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

The Court of Appeals affirmed a default judgment against an insurance company in Aegis Insurance Company v. Robertson, No. CA-07-872. The case started out commonly enough: the plaintiff filed suit in Benton County. "After receipt of service, counsel for appellant . . . contacted appellee’s attorney and requested a thirty-day extension of time to file a response. Appellee granted this request." Things got interesting after the 30-day extension expired:

[A]fter the expiration of that period [appellant's counsel] sent appellee a letter stating that its response had been delayed by stenographic and weather problems, that local counsel had been obtained, and that it would file a counterclaim for “abuse of process in a frivolous law suit” if appellee did not voluntarily dismiss her lawsuit.

Appellant filed an untimely answer one week later.

The Court of Appeals unceremoniously dealt with the idea that "stenographic and weather problems" were sufficient to justify setting aside a default judgment." Appellant also floated the argument that "grant of a default judgment in this case is contrary to the public policy preference for deciding cases on their merits." As the Court of Appeals noted, "that can be said of all default judgments."

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The Arkansas Court of Appeals affirmed dismissal in Bibbs v. Community Bank, No. 07-808 (3/5/08).

 

The plaintiffs defaulted on a loan to Community Bank. The bank sued for foreclosure in 2003, and the plaintiffs filed for bankruptcy. In 2005, they filed this action claiming the bank's misconduct forced them into bankruptcy. In 2007, the bank moved for summary judgment, arguing that only the bankruptcy trustee could have standing. The plaintiffs amended the complaint to add the trustee, but the trial court dismissed the case because the statute of limitations had run.

 

The court of appeals affirmed because the relate back doctrine could not apply in this case. Because the plaintiffs did not have standing, the original complaint was void. The amended complaint had nothing to relate back to, and the statute of limitations had run.

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The Arkansas Court of Appeals affirmed summary judgment in Neal v. Farris, No. 07-839 (2/27/08). his case concerns a dispute about summary judgment procedure. As we all know, the nonmovant has 21 days to respond, and then the movant has 14 days to file a reply. See Ark. R. Civ. P. 56(c)(1). Later, the rule says, "No party shall submit supplemental supporting materials after the time for serving a reply." Id.

 

Farris moved for summary judgment. Neal received two extensions and then timely filed the response. Farris filed his reply 3 days later, and the trial court granted summary judgment 6 days later. Five days later (11 days since the response was filed), Neal tried to file a supplemental response with new evidence. Farris appealed, arguing the quoted language above means both parties have up to 14 days after the response is filed to submit supplemental materials, regardless of when the reply is actually filed.

 

The court of appeals skirted the issue. Following the supreme court's analysis in Southeastern Distributing Co. v. Miller Brewing Co., 366 Ark. 560 (2006), the court focused on Neal's extensions. The court felt that, with two extensions, Neal had plenty of time to supplement her response. These cases are unsatisfying; the courts need to declare whether or not filing the reply cuts off the time to submit supplemental materials or not.

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The Arkansas Court of Appeals reversed judgment in Farm Bureau Mut. Ins. Co. of Am. v. Nowlin, No. 06-1053 (2/20/08).

 

Nowlin took ownership of his deceased mother's home and had it insured by Farm Bureau. The home was destroyed by fire in May 2003. At trial, he and his uncle both confirmed that no one had lived in the house from September 2002 until May 2003. The insurance policy had an exception if the house was not occupied for more than 60 consecutive days. Despite Nowlin's testimony, the jury found the exception did not apply.

 

The court of appeals held there was no evidence to support the jury's finding. Even considering his testimony in a light most favorable to Nowlin, the house had been unoccupied for more than 60 consecutive days.

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The Arkansas Court of Appeals reversed a grant of default judgment in Brooks v. Farmers Bank and Trust Co., No. 07-694 (2/20/08).

 

Farmers Bank properly served Brooks with the complaint, but he failed to answer. The bank did not move for default judgment, but there was a "hearing on the Bank's complaint" (we're not sure what that is). Brooks appeared at this hearing. The bank orally moved for default judgment, and the trial court granted it.

