text:
    Aaron COLLINS and Diane Collins v. Burl KELLER, Carol Keller, and Jeremy’s Investments, Inc.
    97-1012
    969 S.W.2d 621
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      Philip Jack Taylor, for appellants.

      Thurman Ragar, Jr., for appellees.
   Tom Glaze, Justice.

Appellants Aaron and Diane Collins bring this appeal from the Crawford County Chancery Court’s finding that they had breached their contract to purchase two unimproved lots from appellees, Burl and Carol Keller and Jeremy Investments, partners who own a subdivision named Butterfield Trail Properties. This court’s jurisdiction was invoked because this case involves issues concerning the interpretation and application of the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., and the Interstate Land Sales Act, 15 U.S.C. § 1701 et seq.

On May 2, 1992, appellees sold the two disputed lots to the appellants by a contract for deed. The purchase price was for $15,000.00 at 8.5% in 239 amortized monthly payments of $128.90. Appellants’ first payment was due on June 1, 1992, and subsequent payments were to be made each month thereafter. The parties agreed that, if appellants failed to make a payment within fifteen days after a monthly payment was due, or after twenty days’ notice appellants failed to pay the taxes, appellees could declare the entire balance of the purchase price due, or could rescind and declare the entire contract forfeited. In addition, if appellees duly declared a forfeiture, they could further demand immediate possession of the property, and retain previous payments as liquidated damages, whereupon appellants would become tenants and pay monthly rental payments in the amount of $128.90.

Appellants defaulted commencing on their first payment, and thereafter, never came into compliance with the terms of the parties’ contract. At one stage, appellants did reach some agreement with appellees to pay on the arrearages, along with continuing their $128.90 monthly payments, but because appellant Aaron Collins sustained a back injury and could not work, appellants were unable to make their payments and therefore, continued in default.

On October 27, 1995, appellees brought suit against appellants for breach of contract and unlawful detainer, and appellants later filed a motion to dismiss, an answer asserting affirmative defenses, and a counterclaim.

In their counterclaim, appellants alleged the appellees had violated the Truth-in-Lending Act by fading to make certain required material disclosures. Additionally, appellants, in their counterclaim, tendered the subject property to appellees, requested rescission of the parties’ contract, and asked for damages provided under the Truth-in-Lending Act.

At a hearing on May 12, 1997, appellants admitted they were in default of the parties’ May 2, 1992 contract, and conceded they had made only seventeen payments in fifty-nine months. Nonetheless, appellants asserted that they were entitled to relief in the form of rescission under the Truth-in-Lending Act, and added that they had a similar right to relief for appellees’ having violated the federal Interstate Land Sales Act. Appellants also argued that appellees’ finance charge under the May 2 contract was usurious, and additionally claimed damages for conversion, alleging appellees had wrongfully removed shale from the property while appellants owned and were in possession of the lots.

On June 3, 1997, the trial court entered its order finding the appellants had breached the parties’ May 2, 1992 contract by failing to make timely payments and concluded the contract had been effectively terminated on October 27, 1995, when appellees filed this suit. Because appellants continued to hold possession of the property after defaulting, the trial court determined appellees were entitled to rent from appellants in the sum of $4,640.50. Also, because appellants were in default, the trial court denied their conversion claim, holding they had no equitable or legal title in the lots or the shale at the time it was removed. Regarding the appellants’ Truth-in-Lending Act claims, the trial court held they were barred from asserting those claims because of the doctrines of laches and estoppel. Finally, the trial court ordered appellants to vacate the two lots, and if they failed to do so, directed a writ of assistance would be issued to oust them.

Appellants raise five points for reversal, but their points one, two, and four are basically grounded in rescission rights they assert they are entided to under either the federal Truth-in-Lending Act or the Interstate Land Sales Act or both. We hold the appellants are not availed entitlement to those federal laws or the rescission rights provided in these acts. In their first argument, appellants urge the trial court erred in denying them rescission because the appellees failed to provide material disclosure forms required by the Truth-in-Lending Act and its regulations, and appellees made misstatements and material omissions of facts that violated both the Truth-in-Lending Act and the Interstate Land Sales Act.

First, we note that appellants never specified the Interstate Land Sales Act as an affirmative defense, nor did they mention the Act in their counterclaim. Appellants did submit the Interstate Land Sales Act to the trial court to support their request for rescission, but the trial court never addressed or ruled on that Act’s applicability to the parties’ contract. It is well settled that an issue must be raised and ruled on before we consider it on appeal. Hercules, Inc. v. Pledger, 319 Ark. 702, 894 S.W.2d 576 (1995).

While other reasons may be suggested that would support the trial court’s decision denying appellants’ request for rescission under the federal laws, the court was correct in refusing such relief because appellants’ request was untimely. Specifically, § 1635(a) of the Truth-in-Lending Act limits an obligor (as appellants purport to be under the Act) the right to rescind a consumer credit transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission form required under § 1635. Section 1635(f) further provides that an obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under the section or any other disclosure required under this provision have not been delivered to the obligor.

The Interstate Land Sales Act, likewise, has provisions that limit when a purchaser of property can seek rescission for the seller’s violation of the Act. Section 1703(b), for instance, provides in relevant part, that any contract for the sale of a lot not exempt under the Act may be revoked at the option of the purchaser until midnight of the seventh day following the signing of such contract or until such later time as may be required by state laws. Also, any such contract for the sale of a lot not exempted under the Act may be revoked at the option of the purchaser for two years from the date of the signing of such contract. See § 1703(d).

Here, appellants failed to act timely under the provisions of both the Truth-in-Lending and Interstate Land Sales Acts. In fact, appellants waited to assert their rescission rights only after appellees brought suit against them for having defaulted on their contract, which occurred more than three years after the parties’ contract was consummated.

In their second point, appellants complain that the appellees had defaulted in the suit below because they failed to answer the appellants’ counterclaim. Once the trial court determined that appellees had filed no timely response, appellants argue they were entided to a default judgment. They also contend the trial court erred in finding the appellees were entided to the affirmative defenses of laches and estoppel, even though those defenses were never pled by the appellees and are inapplicable to the facts of this case. However, as appellants failed to object to the trial court’s findings at the May 12, 1997 hearing, they have waived their opportunity to raise the issue on appeal. Stacks v. Jones, 323 Ark. 643, 916 S.W.2d 120 (1996). Moreover, contrary to the appellants’ argument, under ARCP Rule 55(a), the entry of a default judgment is discretionary rather than mandatory. Appellants never proved any claim or damages under the federal laws, thus, the trial court correctly denied appellants the relief they sought.

As previously noted, appellants’ fourth point is also premised on their federal claims, and asserts that the trial court erred in awarding appellees rental damages under the terms of the parties’ May 2, 1992 contract. Relying on the Truth-in-Lending and Interstate Land Sales Acts, appellants argue the May 2 contract should have been rescinded, thereby discharging them from any obligation for rental damages. Again, appellants were not entitled to rescission of the contract, and because they indisputably remained in default of its terms, the trial court appropriately addressed the rental damages to which appellees were due under the contract.

We now come to appellants’ damage claims for appellees’ alleged violation of Arkansas’ usury laws and of conversion of the shale taken from the two lots in dispute. Appellants’ usury claim can be summarily dismissed, since the trial court never ruled on this issue. McQuay v. Guntharp, 331 Ark. 466, 963 S.W.2d 583 (1998). Concerning appellants’ claim for conversion, the trial court denied this request because they never had legal title to the two lots, and since appellants were in default, they never obtained any equitable title to the property. The trial court ruled that appellants were merely tenants at sufferance, and as such possessed no interest in the shale located on and taken from the property, and therefore had no conversion claim for the shale. We affirm the trial court’s holding.

Appellants mention various, somewhat confusing, arguments when asserting they had obtained an equitable interest in the two lots which supported their conversion claims. In this respect, they point out that only appellee Burl Keller signed the contract for deed, and as a consequence the parties’ agreement was never effective. However, once again, appellants failed to get a ruling on this issue below, and thus cannot argue the issue on appeal.

Appellants urge that, even if they were in default on the contract, they could still enforce their rights to the converted shale under the federal Truth-in-Lending Act. However, as previously discussed, laches and the statute of limitations barred any right appellants may have had under the Truth-in-Lending Act.

Appellants also argue the parties’ contract for deed operated as an equitable conversion by which appellants’ interest, as purchasers, became real estate. While appellants argue they had an equitable interest in the disputed property until appellees rescinded the contract for deed, the record reflects that the appellants’ rights in the property were subject to a forfeiture clause of an executory contract which they breached. Appellees elected to seek strict enforcement of their rights under the contract, and the trial court correctly rejected appellants’ equitable conversion argument, which, if applied, would have effectively and improperly rewritten the parties’ argument. See Smith v. MRCC Partnership, 302 Ark. 547, 792 S.W.2d 301 (1990); Humke v. Taylor, 282 Ark. 94, 666 S.W.2d 394 (1984); White v. Page, 216 Ark. 632, 226 S.W.2d 973 (1950). From our review of the record, we are unable to say the trial court was wrong in holding that the forfeiture provisions of the parties’ contract were valid and timely enforced. Ashworth v. Hankins, 248 Ark. 567, 452 S.W.2d 838 (1970).

Finally, appellants contend their substantial rights were violated because the trial court did not allow them sufficient time at trial to call their witnesses and establish their case. Appellants did not raise this issue below and therefore may not argue it on appeal. Zhan v. Sherman, 323 Ark. 172, 913 S.W.2d 776 (1996). In sum, as appellants have failed their burden of proving the chancellor’s findings were clearly erroneous or against the preponderance of the evidence, we affirm.

