author: TOM Glaze, Justice.

text:
    OUACHITA TREK and DEVELOPMENT COMPANY v. Lynn C. ROWE and Martha J. Rowe
    99-58
    17 S.W.3d 491
    Supreme Court of Arkansas
    Opinion delivered June 1, 2000

      Vicki S. Cook, Chancellor;

      Brown, Schwander, Greene & Sloan, P.L.C., by: Alice Ward Greene, for appellant.
    D. Scott Hickam, for appellees.
   TOM Glaze, Justice.

This appeal arises from a Garland County tice. dismissal of a lawsuit between Ouachita Trek and Development Company (“OTDC”) and Lynn and Martha Rowe. The chancellor had originally granted specific performance in favor of OTDC, but after a series of attempts to close on the property failed, she dismissed OTDC’s suit. For the reasons set out herein, we affirm.

In May of 1992, OTDC and the Rowes entered into an option agreement which provided for the sale of land on Blakely Mountain in Garland County owned by the Rowes in three forty-acre tracts of land, that the Rowes had not previously sold to others. This land constituted about seventy acres of land altogether. In order to extend the length of the option agreement, OTDC purchased two additional tracts of property in those three forties on July 7, 1993, on which date the parties also entered into another purchase and option agreement. This second purchase and option agreement provided for an initial term of fifteen months and was set to expire on October. 7, 1994, unless OTDC exercised a provision contained in the agreement to extend the expiration of the agreement for another six months, or until April 7, 1995, during which time OTDC was to purchase an additional 2.3 acre tract of property. OTDC properly extended the expiration of the agreement until April 7, 1995, by purchase of the additional 2.3 acres in July of 1994.

On April 7, 1995, OTDC gave notice to the Rowes that it intended to exercise its right to purchase all of the land contained in the three forty-acre tracts which the Rowes had not previously sold. The parties proceeded toward a closing on the optioned property set for July 25, 1995, but the closing did not occur. According to the Rowes, OTDC had insisted on terms that were different from those contained in the original agreement. In October of 1995, OTDC filed suit against the Rowes in Garland County Chancery Court, seeking specific performance of the purchase and option agreement and damages suffered due to the faded July 1995 closing.

The basis of the complaint was the parties’ differing interpretations of several provisions of the purchase and option agreement, including the method by which OTDC could exercise the option, what acreage was to be included in the option, which properties were intended to be included in the provision allowing OTDC a first option to reacquire property previously sold by the Rowes subject to their right to reacquire, how a resale and release clause was to be interpreted and implemented, who had responsibility for the roads to the optioned property (and the extent of that responsibility), and other matters.

The case was tried before Garland County Chancellor Vicki Cook in October of 1997. On January 27, 1998, she issued a letter order in which she granted specific performance to OTDC; however, she awarded no damages or attorneys’ fees. OTDC prepared a precedent, which was signed by the chancellor on March 30, 1998, and entered it on that same date. Also on March 30, a closing date was set for June 1, 1998.

On April 10, 1998, the Rowes filed a motion under Rules 52(b), 59, and 60 of the Arkansas Rules of Civil Procedure to amend the precedent, asserting that the precedent prepared by OTDC contained language that was not in the chancellor’s letter order. In response, on June 15, 1998, the trial court entered an amended order, correcting the March 30 order to reflect what was contained in its original letter order.

The parties did not close on June 1, and on June 23, 1998, the Rowes filed a motion pursuant to Ark. R. Civ. P. 70, asserting that OTDC had failed to comply with the court’s orders with respect to closing and that OTDC’s cause of action should be dismissed. A hearing on the motion was held on August 21, 1998, and the chancellor ordered the parties to close on September 21, 1998, or she would grant the Rowes’ Rule 70 motion. On September 14, 1998, another hearing was held to discuss closing documents. OTDC filed a “Motion to Determine Closing Documents” on September 18, asking the court to determine that the mortgage and promissory note it submitted were the documents that best reflected the previous orders of the court; this order was never ruled on by the court.

Closing did not occur on September 21, and the Rowes entered a motion to dismiss on September 28. A hearing was held on October 12, at the close of which the trial court granted the Rowes’ motion and dismissed OTDC’s cause of action. The-same day, she granted OTDC’s motion for stay pending appeal on the condition that OTDC post a supersedeas bond. OTDC timely filed a notice of appeal, and now raises six points for reversal. Because we find that none of these points has merit, we affirm the chancellor’s dismissal of the matter; however, we do so for a reason different from the one given by the chancellor. We discuss this point further below. In addition, the Rowes filed a notice of cross-appeal, in which they assert that this court should remand the matter to the trial court for entry of judgment in the amount of the supersedeas bond which OTDC never posted.

We hear chancery cases de novo on the record, but will not reverse a finding of fact by the chancellor unless it is clearly erroneous. McKay v. McKay, 340 Ark. 171, 8 S.W.3d 525 (2000) (citing Webber v. Webber, 331 Ark. 395, 962 S.W.2d 345 (1998); Box v. Box, 312 Ark. 550, 851 S.W.2d 437 (1993)). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Ross Explorations, Inc. v. Freedom Energy, 340 Ark. 74, 8 S.W.3d 511 (2000). The evidence on appeal, including all reasonable inferences therefrom, and the findings of fact by a judge must be reviewed in a light most favorable to the appellee. McKay, 340 Ark. at 176, 8 S.W.3d at 528 (citing Looper v. Madison Guar. Sav. & Loan Ass’n, 292 Ark. 225, 729 S.W.2d 156 (1987)).

For its first point on appeal, OTDC argues that the trial court erred in entering an amended precedent on June 15, 1998, urging that the Rowes waived all objections to the March 30 order during the hearing held on that date. In addition, OTDC asserts that the trial court lost jurisdiction to enter a new precedent when the court failed to rule on the Rowes’ April 10, 1998, motion pursuant to Rules 52, 59, and 60 within thirty days; because of this failure, OTDC contends that the Rowes’ motion was deemed denied on May 10, 1998.

The basis of the Rowes’ motion was a discrepancy between the language of the precedent prepared by OTDC and that of the letter order written by Chancellor Cook. The letter order, dated January 27, 1998, ordered the Rowes “to bring the roads to these three tracts within a reasonable level or performance on or before 90 days after the closing by taking all steps necessary for the roads to be paved and accepted by the County.” (Emphasis added.) The precedent prepared by OTDC, however, read that the Rowes had “responsibility for maintaining and improving the roads. . . and shall have 90 days from January 27, 1998, to improve and pave these roads up to the point sufficient to comply with the Garland County requirements ...” (Emphasis added.)

Pursuant to Ark. R. Civ. P. 60, the Rowes’ motion alleged mistake or oversight in the preparation of the precedent, and asked the trial court to amend the precedent to delete any language requiring them to pave the roads. Rule 60(b), at the time this case was originally heard, provided as follows:

To correct any error or mistake or to prevent the miscarriage of justice, a decree or order of a . . . chancery . . . court may be modified or set aside on motion of the court or any party, with or without notice to any party, within ninety days of its having been filed with the clerk.

Ark. R. Civ. P. 60(b) (1999).

Thus, corrections of mistakes or errors, or efforts to prevent the miscarriage of justice, may be made within ninety days of the original order. The amended order in the instant case was entered on June 15, 1998, less than ninety days (actually, seventy-seven days) from the original order on March 30, 1998. Because OTDC attempted to mislead both the trial court and the Rowes by inserting the improper language about paving the roads into the precedent it prepared, the court properly amended the order under Rule 60 to prevent the miscarriage of justice.

OTDC raises the additional argument that the Rowes waived any objection to the language in the precedent when they announced “no objections” to the precedent at the March 30 hearing. However, one cannot waive something that one is unaware of. The Rowes never agreed to pave the roads over the property, yet OTDC inserted the language quoted above into the precedent. At the March 30 hearing, the trial court asked counsel for OTDC if he had tracked the language of the letter opinion; the attorney responded that he had. When asked if he had any objections, counsel for the Rowes stated that “if [the precedent is] the same one that I’ve seen previously,” he had none. Counsel for OTDC stated that “[t]he only thing that was sent was a new signature page which allows you to fill in the date for it because that had been left off.” This material misrepresentation prevents OTDC from arguing waiver at this time.

Thus, the chancellor was correct when she entered an amended order that properly stated that the Rowes only had to maintain the roads until the county would accept them for paving, correcting the order entered on March 30 which ordered the Rowes to pave the roads. Rule 60 permits such oversights to be corrected within ninety days; this amended order was entered in seventy-seven days, well within the time allotted.

OTDC’s second point on appeal is that the trial court erred in its interpretation of the resale and release clause in the purchase and option agreement. The clause in question reads as follows:

It is the understanding of the parties that OTDC may hold the property described herein ... for resale to the public. ROWE agrees to accommodate OTDC in its best efforts to resale [sic] any and all property South of Heritage Trail, and accordingly, after exercising the option, ROWE agrees to release their lien upon any portion of the property contracted for sale to third parties upon the payment of FIVE THOUSAND AND NO/100 DOLLARS ($5,000.00) per acre. The parties further agree to a payment or reduction of the principal amount owed for that portion.

In her June 15, 1998, amended order, the chancellor interpreted this language to mean that “the down-payment, once paid by [OTDC], shall operate to provide security to defendants for the entire transaction. After the down-payment, any payment of $5,000.00 or more will entitle the plaintiff to a release of lien at the rate of $5,000.00 per acre as stated in the agreement.” At the August 21, 1998, hearing, the court found that “the monthly payments would be made and the $5,000.00 would be additional if there was going to be a release.” Reiterating her order in a September 15, 1998, letter, she wrote that “[a]fter the down payment, any payment of $5,000.00 or more will entide [OTDC] to a release of hen at the rate of $5,000.00 per acre as stated in the agreement.” Thus, her conclusion was that payments of $5,000.00 beyond the monthly principle and interest payments, after the down payment was made, would operate to do two things: 1) reduce the principle amount owed, and 2) entitle OTDC to a release of one acre of land from the Hen retained by the Rowes.

OTDC contends that the trial court’s interpretation is erroneous and argues here, as it did to the court below, that “any payment” of $5,000.00 includes the monthly instaHments and should warrant a release of Hen. In addition, OTDC urges that the trial court’s “verbal interpretation” of this language at the August 21 hearing amended its earlier ruHng. However, we do not find this argument persuasive. The chanceHor’s interpretation of the resale and release clause — that any additional payment of $5,000.00 over the monthly principle and interest payment would release an acre from the Hen — is a common-sense one, and her statements at the August hearing merely clarified her earlier written ruling. We cannot say that her decision was clearly erroneous, and thus, we do not reverse on this point.