 

The court of appeals reversed on procedural grounds. When a motion for default judgment is filed, the defendant must have at least 3 days' notice before the hearing. See Ark. R. Civ. P. 55(b). This point is probably academic; it seems Brooks has no defense to his failure to answer, and the default judgment will probably be reinstated.

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The Arkansas Supreme Court granted a writ of mandamus and writ of prohibition in CenterPoint Energy, Inc. v. Miller County Circuit Court, No. 07-924 (2/14/08).

 

In a class action against CenterPoint, the named plaintiffs were an Arkansas plaintiff (Johnson) and a Texas plaintiff (Engledowl). Last summer, the Arkansas supreme court dismissed Johnson because the Arkansas Public Service Commission had exclusive jurisdiction (previously posted 6/11/07). CenterPoint then moved the trial to dismiss Johnson for lack of jurisdiction.

 

CenterPoint also moved to dismiss Engledowl for lack of venue because now there was no Arkansas plaintiff in the case. Engledowl argued CenterPoint waived venue because it did not raise it in the first motion to dismiss. CenterPoint claimed its venue challenge did not arise until Johnson was dismissed. The trial court denied the motions and stayed the proceedings pending a decision by the APSC.

 

The supreme court reversed, stating that the trial court never had jurisdiction over Johnson's claims, so it cannot maintain jurisdiction while awaiting a ruling by the APSC. Citing federal cases, the court agreed with CenterPoint that its venue challenge did not arise until Johnson was dismissed. CenterPoint did not waive its venue challenge by not raising it in the original motion to dismiss.

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The Arkansas Court of Appeals affirmed dismissal without prejudice in Clouse v. Tu, No. 07-586 (2/6/08). The opening line of the opinion states: "This case arises at the three-way intersection of a service problem, the statute of limitations, and the terms of the dismissal."

 

One week before the limitations period expired, Tu filed suit against Dr. Clouse. The service was defective because the complaint was served on Dr. Clouse's wife at his office. Tu did not cure the defect within 120 days. The trial court dismissed the case without prejudice, which triggered the one-year saving statute. See A.C.A. § 16-56-126(a)(1).

 

The court of appeals affirmed and clarified the saving statute. If the plaintiff fails to accomplish any service, the statute is not triggered. If the plaintiff makes timely but defective service, the statute is triggered.

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The Arkansas Supreme Court affirmed dismissal for want of prosecution in Watson v. Connors, No. 07-208 (1/10/08).

 

This case was inactive for 2 years, so the trial dismissed the case pursuant to Ark. R. Civ. P. 41(b). Unfortunately, the court failed to notify the parties. Watson found out about the dismissal a year later and moved to have the case reinstated under Ark. R. Civ. P. 60(b). Under this rule, trial courts can amend a "clerical error" at any time, but  they cannot make other amendments after 90 days. The trial court acknowledged the dismissal was entered in error but determined it did not have jurisdiction to reinstate the case.

 

The supreme court agreed and affirmed the dismissal. The court hinted that it may make an exception if circumstances dictate, but it refused to create an exception when Watson failed to do anything in the case for 3 years.

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The Arkansas Supreme Court affirmed dismissal based on defective service in Brennan v. Wadlow, No. 06-1406 (1/10/08).

Brennan and Wadlow were involved in a car accident. On his driver's license, Wadlow uses the address of his father's business, although this is a separate address from Wadlow's residence. This was the address that appeared in the police report. Brennan filed suit and left the complaint with Wadlow's father at the business address. Wadlow's father said he would pass it on. After the statute of limitations had run, Brennan moved to dismiss for defective service, which the trial court granted.

 

In affirming, the supreme court again stated that parties must strictly comply with Rule 4 of the Arkansas Rules of Civil Procedure, which governs service. The rule requires that a person be served at his/her "dwelling house or usual place of abode." The rule does not provide an exception when a business address is listed on a driver's license.