       Appellees initially filed their claim in the Crawford County Circuit Court, where appellants filed a pro se answer and “objection.” However, after the circuit court entered an order in appellees’ favor, and appellants moved to set aside that order, the circuit court granted appellants’ motion, but removed the case with directions to transfer it to chancery court.

       Appellants seem to argue this two-year period for revoking a contract might be extended under situations described in § 1703(d)(1), (2), and (3), but those situations describe circumstances that require a seller to make a specified refund.

       Appellants did request the trial court to rule on their counterclaim for conversion and for additional findings, but the usury claim was not mentioned.


source: Caselaw Access Project

author: Robert L. Brown, Justice.

license: Public Domain

text:
    Carol J. HODGES v. Mike HUCKABEE and Tom Dalton
    97-1034
    968 S.W.2d 619
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      J. Fred Hart, Jr., for appellant.

      Breck Hopkins and Frank J. Wills, III, for appellee Tom Dalton.

      Wright, Lindsey & Jennings, by: Bettina E. Brownstein; and Priscilla J. Smith, for intervenor-appellees Little Rock Family Planning Services, P.A., and Curtis E. Stover, M.D.
   Robert L. Brown, Justice.

The issues before this court on appeal are whether the trial court erred in concluding that a federal district court order preempted Amendment 68 of the Arkansas Constitution and further erred in denying appellant Carol J. Hodges’s motion for a new trial to overturn an order of summary judgment when material questions of fact allegedly were at issue. Because the abstract and record in this case are silent on the disposition of Hodges’s complaint against appellee, Governor Mike Huckabee, we dismiss this appeal without prejudice pursuant to Arkansas Rule of Civil Procedure 54(b).

This appeal concerns the use of public funds to pay for abortions under the Medicaid program (Title XIX of the Social Security Act of 1965) in cases of rape and incest. On July 29, 1994, Hodges filed her complaint for injunctive relief against former Governor Jim Guy Tucker and appellee Tom Dalton, then Director of the Arkansas Department of Human Services (DHS), in their official capacities. Hodges sought an order mandating that Governor Tucker and Dalton terminate Arkansas’s participation in the federal Medicaid program because under the Medicaid program, public funds were required to be expended to pay for abortions in cases of rape and incest. According to Hodges’s complaint, this constituted an illegal exaction under Ark. Const. art. 16, § 13, because public funds were being used to pay for abortions other than to save the life of the mother which was in contravention of Amendment 68.

On September 1, 1994, Hodges moved for summary judgment and asserted that no genuine issue of material fact existed because the defendants had admitted that public funds were being used by certain agencies to pay for abortions in cases of rape and incest.

On September 11, 1996, Dalton moved for summary judgment on the basis that Amendment 68 was not an obstacle to state funding of abortions in cases of rape or incest due to the federal district court’s August 9, 1996 order on remand following the Supreme Court’s decision in Dalton v. Little Rock Family Planning Services, 516 U.S. 474 (1996) (per curiam); and, secondly, because the State had not expended public funds to provide for abortions in cases of rape or incest. Rather, according to Dalton, a private trust, the Arkansas Medicaid Saving Trust (Medicaid Trust), had been created for this purpose on August 19, 1996, and was being privately funded. According to the affidavit of Ray Hanley, DHS’s Assistant Director for Medical Services, which was attached in support of Dalton’s motion, the privately-funded Medicaid Trust was to remain in effect until either a state court determination that Amendment 68 was not a bar to Medicaid funding of abortions in cases of rape or incest or until Amendment 68 was amended or repealed by a vote of the people to avoid any conflict with federal Medicaid laws. Both Hanley and Dalton averred in affidavits attached in support of the Dalton motion that no public funds had been used in Arkansas to reimburse the cost of abortions in cases of rape or incest.

On September 16, 1996, intervenors-appellees Little Rock Family Planning Services, P.A., and Curtis E. Stover, M.D. (jointly referred to as Family Planning), moved for summary judgment as a matter of law on the theory that Amendment 68 did not bar Arkansas’s participation in the Medicaid program. Family Planning contended that the federal district court’s August 9, 1996 order enjoined the operation of Amendment 68 to the extent it conflicted with federal law following the United States Supreme Court decision in Dalton v. Little Rock Family Planning Services, supra. That decision mandated public funds to be used for abortions in cases of rape and incest, according to both Dalton and Family Planning.

Hodges responded to the motions and contended that the motions should be denied because the United States Supreme Court had reversed the decision of the Eighth Circuit Court of Appeals, which had affirmed the federal district court’s blanket invalidation of Amendment 68. See Dalton v. Little Rock Family Planning Services, 516 U.S. 474 (1996) (per curiam), rev’g Little Rock Family Planning Services, P.A. v. Dalton, 60 F.3d 497 (8th Cir. 1995). Under Hodges’s theory, the Supreme Court’s decision in Dalton mandated Arkansas’s removal from voluntary participation in the federal Medicaid program so as to give full effect to Amendment 68. In addition, she contended that material issues of fact surrounded the creation of the Medicaid Trust.

On February 10, 1997, the trial court entered an order of summary judgment granting the motions of Dalton and Family Planning. In that order, the court determined (1) that Dalton and Family Planning were entitled to judgment based on the federal district court’s August 9, 1996 order, which only partially preempted Amendment 68, and (2) that Hodges failed to create an issue of fact with respect to whether the state executive branch or public funds were involved in the privately funded Medicaid Trust. Furthermore, according to the court, executive branch involvement did not present an issue of material fact because Amendment 68 proscribed only the public funding of abortions.

On February 19, 1997, Hodges moved for a new trial and contended that the chancery court’s decision was clearly contrary to the preponderance of the evidence and the law and attached a February 16, 1997 article from the Arkansas Democrat-Gazette entided “Abortion Issue Now Seems Void,” which, she maintained, showed that Governor Huckabee’s administration was instrumental in creating the Medicaid Trust. Hodges did not get a ruling on her new trial motion, which was deemed denied thirty days later on March 23, 1997. Hodges then filed her notice of appeal.

The problem with this appeal, as has already been noted, is the unresolved claim of Hodges against Governor Huckabee, which from all appearances, remains in effect. Our Rule of Civil Procedure 54(b) provides in part:

In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.

We have said many times that the failure to comply with Rule 54(b) and adjudicate all claims against all parties is jurisdictional and renders the matter not final for purposes of appeal. See, e.g., Richardson v. Rodgers, 329 Ark. 402, 947 S.W.2d 778 (1997); Tucker v. Lake View Sch. Dist. No. 25, 323 Ark. 693, 917 S.W.2d 530 (1996); State Farm Mut. Auto Ins. Co. v. Thomas, 312 Ark. 429, 850 S.W.2d 4 (1993). Because a violation of Rule 54(b) relates to the subject-matter jurisdiction of this court, we must raise the issue on our own. Richardson v. Rodgers, supra; Tucker v. Lake View Sch. Dist. No. 25, supra; Reeves v. Hinkle, 321 Ark. 28, 899 S.W.2d 841 (1995); Cortese v. Atlantic Richfield, 317 Ark. 207, 876 S.W.2d 581 (1994). Subject-matter jurisdiction cannot be waived by the parties or by this court. Dean v. Tallman, 331 Ark. 127, 959 S.W.2d 41 (1997).

The February 10, 1997 order entered by the trial court does not mention Hodges’s complaint against Governor Huckabee, and neither the abstract nor the record reflects that the governor joined the motions for summary judgment filed by Dalton or Family Planning. In a similar case, this court recently held that dismissal of an appeal was appropriate when all defendants were not granted summary judgment, leaving claims against certain defendants still pending. See Dean v. Tallman, supra. In Dean, the precise defect in the appeal was that certain city defendants had not joined the summary-judgment motions filed by the state and county defendants. Disposition of the state and county motions left the city claims unresolved, and we deemed dismissal of the appeal to be required. Id.

We do observe that there is a “phantom” reference in the abstract and record to an unnamed defendant’s motion to dismiss that was declared moot by the trial court in its summary-judgment order. No other information about this motion to dismiss is disclosed in either the abstract or record, including any information about whether Governor Huckabee was the defendant involved. Again, the summary-judgment order is silent as to Governor Huckabee, who, Hodges maintains throughout, is an important defendant because of his status as the state’s chief executive officer.

In sum, though the trial court and the parties may have intended to conclude the lawsuit by the summary-judgment order, the trial court’s order fails to dispose of Hodges’s complaint against Governor Huckabee. Moreover, it does not include a proper certification of the appeal to this court on the basis that there is no just reason for delay, even though fewer than all the claims have been resolved. See Ark. R. Civ. P. 54(b). This court has made it clear that the fundamental policy behind Rule 54(b) is to avoid piecemeal appeals. Cortese v. Atlantic Richfield, supra. Accordingly, we dismiss this appeal without prejudice.

In holding that the summary-judgment order is not a final, appealable order under Rule 54(b), we take no position on the merits of Hodges’s claim against Governor Huckabee. Absent a final court order deciding that claim, we simply will not speculate on the status of Hodges’s complaint against Governor Huckabee or assume that the summary-judgment order effectively resolves it as well.

Appeal dismissed without prejudice.