For its third point on appeal, OTDC argues that the trial court erred by failing to include certain property, referred to by the parties as the “church property,” as part of the property to be acquired pursuant to the purchase and option agreement. The purchase and option agreement contained language to the effect that the Rowes had reserved rights to reacquire property in the area previously sold by them and had agreed to assign those rights to OTDC, in the event OTDC exercised its purchase option. The property that OTDC contended came within this reservation of rights was a ten-acre tract previously conveyed by gift from the Rowes to their church.

After hearing testimony and reviewing the documentary evidence presented during the trial, the chancellor found that the church property was not part of the acreage included in the purchase and option agreement. First, she found that the property had not previously been sold by the Rowes; rather, it had been a gift to their church for which no consideration had been paid on its return to the Rowes. In addition, she noted that the legal description of the land in the agreement provided for 61.65 total acres, more or less, which, when multiplied by the resale and release price of $5,000.00 per acre, was roughly consistent with the total agreed purchase price of $300,000.00. In addition, she pointed to exhibits which did not depict the church property on them. Testimony from the Rowes, including Martha Rowe’s diary, also supported their contention that the church property was not shown on the plat attached to the parties’ agreement; nor did the contract refer to the property directly or indirectly. Based on this evidence, the chancellor concluded that the contract did not include the church property.

The chancellor’s decision appears well-founded on the testimony and evidence presented at trial. Especially convincing is the fact that the property to be sold encompassed approximately sixty acres and was to be sold for $300,000.00 (or 60 x $5,000.00 per acre, the value assigned in the resale and release clause). Had the ten-acre church property been included, the sale price should have been roughly $50,000 higher. This court has repeatedly held that it will not reverse a chancellor’s findings of fact unless they are clearly erroneous; in this case, given the chancellor’s superior position to view all the evidence, it cannot be said that she clearly erred.

OTDC’s fourth argument on appeal is that the trial court erred in failing to require the Rowes to pave all of the roads to the optioned property, or in the alternative, in failing to award damages based on the Rowes’ failure to pave the roads. First, OTDC relies on the March 30, 1998, order it prepared in which the Rowes were given ninety days from January 27, 1998, “to improve and pave those roads.” However, this was the language that the trial court properly corrected by removing it in the June 15 amended order, and OTDC cannot rely on it now.

Second, OTDC urges that even under the June 15, 1998, order, the Rowes were directed to bring the roads to the three tracts of land “within a reasonable level of performance on or before ninety days after the closing by taking all steps necessary for the roads to be paved and accepted by the county” (emphasis original in OTDC’s brief). Basically, OTDC claims that the Rowes had not done what they could to get the county to accept the roads. On this point, however, the chancellor ultimately decided that since there had been no closing, and thus no way to determine when ninety days from closing would be, this issue was not ripe. For that reason, she refused to award damages to OTDC. Again, we cannot say that this decision was clearly erroneous.

The fifth point of OTDC’s argument is that the trial court erred by denying its attorneys’ fees pursuant to Ark. Code Ann. § 16-22-308 (Repl. 1999). In her order, the chancellor noted that the decision whether to award attorneys’ fees is within the court’s discretion, and she found that since neither party was entitled to damages, both parties were to be responsible for their own attorneys’ fees.

In Chrisco v. Sun Industries, 304 Ark. 227, 800 S.W.2d 717 (1990), this court was very clear on the subject of attorneys’ fees and a trial court’s discretion with respect to whether or not to grant them. The Chrisco court stated the following:

Our general rule relating to attorney’s fees is well established and is that attorney’s fees are not allowed except when expressly provided for by statute.
[Ark. Code Ann. §] 16-22-308 addresses attorney’s fees in certain civil actions and provides in pertinent part as follows:
In any civil action to recover on . . . breach of contract, . . . the prevailing party may be allowed a reasonable attorney fee to be assessed by the court and collected as costs.
(Emphasis added.)
The word “may” is usually employed as implying permissive or discretional, rather than mandatory, action or conduct and is construed in a permissive sense unless necessary to give effect to an intent to which it is used. We find, within the context in which the word “may” is employed in this case, that section 16-22-308 is permissive and discretional with the trial court.
* * * *
We have also previously noted that due to the trial judge’s intimate acquaintance with the record and the quality of service rendered, we usually recognize the superior perspective of the trial judge in assessing the applicable factors. Accordingly, an award of attorney’s fees will not be set aside absent an abuse of discretion by the trial court.

Chrisco, 304 Ark. at 229-30, 800 S.W.2d at 718 (internal citations omitted).

The chancellor was involved in this lawsuit from its beginning, and no doubt is intimately familiar with the performance and quality of service rendered by counsel for both parties. Her decision was certainly based on her familiarity with the case, and OTDC has not proven that she abused her discretion in refusing to award fees.

OTDC’s final point on appeal is that the trial court erred by dismissing with prejudice its entire cause of action after the closing failed on September 21, 1998. The chancellor purported to dismiss the action pursuant to the Rowes’ motion under Ark. R. Civ. P. 70. The language of Rule 70, however, does not provide for dismissal. That rule reads as follows:

If a judgment directs a party to execute a conveyance of land or to deliver deeds or other documents or to perform any other specific act, and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done has like effect as if done by the party. . . . The court may also in proper cases adjudge the party in contempt.

Although Rule 70 does not provide a mechanism for dismissal, we nonetheless affirm the chancellor’s decision to dismiss OTDC’s cause of action for another reason. Here, OTDC sought specific performance, an equitable remedy. See Bharodia v. Pledger, 340 Ark. 547, 11 S.W.3d 540 (2000); Hardy Constr. Co. v. Arkansas State Hwy. & Transp. Dep’t., 324 Ark. 496, 922 S.W.2d 705 (1996). However, one of the most basic maxims of equity is that he who seeks equity must do equity. See Cardiac Thoracic & Vascular Surgery, P.A. v. Bond, 310 Ark. 798, 840 S.W.2d 188 (1992).

Arkansas cases extending back more than seventy years have recognized that a party who breaches a contract cannot compel specific performance of that same contract by the other party. Moody v. Kahn, 174 Ark. 1072, 298 S.W. 353 (1927). Here, OTDC continually insisted on improper language, not only in the precedent it prepared, but also in the closing documents it tried to have the Rowes sign. With OTDC, the chancellor was confronted with a party who sought specific performance of the parties’ agreement, but OTDC repeatedly rejected the chancellor’s interpretations of the agreement that she deemed were necessary to carry it out. Thus, the chancellor in the instant case was correct to dismiss OTDC’s suit for specific performance. In so holding, we adhere to the recognized rule that this court will affirm a trial court when it has reached the right result, even if for the wrong reason. State of Washington v. Thompson, 339 Ark. 417, 6 S.W.3d 82 (1999) (citing Malone v. Malone, 338 Ark. 20, 991 S.W.2d 546 (1999); Dunn v. Westbrook, 334 Ark. 83, 971 S.W.2d 252 (1998); Marine Servs. Unlimited, Inc. v. Rake, 323 Ark. 757, 918 S.W.2d 132 (1996)). In sum, because the circumstances in this case do not support the granting of specific performance, we agree that the chancellor correctly dismissed OTDC’s cause of action.

We next turn to the Rowes’ cross-appeal, in which they argue that we should remand the matter to the lower court for entry of a judgment in the amount of $60,000.00, the amount of the supersedeas bond OTDC was to post with the chancery clerk on or before October 26, 1998 ■ — ■ two weeks after the trial court’s order dismissing OTDC’s cause of action. The trial court’s order directed OTDC to submit its surety bond pertaining to its appeal or dismiss the appeal forthwith. OTDC never posted a surety bond, nor did the Rowes object to or move to dismiss OTDC’s appeal.

On appeal, OTDC argues that there was no necessity for it to post a supersedeas bond in order for it to maintain its interests in the property at issue. OTDC contends that its interests were sufficiently protected by having filed a lis pendens when it filed its original action. The Rowes offer no reason why they did not move to enforce OTDC’s posting of a bond, but instead, ask that we remand the matter for the trial court to enter a judgment for $60,000.00 — the bond amount that was to be posted by October 26, 1998. The Rowes cite no legal authority that supports their proposition, and we have stated on occasions too numerous to count that we will not consider the merits of an argument if the appellant fails to cite any convincing legal authority in support of that argument, and it is otherwise not apparent without further research that the argument is well taken. Matthews v. Jefferson Hospital Ass’n, 341 Ark. 5, 14 S.W.3d 482 (2000).

Rule 8(c) of the Rules of Appellate Procedure — Civil states that whenever an appellant desires a stay on appeal, he or she shall present to the court for its approval a supersedeas bond which shall have such surety or sureties as the court requires. Rule 8(c) further provides that the bond shall be to the effect that appellant shall pay to appellee all costs and damages that shall be affirmed against appellant on appeal; or if appellant fails to prosecute the appeal to a final conclusion, or if such appeal shall for any cause be dismissed, that appellant shall satisfy and perform the judgment, decree, or order of the trial court.

Here, while OTDC initially requested a stay pending an appeal, it later decided no stay was needed to protect its interests. As previously noted, once OTDC chose not to seek a stay under Rule 8, the Rowes took no action when the October 26, 1998, date for posting bond passed. We believe the circumstances and the argument put forth here by the Rowes fall short of showing their entitlement to a remand and entry of judgment.

For the above reasons, the order of the chancellor dismissing OTDC’s cause of action is affirmed, and the cross-appeal of the Rowes is dismissed.

IMBER, J., not participating.

       Rule 60 was amended in 2000 to reflect this court’s decision in Lord v. Mazzanti, 339 Ark. 25, 2 S.W.3d 76 (1999), in which we held that clerical errors could be corrected by the court “at any time.” Corrections of errors or mistakes or to prevent the miscarriage of justice must still be made within ninety days.

       OTDC’s point heading on this issue mentions Ark. Code Ann. § 16-22-302, but their brief assigns error only under § 16-22-308. Thus, our analysis is pursuant to this latter section.


source: Caselaw Access Project

author: TOM GLAZE, Justice.

license: Public Domain

text:
    Donnie R. REED and Peggy J. Reed, Husband & Wife v. ARKANSAS STATE HIGHWAY COMMISSION
    99-994
    17 S.W.3d 488
    Supreme Court of Arkansas
    Opinion delivered June 1, 2000
    [Petition for rehearing denied June 29, 2000.]