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The District Court of Minnesota transferred a copyright infringement case to the Northern District of Texas (Dallas division) in RMC Publications, Inc. v. Doulos PM Training, 2007 WL 4287670 (D. Minn. 12/4/07).

 

Gary Rechtfertig offers project management courses in Texas. He used exam-simulation software under a license from RMC Publications. However, he made illegal copies and violated the terms of the license, which amounts to copyright infringement. RMC filed this action in Minnesota.

 

Rechtfertig's only contacts with Minnesota were buying the software and negotiating with RMC's sales agents. The court held that Minnesota had neither personal jurisdiction over Rechtfertig nor was it the proper venue for the suit. The court transferred the case to the Northern District of Texas.

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The Arkansas Supreme Court reversed a grant of summary judgment in Benton County, Arkansas v. Overland Development Co., Inc. 07-613 (11/29/07).

 

Overland wants to operate a red-dirt mine close to Cross Hollows, the historic site where the Confederate Army camped before the Battle of Pea Ridge. Overland submitted an application to the Benton County Planning Board along with an archaeological survey performed by Randall Guendling. The Guendling report found no Civil War artifacts on the proposed site but did find some 19th century artifacts.

 

The Planning Board denied the application, which was affirmed by the Benton County Appeal Review Board. Overland appealed to the circuit court, the remedy provided in A.C.A. 14-17-211. At the circuit court, Benton County submitted an affidavit of Jerry Hilliard. He concluded the red-dirt mine would adversely impact Cross Hollows. The trial court granted summary judgment to Overland.

 

The supreme court reversed because the Guendling report did not entitle Overland to summary judgment. The report did not discuss the effects of the red-dirt mine on Cross Hollows, which was the main issue, and the Hilliard affidavit showed an issue of fact exists for trial. A jury will determine if a red-dirt mine can exist near Cross Hollows.

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The Arkansas Supreme Court dismissed an appeal as moot in Honeycutt v. Foster, No. 07-665 (11/29/07).

 

In 2004, Honeycutt filed a lawsuit against Stone Timber Co. in Union County District Court. The case was dismissed for improper venue. On October 6, 2004, Honeycutt re-filed the suit in Ouachita County District Court (Judge Phillip Foster). On March 24, 2005, Honeycutt filed a motion to transfer the case to Union County. Honeycutt's lawyer sent numerous letters, but Judge Foster never ruled on the motion.

 

On November 21, 2006, Honeycutt filed a petition with the Ouachita County Circuit Court to compel a decision from Judge Foster. On December 6, 2006, Judge Foster denied the motion to transfer. The circuit court then denied the petition, and Honeycutt voluntarily nonsuited the petition. Nevertheless, he filed this appeal. The supreme court denied the appeal as moot. The petition only sought to compel a decision by Judge Foster, which he rendered on December 6, 2006.

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A recent trademark infringement case featured the seldom-used counterclaim-in-reply. Feed Management Systems, Inc. v. Brill, 2007 WL 3156282 (D. Minn. 10/30/07).

 

Feed Management filed suit for breach of contract and related claims. With permission from the court, Brill filed a counterclaim for trademark infringement after the deadline to amend pleadings. Feed Management filed a counterclaim-in-reply for trademark infringement, which Brill moved to dismiss as not permitted under Fed. R. Civ. P. 7(a).

 

The court stated a counterclaim-in-reply is a proper pleading if it is a compulsory reply to the counterclaim. The court determined that Feed Management's counterclaim-in-reply for trademark infringement was a compulsory reply to Brill's counterclaim and permitted the pleading.

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The Arkansas Court of Appeals affirmed judgment in an odd conversion case. Huffman v. Landers Ford North, Inc., No. 07-157 (10/24/07).

