Justia Arkansas Supreme Court Opinion Summaries

SSW Holding filed a complaint against BDO Seidman and other defendants, asserting several causes of action and seeking damages arising from a tax-advantaged investment strategy involving investments in distressed debt that SSW entered into and utilized on its federal tax returns for the 2001-2005 tax years. BDO filed an amended motion to compel arbitration and stay the motion, asserting that it and SSW entered into two consulting agreements that provided for arbitration before the American Arbitration Association. The circuit court denied the motion. The Supreme Court reversed, holding (1) SSW's claims fell within the scope of the arbitration provisions; and (2) the circuit court erred in finding that the arbitration provisions were unenforceable and invalid due to fraud and procedural and substantive unconscionability. Remanded.

After Kenneth Middleton was convicted of first-degree murder but before a judgment was entered against him in a wrongful-death suit, Kenneth conveyed property he owned in Arkansas to his brother. The sale was found to be fraudulent and was set aside by decree. Appellees, several individuals, filed a petition for writ of scire facias more than ten years later to allow more time to sell the property in an effort to satisfy the Missouri judgment. Appellants, the Middleton brothers, filed a motion for summary judgment, which the circuit court dismissed. Appellants subsequently filed a motion for clarification as well as a notice of appeal. Appellants' motion was subsequently deemed denied. Appellees then filed a motion to dismiss the appeal, arguing that a second notice of appeal was required after the denial of the consolidated motion for clarification. The Supreme Court denied Appellees' motion, holding that the notice of appeal in this case was effective.

Gene Shields, an agent for State Farm Insurance Companies, opened an account with Bankcorp Bank. The owner of the account was State Farm. Shields's office manager subsequently diverted funds that were due to be deposited into the account, and Shields allegedly suffered at least $77,925 in losses as a result of over 100 overdrafts on the account. Shields sued Bancorp Bank for negligence in failing to notify him of overdrafts. Bancorp moved to compel arbitration based on the account's arbitration clause. The circuit court denied the motion to compel, and Bancorp appealed. At issue on appeal was whether the parties' 2005 agreement to modify the contract entered into by the parties in 1982 controlled when Shields signed the agreement but State Farm was not a party to the contract. The Supreme Court affirmed, holding that the 2005 agreement, which contained the arbitration provision, was not binding because the agreement was entered into in contravention of the rights of the account owner, State Farm.

Delta Environmental filed a contract suit against Jonesboro Healthcare Center, alleging damages for the early termination of a five-year contract for services. The complaint was mistakenly filed in district court and alleged damages in excess of the district court's jurisdiction. The district court entered an order dismissing the case without prejudice due to a lack of subject-matter jurisdiction. On the same day, Delta filed the identical complaint in circuit court. Jonesboro moved to dismiss the complaint with prejudice based on a fatally flawed summons. Jonesboro argued in the motion that this would be the second dismissal in the case following a first dismissal that was a voluntary nonsuit and therefore should be a dismissal with prejudice pursuant to Ark. R. Civ. P. 41(b). The circuit court granted Jonesboro's motion but entered the current dismissal without prejudice, concluding that the previous dismissal in the district court did not trigger the two-dismissal rule. The Supreme Court affirmed, holding that the dismissal for lack of subject-matter jurisdiction was not the type of voluntary dismissal contemplated by rule 41(a), nor the type of involuntary dismissal contemplated by rule 41(b), and therefore, the circuit court did not err in its judgment.

Brett Nelson entered into contracts with the Arkansas Rural Medical Practice Student Loan and Scholarship Board and the rural community Forrest City pursuant to the state's community-match program that loaned Nelson money for his medical schooling and obliged him to practice medicine full time in Forrest City for four years upon the completion of his residency. Nelson began serving his four-year commitment in Forrest City, but when the hospital he was employed with did not renew his employment contract the next year, Nelson left Forest City to practice medicine in another state. The Board filed a complaint against Nelson for breach of contract and, alternatively, unjust enrichment. Nelson answered, asserting several affirmative defenses and making several counterclaims. The circuit court granted the Board's motion for summary judgment and entered judgment against Nelson in the amount of $133,152. The Supreme Court (1) reversed the grant of summary judgment to the Board on its breach of contract claim because questions of fact remained as to Nelson's counterclaims and defenses; and (2) otherwise affirmed. Remanded.