      Harold S. Erwin, Judge;

      Murrey L. Grider Law Firm, by: Murrey L. Grider, for appellant.

      Robert L. Wilson, Chief Counsel and Lawrence W. Jackson, Staff Attorney, for appellee.
   TOM GLAZE, Justice.

This appeal arises out of a condemnace. proceeding by the appellee Arkansas State Highway Commission and its construction project to widen that part of Highway 67 which runs through Pocohontas. The appellants, Donnie and Peggy Reed, own a flower shop located along Highway 67’s right-of-way. As part of the project, the Commission filed an action of condemnation and declaration of a taking for a temporary easement needed to construct curbs, gutters, and sidewalks within the Commission’s right-of-way abutting the Reeds’ property. The Commission interpleaded $100.00 as compensation for the estimated fair market value of the taking. The Reeds conceded that the Commission’s construction was contained wholly within the Commission’s highway right-of-way. Nonetheless, the Reeds responded by stating they intended to offer lay and expert testimony bearing on lost profits to its' business and other fair market value damages. The Commission, on the other hand, sought to limit the Reeds’ proof to the fair market value of the property taken by the temporary easement. Based on the Commission’s assertion, the Reeds’ damages were limited to the use of the construction easement for sixty days, which amounted to the $100.00 amount deposited by the Commission.

On March 8, 1999, prior to the commencement of a jury trial, the trial court conducted a hearing on two motions in limine filed by the Commission, whereby the Commission sought to exclude any lost profits evidence offered by the Reeds and to exclude testimony by their expert appraiser, R. M. Weaver. Mrs. Reed’s testimony, if given, was intended to show lost profits in the amount of $26,484.44, and Mr. Weaver’s testimony placed damages caused by the construction at $30,175.00. After listening to argument of counsel for the Commission and the Reeds, the trial court granted the Commission’s motions. While the trial court then offered the Reeds the opportunity to present evidence of damages as to fair rental value of any loss due to the temporary easement used by the Commission to complete its project, the Reeds declined, stating they could offer no evidence beyond that excluded by the Commission’s motions in limine because their lost-profit damages could not be separated from other market value evidence.

After the Reeds opted not to proceed further, the trial court suggested a directed verdict was in order, even though no trial testimony had been introduced. At this point, the Reeds were given the opportunity to proffer Mrs. Reed’s and Mr. Weaver’s testimonies. The Reeds also advanced an inverse condemnation argument, which was rejected by the trial court. The trial court concluded that the only damages shown were in the $100.00 amount deposited by the Commission, so it awarded that amount to the Reeds. The Reeds responded that they would appeal, and the hearing ended.

Following the March 8 hearing, the Reeds prepared the trial court’s precedent which the trial court signed and entered on May 20, 1999. The Reeds appealed from that judgment on June 2, 1999. However, the Commission discovered the May 20 order contained errors, and it filed a motion pursuant to Rule 60(b) of the Arkansas Rules of Civil Procedure to correct the May 20 judgment. To protect its claim on cross-appeal, the Commission, on June 7, 1999, filed its notice of appeal from the May 20 judgment.

Upon reviewing its May 20 order, the trial court found numerous errors. The order contained seven findings that mistakenly related that the Commission, as plaintiff, was granted a directed verdict on points such as the value of the construction easement and the Reeds’ inverse condemnation claim. The judgment was significantly erroneous, by stating (1) that the Reeds had been prohibited from testifying about their knowledge of rental values in the area as those values related to damages resulting from the Commission’s temporary easement, and (2) that the trial court permitted the introduction of Mr. Weaver’s appraisal as a joint exhibit. The trial court corrected the foregoing errors by entering a new judgment on June 15, 1999. Neither the Reeds nor the Commission filed an appeal from the June 15 corrected judgment.

On appeal, the Reeds seek to reverse the trial court’s May 20 judgment, arguing the trial court erred by excluding their market value evidence and by holding they had no inverse condemnation claim. The Commission, on the other hand, submits that, in the event this case is reversed on appeal, the trial court erred in the May 20 judgment by purporting to admit Weaver’s appraisal report. We are unable to reach the merits of this case because the parties appealed from the wrong judgment.

The central issue here is the effectiveness of the notices of appeal and cross-appeal which were filed after the entry of the trial court’s original May 20 judgment but prior to the trial court’s correction of its judgment pursuant to Rule 60. Although neither party raises the issue, the question of whether an order is final and subject to appeal is a jurisdictional question which the Court will raise sua sponte. Arkansas Savings & Loan Association v. Corning Savings & Loan Ass’n, 252 Ark. 264, 478 S.W.2d 431 (1972); J. W Reynolds Lumber Co. v. Smackover State Bank, 310 Ark. 342, 836 S.W.2d 853 (1992). It is not only the power but the duty of a court to determine whether it has jurisdiction of the subject matter. Id. The parties to an action may not confer subject matter jurisdiction on the court, McCraw v. Simpson, 203 Ark. 763, 158 S.W.2d 655 (1942). See, also, Arkansas Dept. Of Human Serv. v. Estate of Hogan, 314 Ark. 19, 858 S.W.2d 105 (1993).

For an order to be final, it must dismiss the parties from the trial court, discharge them from the action, or conclude their rights to the subject matter in controversy. See Roberts Enterprises, Inc. v. Arkansas State Hwy. Comm’n, 211 Ark. 25, 638 S.W.2d 75 (1982); Cigna Ins. Co. v. Brisson, 294 Ark. 504, 744 S.W.2d 716 (1988). An order must be of such a nature as to not only decide the rights of the parties, but also to put the court’s directive into execution, ending the litigation or a separable part of it. See Kilgore v. Viner, 293 Ark. 187, 736 S.W.2d 1 (1987); Kelly v. Kelly, 310 Ark. 244, 835 S.W.2d 869 (1992). Here, the May 20 order, from which the Reeds and the Commission appealed, was set aside and corrected by the court’s subsequent judgment of June 15, 1999, entered pursuant to Ark. R. Civ. P. 60(b). The appeal and cross-appeal from the order entered on May 20 are ineffective because both were filed prematurely. Because the notice of appeal was ineffective, the appellate court is without authority to accept jurisdiction.

Appeal and cross-appeal dismissed.


author: Robert L. Brown, Justice.

text:
    James L. FLOWERS v. NORMAN OAKS CONSTRUCTION COMPANY
    99-1520
    17 S.W.3d 472
    Supreme Court of Arkansas
    Opinion delivered June 1, 2000

      Baxter, Jensen, Payne, Young & Smith, by: Terence C. Jensen, for appellant.

      Roberts Law Firm, P.A., by: Mike Roberts and J. Mark White, for appellee.
   Robert L. Brown, Justice.

The appellant, James Flowers, stice. carpenter. While framing a house and attempting to extend scaffolding at the site, he lost his balance and fell more than twenty feet. Fie landed on his back which caused a fracture to his spine. The Administrative Law Judge found that there was sufficient evidence to show the presence of alcohol and to raise the rebuttable presumption that the injury was substantially occasioned by the presence of alcohol. The ALJ further found that Flowers had failed to rebut this presumption due to failure of proof and lack of credibility. The Workers’ Compensation Commission, with one commissioner dissenting, adopted the findings of the ALJ and concluded that he was correct in denying benefits. Flowers appealed, and the court of appeals reversed the Commission in a plurality decision. Flowers v. Norman Oaks Construction Co., Inc., 68 Ark. App. 239, 6 S.W.3d 118 (1999). Four judges of the court of appeals agreed to reverse the Commission on the basis that the presence of alcohol was not established by the mere smell of alcohol on Flowers’s breath. One judge agreed with reversal but wrote that the only means to establish the fact that alcohol is present is by a blood-alcohol test. Four judges dissented on the basis that the smell of alcohol on Flowers’s breath was documented by medical personnel and that Flowers had admitted to drinking between six and eight beers on the evening prior to the injury. We affirm the Commission and reverse the court of appeals.

The facts in this case are largely undisputed. After Flowers fell from the scaffolding at approximately nine o’clock in the morning on December 6, 1997, he was taken by ambulance to Baptist Medical Center in Little Rock where he underwent a spinal fusion. The report of the emergency medical technician who accompanied Flowers to the hospital stated: “Strong smell of ETOH on pt. He states he drank last pm but denies ETOH this day.” Flowers’s Emergency Room Record completed by a registered nurse at the hospital that same morning stated “Smell of ETOH about breath.” No blood-alcohol tests were administered to determine the presence of ETOH, which is an acronym for alcohol, in Flowers’s blood.

According to Flowers’s testimony before the ALJ, he was in the process of putting together a walk-board when he pulled back a two-by-twelve board, and it slipped off the scaffolding pole, causing him to lose his balance and fall more than twenty feet. He testified that the night before the injury, he drank six or eight beers with his friends over a five-hour period and went to bed at 11:30 p.m. Fie said that he stopped drinking by 11:00 or 11:30 p.m. He was at work by seven o’clock the next morning, and the accident occurred around nine o’clock a.m. He said he drank coffee the morning of the accident but no alcohol. Flowers admitted that he drank several beers three or four nights a week.

On cross-examination, Flowers testified that he had said in an earlier deposition that he had been drinking alone rather than with friends but stated he was not alone “all the time.” He further admitted that he had been cited for DWI three times over the past five years. He offered that the paramedic reported a strong smell of alcohol, because he was wearing the same clothes from the night before and had not brushed his teeth or taken a shower. He stated that the only time he drank beer on a jobsite was after working hours.

Two other witnesses testified about Flowers and beer consumption. After the accident, Steven Coleman, a building contractor, investigated the jobsite where Flowers was injured for signs of alcoholic beverages and found six to ten beer cans. Charles Smith, a framing subcontractor who was building a house next to the jobsite where Flowers was injured, saw Flowers at work with Busch beer cans in his coat in late November or early December 1997. He did not actually see Flowers drinking beer on the job. A medical record entered after Flowers was readmitted to the hospital on December 14, 1997, stated that Flowers admitted to drinking a twelve-pack or a six-pack of beer every day.

After the court of appeals reversed the Commission’s denial of benefits, Norman Oaks Construction petitioned this court for review of the decision pursuant to Rule 2-4 of the Rules of the Arkansas Supreme Court. This court granted the petition. When this court grants review in a case such as we have before us, we review the Commission’s opinion as if the appeal had been originally brought to this court. Meister v. Safety Kleen, 339 Ark. 91, 3 S.W.3d 320 (1999).