 

The Huffmans were interested in buying a Ford Freestyle from Landers Ford. They took the Freestyle home for an overnight test drive and left their 1996 Taurus at Landers. They had to sign a Retail Buyer's Order Form, which has language to suggest it is not a contract. The next day Ms. Huffman called to say they did not want to buy the Freestyle. This is where it gets interesting. On the way to Landers, she wrecked the Freestyle. Landers claimed the Retail Buyer's Order Form was a contract to purchase the Freestyle, and they refused to return the Taurus.

 

The jury made three key findings: (1) there was no contract between the parties; (2) Ms. Huffman negligently operated the Freestyle and inflicted $12,2410 damages on Landers; and (3) Landers committed conversion of the Taurus, inflicting $6,500 damage on the Huffmans. The trial court entered judgment for Landers of $5,740 and held that Landers now owns the Taurus.

 

The court of appeals affirmed. When a defendant converts property and satisfies judgment to the plaintiff, the defendant becomes the new owner of the property.  Meyer Bros. Drug Co. v. Davis, 68 Ark. 112 (1900).

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The Arkansas Court of Appeals affirmed a dismissal based on statute of limitations in Pambianchi v. Howell, No. 06-1239 (10/24/07).

 

The dispute arises over an unremarkable automobile accident that occurred on June 9, 2000. Claims for negligence and most torts would expire on June 9, 2003. In 2002, Pambianchi settled her claim against Howell and received payment of $46,763.88 from Howell's insurer, Southern Farm Bureau.

 

In 2004, Pambianchi sued Howell for negligence and Southern Farm Bureau for fraud in procuring the settlement. She claimed that Howell's insurance agent misled her into the settlement by telling her she could recover additional money from other parties. The trial court dismissed both claims on grounds that the statute of limitations had run.

 

In affirming the dismissal, the court of appeals set out the rule of fraudulent concealment. Fraudulent concealment will suspend the statute of limitations, but only until the plaintiff discover the fraud or should have discovered the fraud through reasonable diligence. If reasonable diligence might have detected the fraud, the plaintiff is presumed to have knowledge of it. Curry v. Thornsberry, 354 Ark. 631 (2003). The reasonable diligence aspect of the rule is the most crucial and proved fatal to Pambianchi's claims.  

 

This rule is important because of the growing trend in consumer fraud cases for plaintiffs to plead fraudulent concealment. To survive a dispositive motion, plaintiffs must establish they acted with reasonable diligence and that reasonable diligence would not have detected the fraud.

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For our second post on Rymor Builders, Inc. v. Tanglewood Plumbing Company, Inc., No. CA-06-1430, we highlight the first holding of the case: it is error for the trial court in a bench trial to assess witness credibility at the motion to dismiss case. The temptation for the trial judge to do so was natural considering the events at trial:

At the bench trial, Rymor called Tanglewood’s owner (Troy Wilkins) as its first witness. At the conclusion of Rymor’s examination of Wilkins,Tanglewood’s lawyer said, “I’ll just go ahead and put on my case-in-chief, your Honor, since you’ve heard that part of it[,]” and examined Wilkins further. Then Rymor’s two principals testified. All of the material documents about these transactions seem to have been admitted into evidence during the testimony of these three witnesses. . . .After Rymor rested, Tanglewood moved for a directed verdict.

Judge Fox then ruled on the directed verdict motion (politely but nevertheless painfully for any trial lawyer to hear):

After returning to the bench, the circuit court granted Tanglewood’s motion. The court said:

All right. With respect to [Tanglewood’s] motion, I’m going to grant it. There’s really not an easy way to say this. I simply didn’t find the testimony of the plaintiffs credible in this case.

(emphasis added). The circuit court eventually entered its judgment, which Tanglewood had written. The judgment recited that “the Court after hearing the evidence adduced by [Rymor] granted [Tanglewood’s] Motion for a directed verdict.”

The Court of Appeals held that it was error for the trial court to base the motion to dismiss ruling on the credibility of the witnesses, as the last post explains. But, there was no reversal or remand in this case -- as the next post explains.