       On its own motion, the trial court subsequently substituted Governor Tucker’s successor, Governor Mike Huckabee, as the proper party.


author: Ray Thornton, Justice.

text:
    GOLDEN TEE, INC. v. VENTURE GOLF SCHOOLS, INC., and Cooper Communities, Inc.
    97-878
    969 S.W.2d 625
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998
    [Petition for rehearing denied June 11, 1998.]

      Timothy O. Dudley; Arnold, Grobmyer & Haley, by: Lee Thalheimer; and Gary Lax, for appellant.

      Rose Law Firm, by: David C. Williams and Grant E. Fortson, for appellees.
   Ray Thornton, Justice.

Appellant Golden Tee, Inc. (Golden Tee), a limited partner in Hot Springs Village Golf School Limited Partnership (Golf Partnership), filed this action for fraud, breach of contract, and breach of fiduciary duty against another limited partner, Cooper Communities, Inc. (Cooper), and against the general partner, Venture Golf Schools, Inc. (Venture). The action was filed as an individual action directed against appellees Venture and Cooper, and was not brought as a derivative action asserting rights on behalf of the Golf Partnership for recovery of alleged damages to the Golf Partnership. The trial court found that Golden Tee could not present proof to show a genuine dispute of material fact required to support essential elements of its claims for fraud, and that Golden Tee lacked standing to bring an action for injuries to the Golf Partnership except as a derivative action, and granted appellees’ motion for summary judgment. Golden Tee appeals, asserting that the trial court erred because issues of material fact remained. We find no error and affirm.

Mr. Roger C. Kluska, who later became President of Golden Tee, was a golf professional who began a dialogue with Mr. Randy Brucker, his next-door neighbor, in early 1992 about the development of a golf school in Hot Springs Village. Mr. Kluska submitted a design for a three-hole golf school, driving range, putting green, clubhouse, and other facilities to Mr. Brucker, who later became President of Venture. Mr. Brucker was a representative of Cooper, and in May, Mr. Kluska was invited to Bella Vista to show his plans for a golf school to the corporate management of Cooper. In late September, Cooper expressed an interest in the project and indicated that if Mr. Kluska would come up with $200,000, for a 25% share in the project, Cooper would put up $800,000 for a 75% share. Mr. Kluska persuaded three other golf professionals to join with him, and in November, informed Cooper that they were ready to go forward with the project. The four golf professionals formed Golden Tee. Venture was also incorporated, and Cooper joined in the formation of the limited Golf Partnership on November 19. In addition to the general partner, Venture, and Golden Tee and Cooper as limited partners, the agreement forming the limited Golf Partnership was signed by the four golf professionals who owned all the shares of stock in Golden Tee.

The Golf Partnership was formed pursuant to the Arkansas Revised Limited Partnership Act of 1991, Ark. Code Ann. § § 4-43-101 to -1206, and specifically provided that all the parties to the agreement consented and agreed to employment agreements between the general partner, Venture, and the four golf professionals; as well as to the leasing and use of Cooper’s property for the Golf Partnership’s business. It was further provided that upon the termination and dissolution of the Golf Partnership, properties leased from Cooper and all leasehold improvements should revert to Cooper. All parties agreed that in the event there should be a negative cash flow produced from operations of Golf Partnership exceeding a cumulative loss of $200,000, Venture had authority to terminate and dissolve the Golf Partnership. The golf school opened for business in the summer of 1993.

Cooper had planned for the contingency that the project might fail by developing an exit strategy involving the donation of the improvements to the Hot Springs Village Property Owners’ Association (POA), and it did not disclose this plan to Golden Tee. Cooper had also prepared some proforma projections of operations over a ten-year period, with estimates of a monthly management fee of $400 and the depreciation of improvements at $10,000 per year. Mr. Kluska had seen these proforma projections at about the time the Golf Partnership was formed.

By October of 1994, the Golf Partnership had sustained a negative cash flow of more than $500,000, and even if the management fees that were charged by Cooper and objected to by Golden Tee are entirely eliminated as an expense, the negative cash flow was $438,582. Mr. Kluska stated that he knew that the Golf Partnership had experienced a negative cash flow in excess of $200,000. Based upon the provisions of the agreement, Venture terminated and dissolved the partnership, and the school closed in November 1994. The real estate and improvements reverted to Cooper, who donated the property, together with other property to the POA for development as a golf course.

After the school closed, Cooper charged the Golf Partnership the present value of future lease payments left on the lease agreement with the Golf Partnership. The total amount due was $376,000, with $94,000 of the liability charged to Golden Tee. This reduced the amount left in Golden Tee’s capital account to $587.

Our standard for reviewing a grant of summary judgment is well settled. The remedy of summary judgment should only be granted if there exists no genuine issue of material fact and the party moving for summary judgment is entitled to judgment as a matter of law. Ark. R. Civ. P. 56; Smothers v. Clouette, 326 Ark. 1017, 1020, 934 S.W.2d 923, 925 (1996). We view the issue in the light most favorable to the party opposing the judgment, and the court resolves all inferences and doubts against the moving party. Id. If the party moving for summary judgment makes a prima facie showing that no issues of fact exist, and the non-moving party fails to show that such issues do exist, then the court must affirm the trial court’s grant of a summary judgment. Pyle v. Robertson, 313 Ark. 692, 694, 858 S.W.2d 662, 663 (1993).

The response and supporting material must set forth specific facts showing that there is a genuine issue of fact for trial. Norris v. Bakker, 320 Ark. 629, 632, 899 S.W.2d 70, 71 (1995). Our rules of civil procedure clearly provide that the trial court may only consider “pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any” for purposes of summary judgment. Ark. R. Civ. P. 56(c).

Standing

Our analysis begins with the issue whether the party who is seeking damages has standing. If we conclude that Golden Tee has standing, then we must decide whether Golden Tee has alleged facts upon which relief can be granted.

The Arkansas General Assembly has recognized that a derivative suit may be instituted by a limited partner in certain circumstances. See Ark. Code Ann. § 4-43-1001 (Repl. 1996). Recognizing this possibility, we must distinguish between causes of action that accrue to the Golf Partnership and those that accrue to one or more of the limited partners as individuals. See Edwin W. Hecker, Jr., Limited Partners’ Derivative Suits Under the Revised Uniform Partnership Act, 33 Vanderbilt L. Rev. 343, 355 (1980). The “prevailing criterion is whether the claimed injury is primarily to the partnership and only indirectly to the partners through their interest in the partnership — a partnership claim — or is direct and unique to the partner(s) — an individual claim.” 4 Alan R. Bromberg and Larry E. Ribstein on Partnership § 15.04(f), at 15:31 (1997). Similarly, other courts have stated that “for a plaintiff to bring an individual action, he must be injured direcdy or independently of the corporation.” Lenz v. Associated Inns & Restaurants Co. of America, 833 F. Supp. 362, 380 (S.D.N.Y. 1993) (quoting Kramer v. Western Pac. Indus., Inc., 546 A.2d 348, 351 (Del. Supr. 1988)). Looking to the federal court for guidance, when the individual limited-partner alleges wrongs to the Golf Partnership that indirectly damage him by “rendering his contribution or interest in the limited partnership valueless, the limited partner is required to bring his claim derivatively on behalf of the partnership.” Kenworthy v. Hargrove, 855 F.Supp. 101, 106 (E.D. Pa. 1994), aff'd, 27 F.3d 557 (3d Cir. 1994).

This is consistent with our corporate law regarding derivative suits. In ascertaining whether a cause of action is derivative, it is appropriate to look to corporate law for guidance. See Alpert v. Haimes, 315 N.Y.S.2d 332 (Sup. Ct., Sp. Div. 1970). In the corporate context, we have stated:

The real distinction between a derivative and an individual action is whether it is the corporation that has been injured by the action complained of or whether it is only the individual shareholder who has suffered harm. The primary purpose of the derivative action is to allow one or more shareholders to bring a suit on behalf of the corporation. If the alleged wrong is one primarily against the corporation, the action should be brought in a derivative capacity ....

Brandon v. Brandon Constr. Co., 300 Ark. 44, 48, 776 S.W.2d 349, 352 (1989).

Similarly, we recently determined that individual stockholders had no standing to sue in their individual capacities for injuries allegedly suffered primarily by the corporation and its shareholders in Hames v. Cravens, 332 Ark. 437, 441, 966 S.W.2d 244 (1998). We noted that our decision did not imply that shareholders may never bring a direct suit. Id. at 442. However, direct suits are appropriate only where a shareholder asserts “a direct injury to the shareholder distinct and separate from harm caused to the corporation.” Id.

With these guiding principles in mind, we examine each of Golden Tee’s claims to determine whether, based on the nature of the wrong, the injury is primarily to the Golf Partnership, and only indirectly to the partners, or whether it is direct and unique to the partners.

A. Breach of Contract

Golden Tee argues on appeal that the trial court erred in granting summary judgment on two of its breach-of-contract claims: (1) that appellees breached the partnership agreement by disposing of Golf Partnership property without Golden Tee’s consent, and (2) that Cooper breached the partnership agreement by managing and controlling the affairs of the Golf Partnership. We have determined that the trial court did not err, and we affirm.

Actions for breach of the partnership agreement may be brought as individual actions or partnership actions, depending on which entity or party is primarily injured. See 4 Bromberg & Ribstein, § 15.04(h), at 15:37. Analogizing to corporate law, if the injuries alleged were those for which relief should have been granted to the Golf Partnership, and not to an individual partner, then derivative action should be the appropriate route for relief. See Walker v. Hyde, 303 Ark. 615, 798 S.W.2d 435 (1990) (reviewing the propriety of a derivative claim in a shareholder setting).