Flowers, in his appeal from the Commission’s opinion, raises three issues. He contends that the Commission erred in finding that he did not sustain a compensable injury and that he was intoxicated at the time of the accident. The trial court further erred, according to Flowers, in its application of Ark. Code Ann. § 11-9-102(4)(B)(iv)(a-c) (Supp. 1999). We begin by quoting the pertinent subsections of the Code:

(B) “Compensable injury” does not include:
(iv)(a) Injury where the accident was substantially occasioned by the use of alcohol, illegal drugs, or prescription drugs used in contravention of physician’s orders.
(b) The presence of alcohol, illegal drugs, or prescription drugs used in contravention of a physician’s orders shall create a rebuttable presumption that the injury or accident was substantially occasioned by the use of alcohol, illegal drugs, or prescription drugs used in contravention of physician’s orders.
(c) Every employee is deemed by his performance of services to have impliedly consented to reasonable and responsible testing by properly trained medical or law enforcement personnel for the presence of any of the aforementioned substances in the employee’s body.

Flowers argues that the clear intention of the presumption in § 11-9-102, when read as a whole, requires blood or urine testing by trained medical or law enforcement personnel to create a presumption. Moreover, he emphasizes that subsection (4)(b)(iv)(c) describes the appropriate testing for “the presence of the aforementioned substances in the employee’s body.” The use of the term “in the employee’s body” in subsection (c), according to Flowers, further suggests that to raise the applicable presumption, the substance must be present in the employee’s blood stream and not merely on his breath. Finally, he asserts that the statement of one person that the smell of alcohol existed on another person is too subjective and cannot substitute for valid medical testing.

Flowers goes c ; to explain the reasons he might have smelled of alcohol. He admhs that he had been drinking the night before, but adds that he had worn the same clothes to work as he had worn the previous night and had not brushed his teeth on the day of the accident. Fie also offers that the medical personnel could have been mistaken as to what they smelled, especially since alcohol in its pure form has no smell. There was no testimony by his employer or coworkers, he emphasizes, that he had slurred speech or was unsteady on his feet. Similar testimony, he notes, is often given by police officers to prove intoxication following a DWI charge.

We are persuaded that the Commission’s finding of the presence of alcohol is supported by substantial evidence. Flowers admitted that he drank six to eight beers at his home with some friends the night before the accident. FFe stated that he went to bed by 11:00 or 11:30 p.m.-the evening before the accident and left for work on the morning of the accident at about 6:30 a.m. Upon arrival at the accident scene, EMT paramedics noted “a strong smell of ETOH” about Flowers at 8:45 a.m. The registered nurse at the hospital reported that Flowers had a “smell of ETOH about breath.” When Flowers was readmitted to the hospital a week later complaining of hallucinations, his medical records state that he admitted that he habitually drank a twelve-pack or six-pack of beer a day.

There was also circumstantial evidence that Flowers drank beer at the jobsite. Charles Smith testified that he had seen Flowers at work on a different day than the day of the accident display Busch beer cans hidden in his coat. (Flowers admitted that Busch is his preferred brand of beer.) Smith testified that the same day he saw Flowers with beer in his coat, he saw Flowers fall and injure himself. Steven Coleman testified that he found between six and twelve empty Busch beer cans on the jobsite a few days after the accident. Coleman also testified that no other work crew was at that site between the time of the accident and the day he found the beer cans.

In reviewing an appeal from the Commission, this court views the evidence in the light most favorable to the Commission’s decision and affirms when that decision is supported by substantial evidence. Meister v. Safety Kleen, supra. Such evidence exists if reasonable minds could reach the same conclusion. This court will not reverse the Commission’s decision unless fair-minded persons could not have reached the same conclusion when considering the same facts. See Ester v. National Home Ctrs., Inc., 335 Ark. 356, 981 S.W.2d 91 (1998).

The Workers’ Compensation Law must be strictly and literally construed by the Commission and the courts. See Stephens Truck Lines v. Millican, 58 Ark. App. 275, 950 S.W.2d 472 (1997). A particular provision in a statute must be construed with reference to the statute as a whole. See Boyd v. State, 313 Ark. 171, 853 S.W.2d 263 (1993).

This court has defined a statutory presumption as “a rule of law by which the finding of a basic fact gives rise to the existence of a presumed fact, unless sufficient evidence to the contrary is presented to rebut that presumption.” ERC Contr. Yard & Sales v. Robertson, 335 Ark. 63, 69, 977 S.W.2d 212, 215 (1998). This court in ERC Contr. pointed out that the statutory presumption does not “quantify the term ‘presence.’ Therefore alcohol is present whenever any amount of alcohol is revealed, no matter how small.” Id. We further stated in ERC Contr. that even though the employee’s blood-alcohol test revealed a low alcohol level, the test revealed the presence of alcohol and triggered the statutory presumption. See id.

In several recent cases, both this court and the court of appeals have held that the presence of drugs or alcohol established only by metabolites or a slight amount of the drugs or alcohol was sufficient to raise the rebuttable presumption and shift the burden of proof to the claimant to rebut the presumption. See Ester v. National Home Ctrs., Inc., supra; Express Human Resources III v. Terry, 61 Ark. App. 258, 968 S.W.2d 630 (1998); Brown v. Alabama Elec. Co., 60 Ark. App. 138, 959 S.W.2d 753 (1998), petition for review denied, 334 Ark. 35, 970 S.W.2d 807 (1998); Weaver v. Whitaker Furniture Co., 55 Ark. App. 400, 935 S.W.2d 584 (1996). However, in each of these cases some type of medical test was administered to the employee. In Ester, the employee tested positive in a drug-screen test for opiates and cocaine metabolites. In Express Human Resources, Brown, and Weaver, urine specimens were tested revealing the presence of metabolites of the drug in question.

This court and the court of appeals have further upheld a finding of “presence” where the admitted use of drugs occurred several hours or even days before the accident and injury. See Ester v. National Home Ctrs., Inc., supra, (employee admitted using cocaine three days before accident); Express Human Resources III v. Terry, supra, (employee admitted using marijuana four days prior to the accident); Continental Express v. Harris, 61 Ark. App. 198, 965 S.W.2d 811 (1998) (employee ingested alcohol twelve hours before accident).

Our research shows that Arkansas appears to be the only state that raises a presumption that an accident was substantially caused by drugs or alcohol by merely establishing the presence of drugs or alcohol without requiring that that presence be confirmed by medical testing. Some statutes in other states require an employee’s intoxication for the injury to be noncompensable. See, e.g., Ala. Code § 25-5-51 (1992 Repl.); Conn. Gen. State. § 31-284 (1999); Del. Code Ann. tit. 19, § 2353 (1995 Repl.); S.D. Codified Laws § 62-4-37 (1993 Rev.); Vt. Stat. Ann. tit. 21, § 649 (1987). Other statutes require blood-alcohol testing. See, e.g., Tenn. Code Ann. § 50-6-110 (1999 Repl.); Va. Code Ann. § 65.2-306 (1995 Repl.). On this point, the court of appeals has stated that § 11 — 9— 102 does not require:

that the Commission promulgate drug-testing procedures or specify particular types of tests to be used as a precondition to the intoxication presumption. The Arkansas General Assembly could have required testing that would show a certain level of illegal drugs, as it has required to invoke the presumption in DWI cases, but it has not made such a requirement.

Brown v. Alabama Elec. Co., 60 Ark. App. at 144, 959 S.W.2d at 756. We agree with that assessment. The end result is that our standard for noncompensability due to drug or alcohol consumption is broad and far-reaching.

Observations of police officers, which include as one element the smell of alcohol on a suspect’s breath, can constitute competent evidence to support a DWI charge. See Johnson v. State, 337 Ark. 196, 987 S.W.2d 694 (1999) (sufficient evidence of intoxication where appellant was driving erratically and left of center, smelled of alcohol, was unable to stand upright without support, was unsteady on his feet, had bloodshot eyes, and refused to submit to breath or field sobriety tests). Thus, intoxication for a DWI conviction is not dependent on evidence of blood-alcohol testing where other sufficient evidence of intoxication exists. See Mace v. State, 328 Ark. 536, 944 S.W.2d 830 (1997). This is so because the General Assembly has provided that a person can be found guilty of a DWI if he or she either (1) operates a motor vehicle while intoxicated or (2) operates a motor vehicle with a blood-alcohol content of .10 percent or more. See State v. Johnson, 326 Ark. 189, 931 S.W.2d 760 (1996); see also Ark. Code Ann. § 5-65-103(a) and (b) (Repl. 1997).

The instant case does not involve facts where a co-worker or an acquaintance testified to the smell of alcohol on Flowers’s breath. It is a case where two people working in the medical field on the day of the accident entered their objective assessments on separate medical records. One was an emergency medical technician; the other a registered nurse. The EMT’s report was not only that he smelled alcohol on Flowers but that the smell was “strong.” The registered nurse smelled alcohol on Flowers’s breath. Surely this testimony is equal in trustworthiness to that of a police officer in the field. When this testimony is coupled with Flowers’s own admission of heavy beer consumption the night before as well as the circumstantial evidence of beer consumption on the jobsite and Flowers’s habitual consumption of beer, we hold that there is substantial evidence to support the Commission’s finding of the presence of alcohol.

We further agree with the Commission that Flowers failed to rebut the presumption that the presence of alcohol substantially caused him to lose his balance. He presented no witnesses to the contrary, and his own testimony lacked credibility according to the findings of the ALJ, which the Commission adopted. Accordingly, we affirm the Commission and reverse the decision of the court of appeals.

THORNTON, J., not participating.

       In Volume 7 of the Arkansas Code, 1996 Replacement, the citation for this subsection was Ark. Code. Ann. § ll-9-102(5)(A)(iv)(a-c) (Repl. 1996). The subsections were renumbered due to subsequent legislation.


author: ROBERT L. Brown, Justice. DONALD L. Corbin, Justice,

text:
    Timothy Davis FOX, et al. v. AAA U-RENT IT, et al.

    99-707
    17 S.W.3d 481
    Supreme Court of Arkansas
    Opinion delivered June 1, 2000
    [Petition for rehearing denied July 13, 2000.]

      Ellen Brantley, Chancellor;

      Rose Law Firm, P.A., by; Allen W. Bird II and GarlandJ. Garrett, for appellants.

      Beth B. Carson, for appellee Department of Finance & Administration.

      Horne, Hollingsworth & Parker, by; Michael O. Parker, for appellee Green Bay Packaging, Inc.
   ROBERT L. Brown, Justice.