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As seems to be the case with many of Court of Appeals Judge D.P. Marshall's decisions, Rymor Builders, Inc. v. Tanglewood Plumbing Company, Inc., No. CA-06-1430, contains too much wisdom to contain in a single post--so we have three.

The fact patterns is that a builder sued a contractor for breach of three contracts, over the trim-out plumbing work for three separate residential building projects, described as "a classic swearing match" by Judge Marshall. Pulaski County Circuit Judge Tim Fox presided over a bench trial of the matter.

In this post, we highlight Judge Marshall's correction of the "common misnomer" of referring to a directed verdict in a bench trial:

We begin with a note about terminology. The bench and bar often refer to a “directed verdict” during a non-jury case. This is a misnomer. Because no jury is in the box, no verdict will be given. The proper motion to challenge the sufficiency of an opponent’s evidence in a non-jury case is a motion to dismiss. Ark. R. Civ. P. 50(a).

Judge Marshall notes the understandable source of the misnomer:

But there is truth in this common misnomer because the circuit court must use the same legal standard in evaluating a motion to dismiss as it would in evaluating a motion for a directed verdict. The court must decide “whether, if it were a jury trial, the evidence would be sufficient to present to the jury.” If the non-moving party has made a prima facie case on its claim or counter-claim, then the issue must be resolved by the finder of fact.  In evaluating whether the evidence is substantial enough to make a question for the fact-finder, however, the circuit court may not assess the witnesses’ credibility.

In this case, the trial judge improperly assessed witness credibility at the motion to dismiss stage; this was reversible error, but did not lead to reversal -- as the next two posts explain.

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The Arkansas Supreme Court denied summary judgment in an important insurance case. Bradley Ventures, Inc. v. Farm Bureau Mut. Ins. Co. of Arkansas, No. 06-1494 (10/4/07).

 

This case arose from a 2004 fire at AQ Chicken House in Bentonville. Joseph Trybulec was arrested for arson, and he pled guilty to the lesser charge of reckless burning. Trybulec lived with his parents, who had an insurance policy with Farm Bureau Insurance of Arkansas. The policy excluded any liability for injuries caused by intentional or criminal acts. It also excluded coverage for any award of punitive damages. The owners of AQ Chicken House filed suit against Trybulec, whose parents submitted a claim to Farm Bureau.

 

Farm Bureau moved for summary judgment on 2 grounds. First, Trybulec's guilty plea to reckless burning was collateral estoppel that he acted intentionally. Second, because the complaint sought punitive damages, Farm Bureau had no duty to defend the lawsuit. The trial court granted summary judgment.

 

The supreme court reversed on both grounds. The court observed that a criminal defendant is often highly motivated to plead guilty to a lesser crime rather than risk a trial for a more serious crime. It is unfair to use the plea bargain as collateral estoppel in a later civil case. As to punitive damages, the court noted that the duty to defend is broader than the duty to indemnify. Farm Bureau must provide a defense even if Farm Bureau does not have to satisfy the punitive damages portion of an adverse judgment.

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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 Western District of Arkansas granted a motion to dismiss in McAdams v. McCord, 2007 WL 2461966 (W.D. Ark. 8/28/07).

 

McAdams and others filed suit against various directors and officers of UCAP, a mortgage lender and brokerage company, including Moore Stephens Frost.  Plaintiffs claimed a conspiracy to defraud them of $10 million. The court dismissed much of the complaint in a prior order. McAdams v. McCord, 2007 WL 951829 (W.D. Ark. 3/27/07).

 

Plaintiffs filed an amended complaint seeking to meet the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA). Although the amended complaint ballooned to 225 pages, the court found that the amended complaint failed to sufficiently state a claim under the PSLRA. The court dismissed the amended complaint except for a claim for breach of fiduciary duty against one of the individual directors.

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"Because the district court did not properly analyze the City's standing to sue the United States, we remand the case for such consideration." The Eighth Circuit thus remanded City of Clarkson Valley v. Mineta, et al., to decide whether Clarkson Valley, Missouri, has standing to sue the federal government over a road-widening project.