Appellees executed a credit application and retail installment contract (RIC) for the purchase of an automobile. The application contained an arbitration agreement. The RIC provided an option for Appellees to purchase credit-life insurance coverage with Insurer. Appellees subsequently filed a class action against Insurer seeking the refund of unearned credit-life insurance premiums from the date they paid off their loan until the original maturity date of the loan. Insurer filed a motion to compel arbitration pursuant to the terms of the arbitration agreement. The circuit court denied the motion after finding that the dispute was governed by Ark. Code Ann. 16-108-201(b), thereby preventing Insurer from compelling Appellees to arbitrate a dispute under an insurance policy. The Supreme Court affirmed, holding (1) the McCarran-Ferguson Act did not allow the Federal Arbitration Act to preempt section 16-108-201(b), and section 16-108-201(b) prohibited arbitration under these facts; and (2) the principles of equitable estoppel did apply to allow Insurer to compel arbitration.

Ross Systems contracted with advanced Environmental Recycling Technologies (AERT) to provide a new software system to manage business functions. AERT filed suit against Ross, alleging deceit, deceptive trade practices, and breach of contract. Ross counterclaimed for breach of contract. During the discovery process, AERT filed a motion for sanctions based on Ross's alleged failure to comply with a circuit court order to provide complete responses to AERT's requests for admission, interrogatories, and production of documents. During a hearing on the motion for sanctions, the circuit court struck Ross's answer. The Supreme Court affirmed, holding that the circuit court did not abuse its discretion in imposing the sanction because the sanction was imposed only after the court considered all of the circumstances surrounding Ross's conduct, including the failure to obey the court's order.

Ernie and Karen Cline sued M. Jay Carter for breach of contract after Carter signed a real estate contract with the intent to purchase residential property from the Clines but was unable to do so because he failed to obtain financing approval. Carter filed a third-party complaint against the real estate agent and company that represented him in the transaction (Jones Defendants). The circuit court consolidated the two lawsuits for trial. The jury returned a verdict (1) against Carter and in favor of the Clines on their breach of contract claim, and (2) against the Jones Defendants and in favor of Carter on Carter's negligence claims. The Supreme Court reversed, holding that the circuit court erred by denying Carter's motion for a directed verdict and his subsequent motion for judgment notwithstanding the verdict because there was a condition precedent included in the real estate contract that required Carter to obtain financing for the purchase, which he was unable to do, and as a result, there was no contract. Remanded.

Perroni Law Firm filed a complaint against Ben Still to recover unpaid legal fees for Samuel Perroni's representation of Still and his wife in connection with a previously dismissed indictment. The circuit court granted Perroni's motion for summary judgment, finding that Perroni's action was not time-barred because it was filed within five years after the cause of action accrued. At issue on appeal was (1) whether the action fell under Ark. Code Ann. 16-56-105, which provides that actions founded on contract but are not in writing shall be commenced within three years, or Ark. Code Ann. 16-56-111, which provides that actions to enforce written agreements shall be commenced within five years; and (2) whether the parties' agreement acknowledging the debt by Still was an oral or written agreement for purposes of the statutes. The Supreme Court reversed, holding that the three-year statute of limitations applied and the suit was time-barred.

After appellant Stephanie Riley, who was insured by State Farm, was involved in a car accident, Riley settled with the tortfeasor's insurer, GEICO. Riley asserted that State Farm filed a lien on her settlement before it knew whether she would be made whole by the settlement. After taking her case to trial court, Riley appealed with a Ark. R. Civ. P. 54(b) certification the dismissal of count one of her amended petition for declaratory judgment and complaint, which sought a declaratory judgment that appellee State Farm had failed to establish a legal lien or right to subrogation under Arkansas law. The Supreme Court reversed and remanded, holding that the circuit court erred in interpreting Ark. Code Ann. 23-89-207 and the state's subrogation law. The subrogation lien cannot arise, or attach, until the insured has received the settlement proceeds or damage award and until there is a judicial determination that the insured has been made whole.