500.

 

 

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