The underlying dispute concerns the environmental impact of a road-widening project. The City, suing under the Administrative Procedure Act and 28 USC 1131, claims that the FHA failed to comply with the National Environmental Policy Act when it OK'd the widening of the road.

The FHA asserted the City's lack of standing in a motion to dismiss, and later in a motion for summary judgment. The District Court denied the motion to dismiss standing argument as premature and the second on the basis that the FHA's brief  "[did] not contain any citations to the record in support of its argument that Clarkson Valley lacks standing."

The Eighth Circuit reversed, holding that under Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), standing is an element of the plaintiff's cause of action and thus should have been decided on the basis of the pleadings, in the case of the motion to dismiss, or on the record, in the case of the motion for summary judgment. The Court also instructed the District Court to conduct a zone-of-interests standing analysis, as well.

Notes after the jump.

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The Arkansas Court of Appeals reversed a grant of default judgment in Valley v. Helena National Bank, No. 06-1075 (6/20/07).

 

Helena National Bank filed suit against Mr. J.F. Valley claiming default on a promissory note. Delivery was restricted to "J.F. Valley." The complaint and summons were served on "L. Danley," a secretary in Mr. Valley's building. The postman noticed his error two days later and had Mr. Valley sign the receipt card. However, Mr. Valley never received the complaint and summons. The trial court awarded default judgment to Helena National Bank.

 

The court of appeals reversed, holding that Mr. Valley's signature on the receipt card did not cure the defective service. Only evidence that Mr. Valley received the complaint and summons could cure the defect. The court opined that to hold otherwise would shift the burden of proof of service to the defendant.

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The U.S. Supreme Court reversed the Eighth Circuit and held that Arkansas state court is the proper forum for the pending class action against Philip Morris in Watson v. Philip Morris Cos., Inc., No. 05-1284 (6/11/07).

 

Plaintiffs filed a class action suit against Philip Morris claiming deceptive trade practices. Plaintiffs claim Philip Morris altered the tests of its light cigarettes to register lower levels of tar and nicotine than what are actually delivered to consumers. Philip Morris removed the case under the federal officer removal statute. See 28 U.S.C. § 1442(A)(1). Philip Morris argued that, since it was subject to intensive review by the Federal Trade Commission, it was a federal official. The district court agreed, and the Eighth Circuit affirmed (opinion here).

 

The Supreme Court reversed, reasoning that a private firm's compliance with federal laws and regulations cannot rise the private firm to the level of a federal official. The case will return to Arkansas state court, and protracted litigation can be expected.

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The Arkansas Supreme Court granted a writ of prohibition denying jurisdiction to the trial court in CenterPoint Energy, Inc. v. Miller County Circuit Court, No. 06-1294 (6/7/07).

 

Plaintiffs filed a class action against CenterPoint Energy and other companies alleging a scheme to increase energy rates to Texas and Arkansas consumers. The complaint stated claims for fraud and unjust enrichment rather than increased rates. The defendants moved to dismiss, arguing that the Arkansas Public Service Commission ("APSC") has exclusive jurisdiction of disputes regarding energy rates.

 

The trial court denied the motion to dismiss, and the defendants filed a writ of prohibition. The APSC submitted an amicus curiae brief supporting the grant of the writ. The supreme court reviewed similar cases from numerous other states that held jurisdiction lied in public utility commissions. Moreover, the court found persuasive that the Legislature granted the APSC "sole and exclusive jurisdiction" over public utility rates. See A.C.A. § 23-4-201(a)(1).  

 

The supreme court granted the writ, but only to the extent it placed jurisdiction of Arkansas consumers under the APSC. The court refused to exercise jurisdiction over Texas consumers in this case.

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The Arkansas Court of Appeals reversed the grant of a new trial in Bailey v. McRoy, No. 06-878 (6/6/07).