Appellants Timothy Davis tice. Holiman, and Hopkins Law Firm (“Attorneys”) are attorneys who petitioned the chancery court to determine the existence of an attorney’s lien on funds held by the Arkansas Department of Finance and Administration (“DFA”). The petition was the outgrowth of a class action brought by the Attorneys on behalf of certain business corporations from whom income taxes had been erroneously collected by DFA. The chancery court certified the class but found that the taxes had not been collected in error. We reversed the court’s determination that there had been no error in the collection of taxes, and we also reversed the certification of the class for the reason that the waiver of sovereign immunity prescribed by state statute only applies to individual claims for refund and not to class actions. ACW, Inc. v. Weiss, 329 Ark. 302, 947 S.W.2d 770 (1997). Following our reversal of the class certification, DFA authorized and paid tax refunds to the business corporations who were former members of the class created by the Attorneys. The Attorneys claimed attorney’s fees based on these refunds. Many of the business corporations paid the attorney’s fee, but some have refused to do so. The chancery court denied collection of attorney’s fees from those nonpaying corporations, and the Attorneys now appeal that decision. We agree with the chancery court that the Attorneys are not entitled to enforce an attorney’s hen.

The history of this case is important to our resolution of this matter. After the chancery court certified the class of approximately 3,100 business corporations on August 30, 1995, the Attorneys advised all members of the proposed class by a Notice of Pendency of Class Action and of Rights of Class Members that they would advance the costs of litigation and after any recovery following an appeal would be awarded those costs and thirty-five percent of any refund as attorney’s fees. None of the corporations, which are currently unwilling to pay the attorney’s fees, elected to opt out of the class. After this court decided that this case could not be certified as a class action in ACW, Inc. v. Weiss, supra, but before a petition for rehearing had been decided, the Attorneys wrote the business corporations that were affected. In that memorandum, the Attorneys advised the corporations that they were entitled to file for a refund individually, but not as a class. The Attorneys further advised that they had filed a verified claim for refund with DFA on behalf of each corporation. The memorandum also stated that the Attorneys were entitled to thirty-five percent of any refunded amount as attorney’s fees pursuant to the fee agreement that was part of the class action.

A second memo was sent out to the business corporations on September 15, 1997, after rehearing was denied by this court in ACW, Inc. v. Weiss, supra. In that memo, the Attorneys again informed the corporations that they were entitled to refunds. They further informed the corporations that they (the Attorneys) were claiming a lien for attorney’s fees based on an expressed and implied contract in the amount of thirty-five percent of all refunds. Two days later on September 17, 1997, the Attorneys filed a claim for an attorney’s lien with DFA for thirty-five percent of those refunds based on tax years 1991 through June 31, 1997.

On September 17, 1997, DFA wrote the Attorneys and said that it expressed no opinion on the proper recipient of the thirty-five percent claimed as attorney’s fees but that it did not want to risk paying that amount twice. Thus, those business corporations filing amended returns within the three-year limitations period would be refunded sixty-five percent of their entitled amount. DFA would hold the remaining thirty-five percent of the refunds pending a decision by the chancery court to determine the appropriate payee. On October 10, 1997, DFA wrote the business corporations and gave them the same information.

On November 13, 1997, DFA wrote the Attorneys that it would pay claimed refunds from 1991 forward and that for the 1996 tax year, DFA was automatically adjusting the income tax returns and issuing refunds for sixty-five percent of the refund amount irrespective of whether a claim was filed by the business corporation (the “auto-adjust refund”). The balance of thirty-five percent of the refunds would be held pending a decision on the attorney’s lien. The retained fund was not interpled or transferred to chancery court.

On July 9, 1998, the Attorneys moved the chancery court to determine the validity of their claimed attorney’s lien. On July 10, 1998, the Attorneys contacted those business corporations that had not agreed to pay the thirty-five percent fee and informed them of their lien claim. They further advised that if the nonpaying corporations wished to oppose the lien, they should file a response and appear at the hearing.

On October 28, 1998, a hearing was held on the lien matter in chancery court. It should be noted at this juncture that the vast majority of business corporations (over 1,800) had authorized DFA to pay the retained thirty-five percent of the refund to the Attorneys either by hiring the Attorneys or by signing a Statement of No Contest and Disbursement Authorization. The fees collected by the Attorneys to date are approximately $2 million. The hearing, therefore, only concerned the nonpaying corporations, which, as of this appeal, involved 562 business corporations. None of the nonpaying business corporations appeared at the hearing; nor did counsel appear on their behalf. Some of these corporations, however, wrote letters to the chancery court contesting the fees requested by the Attorneys.

Following the hearing, the chancery court found in its order that the nonpaying corporations became eligible for refunds as a result of this litigation and due to the work of the Attorneys. Because of their work, according to the chancery court, DFA initiated the auto-adjust refund procedure whereby all business corporations paying the illegal tax in 1996 were not required to claim a refund but automatically received refunds of sixty-five percent of the taxes due. The chancery court referred to the high quality of the Attorney’s work in its findings and stated that if it had the authority, it would award an attorney’s fee of twenty percent of the funds held by DFA. The chancery court concluded, however, that the Attorneys did not have an express contractual right to the claimed thirty-five percent of the funds from the nonpaying corporations, but only had a contractual right with the named class representatives. In addition, the chancery court concluded that because the Attorneys were not fired, they had no right to compensation in quantum meruit or otherwise for work done or for benefits bestowed to the nonpaying corporations. Nor did an implied contract right exist, according to the chancery court, based on the fact that the nonpaying corporations received notice of the fee agreement. Finally, the chancery court ruled that a common-fund or substantial-benefit theory of recovery did not apply in this case because a common fund was not created. It concluded that it was without authority to award attorney’s fees.

I. Common Fund or Common Benefit

We begin by noting that the Attorneys assert that of the original 3,100 business corporations, 562 fall into the category of nonpaying corporations. The Attorneys first take issue with the chancery court’s conclusion that no common fund or common benefit derived from their actions. They claim that the common-fund doctrine, in essence, is the equitable power in the chancery court to award attorney’s fees based on the fruits clients gain from their attorney’s actions. They further contend that the doctrine of a common fund should be recognized when the efforts of attorneys result in a benefit to others and when the circumstances enable an identification of that benefit so that an attorney’s fee may be determined. They emphasize that the chancery court expressly found that the nonpaying corporations received the benefits of the Attorneys’ labor, which included avoiding future erroneous taxes, receiving an auto-adjust refund, and receiving the right to refunds for every year that the income tax was improperly collected.

This court follows the American rule, which requires every litigant to bear his or her attorney’s fees, absent a state statute to the contrary. Lake View Sch. Dist. No. 25 v. Huckabee, 340 Ark. 481, 10 S.W.3d 892 (2000); Love v. Smackover Sch. Dist., 329 Ark. 4, 946 S.W.2d 676 (1997). Arkansas has recognized, in addition, the commor.-fund and common-benefit exceptions to the American rule. Lake View Sch. Dist. No. 25 v. Huckabee, supra; Millsap v. Lane, 288 Ark. 439, 706 S.W.2d 378 (1986); Powell v. Henry, 267 Ark. 484, 592 S.W.2d 107 (1980). The United States Supreme Court has also recognized the common-fund exception to the American rule. Boeing Co. v. Van Gemert, 444 U.S. 472 (1980); Sprague v. Ticonic National Bank, 307 U.S. 161 (1939). In Boeing, a class action was involved, and the Court defined the common-fund exception as applying when a lawyer recovers a common fund for the benefit of persons other than himself or his client. Under such circumstances, that lawyer is entitled to a reasonable attorney’s fee from the fund as a whole. The Court went on to say:

The doctrine rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its cost are unjusdy enriched at the successful litigant’s expense. Jurisdiction over the fund involved in the litigation allows a court to prevent this inequity by assessing attorney’s fees against the entire fund, thus spreading fees proportionately among those benefited by the suit.

See id. at 478 (citations omitted). The Court further stated that in a common-fund case, the class of persons should be easily identifiable, the benefits should be traceable, and the costs should be properly assessed in proportion to the benefit received. The Court concluded that the award of attorney’s fees was proper in the Boeing class action because all of these requirements were met. Every member of the class, including any absentee member, was required “to share the attorney’s fees to the same extent that he can share the recovery.” See id. at 480.

Two foreign jurisdictions have addressed the issue of whether a common fund accrues in the context of tax refunds under facts that bear some similarity to those in the instant case. In Bailey v. State of North Carolina, 500 S.E.2d 54 (N.C. 1998), the North Carolina Supreme Court considered the common-fund exception in a class action which challenged the constitutionality of income tax legislation that placed a cap on exemptions for certain retirees. The State of North Carolina argued that the common-fund doctrine did not apply because the tax refunds or credits were separate, individual claims and not a common fund. The North Carolina Supreme Court, however, refused to accept this “technical interpretation” and cited the same test used in Boeing. See id. at 72-73. The court held that because the retiree beneficiaries were identifiable, the benefits could be traced, and the costs could be accurately shifted, attorney’s fees should be awarded. The fact that the judgment resulted in many different refunds did not preclude recovery. The Bailey case, though, is distinguishable from the case at hand. In Bailey, a certified class of plaintiffs was involved and they created an identifiable fund under court control with their combined refunds from which an attorney’s fee could be assessed. An analogous common fund was not created in the instant case.

A result contrary to Bailey was reached in Hagge v. Iowa Dep’t of Revenue and Fin., 539 N.W.2d 148 (Iowa 1995), and that was the decision that was persuasive to the chancery court in the case before us. In Hagge, a law firm successfully represented one taxpayer in a suit to recover tax refunds owed to a retired federal employee. After the suit was over, the law firm requested attorneys’ fees from similarly situated retired federal employees, though a class action was not involved, and argued that the firm’s efforts allowed many other federal retirees to become eligible for state income tax refunds, which created a common fund. The Iowa Supreme Court denied the attorney’s fees. It noted that the Iowa Code did not allow tax refunds to be paid to anyone other than the individual taxpayer. As a result, the court refused to hold that a common fund had been created from which an award of attorney’s fees could be made. The court concluded that the Department of Revenue owed each beneficiary a separate refund based on individual circumstances. Furthermore, in Hagge, as in the instant case, the Iowa Revenue Department had withheld part of the refunds due to the dispute over attorney’s fees. The law firm contended that this created a common fund, but the Iowa Supreme Court disagreed. It noted that there was no control by the trial court over this fund. Rather, each refund was the individual property of each taxpayer.