The injuries that Golden Tee asserted under its breach-of-contract claims were loss of its initial investment, loss of future profits, and diminishment of the capital account. The first injury alleged, loss of Golden Tee’s initial investment capital, is an injury inflicted on the Golf Partnership. Looking again to the corporate setting for guidance, a federal court has stated:

where a corporation suffers loss because of the acts of officers, directors, or others which diminish or render valueless shares of stock of a stockholder, the stockholder does not have a direct cause of action for such damages, but has a derivative cause of action on behalf of the corporation to recover the loss for the benefit of the corporation.

Lenz, 833 F. Supp. at 381. The Lenz court applied this reasoning to limited partnerships, stating that a limited partner has no greater right to vindicate an injury to the limited partnership for the loss or diminution of the value of his interest than a stockholder in a corporation has. Id. Similarly, the loss of capital, which Golden Tee claims here, involves a primary injury to the Golf Partnership rather than to the individual limited partners.

By their express terms, the latter two claims seek redress of injuries inflicted directly on the Golf Partnership by any breach of the agreement. Although Golden Tee, as a limited partner, undoubtedly suffered injuries, they were indirect damages by way of injury to the Golf Partnership, not only to the individual partners. As such, the injury suffered was derivative, and the claims for breach of contract should have been brought in a derivative action. See, e.g., Oncology Associates v. McGraw-Hill Corp., 109 A.D.2d 616, 486 N.Y.S.2d 181 (Sup. Ct. App. Div. 1985).

Golden Tee asserts that the trial court erred in granting summary judgment on the basis that the claim that appellees disposed of Golf Partnership property without Golden Tee’s consent should have been brought in a derivative action. Golden Tee makes this same argument regarding the alleged breach of fiduciary duty as its first claim under part B below; therefore, we address them concurrently under part B.

Golden Tee’s other claim of breach of contract was based on the allegation that Cooper breached the partnership agreement by managing and controlling the affairs of the Golf Partnership. The trial court granted summary judgment on the ground that Golden Tee failed to present proof that they were damaged by Cooper’s management and control.

The CEO of Cooper, Roger McMennemy, testified that he made the decision to close the golf school and terminate the Golf Partnership. Golden Tee alleges that this breached the partnership agreement because only Venture had the authority to terminate the Golf Partnership when the negative cash flow exceeded $200,000. However, Randy Brucker, president of Venture, testified that he and Mr. McMennemy made the decision to close the golf school. Further, Michael Dial, vice-president and treasurer of Venture, testified that the Golf Partnership had begun experiencing a negative cash flow in excess of $200,000 in September 1993, and that “the decision was made to terminate the Golf Partnership pursuant to paragraph 5.3 and Article XI of the Partnership Agreement” in October 1994, after the Golf Partnership had experienced a negative cash flow of over $523,282.

In light of the evidence showing that the negative cash flow was increasing over time, Golden Tee does not prove how it was individually injured by the decision to terminate operations in accordance with the partnership agreement, which all parties had approved. The decision to terminate the partnership was one that primarily affected the Golf Partnership, with only derivative effect on the limited partners.

Golden Tee also asserts that Cooper controlled the winding up of affairs and disposing of Golf Partnership assets in derogation of the partnership agreement. This claim is likewise for alleged injuries to the Golf Partnership rather than to the individual limited partners. Golden Tee asserts that Cooper’s actions reduced the amount of capital that should have been returned to it; however, an action for diminution of capital in the Golf Partnership account should be a derivative cause of action to recover the loss for the benefit of the Golf Partnership. See Lenz, 833 F. Supp. at 381.

We conclude that the allegations for breach of the partnership agreement complain directly of injuries to the Golf Partnership, and Golden Tee was injured only to the extent of its proportionate interest therein. We affirm the trial court’s grant of summary judgment on this point because Golden Tee should have asserted these claims in a derivative suit.

B. Breach of Fiduciary Duty

Golden Tee alleges that the trial court erred in granting summary judgment on the basis that its breach-of-fiduciary-duty claims were partnership rather than individual claims. Golden Tee argues that the following actions constituted a breach of appellees’ fiduciary duty: (1) negotiating with the POA to construct a golf course that might incorporate the facilities owned by the Golf Partnership for use in constructing a new golf course without the knowledge and consent of Golden Tee, (2) failing to account for value received by appellees after dissolution of the Golf Partnership, (3) charging the Golf Partnership for payments due in the future under the land-lease agreement between the Golf Partnership and Cooper because it reduced Golden Tee’s capital account, (4) charging management fees to the Golf Partnership far in excess of the actual value of services rendered by Cooper to the Golf Partnership; and (5) failing to fully disclose all material facts to Golden Tee. The trial court granted summary judgment based on its belief that these were claims that belonged to the Golf Partnership, and must therefore be brought in a derivative action. We agree.

A general partner owes a fiduciary duty to the limited partners. St. Joseph’s Regional Health Center v. Munos, 326 Ark. 605, 615, 934 S.W.2d 192, 197 (1996); see also Ark. Code Ann. § 4-42-404(1) (Repl. 1996). The critical question before us is “whether the fiduciary duty owed by the general partner is owed to each limited partner or to the limited partnership or both.” Phillips v. Kula 200 II, 667 P.2d 261, 265 (Haw. App. 1983). An individual or a derivative claim may be required, “depending on whether the duty is deemed owed to the partners (as individuals) or to the partnership.” 4 Bromberg & Ribstein, § 15.04(h), at 15:35-36.

Golden Tee argues that nothing in Arkansas’s version of the Revised Limited Partnership Act, Ark. Code Ann. § § 4-43-101 to -1206 (Repl. 1996 & Supp. 1997), requires that this suit must have been instituted as a derivative suit. But cf. Hooper v. Rogar, 289 Ark. 152, 711 S.W.2d 148 (1986) (allowing limited partners to bring a derivative claim in circuit court against general partners). However, while Golden Tee asserts that partners owe one another a fiduciary duty, it does not tell us how the limited partners have sustained separate or individual injuries, independent of the Golf Partnership, as a result of the purported breach. Golden Tee alleges damages in its complaint that were caused by the breach of contract, but does not allege separate damages as a result of the breach of fiduciary duty.

We look to our statutes for guidance on the issue of to whom the fiduciary duty is owed. Arkansas’s Revised Limited Partnership Act provides that:

[A] general partner of a limited partnership has the rights and powers and is subject to the restrictions of a partner in a partnership without limited partners.

Ark. Code Ann. § 4-43-403(a). Arkansas’s Uniform Partnership Act provides that a partner is accountable as a fiduciary as follows:

Every partner must account to the partnership for any benefit and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property.

Ark. Code Ann. § 4-42-404(1) (Repl. 1996). A breach of this fiduciary obligation entitles the injured partner to an accounting. Ark. Code Ann. § 4-42-405 (Repl. 1996).

In this case, the general partners clearly owed a fiduciary duty to the Golf Partnership. However, we have determined that the injuries that Golden Tee alleges were injuries to the Golf Partnership, and, as such, must be brought in a derivative action for damages to the Golf Partnership.

C. Fraud

Golden Tee also alleges that the trial court erred in granting summary judgment on its three fraud claims. For reversal, Golden Tee alleges: (1) that Cooper and Venture fraudulently induced Golden Tee to enter into the partnership agreement by representing that it would charge the Golf Partnership only $400 a month in management fees, and would depreciate the equipment and the property at $10,000 a year; (2) that Cooper and Venture committed fraud in fading to divulge their plans to donate the property on which the golf school was built to the POA; (3) that the appellees fraudulendy charged the Golf Partnership the present value of future lease payments after the land had been donated to the POA and when no future payments were due. In its complaint, Golden Tee asserted that its damages were losses of its investment and future profits.

The tort of fraud consists of five elements that the plaintiff must prove by a preponderance of the evidence: (1) a false representation of a material fact; (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation; (3) intent to induce action or inaction in reliance upon the representation; (4) justifiable reliance on the representation; and (5) damage suffered as a result of the reliance. Medlock v. Burden, 321 Ark. 269, 273, 900 S.W.2d 552, 555 (1995). Further, if a respondent to a motion for summary judgment cannot present proof on an essential element of the claim, the movant is entitled to summary judgment as a matter of law. O’Mara v. Dykema, 328 Ark. 310, 316, 942 S.W.2d 854, 857 (1997).

Fraud is a cause of action that may be brought individually or as a derivative suit, depending on the allegations. If the plaintiff alleges fraud in the inducement to enter into the partnership agreement, the claim is generally individual in nature. 4 Bromberg & Ribstein, § 15.04(f), at 15:32. If, however, the plaintiff alleges fraudulent actions that primarily harm the partnership, then the action must be plead as a derivative suit.

As its first contention of fraud on appeal, Golden Tee alleges that appellees induced it to enter into the partnership agreement by fraudulently misrepresenting Cooper’s management and depreciation projections. Because Golden Tee alleges fraud in the inducement, this claim for fraud may be plead individually. We therefore examine whether Golden Tee has proven the elements of fraud to exist.

The trial court found that the proformas at issue could not sustain a fraud charge because they were projections of future operating expenses. Golden Tee asserts that the pro formas were sufficient to constitute a basis for fraud because appellees either knew that the projections were false or else not knowing asserted them to be true, particularly since the untrue projections were within appellees’ control.