 

McRoy filed a lawsuit against Bailey for a car wreck that occurred between the parties. Pursuant to Rule 68, Bailey made an offer of judgment in the amount of $5,000. The jury returned a verdict for Bailey, and Bailey moved to assess the costs. The trial court granted McRoy's motion for new trial and denied Bailey's motion for costs.

 

The court of appeals reversed both decisions. Regarding the new trial, the court held "the trial judge erroneously substituted his own view of the evidence for that of the jury." Because a new trial was not warranted, Bailey was entitled to recover costs incurred after the offer of judgment was made.  

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After unsuccessfully challenging a default judgment entered in a suit filed in Pulaski County Circuit Court, and failing to timely file a notice of appeal, the appellant in Skit International, Ltd v. DAC Technologies of Arkansas, No. 06-3493, filed a diversity suit in the Eastern District of Arkansas. District Judge Leon Holmes dismissed the suit via the Rooker-Feldman doctrine, which "prohibits lower federal courts from exercising appellate review of state court judgments." The Eighth Circuit held, in an opinion written by Circuit Judge Diane Murphy, that: "Skit's federal complaint is in many ways a classic illustration of the cases covered by the Rooker-Feldman doctrine."

One of Skit's arguments was that it had been deprived of appellate review of the state-court judgment. The Eighth Circuit gave this argument short shrift: "we decline to exempt from Rooker-Feldman a party whose appeal was not heard because it was considered untimely."

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On recommendation from the Arkansas Bar Association, revised Rule 503(e) and (f) would read:

(e) Inadvertent disclosure. A disclosure of a communication or
information covered by the attorney-client privilege or the work-product
doctrine does not operate as a waiver if the disclosing party follows the
procedure specified in Rule 26(b)(5)(D) of the Arkansas Rules of Civil
Procedure and, in the event of a challenge by a receiving party, the circuit court
finds in accordance with Rule 26(b)(5) that there was no waiver.

(f) Selective waiver. Disclosure of a communication or information
covered by the attorney-client privilege or the work-product doctrine to a
governmental office or agency in the exercise of its regulatory, investigative, or
enforcement authority does not operate as a waiver of the privilege or protection
in favor of non-governmental persons or entities.

The comment recognizes that the proposed changes reflect a "selective waiver" of inadvertent disclosure, which is the minority view in American jurisdictions. I would, however, harmonize the Arkansas rule with the Eighth Circuit's rule, perhaps simplifying things for Arkansas practitioners.

The Court has asked for public comments, to be sent the Clerk of the Arkansas Supreme Court and Court of Appeals.

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In a reminder to be very careful in representations one makes to the trial court, the Court of Appeals, in Wilkins, et al. v. Food Plus, Inc., et al., No. CA06-552, affirms Sebastian County Circuit Judge James Marchewski. A variance arose between the testimony of a process server and the representations made by counsel to the court in motions to extend the time to effect service of process.

The plaintiff filed the complaint--a false imprisonment action--on September 4, 1004. And:

On January 13, 2005, appellants filed a motion for extension of time until February 11, 2005, to serve appellees, stating that they had made several unsuccessful attempts to serve the store’s president over the past two or three weeks and that their attorney had been busy with other cases and continuing legal education classes.

On February 10, 2005, appellants filed another motion for extension of time to serve appellees. They stated that, since filing the first motion, their process-server had been unsuccessful in serving process and that their attorney had been tied up in other legal matters until February 7.

(emphasis supplied). At the subsequent motion to dismiss hearings, "appellants’ attorney stated that he had hired the process-server on January 3, 2005, and had provided him with a summons that was to be issued on that day; the process-server, however, had failed to take the summons to be signed at the clerk’s office. Upon extensive questioning by the trial court, appellants’ attorney defended his failure to have the summons issued when he filed the complaint by explaining that he had been very busy. The process-server, however, testified that he did not recall having been asked to get the summons.  This variance led to dismissal of the complaint. More details on the jump.