We agree with the reasoning of the Iowa Supreme Court in Hagge. No common fund under chancery court control was created by the actions of DFA in this case. DFA did not withhold the thirty-five percent of the refunds to create a common fund. It only did so as a prudent measure to avoid the contingency of having to pay the thirty-five percent twice.

We do recognize that the individual refunds, even to the nonpaying corporations, were the result of the efforts of the Attorneys and that this led to DFA’s decision to refund erroneous taxes paid beginning in 1991 and to implement the auto-adjust refund for one year. But those facts do not offset the fact that no common fund was created by the Attorneys’ actions. Moreover, at no point did the nonpaying corporations agree to legal representation by the Attorneys or authorize them to take any action on their behalf.

Nor do we see recovery as appropriate under a substantial-benefit theory such as we approved in Lake View Sch. Dist. No. 25 v. Huckabee, supra. In Lake View, the State waived sovereign immunity, acknowledged that a substantial benefit in a fixed dollar amount had accrued to the State due to the attorneys’ efforts, and urged the court to approve the attorney’s fees. Here, the nonpaying corporations have acknowledged no benefit that resulted from the Attorneys’ efforts and have never recognized the attorney’s entitlement to attorney’s fees. The two situations are entirely different.

Other authority relied on by the Attorneys is likewise distinguishable. In Millsap v. Lane, supra, where this court recognized the substantial-benefit rule, we did so in the context of a shareholder derivative action brought on behalf of the corporation where the corporation received an identifiable benefit. In Millsap, representation of the shareholders by counsel in the derivative action was clear. In the case at hand, there was no legal relationship forged between the nonpaying corporations and the Attorneys.

In Haynie v. Camden Gas, 186 Ark. 842, 56 S.W.2d 419 (1933), also relied upon by the Attorneys, this court upheld an attorney’s lien where attorneys had represented the City of Camden and its gas customers against Camden Gas Corporation in a dispute over a city ordinance requiring lower rates for gas customers. Nearly all of the gas customers had signed an agreement to pay counsel twenty percent of any refund at a mass meeting of the customers. The City of Camden prevailed, and Camden Gas was required to make refunds to the gas customers from a fund accumulated by the utility. We held that the City of Camden was the representative or agent of the gas customers and that the law implied an agreement to the attorney’s fees to be paid by all the gas customers who stood by and, without objection, accepted the legal services and benefits.

We view the Haynie facts as more analogous to a class action where the City of Camden acted as the representative of the gas customers and where a fund was created by the gas company. In the case before us, on the other hand, there was no class action and no named entity or agent acting on behalf of the nonpaying corporations. Nor was a common fund created by the efforts of the Attorneys, as has already been discussed.

Finally, there is the case of Sprague v. Ticonic National Bank, supra. In this 1939 case, a bank depositor, Lottie Sprague, lost money deposited in a bank due to the bank’s closing. She sued in federal district court for a lien against the bonds that secured her deposit and was successful. Sprague then sued and alleged that her successful claim established precedent for “recovery in relation to fourteen trusts in situations like her own,” and she prayed for reasonable attorney’s fees based on those similar matters. 307 U.S. at 163. The Supreme Court then said:

Whether one professes to sue representatively or formally makes a fund available for others may, of course, be a relevant circumstance in making the fund liable for his costs in producing it. But when such a fund is for all practical purposes created for the benefit of others, the formalities of the litigation — the absence of an avowed class suit or the creation of a fund, as it were, through stare decisis rather than through a decree — hardly touch the power of equity in doing justice as between a party and the beneficiaries of his litigation.

Id. at 166-167.

We simply disagree with the Sprague rationale and further disagree that the decision is precedent for cases such as the one we now have before us. Under the Attorneys’ application of Sprague, counsel for one litigant who is successful in obtaining a tax refund could collect attorney’s fees from any successive taxpayer who is successful under similar circumstances irrespective of Ark. R. Civ. P. 23, which we adopted in 1979, and the class-action process. We decline to approve attorney’s fees, under the Sprague reasoning where a class action is not involved, where no attorney-client relationship has been cemented with subsequent claimants, and where the sole basis for claiming the fee is stare decisis.

In sum, we hold that under these facts where no common fund was recognized or established and where no class action existed with respect to the nonpaying corporations so as to establish an obligation to pay fees, an attorney’s lien is not enforceable.

II. Quantum Meruit

The Attorneys next contend that apart from the common-fund doctrine, they are entitled to compensation for work done and for services performed on behalf of the nonpaying corporations. Citing Crockett & Brown, P.A. v. Courson, 312 Ark. 363, 849 S.W.2d 938 (1993), they urge that this is the rule of quantum meruit and that it applies if attorneys are discharged. Under the rule, the discharged attorneys are entitled to reasonable compensation for their services. Where no discharge is involved, the Attorneys claim that they are entitled to a lien for fees consistent with their agreement with their clients, and they cite us to Ark. Code Ann. § 16-22-301 (Repl. 1999), in support of this proposition.

The fallacy in the Attorneys’ argument is that no attorney-client relationship developed between them and the nonpaying corporations. The Attorneys argue that such a relationship did exist for a time until this court reversed certification of the class in ACW, Inc. v. Weiss, supra, but that is not correct. The effect of our decision in Weiss was to nullify any class certification because it was contrary to the doctrine of sovereign immunity as set out in the State Constitution. Without an attorney-client relationship, there is no basis for claiming an attorney’s fee under quantum meruit or § 16-22-301. The Attorneys’ argument fails for that reason.

III. Express or Implied Contract

Finally, the Attorneys urge that each nonpaying corporation, either expressly or impliedly, agreed that the Attorneys would receive a fee. They base this on the notice that was sent out to the proposed class of business corporations which contained the fee arrangement. They point out that none of the nonpaying corporations objected to the fee arrangement or opted out of the class. They emphasize that under state law, an agreement for compensation may be express or implied. Ark. Code Ann. § 16-22-302 (Repl. 1999).

We agree with the chancery court that no express or implied contract arose under these facts. The nonpaying corporations never assented to legal representation by the Attorneys after the class action was out of the picture and never agreed to pay the Attorneys a legal fee. We believe that more is required to establish a legal relationship and entitlement to fees, absent a class action, than the fact that the nonpaying corporations requested a refund or received an auto-adjust refund from DFA, regardless of the fact that the Attorneys’ work paved the way for these refunds. We reject the Attorneys’ reasoning on this point.

Prior to submission of this case, the Attorneys moved this court to allow a supplemental addendum inadvertently omitted from the reply brief. That motion is granted.

Affirmed.

Corbin, J., dissents.

DONALD L. Corbin, Justice,

dissenting. I dissent because I stice, attorneys are entitled to a reasonable fee for their continued representation of the individual class members. After this court decertified the class, the attorneys notified the corporations that they were filing individual refund claims for each of them. The majority of the corporations agreed to pay a portion of the refunds to the attorneys for their representation. Obviously, these corporations knew that they would not be receiving anything but for the work of these attorneys. Some of the corporations, however, refused to pay. In my opinion, the attorneys are entitled to a quantum meruit fee for the work they performed for these nonpaying corporations. If these corporations did not want the attorneys to file claims on their behalf, they should have informed them of their desire immediately after receiving notice that the attorneys would pursue individual refunds for them. Because they stood silent, I believe they must now pay for the services rendered.


author: ANNABELLE Clinton Imber, Justice.

text:
    ARKANSAS TECH UNIVERSITY; Mary Ann Salmon, Steve A. Sutton, Dale Brown, Dr. Dean McDougal, Individually and as Members of the Board of Trustees of Arkansas Tech University; Dr. Robert Brown, Individually and as President of Arkansas Tech University v. Michael A. LINK, Stanley Lombardo, Charles A. Mitchell, Steve A. Shry, William C. Titus, Margaret Wilkerson, Marilyn Bocksnick
    99-665
    17 S.W.3d 809
    Supreme Court of Arkansas
    Opinion delivered June 1, 2000

      Ellen Bass Brantley, Chancellor;

      Thomas W. Pennington; Mark Pryor, Att’y Gen., by: Dennis R. Hansen, Ass’t Att’y Gen., and Sherri L. Robinson, Ass’t Att’y Gen.; Timothy O. Dudley; and Streett & Coutts, by: Alex G. Streett, for appellants.

      Richard C. Downing, P.A., by: Richard C. Downing; Pulliam & Wright, P.A., by: Janet L. Pulliam and Randall G. Wright; Dunham & Faught, by: James Dunham, for appellees.
   ANNABELLE Clinton Imber, Justice.

The appellees, who semployees tice. University (“ATU”), filed this action in the Chancery Court of Pope County against ATU, the president of ATU, and the members of its Board of Trustees. At issue in this interlocutory appeal by ATU and the Board is the trial court’s denial of their motion to dismiss appellees’ second amended petition for declaratory judgment and injunction. Specifically, ATU and the Board argue on appeal that appellees are barred from filing this suit against the State by the doctrine of sovereign immunity; that appellees’ claims against a state agency and state officials are solely for breach of contract and, therefore, should be brought before the Arkansas Claims Commission; and that appellees have not pled facts sufficient to state a claim under any recognized exception to the sovereign-immunity doctrine. We hold that the trial court should have dismissed appellees’ second amended petition because it fails to state a claim upon which relief can be granted.

Beginning in the 1960s, ATU provided its employees who had reached the age of fifty-five and who had worked at the university for twenty years with the ability to retire and receive health insurance for the rest of their lives, with ATU bearing the full cost of that insurance. This unwritten policy was never adopted by the Board of Trustees; nor was it included in any written contract or state statute. When the cost of health insurance began to increase dramatically in 1993, ATU began to reconsider its policy of providing health insurance to its eligible retirees at no cost to them. A presidential task force was created to study the issue, and in June 1997, Dr. Robert Brown, ATU President, presented a report on health insurance to the Board of Trustees. He presented the Board with four possible options regarding post-retirement health-insurance benefits. The Board voted to (1) let existing eligible retirees maintain their lifetime health-insurance coverage, with ATU bearing the full cost; (2) give employees age fifty-five or older who have served ATU for at least twenty years the option of retiring by July 1, 1998, in order to receive the same health-insurance benefits as current retirees; and (3) give employees not yet meeting the fifty-five/ twenty criteria the ability to retire upon reaching age sixty after they have served ATU for at least ten years, at which time the same health-insurance benefits given to current retirees would be provided by ATU until those retirees become eligible for Medicare. After the Board adopted these changes, this lawsuit was filed.