We have often declared that projections of future events or a promise of future conduct may not form the basis of a fraud claim. See, e.g., South County, Inc. v. First Western Loan Co., 315 Ark. 722, 727, 871 S.W.2d 325, 327 (1994). We have stated:

In the context of negotiating a contract, a misrepresentation sufficient to form the basis of a deceit action may be made by one prospective party to another and must relate to a past event, or a present circumstance, but not a future event. An assertion limited to a future event may be a promise that imposes liability for breach of contract or a mere prediction that does not, but it is not a misrepresentation of that event.

Id. at 727-28, 871 S.W.2d at 327 (quoting P.A.M. Transport, Inc. v. Arkansas Blue Cross & Blue Shield, 315 Ark. 234, 240, 868 S.W.2d 33, 36 (1993). A pro forma statement is defined as a “financial statement showing the forecast (or projected) operating results or impact of a particular transaction.” Black’s Law Dictionary 842 (Abr. 6th ed. 1991).

The proformas at issue before us are clearly projections of future operating expenses, which cannot sustain a fraud charge. Golden Tee did not meet its burden of proving that appellees made any misrepresentations that would give rise to a cause of action for fraud, and we cannot say that the trial court erred in granting summary judgment on this claim.

In its second and third fraud claims, Golden Tee argues that the trial court erred in granting summary judgment because appellees committed fraud by charging future lease payments against the Golf Partnership after they knew the land had been donated to the POA for the purpose of reducing any return of capital due to Golden Tee, and by faffing to divulge their plans to donate the property on which the golf school was built to the POA. However, under our criteria set forth above, the claimed injury here is primarily against the Golf Partnership, rather than against the individual limited partners. As such, Golden Tee should have pursued this cause of action in a derivative suit.

No question of fact remains to be resolved, and we affirm the trial court’s decision granting summary judgment on all fraud claims.

Conclusion

Although Golden Tee argues that it had the option of bringing its causes of action as either individual or derivative claims under our statutory language, we disagree. Our statute provides that:

A limited partner may bring an action in the right of a limited partnership to recover a judgment in its favor if general partners with authority to do so have refused to bring the action or if an effort to cause those general partners to bring the action is not likely to succeed.

Ark. Code Ann. § 4-43-1001 (Repl. 1996). We agree with the analysis of the New York court in Alpert v. Haimes, where the court reasoned that the purpose of their statute was not to allow a choice between bringing an individual action or a derivative one, but was to give the plaintiffs the right to bring a suit in a derivative capacity that had been unavailable prior to the statute’s adoption. Alpert v. Haimes, 315 N.Y.S.2d at 335. The court stated that “to hold otherwise would undermine the intent of the Legislature in providing safeguards to both limited partners and general partners in derivative suits.” Id.

We note that procedural requirements for derivative suits differ from those required in individual or class actions. See Hecker, 33 Vanderbilt L. Rev. at 355. Also, the interests of the individual limited partners may not be the same as the interests of the partnership entity. R.S. Ellsworth v. Amfac Financial Corp., 65 Haw. 345, 351, 652 P.2d 1114, 1118 (1982). If we allow less than all limited partners to sue to enforce rights belonging to the partnership, we would be exposing the general partners to future liability for the same claims. Id. Also, the monetary damages in a derivative suit belong to the partnership to be distributed to the limited partners, instead of belonging to those individual partners who bring the suit. Id.

We conclude that all of the claims, with the exception of the claim alleging fraud in inducing the limited partners to sign the hmited-partnership agreement, should have been brought in a derivative action and that the trial court’s finding that Golden Tee did not prove essential elements of its claim of fraud was not erroneous. Accordingly, we affirm the trial court’s grant of summary judgment.

Affirmed.


author: Per Curiam.

text:
    FINANCIAL BENEFIT LIFE INSURANCE CO., and Billie Hendricks, as Administrator of the Estate of Inza Weedman v. Mark WEEDMAN, Jr., Individually and as Administrator of the Estate of Mark Weedman, Sr., Deceased
    98-380
    968 S.W.2d 624
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      Timothy O. Dudley, for appellants.

      Robinson, Staley & Marshall, by: Robert Robinson and Eichenbaum, Lisles & Heister, P.A., by: James H. Penick, for appellee.
   Per Curiam.

Appellants petitioned for review of the court of appeals’ unpublished decision rendered in this case on March 11, 1998. The decision was based in part on this court’s recognition of the rule that an objection to an irregularity or inconsistency in a verdict must be made prior to the discharge of the jury. In affirming the verdict in this case, the court of appeals determined that the time for correcting a verdict had passed because an objection to the verdict was not raised by the appellants until the jury had already been discharged and left the courtroom. See P.A.M. Trans., Inc. v. Arkansas Blue Cross & Blue Shield, 315 Ark. 234, 868 S.W.2d 33 (1993).

In appellants’ petition, they cite Traylor v. Huntsman, 253 Ark. 704, 488 S.W.2d 30 (1972), in support of their argument that the answers to the interrogatories submitted to the jury were irreconcilable and should have been corrected by the trial court as a matter of law. Appellants cite no case law wherein this court has ever held that a trial court’s failure to correct a verdict after the jury has been discharged constitutes reversible error.

Alternatively, appellants contend in their petition that, even if the correction is considered factual rather than an issue of law, the jury here had not lost its “separate identity” and should have been reconvened. In support of their argument, they assert in their petition for review that “the jurors had not left the courthouse when their objection was made, and were in fact still standing in the hall outside the courtroom.” (Appellants’ emphasis.) Appellants’ petition further alleged that appellee’s counsel indicated “it could be worked out the next day,” when explaining why their conduct was reasonable at the trial’s end and was “well within the principles and exceptions concerning waivers.” Appellee counters, stating the record reflects nothing about jurors standing outside the courtroom after their discharge, nor does it show the appellants interposed a specific objection on the basis that inconsistent verdicts were rendered, or that appellee’s counsel ever made the remarks attributed to him.

Appellee further responded to appellants’ petition, stating the petition should be denied as merely reargument of the appellate court’s decision, which contained no mistake of fact or law. We denied appellants’ petition on April 30, 1998, but took under submission appellee’s motion for Rule 11 sanctions, wherein he alleges the appellants’ foregoing factual statements are unsupported by the record, and are grounds for the imposition of attorney’s fees against appellants’ counsel. We are compelled to agree.

In reviewing the record, we agree with appellee that the record in no way supports the appellants’ assertions that the jurors were still standing in the hall outside the courtroom after they had been discharged. Nor can we find in the record that appellee’s counsel said or indicated “it could be worked out the next day.” The significance or relevance of these erroneous references become self evident when you consider that part of the relief sought by appellants is for our court to adopt a rule they argue is recognized in other jurisdictions, namely, that when the jury has not been subjected to outside influences, or has not lost its “separate identity,” there is no waiver. Appellants cite this principle as being the majority rule, and if applied here would allow them to raise an argument that otherwise would have been waived because they failed to object and argue the issue before the trial court had discharged the jury. To support their argument, they cite 75B AM. JUR. 2d, Trial § 1896; Sierra Foods v. Williams, 816 P.2d 466 (1991); Benton v. Wesley Machinery Inc., 191 Ga. App. 334, 381 S.E.2d 577 (1989).

Rule 11 (a) of the Arkansas Rules of Appellate Procedure — Civil provides as follows:

The filing of a brief, motion or other paper in the Supreme Court or the Court of Appeals constitutes a certification of the party or attorney that, to the best of his knowledge, information and belief formed after reasonable inquiry, the document is well grounded in fact; is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and is not filed for an improper purpose such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. A party or an attorney who files a paper in violation of this rule, or party on whose behalf the paper is filed, is subject to a sanction in accordance with this rule.

Here, appellants’ legal argument and request for us to depart from present case law are dependent upon statements of facts that cannot be found in the record. The statements alleged must appear in the record for us to consider them to be well grounded in fact. Consequently, we are unable to say appellants’ petition for review is well grounded in fact as is required by Rule 11. In accordance with Rule 11(c), we grant appellee’s request for reasonable attorney’s fees related to his work in responding to appellants’ petition. We award attorney’s fees in the amount of $375.00.


text:
    George Mitchell MOORE v. STATE of Arkansas
    CR 98-478
    966 S.W.2d 266
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      John R. Irwin, for appellant.

      Winston Bryant, Att’y Gen., by: Mac Golden, Asst. Att’y Gen., for appellee.
   Per Curiam.

George Mitchell Moore, by his attorney, has filed a motion to file belated appeal, which we will treat as a motion for rule on the clerk.

The motion admits that the record was not timely filed and that it was no fault of the appellant.

This court has held that we will grant a motion for rule on the clerk when the attorney admits that the record was not timely filed due to an error on his part. See, e.g., Tarry v. State, 288 Ark. 172, 702 S.W.2d 804 (1986). Here, the attorney does not admit fault on his part. We have held that a statement that it was someone else’s fault or no one’s fault will not suffice. Clark v. State, 289 Ark. 382, 711 S.W.2d 162 (1986). Therefore, appellant’s motion must be denied.

The appellant’s attorney shall file within thirty days from the date of this per curiam a motion and affidavit in this case accepting full responsibility for not timely filing the transcript, and upon filing same, the motion will be granted and a copy of the opinion will be forwarded to the Committee on Professional Conduct.

The present motion for rule on the clerk is denied.


text:
    Tommy Ray MOSLEY v. STATE of Arkansas
    CR 95-872
    968 S.W.2d 612
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      Petitioner, pro se.

    No response.
   Per Curiam.