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The Arkansas Supreme Court affirmed a confirmation of arbitration award in The Ruth R. Remmel Revocable Trust v. Regions Financial Corp., No. 06-616 (4/12/07).

 

In 2001, the Remmels family sold Rebsamen Insurance to Regions Bank. The contract contained an arbitration provision. In 2003, the Remmels brought suit against Regions and two officers of Rebsamen for conspiring to sell Rebsamen below market value. The claim alleged numerous torts and statutory violations. Under the Arkansas Arbitration Act, these claims would not be arbitrable. See A.C.A. § 16-108-201(b)(2).

 

The trial court determined that because the contract involved interstate commerce, the Federal Arbitration Act applied, which made all claims arbitrable. See 9 U.S.C. § 2. The trial court compelled arbitration, which was conducted by the American Arbitration Association. The arbitrator ruled in favor of Regions, and the trial court dismissed the Remmels' complaint on grounds of claim and issue preclusion.

 

The Supreme Court affirmed on two grounds. First, the arbitration provision covered the Remmels' claims, which showed the parties intended to arbitrate any such disputes. Second, the Remmels failed to object to the scope of the arbitration, which waived any objection they may have  had.

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The Arkansas Supreme Court reversed a 12(b)(6) dismissal in Wal-Mart Stores, Inc. v. Coughlin, No. 06-315 (4/12/07).

 

Wal-Mart's dispute with Tom Coughlin is well-chronicled by Arkansas Business. Coughlin misappropriated hundreds of thousands of dollars from Wal-Mart. Without disclosing these misappropriations, he entered into a Retirement Agreement with Wal-Mart. Under the agreement, the parties released each other from all claims that existed or that may exist. Wal-Mart sued to void the agreement and to claim fraudulent inducement, but the trial court granted Coughlin's motion to dismiss.

 

The Supreme Court reversed, holding that Wal-Mart properly stated a claim. The court cited a number of state and federal cases stating that a fiduciary owes a duty of full disclosure when entering into a mutual release with the corporation. The court made it clear that this decision did not create new law:

 

We emphasize, however, that this duty of a fiduciary to disclose is embraced within the obligation of a fiduciary to act towards his corporation in good faith, which has long been the law in Arkansas. Stated differently, we are not adopting a new principle of fiduciary law by our holding today but simply giving voice to an obvious element of the fiduciary's duty of good faith.

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The Court of Appeals reversed a sua sponte grant of summary judgment in 2200 Commercial Street Warehousing, LLC v. Hastings Development Co., Inc., No. 06-312 (4/11/07).

 

This case involved a dispute over whether an easement was conveyed with the sale of property. 2200 Commercial claimed there was an easement and moved for summary judgment. Hastings resisted the motion but did not cross move for summary judgment. The trial court sua sponte granted summary to Hastings.

 

The Court of Appeals reversed, finding that 2200 Commercial was not on notice that it needed to meet proof with proof in response to a motion for summary judgment. The fact that 2200 Commercial itself moved for summary judgment on the same issue was not enough notice for Hastings. The court noted that, if another defendant had moved for summary judgment, the sua sponte summary judgment to Hastings would have been appropriate.

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"In this case, for the first time, we are faced with the question of whether a trial court order granting permissive intervention, but denying intervention as a matter of right, is immediately appealable. It is not." Duffield v. Benton County Stone Co., No. 06-1329.

The Court acknowledged that an interlocutory appeal normally lies against an order denying intervention as of right under Rule 2(a)(2) of the Appellate Rules of Appellate Procedure--Civil. This is because such is an order determines the outcome of the action as to the party attempting to intervene. In Duffield, however, the Court held that when the intervening party is granted permissive intervention in the same breath as it is denied intervention by right, the party's arguments as to intervention by right can be addressed on direct appeal after the outcome in the trial court.

Since the order was not appealable, the Court held it lacked appellate jurisdiction and dismissed. An interesting note on this case is that the parties did not recognize the jurisdictional problem, which the Court raised sua sponte.

More on the Court's analysis after the jump.

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