The original plaintiffs below, the appellees on appeal, were seven tenured ATU professors. Three of those plaintiffs satisfied the fifty-five/twenty requirement. The appellees filed a petition for declaratory judgment on December 29, 1997, in which they alleged that ATU had contractually obligated itself to provide the lifetime health-insurance benefit to those retirees meeting the fifty-five/ twenty criteria at no cost to the retirees, and that the benefit was an essential term of the parties’ employment agreement. Appellees also alleged that the health-insurance benefit was deferred compensation in which they had a “vested contract right” or a “contractual property right,” and that the Board’s action was “a taking of plaintiff’s vested property rights and a breach of contract.” In count one of the petition, the appellees asked the trial court to “determine the actions of Defendants constitute a breach of the parties’ employment agreements [.]” In count two, the appellees asked the court to enter a preliminary injunction to protect a vested contract right. In count three, they asked the court to find ATU’s actions actionable under 42 U.S.C. § 1983; and, in count four, they asked for attorneys fees and costs pursuant to 42 U.S.C. § 1988 and Ark. Code Ann. § 16-22-308.

ATU and the Board moved to dismiss, and argued that the trial court was without subject-matter jurisdiction because the appellees’ claim is for breach of contract, which, under the doctrine of sovereign immunity, is cognizable solely in the Arkansas Claims Commission. The appellees responded by arguing that, regardless of the sovereign-immunity doctrine, the State could still be enjoined by a court of equity when the actions of the State are illegal, unconstitutional, ultra vires, in bad faith, or arbitrary. They also argued that 42 U.S.C. § 1983 authorizes the court to enjoin state agencies and officers from depriving people of their constitutional rights. Furthermore, appellees argued that their lawsuit was not for breach of contract, but sought declaratory judgment to determine the parties’ contract rights and an injunction to prohibit an unconstitutional taking of property rights. In support of these arguments, the appellees relied on the case of Jones v. Cheney, 253 Ark. 926, 489 S.W.2d 785 (1973). ATU replied that sovereign immunity was nonetheless a bar to the action because injunctive relief was not necessary to the claim, and the appellees had not pled specific facts showing bad faith, ultra vires acts, or unconstitutionality sufficient to waive sovereign immunity. After a hearing, the trial court dismissed the members of the Board in their individual capacities, but refused to dismiss ATU and the board members in their official capacities based on certain exceptions to the sovereign-immunity doctrine established by this court in the case of Toan v. Falbo, 268 Ark. 337, 595 S.W.2d 936 (1980), and based on the provisions of 42 U.S.C. § 1983, that authorize state courts to enjoin state agencies and officers from depriving people of constitutional rights. On January 30, 1998, ATU and the Board filed an answer in which they again argued that the trial court was without jurisdiction and alleged the affirmative defense of sovereign immunity, as set forth in Article 5, section 20, of the Arkansas Constitution.

In June of 1998, Judge Swindell recused from the case, whereupon Judge Brantley was assigned to preside over the case. ATU and the Board then moved for summary judgment, contending that 42 U.S.C. § 1983 was inapplicable and sovereign immunity deprived the trial court of jurisdiction because the claim by the appellees was in essence a contract dispute. The trial court granted ATU and the Board summary judgment on the 42 U.S.C. § 1983 claim, but denied summary judgment on the issue of whether the appellees have a property interest or right in the post-retirement health-insurance benefit.

While the motion for summary judgment was pending, the appellees filed two amended petitions for declaratory judgment. The first amended petition added a plaintiff, and also added Robert Brown, president of ATU, as a defendant. The second amended petition added allegations that ATU and the Board had acted ultra vires and without legitimate authority, as well as arbitrarily and capriciously, in depriving the appellees of a vested property right which existed pursuant to contractual agreements. ATU and the Board moved to dismiss the first and second amended petitions and once again argued the doctrine of sovereign immunity.

On May 10, 1999, after conducting a hearing, the trial court issued its order on the motion to dismiss appellees’ second amended petition for declaratory judgment. The trial court dismissed the suit against President Brown and found that ATU and the Board were, for purposes of sovereign immunity, the State of Arkansas. The trial court also ruled that the second amended petition failed to state a claim that the actions of ATU and the Board were ultra vires, arbitrary, or capricious. However, after noting the appellees’ reliance on the case of Jones v. Cheney, the trial court ruled that the second amended petition did “allege a claim that [the appellees] had a vested property right to the insurance benefits,” and that “the action of the Board of Trustees deprived them of this right in violation of the Constitutions of Arkansas and the United States.” Based on this ruling, the trial court refused to dismiss the second amended petition on sovereign-immunity grounds. From the trial court’s denial of their motion to dismiss the second amended petition for declaratory judgment, ATU and the Board bring this interlocutory appeal pursuant to Ark. R. App. P — Civil 2(a)(10). Our jurisdiction is invoked pursuant to Ark. Sup. Ct. R. 1 — 2(a)(1).

In this appeal, ATU and the Board contend that the constitutional doctrine of sovereign immunity bars the appellees from filing their petition for declaratory judgment and injunction in any state court. In reviewing the trial court’s decision on a motion to dismiss under Ark. R. Civ. P. 12(b)(6), we treat the facts alleged in the complaint as true and view them in the light most favorable to the party who filed the complaint. Grine v. Board of Trustees, 338 Ark. 791, 2 S.W.3d 54 (1999). In testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be liberally construed. Id. However, our rules require fact pleading, and a complaint must state facts, nor mere conclusions, in order to entitle the pleader to relief. Id. Furthermore, sovereign immunity is jurisdictional immunity from suit, and jurisdiction must be determined entirely from the pleadings. Department of Human Servs. v. Crunkleton, 303 Ark. 21, 791 S.W.2d 704 (1990). The issue we must decide in this appeal is whether the doctrine of sovereign immunity applies to bar the appellees’ only remaining claim that ATU and the Board unconstitutionally deprived them of a vested property right in health-insurance benefits that arose from purported contractual agreements.

In the recent case of Grine v. Board of Trustees, we summarized our rules regarding the doctrine of sovereign immunity: Grine v. Board of Trustees, 338 Ark. at 796-97, 2 S.W.3d at 58. Furthermore, a suit against a state official in his or her official capacity is not a suit against that person, but rather is a suit against that official’s office. Brown v. Arkansas State HVACR Lic. Bd., 336 Ark. 34, 984 S.W.2d 402 (1999). A suit against the board of trustees of a state university is a suit against the State, and is barred by the doctrine of sovereign immunity. State Comm’r of Labor v. University of Ark., 241 Ark. 399, 407 S.W.2d 916 (1966).

Sovereign immunity for the State of Arkansas arises from express constitutional declaration. Article 5, section 20, of the State Constitution provides: ‘The State of Arkansas shall never be made a defendant in any of her courts.’ Suits against the State are expressly forbidden by this provision. Beaulieu v. Gray, 288 Ark. 395, 705 S.W.2d 880 (1986); Page v. McKinley, 196 Ark. 331, 118 S.W.2d 235 (1938). As we stated long ago in Pitock v. State, 91 Ark. 527, 535 (1909), ‘[A] sovereign State cannot be sued except by its own consent; and such consent is expressly withheld by the Constitution of this State.’ Recently, we reiterated this express prohibition in Brown v. Arkansas State HVACR Lic. Bd., 336 Ark. 34, 984 S.W.2d 402 (1999). In Brown, we pointed out that sovereign immunity is jurisdictional immunity from suit, and where the pleadings show the action is one against the State, the trial court acquires no jurisdiction. However, unlike subject-matter jurisdiction, sovereign immunity can be waived. Newton v. Etoch, 332 Ark. 325, 331, 965 S.W.2d 96 (1998); State v. Tedder, 326 Ark. 495, 932 S.W.2d 755 (1996); Cross v. Arkansas Livestock & Poultry Comm’n, 328 Ark. 255, 943 S.W.2d 230 (1997); Department of Human Servs. v. Crunkleton, 303 Ark. 21, 791 S.W.2d 704 (1990). The doctrine makes no distinction between actions in equity and actions at law. Id.

Specifically, ATU and the Board argue that this suit by the appellees is essentially a breach-of-contract claim and, thus, is barred. They are correct that breach-of-contract claims must be heard by the Arkansas Claims Commission. Hanley v. Arkansas State Claims Comm’n., 333 Ark. 159, 970 S.W.2d 198 (1998). The appellees counter this argument by suggesting that their suit is not for breach of contract, but is merely a petition for declaratory judgment. According to our case law, however, such a distinction is not necessarily determinative. Rather, the decisive issue is whether the State’s financial obligations would increase if the plaintiffs prevail in their suit. Commission on Judicial Discipline and Disability v. Digby, 303 Ark. 24, 792 S.W.2d 594 (1990). If so, the action is barred by the doctrine of sovereign immunity. Id. As the rule has been more commonly stated, if a judgment for the plaintiff will operate to control the action of the State or subject it to liability, the suit is one against the State and is barred by the doctrine of sovereign immunity. Grine v. Board of Trustees, supra.; Fireman’s Ins. Co. v. Arkansas State Claims Comm’n, 301 Ark. 451, 784 S.W.2d 771 (1990); Page v. McKinley, 196 Ark. 331, 118 S.W.2d 235 (1938).

In the present case, the appellees petitioned the chancery court for declaratory judgment and an injunction. In their prayer for declaratory judgment, the appellees asked the chancery court to determine that the actions of ATU and the Board constituted a breach of their employment agreements. This is essentially a breach-of-contract claim that should be brought in the Arkansas Claims Commission. Additionally, the appellees asked the court to enter “an injunction regarding further implementation of the new policy and [to] reinstate [appellees’] contract rights.” If the appellees were to prevail on their claim for an injunction and reinstatement of their “contract rights” to lifetime health insurance upon retirement at no cost to them, ATU and the State of Arkansas would be required to expend money to provide such insurance. Because the State’s financial obligations would increase, the suit would be barred by the doctrine of sovereign immunity unless an exception to the doctrine of sovereign immunity is applicable.

The appellees argue that they properly pled certain exceptions to the doctrine of sovereign immunity in their second amended petition. One of those exceptions is that equity has jurisdiction to enjoin or restrain State officials or agencies from acts which are ultra vires, in bad faith, or arbitrary and capricious. Grine v. Board of Trustees, supra; Villines v. Lee, 321 Ark. 405, 902 S.W.2d 233 (1995); Cammack v. Chalmers, 284 Ark. 161, 680 S.W.2d 689 (1984); Toan v. Falbo, 268 Ark. 337, 595 S.W.2d 936 (1980); Game and Fish Comm’n v. Eubank, 256 Ark. 930, 512 S.W.2d 540 (1974); Harkey v. Matthews, 243 Ark. 775, 422 S.W.2d 410 (1967). The trial court, in ruling on the motion to dismiss, found that this exception was inapplicable. Specifically, the trial court found that appellees’ second amended petition failed to state a claim when it alleged that the actions of ATU and the Board were ultra vires, arbitrary, and capricious. Thus, the trial court granted the appellants’ motion to dismiss in part.