In 1995, Tommy Ray Mosley was found guilty of rape and sentenced as a habitual offender to life imprisonment. We affirmed. Mosley v. State, 323 Ark. 244, 914 S.W.2d 731 (1996). Mosley subsequently filed in the trial court a petition pursuant to Criminal Procedure Rule 37 which was denied.

Mosley now petitions this court to reinvest the trial court with jurisdiction to consider a petition for writ of error coram nobis in the case. The petition for leave to proceed in the trial court is necessary because the circuit court can entertain a petition for writ of error coram nobis after a judgment has been affirmed on appeal only after we grant permission. Larimore v. State, 327 Ark. 271, 938 S.W.2d 818 (1997).

A writ of error coram nobis is an exceedingly narrow remedy, appropriate only when an issue was not addressed or could not have been addressed at trial because it was somehow hidden or unknown and would have prevented the rendition of the judgment had it been known to the trial court. Penn v. State, 282 Ark. 571, 670 S.W.2d 426 (1984), citing Troglin v. State, 257 Ark. 644, 519 S.W.2d 740 (1975). The writ is allowed only under compelling circumstances to achieve justice and to address errors of the most fundamental nature. A presumption of regularity attaches to the criminal conviction being challenged, Larimore, supra, citing United States v. Morgan, 346 U.S. 502, 512 (1954), and the petition must be brought in a timely manner. Penn, supra. Newly discovered evidence in itself is not a basis for relief under coram nobis. Larimore, supra; Smith v. State, 301 Ark. 374, 784 S.W.2d 595 (1990). A claim of newly discovered evidence must be addressed to the trial court in a motion for new trial made within the time in which a notice of appeal must be filed. See A.R.Cr.P. 33.3; Penn, supra.

Petitioner claims that jurisdiction should be reinvested in the trial court to consider an error coram nobis petition on the ground that the United States government failed to disclose that it possessed a videotape of him and the victim made by a satellite during the encounter which led to the rape charge. He states that he became aware of the undisclosed evidence during the trial of the Oklahoma City bombing defendant when such satellite technology was revealed to the public. While petitioner asserts that the entire surface of North America is on tape, he offers nothing to establish that a videotape exists of him and the victim. The allegation is unsubstantiated and merits no further discussion.

Petitioner also asserts that he has conducted research which reflects that “the threat of a life prison sentence for rape removes the potential deterrent effect of the threat of the death penalty to deter murder.” He argues that if a writ of error coram nobis is not issued in his case, future rape victims will be subjected to an enhanced risk of being murdered. The allegation, which is also unsubstantiated, does not provide any ground on which a court could grant the writ.

Petitioner further contends that in a 1996 hearing on a civil-rights complaint petitioner had filed in federal court, his trial attorney testified that a key witness had given him false information. Petitioner alleges that counsel was unable to call the witness to testify as a result of the false information. He goes on to allege that the misinformation was the result of the witness’s faulty memory which was caused by the eight-and-one-half-month delay between appellant’s arrest and his trial. He also asserts that the victim bribed and illegally influenced the key witness to conceal the truth. The allegations, even if considered cumulatively, are conclusory in nature and fail to establish that there was some error of a fundamental nature. Petitioner has not shown that there was some fact extrinsic to the record which could not have been known at trial which would warrant issuance of a writ of error coram nobis.

There is a distinction between fundamental error which requires issuances of the writ and newly discovered information which might have created an issue to be raised at trial had it been known. Before a writ of error coram nobis may issue it must appear that the facts as alleged as grounds for its issuance are such as would have precluded the entry of the judgment had they been available at trial; not that such facts might have produced a different result. Larimore, supra. As we do not find that any grounds advanced by petitioner demonstrate an error of fundamental nature which could not have been addressed at trial or otherwise in accordance with the prevailing rules of procedure, the petition to proceed in the trial court with a petition for writ of error coram nobis is denied.

Petition denied.


author: Per Curiam. Tom Glaze, Justice,

text:
    Sedric Maurice SIMPSON v. SHERIFF OF DALLAS COUNTY, Arkansas
    CR 98-423
    968 S.W.2d 614
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      Robert N. Jeffrey, Public Defender, for appellant.

      Tom Wynne, Prosecuting Att’y, for appellee.
   Per Curiam.

Sedric Maurice Simpson has petitioned this Court for a writ of habeas corpus based on his alleged unlawful detention in violation of Ark. R. Crim. P. 28.1(a). We must decide whether a pretrial detainee may claim a violation of Rule 28.1(a) through a petition for a writ of habeas corpus filed in this Court and, if so, whether Mr. Simpson is in fact being detained in violation of that rule. We hold that a pretrial detainee may seek a writ of habeas corpus in this Court, following an adverse ruling below, for the purpose of determining whether he or she is being detained in violation of Rule 28.1(a). We conclude, however, that Mr. Simpson’s detention does not violate Rule 28.1(a) and that he, therefore, is not entitled to the writ.

Mr. Simpson and Ezekiel Thomas Harrison, Jr., were arrested on June 20, 1997, in connection with the deaths of Wendy Lynn Pennington and Lena Sue Garner. An information was filed in the Dallas County Circuit Court on September 5, 1997, charging Mr. Simpson and Mr. Harrison each with two counts of capital murder and two counts of aggravated robbery. Since his arrest, Mr. Simpson has remained in the Dallas County Jail awaiting trial.

On March 23, 1998, Mr. Simpson filed a motion in the Circuit Court asserting that, as he had been incarcerated for more than nine months without having been brought to trial, he was entitled by Rule 28.1(a) to be released on his own recognizance subject to an order to appear for trial on May 26, 1998. Under Rule 28.1(a), “[a]ny defendant charged with an offense in circuit court and incarcerated in a city or county jail in this state pending trial shall be released on his own recognizance if not brought to trial within nine (9) months from the time provided in Rule 28.2, excluding only such periods of necessary delay as are authorized in Rule 28.3.”

The Circuit Court denied the motion at the conclusion of a hearing held on April 7, 1998. Mr. Simpson then filed in this Court a petition for a writ of habeas corpus directing the Dallas County Sheriff to discharge him from custody pursuant to Rule 28.1(a).

1. Habeas corpus

As a threshold matter, we must determine whether a pretrial detainee who claims that his detention violates Ark. R. Crim. P. 28.1(a) may raise that claim in this Court through a petition for a writ of habeas corpus after having pursued the claim in a trial court unsuccessfully. We hold that he may.

a. Jurisdiction

In response to the petition, the Sheriff suggests that we lack jurisdiction to consider it. Without citation to authority, the Sheriff argues that Mr. Simpson’s action “is an original proceeding for a writ of habeas corpus” and that “jurisdiction for an original proceeding for a writ of habeas corpus lies in Circuit Court.”

Article 7, § 4, of the Arkansas Constitution, in the following passage, confers on this Court the authority to entertain and grant petitions for writs of habeas corpus filed here originally:

The Supreme Court. . . shall have a general superintending control over all inferior courts of law and equity; and, in aid of its appellate and supervisory jurisdiction, it shall have power to issue writs of error and supersedeas, certiorari, habeas corpus, prohibition, mandamus and quo warranto, and, other remedial writs, and to hear and determine the same. Its judges shall be conservators of the peace throughout the State, and shall severally have power to issue any of the aforesaid writs.

Ark. Const., Art. 7, § 4 (emphasis added). See also State ex. rel. Arkansas Industrial Co. v. Neel, 48 Ark. 283, 3 S.W. 631 (1886); In re Beard, 4 Ark. 9, 4 Pike 9 (1842) (“That this court has full power to issue writs of habeas corpus, and to try and determine the same, cannot be denied . . . .”).

We note, as well, that a habeas corpus statute allows members of this Court to issue the writ “upon proper application” and further provides that the power of this Court “to issue writs of habeas corpus shall be coextensive with the state.” Ark. Code Ann. § 16-112-102(a)(1) (1987). Although the nature of our jurisdiction may “in form” be “original,” it is “in fact appellate.” Ark. Sup. Ct. R. 6-1 (a). See also Bryant v. Ruff, 303 Ark. 330, 798 S.W.2d 417 (1990); Estes v. Masner, 244 Ark. 797, 427 S.W.2d 161 (1968).

A summary review of our cases reveals that Mr. Simpson’s is not the first habeas petition to be filed, and considered, in this Court as an original action. See, e.g., In re Rook v. Sheriff 323 Ark. 443, 914 S.W.2d 316 (1996); Renton v. State, 265 Ark. 223, 577 S.W.2d 595 (1979); Morris v. State, 229 Ark. 77, 313 S.W.2d 241 (1958); Ex parte Robins, 15 Ark. 402 (1855); Ex parte White, 9 Ark. 222, 4 Eng. 222 (1848).

b. Propriety of the writ

That we have jurisdiction to consider Mr. Simpson’s petition for a writ of habeas corpus does not answer the question whether we should issue the writ to remedy a pretrial detention in violation of Ark. R. Crim. P. 28.1(a). As best we can tell, this is an issue of first impression for this Court.

According to Ark. Code Ann. § 16-112-103(a) (1987),

[t]he writ of habeas corpus shall be granted forthwith by any of the officers enumerated in § 16-112-102 (a) [including members of this Court] to any person who shall apply for the writ by petition showing, by affidavit or other evidence, probable cause to believe he is detained without lawful authority or is imprisoned when by law he is entitled to bail. [Emphasis added.]

As Mr. Simpson does not seek the writ on the ground that he is entitled to bail, see Renton v. State, supra; City of Clinton v. Jones, 302 Ark. 109, 111, 787 S.W.2d 242, 244 (1990), the question is whether the claim of a pretrial detainee of detention in violation of Rule 28.1(a) suffices as a claim of detention “without lawful authority” within the meaning of § 16-112-103(a).

As mentioned, we have found no case in which we have considered the availability of the habeas corpus remedy to a pretrial detainee held in violation of Rule 28.1(a). We once said in an obiter dictum that, “if a judge refuses to release a defendant after nine months as provided in the rule, the remedy is to seek a writ of mandamus from this court.” Jackson v. State, 290 Ark. 375, 386, 720 S.W.2d 282, 287 (1986). We have not, however, discussed whether a detention in violation of that rule qualifies as detention “without lawful authority” as that phrase is used in § 16-112-103(a) and as it applies to a judge or another person or officer, such as a sheriff.

In the “typical” habeas corpus case, the petitioner files his or her request for relief after he or she has been tried for an offense, convicted, sentenced, and then incarcerated, through a formal judgment and commitment order, in a correctional facility. In that context, we invariably decline to view the petitioner’s detention as one “without lawful authority,” and thus deny the habeas petition, unless (1) the commitment or judgment of conviction is invalid on its face, or (2) the court that committed the petitioner lacked jurisdiction over the cause. See, e.g., Sawyer v. State, 327 Ark. 421, 422, 938 S.W.2d 843, 844 (1997); Davis v. Reed, 316 Ark. 575, 577, 873 S.W.2d 524, 525 (1994). As we often say in those cases, “an application for habeas corpus cannot be made to perform the function of an appeal, or writ of error, in correcting errors and irregularities at the trial.” Mitchell v. State, 233 Ark. 578, 581, 346 S.W.2d 201, 203 (1961). See Goodman v. Storey, Sheriff, 221 Ark. 308, 254 S.W.2d 63 (1952).

Mr. Simpson is, however, in a position different from the habeas petitioner ordinarily encountered. He has not been tried or convicted. He has not been sentenced, and he has not been “committed” to a correctional facility by way of a judgment and commitment order. There is no commitment order or judgment of conviction, and thus we cannot determine whether such documents are “valid on their face,” and there is no suggestion that the Dallas County Circuit Court “lacks jurisdiction over the cause.” Mr. Simpson claims only that his detention in the Dallas County Jail is unlawful because he has been held there for more than nine months without having been brought to trial.

Chief Justice John Marshall once referred to the writ of habeas corpus as the “great writ,” Ex parte Bollman, 4 Cranch 75, 95 (1807), and the writ “has been for centuries esteemed the best and only sufficient defence of personal freedom.” Ex parte Yerger, 8 Wall. 85, 95 (1869). Justice George Rose Smith observed nearly fifty years ago that the “extraordinary remedy” of the writ of habeas corpus may “be invoked when no other effective means of relief is at hand.” Haller v. Ratcliffe, 215 Ark. 628, 629, 221 S.W.2d 886, 887 (1949).

That is the case here. A detainee who is held in violation of Rule 28.1(a) has no way of obtaining appellate review of a trial judge’s adverse ruling on his or her motion for release unless we allow the detainee to bring in this Court a petition for an extraordinary writ. As our cases make clear, a person held in violation of Rule 28.1(a) is only entitled to release on his or own recognizance, not dismissal of the charges or absolute discharge. Green v. State, 313 Ark. 87, 91, 852 S.W.2d 110, 112-13 (1993); Brawley v. State, 306 Ark. 609, 614, 816 S.W.2d 598, 601 (1991) (Dudley, J., concurring); Jurney v. State, 298 Ark. 91, 93, 766 S.W.2d 1, 2 (1989).

Hence, if the trial judge erroneously denies the detainee’s request for release under Rule 28.1(a), and the detainee is then tried and convicted and does not challenge the trial judge’s release decision until his or her direct appeal, the issue would be moot. In that situation, the detainee would have no way to enforce the right to release guaranteed by Rule 28.1(a). As we have held, an “[a]lleged violation of Rule 28.1(a) is not a basis for reversal.” Matthews v. State, 313 Ark. 327, 332, 854 S.W.2d 339, 342 (1993). See also Jackson v. State, 290 Ark. at 386, 720 S.W.2d at 287 (stating violations with respect to bail and release matters “are not the sort for which we will reverse an otherwise valid conviction”), citing Orsini v. State, 281 Ark. 348, 665 S.W.2d 245 (1984).

Thus, absent a rule allowing a petitioner in Mr. Simpson’s position to seek a writ of habeas corpus in this Court, there is, in Justice George Rose Smith’s words, “no other effective means of relief. . . at hand.” Haller v. Ratcliffe, supra. We remain mindful of our obiter suggestion in Jackson v. State, supra, that the remedy of a pretrial detainee who is denied release under Rule 28.1(a) is to seek a writ of mandamus to the trial judge in this Court. We have no reason to hold that the possible availability of mandamus to a trial judge forecloses the availability of the writ oí habeas corpus to a detainee in Mr. Simpson’s position.

We note with approval the many decisions from other jurisdictions allowing a pretrial detainee to seek a writ of habeas corpus in an appellate court following a trial court’s refusal to release him or her pursuant to “own recognizance” release provisions similar to our Rule 28.1(a) or other “speedy-trial” provisions. See, e.g., Beicke v. Boone, 527 So.2d 273 (Fla.App. 1 Dist. 1983); Owens v. Duryee, 285 Or. 75, 589 P.2d 1115 (1979); State v. Hill, 299 So.2d 625 (Fla.App. 1 Dist. 1974); State v. Gundell, 298 So.2d 504 (Fla.App. 1 Dist. 1974).

A thoughtful treatment of this issue appears in the New York Court of Appeals decision in People ex rel. Chakwin v. Warden, New York City Correctional Facility, Rikers Island, 63 N.Y.2d 120, 480 N.Y.S.2d 719, 470 N.E.2d 146 (1984). The release provision'at issue in the Chakwin case provided for the detainee’s release on bail or upon his own recognizance if the State was not ready for trial within 90 days after the detainee’s arrest. The detainee was allowed to commence habeas proceedings in the Court of Appeals for the purpose of reviewing the trial judge’s adverse release decision. The Court observed that, unless the detainee were allowed to seek the writ there, he would have

no way to effectively appeal an adverse ruling. Obviously, once the defendant’s case is tried the legality of his pretrial detention is mooted and the relief guaranteed by CPL 30.30 (subd. 2) would be academic on direct appeal from a judgment of conviction. Thus, the present situation is one where “[departure from traditional orderly proceedings, such as appeal, should be permitted ... by reason of practicality and necessity . . . .”

470 N.E.2d at 148. The New York courts continue to follow the rule announced in the Chakwin case. See, e.g., People ex rel. Zoli v. Warden, New York City Correctional Facility, 236 A.D.2d 643, 654 N.Y.S.2d 668 (A.D. 2 Dept. 1997); People ex rel. Greenstein v. Sheriff of Schenectady County, 220 A.D .2d 190, 645 N.Y.S.2d 339 (A.D. 3 Dept. 1996).

We hold that, when a pretrial detainee has moved in the trial court for his release under Rule 28.1(a), and that motion is denied, the detainee may then file in this Court a petition for habeas corpus seeking his or her release under that rule.

2. Ark. R. Crim. P. 28.1(a)

As to the merits of Mr. Simpson’s petition, we conclude the Circuit Court was correct in dechning Mr. Simpson’s motion to be released in accordance with Rule 28.1(a). The Rule requires a defendant “charged with an offense in circuit court and incarcerated in a city or county jail in this state pending trial” to be “released on his own recognizance if not brought to trial within nine (9) months from the time provided in Rule 28.2, excluding only such periods of necessary delay as are authorized in Rule 28.3.” According to Rule 28.2(a), the nine-month period commenced on June 20, 1997, the date of Mr. Simpson’s arrest. The nine-month period expired on March 20, 1998, and Mr. Simpson is still being detained in the Dallas County Jail and has not been brought to trial. Thus, “the burden is upon the State to show that the delay was the result of the defendant’s conduct or was otherwise justified.” Bradford v. State, 329 Ark. 620, 622, 953 S.W.2d 549, 550 (1997).

The State has satisfied its burden. Mr. Simpson has filed numerous pretrial motions, many of which are still under advisement in the Circuit Court. According to Rule 28.3(a), the time in which a pretrial motion is held under advisement, up to 30 days, may be excluded in computing the time for trial. See State v. McCann, 313 Ark. 286, 288-89, 853 S.W.2d 886, 888 (1993); Matthews v. State, 313 Ark. 327, 332, 854 S.W.2d 339, 342 (1993).

The Circuit Court determined that 68 days should be excluded from the speedy-trial calculation and charged against Mr. Simpson. The pretrial motions filed by Mr. Simpson appear in the record and are stamped with the date of their filing. Our own calculations based on the record indicate the Circuit Court was correct in excluding at least 68 days from the detention time for purposes of the rule. Mr. Simpson thus remains within the nine-month period that commenced on June 20, 1997, and his detention is not in violation of Rule 28.1(a).

Writ denied.

Arnold, C.J., Glaze, J., and Corbin, J., concur in part and dissent in part.

Tom Glaze, Justice,

dissenting in part; concurring in part. The per curiam is mistaken when it says Sedric Simpson could be entitled to a petition for writ of habeas corpus to determine if a speedy-trial violation occurred. He has had a proper hearing on that issue and was denied that relief. The record clearly reflects that, on September 5, 1997, Simpson was charged with two counts of aggravated robbery. The probable-cause affidavit averred that, during a store robbery, Simpson used a twelve-gauge shotgun to shoot two women to death. He admitted to another person that he had “just blown away two bitches.”