The trial court did, however, refuse to dismiss the second amended petition with respect to the appellees’ claims that ATU and the Board violated Article 1, section 10, of the United States Constitution and Article 2, section 17, of the Arkansas Constitution regarding impairment of contracts and Article 2, section 22, of the Arkansas Constitution regarding the unconstitutional taking of private property without just compensation. We have stated on one occasion, albeit without citing authority, that illegal or unconstitutional acts by the State may be enjoined despite the doctrine of sovereign immunity. Cammack v. Chalmers, supra. However, in affirming the chancellor’s finding that he had jurisdiction to enjoin the action of the University of Arkansas Trustees, we expressly confined our holding to the facts of that case: “We reach a limited decision today that does not allow the University of Arkansas Trustees to ignore their commitments to donors.” Id., 284 Ark. at 163, 680 S.W.2d at 690. We also noted that a statute designated the Board of Trustees of the University as a corporate entity capable of being sued, citing Ark. Code Ann. § 4-28-209 (Repl. 1996) and Ark. Code Ann. §§ 6-64-201 — 6-64-202 (Repl. 1996). Id. Furthermore, Cammack v. Chalmers dealt with a parcel of real property that had been conveyed to the Board of Trustees of the University of Arkansas along with a separate contract, delivered simultaneously with the deed, which stipulated that the Board of Trustees would develop the property into the University’s “Cammack Campus.” Cammack v. Chalmers, supra. There, we were presented with a sovereign-immunity-doctrine issue in the context of a conditional gift of real property to the State. The facts presented here are distinctly different. In any event, a complaint alleging illegal and unconstitutional acts by the State as an exception to the sovereign-immunity doctrine is not exempt from complying with our rules that require fact pleading:

A pleading which sets forth a claim for relief... shall contain (1) a statement in ordinary and concise language of facts showing that the court has jurisdiction and is the proper venue and that the pleader is entitled to relief...

Ark. R. Civ. P. 8(a)(1) (emphasis added). Rule 12(b)(6) provides for the dismissal of a complaint for “failure to state facts upon which relief can be granted.” A complaint must state facts, not mere conclusions, in order to entitle the pleader to relief. Brown v. Tucker, 330 Ark. 435, 954 S.W.2d 262 (1997). Thus, we must determine whether the appellees have pled facts sufficient to state a claim based on the unconstitutional impairment or deprivation of a vested property right. In doing so, we look to the case of Jones v. Cheney, 253 Ark. 926, 489 S.W.2d 785 (1973).

The appellees contend that the allegations in the second amended petition sufficiently plead a deprivation of a vested property right because they are similar to the facts alleged in Jones v. Cheney. While this court did not mention the doctrine of sovereign immunity in Jones v. Cheney, we held that the constitutional prohibition against the impairment of contracts applies not only to contracts between individuals, but also to contracts made by the State or one of its agencies. In that case, a former state official petitioned for a writ of mandamus directing the State Auditor to pay him his statutory retirement benefits. The official had met all of the requirements of Act 148 of 1965, which established the pension plan at issue, with the exception of being age sixty-five. However, before the official reached the age of sixty-five, the General Assembly passed Act 167 of 1967, which amended the 1965 law to require service in any one of several named State offices for at least ten years. The official did not meet this new requirement because, while he had served the State for ten years, he had not served ten years in any one position. Thus, the Auditor denied the official his retirement benefits, and the official sued for a writ of mandamus. The trial court granted the official’s petition and entered a mandamus order directing the Auditor to pay the official his retirement benefits under Act 148 of 1965, because his rights to the benefits had become vested prior to the change in the law. We affirmed the trial court’s issuance of a writ of mandamus against the State and held that the official’s rights vested in him prior to the change in the law, and that he had a constitutional right to have his vested right remain unimpaired. Id.

Jones v. Cheney is clearly distinguishable from the present case in three respects. First, as previously noted, this court did not directly address the issue of sovereign immunity in that case. Second, the retirement plan at issue in Jones v. Cheney was based on voluntary contributions from its member employees. We held that such a system represents delayed compensation for services rendered in the past and due under a contractual obligation and is not a gratuitous allowance in which the pensioner has no vested right. Id. The post-retirement health-insurance benefit in this case, on the other hand, was funded entirely by ATU out of State funds and the retirees contributed no funds. It was merely a gratuitous allowance. Third, the retirement plan in Jones v. Cheney was established by the Arkansas General Assembly; that is, it was created by the enactment of a statute. Id. In contrast, the appellees’ pleadings in this case fail to state facts showing that the post-retirement health-insurance benefit was created by statute. Despite these distinctions, the appellees argue that Jones v. Cheney should be applied to allow this suit against the State. We disagree. In their second amended petition, appellees alleged that ATU and the Board contractually obligated themselves to provide lifetime health-insurance benefits to retirees meeting the fifty-five/twenty criteria at no cost to the retirees and thus created a vested property right in the appellees. They failed, however, to plead facts comparable to those in Jones v. Cheney from which the trial court might determine that they had a vested property right. Thus, the trial court erred in finding otherwise.

In Jones v. Cheney, we relied heavily on the case of Hickey v. Pension Board of City of Pittsburgh, 106 A.2d 233 (Pa. 1954) to conclude that Cheney’s rights became firmly vested prior to the passage of the 1967 Act. Jones v. Cheney, supra. However, Hickey v. Pension Board of City of Pittsburgh is clearly distinguishable from the present case for the same reasons as Jones v. Cheney; that is, the decision did not directly address the issue of sovereign immunity, the plan at issue was based on voluntary contributions from employees, and the plan was created by the Pennsylvania legislature. Likewise, McCarty v. Board of Trustees, 45 Ark. App. 102, 872 S.W.2d 74 (1994), which cited Jones v. Cheney with approval, is inapposite for similar reasons. Moreover, the Arkansas Court of Appeals held in McCarty v. Board of Trustees that the decision of the Board of Trustees was arbitrary and capricious, thus placing that case into a sovereign-immunity exception which is no longer a part of this case. The cases of Daggett v. St. Francis Levee District, 226 Ark. 545, 291 S.W.2d 254 (1956) and Chandler v. Board of Trustees, 236 Ark. 256, 365 S.W.2d 447 (1963) were also cited in Jones v. Cheney. Yet, they have little, if any, relevance to this case. Daggett v. St. Francis Levee District was an illegal-exaction suit brought by a taxpayer to enjoin the levee district directors from starting a retirement plan for the levee district’s employees. Daggett v. St Francis Levee District, supra. Although we discussed the compensatory nature of such retirement systems in Daggett, the dispositive issue in that case was whether the legislature intended by the enactment of a statute to give the levee district the authority to adopt a retirement plan. Daggett v. St Francis Levee District, supra. No claim based on statutory law is at issue in this appeal. Likewise, Chandler v. Board of Trustees, another illegal-exaction case, dealt with constitutional provisions not at issue here.

Finally, both parties have cited our decision in City of North Little Rock v. Vogelgesang, 273 Ark. 390, 619 S.W.2d 652 (1981). There, former North Little Rock police officers sued the city to recover accumulated sick-leave pay allegedly due to each of them pursuant to a city ordinance. The city ordinance allowing for the sick-leave pay upon retirement had been modified so as to require ten years of service, and none of the former police officers met the ten-year requirement. The former police officers argued that they had a vested contractual right to their accumulated sick leave because (1) they had contributed to the plan, not in money but by coming to work; and (2) the plan was held out to them as a fringe benefit at the time of their employment. We rejected both of those arguments and held that their right to the accumulated sick leave continued to vest as long as the plan was in place, but the city was free to prospectively modify the plan if that course was found to be advisable. Id. Despite some apparent factual similarities, there are several reasons why the City of North Little Rock v. Vogelgesang case is not applicable to the issues in the case before us now. First, in that case, the former police officers sued to recover accumulated sick-leave pay; that is, they sued for money damages rather than an injunction. The exception to the sovereign-immunity doctrine for unconstitutional acts pronounced by this court in Cammack v. Chalmers was limited to actions for injunctions. Cammack v, Chalmers, supra. There is no such exception for suits seeking money damages. Second, the plan at issue in City of North Little Rock v. Vogelgesang was created by a North Little Rock city ordinance. In this case, the post-retirement health-insurance benefit at issue was not created by an ordinance or a statute. Rather, it was the result of a purported contractual agreement. Third, the former police officers brought suit against a city in City of North Little Rock v. Vogelgesang. Cities in Arkansas do not share in the State’s sovereign immunity, and they are capable of suing and being sued. Ark. Code. Ann. § 14-54-101 (Repl. 1998); Hot Springs Adver. & Promotion Comm’n v. Cole, 317 Ark. 269, 878 S.W.2d 371 (1994). Thus, sovereign immunity was not an issue before this court in City of North Little Rock v. Vogelgesang, as it is here.

We therefore hold, pursuant to our decision in Jones v. Cheney, that the appellees have failed to properly plead facts sufficient to state a claim based on the unconstitutional impairment or deprivation of a vested property right. Accordingly, the exception to the sovereign-immunity doctrine set forth in Cammack v. Chalmers is not applicable, and this suit by appellees against ATU and its Board of Trustees is barred by the doctrine of sovereign immunity as set forth in Article 5, section 20, of the Arkansas Constitution. The trial court erred when it held otherwise.

Reversed and dismissed.

       The trial court made no finding as to bad faith, and bad faith was not pled by the appellees.

       The appellees have not cross-appealed this ruling.

       The appellees also cite the case of Arkansas State Med. Bd. v. Leipzig, 299 Ark. 71, 770 S.W.2d 661 (1989), for the proposition that unconstitutional acts by the State may be enjoined despite the doctrine of sovereign immunity. The plaintifls in that case, however, sought an injunction pursuant to 42 U.S.C. § 1983. Here, the trial court ruled that ATU and the Board were entitled to summary judgment on the 42 U.S.C. § 1983 claim, and that ruling has not been appealed. Thus, Arkansas State Med. Bd. v. Leipzig is inapposite.