Based upon a finding of probable cause for detention, an Ark. R. Crim. P. 8.3 hearing was held where a judge determined that Simpson should be detained without bail. Subsequently, Simpson filed forty motions, seeking various forms of relief, finally ending with a speedy-trial motion on March 23, 1998 — about six months and seventeen days after he was charged, and nine months and three days from his arrest. At a hearing on April 7, 1998, the circuit court ruled, after considering Simpson’s numerous motions, that a minimum of sixty days were excluded and that no speedy-trial violation occurred.

In sum, the record clearly reflects the court had jurisdiction of this case and the order committing Simpson to incarceration is facially valid. For this reason alone, Simpson is not entitled to habeas corpus relief. See Sawyer v. State, 327 Ark. 421, 938 S.W.2d 843 (1997); Davis v. Reed, 316 Ark. 575, 873 S.W.2d 524 (1994). Neither would Simpson be entitled to a petition for writ of prohibition. He had a hearing on his speedy-trial motion before the circuit court, and the proof is abundantly clear that Simpson’s own actions were responsible for causing a delay of his trial. If Simpson has any relief in these circumstances, it is by an appeal from the circuit court’s ruling. Simpson’s filing a petition for writ of habeas corpus here is merely another example of needless delay caused by his own action. In fact, the record shows the circuit court has done all it can to get this case to trial, but its greatest obstacle in doing so has been the motions filed by Simpson.

In conclusion, I repeat the per curiam’s statement that the majority “found no case in which [the court] had considered the availability of the habeas corpus remedy to a pretrial detainee held in violation ofRule 28.1(a).” I strongly suggest the reason is because habeas corpus is inappropriate for all the reasons stated above. The per curiam opinion attempts to widen the effect of this ancient extraordinary writ to fit speedy-trial issues, and the writ’s purpose is much too narrow, as our case law has steadfastly held. Id. Thus, while I would deny habeas corpus relief in this case, I do so for reasons vastly different from those given in the per curiam.

Arnold, C.J., and Corbin, J., join this opinion.


author: W.H. “Dub” Arnold, Chief Justice.

text:
    Stephen MOORE v. ARKANSAS DEPARTMENT OF HUMAN SERVICES
    97-982
    969 S.W.2d 186
    Supreme Court of Arkansas
    Opinion delivered May 21, 1998

      Denny Hyslip, for appellant.

      Deborah Reagan, Office of Chief Counsel, for appellee Arkansas Department of Human Services.

      W. Marshall Prettyman, for appellee Guardian ad litem.

   W.H. “Dub” Arnold, Chief Justice.

This is a termination-of-parental-rights case. The appellant, Stephen Moore, is the parent of a son born on November 2, 1993. He appeals an order of the Juvenile Division of Washington County Chancery Court terminating his parental rights with respect to his son. We affirm the order of termination.

On April 6, 1994, appellant’s son, then five months old, was taken to the emergency room at Washington Regional Medical Center because he had stopped breathing. Both of his legs were broken. X-rays revealed that the child had a linear skull fracture, bilateral rib fractures, and a healed fracture of the upper arm. At the time, the child had been living with his mother, June Moore, and the appellant. A subsequent investigation resulted in both criminal and civil proceedings. The criminal proceeding resulted in the appellant’s conviction for first-degree battery, for which he was sentenced to twenty-eight years’ imprisonment. The civil proceeding, which is the subject of the present appeal, was initiated by the appellee, Arkansas Department of Human Services (“DHS”), which, in April of 1994, filed a petition for emergency custody of the child in the Juvenile Division of Washington County Chancery Court, asserting that the child was dependent-neglected as defined in Ark. Code Ann. § 9-27-303 (Repl. 1993). The chancery court entered an order granting DHS emergency custody of the child on April 11, 1994.

Following a hearing on May 23, 1994, the child was adjudicated dependent-neglected. Specifically, the chancery court determined that the child was the victim of “battered child syndrome” and “failure to thrive.” The chancery court approved the case plan developed by DHS. The stated goal of the case was the reunification and rehabilitation of the family. Ms. Moore was offered increased visitation with her son in accordance with her counselor’s recommendations. Both Ms. Moore and the appellant were ordered to submit affidavits of financial means, to comply with the case plan, and to sign any releases necessary for reports, evaluations, and counseling sessions so that they could be released to the court and all parties.

Following a review hearing on January 18, 1995, the chancery court entered an order on March 2, 1995, continuing custody of the child with DHS. While the chancery court found that the DHS, the child, and Ms. Moore were in compliance with the case plan, it concluded that the appellant was not in compliance with the plan. The court approved trial placement of the child with Ms. Moore, while ordering her to continue counseling.

After a review hearing on May 31, 1995, the chancery court entered an order on June 26, 1995, approving DHS’s case plan and the return of custody of the child to Ms. Moore. The chancery court found that Ms. Moore was in compliance with the case plan in that she had completed a psychological evaluation, had cooperated with DHS, was continuing weekly counseling, had signed releases, had maintained stable housing and employment for over six months, had allowed the caseworker into her home, had provided DHS with a copy of her financial earnings, had taken the child to a licensed day-care provider, and had provided DHS with a copy of her divorce decree. The court further determined that the appellant was not in compliance with the case plan or prior court orders in that he had failed to submit documentation of his psychological evaluation or counseling on the issue of child abuse, and that he had not met any objectives since he had begun serving his prison term. The chancery court ordered the appellant to participate and complete the case plan for which services were available at the prison facility.

On April 3, 1996, DHS filed a petition to terminate appellant’s parental rights. The petition stated that the child had been adjudicated dependent-neglected as a result of neglect and abuse that was perpetrated by the appellant, who had been sentenced in a criminal proceeding for a period of time that would constitute a substantial period of the child’s life. The petition further stated that the appellant had willfully failed to provide significant material support in accordance with his means, and that he had failed to maintain meaningful contact with the child. At a hearing on the petition, the appellant objected on the grounds that the Ark. Code Ann. § 9-27-341 (Supp. 1995), the termination-oTparental-rights statute, required the child to be in the custody of DHS.

Because custody of the child was with Ms. Moore, the appellant argued that DHS could not proceed to terminate his parental rights and that the Juvenile Division of Washington County Chancery Court had no jurisdiction to proceed. Over the appellant’s objection, the chancery court entered an order terminating the appellant’s parental rights on April 10, 1997. On this date, the chancery court entered a separate order allowing DHS to close its protective-services case and dismissing the action. This appeal followed.

At the time DHS filed its petition to terminate the appellant’s parental rights on April 3, 1996, the relevant statute, Ark. Code Ann. § 9-27-341 (Supp. 1995), provided in part that:

(b) The court may consider a petition to terminate parental rights if it finds that the Department of Human Services has physical or legal custody of the juvenile, and appropriate placement for the juvenile and the parent or parents, or putative parent, if the putative parent can be identified, have received actual or constructive notice of the hearing to terminate parental rights . . .

(Emphasis added.) However, prior to the entry of the chancery court’s order in the present case, the General Assembly amended § 9-27-341 by passing Act 1227 of 1997, which eHminated the requirement that DHS have physical or legal custody of the child before the chancery court could consider a petition filed by DHS to terminate parental rights. Section 9-27-341, as amended, provides in relevant part:

(a) This section shall be a remedy available only to the Department of Human Services or a court-appointed attorney ad litem. It shall not be available for private litigants or other agencies. It shall be used only in such cases when the Department of Human Services is attempting to clear a juvenile for permanent placement. The intent of this section is to provide permanency in a juvenile’s life in all instances where return of a juvenile to the family home is contrary to the juvenile’s health, safety, or welfare, and it appears from the evidence that return to the family home cannot be accomplished in a reasonable period of time.
(b) The court may consider a petition to terminate parental rights if there is an appropriate permanency placement plan for the juvenile. The petitioner shall provide the parent, parents, or putative parent(s) actual or constructive notice of a petition to terminate parental rights. An order forever terminating parental rights shall be based upon a finding by clear and convincing evidence:
(1) That it is in the best interest of the juvenile, including consideration of the following factors:
...
(B) The potential harm caused by continuing contact with the parent, parents, or putative parent;
(2) Of one (1) or more of the following grounds:
...
(F) The juvenile court has found the juvenile victim dependent-neglected as a result of neglect or abuse that could endanger the life of the child, sexual abuse, or sexual exploitation, and which was perpetrated by the juvenile’s parent or parents. Such findings by the juvenile court shall constitute grounds for immediate termination of the parental rights of one (1) or both of the parents;
...
(H)(1) The parent is sentenced in a criminal proceeding for a period of time which would constitute a substantial period of the juvenile’s life and the conditions in subdivision (b)(2)(A) or (B) of this section have also been established.

(Emphasis added.) Act 1227 of 1997 was signed into law by the Governor on April 7, 1997. The Act contained an emergency clause and thus became effective on April 7, 1997. The chancery court’s order terminating the appellant’s parental rights was filed on April 10, 1997, after the new Act became effective. Thus, as the new Act was in effect at the time the appellant’s parental rights were terminated, we must reject his argument that DHS was required to have physical or legal custody of the child in order to proceed under § 9-27-341.

Even if we were to agree with the appellant’s argument, we would affirm due to our conclusion that DHS in fact had legal custody of the child until the chancery court dismissed DHS’s case on April 10, 1997. The statute in question, § 9-27-341, must be read in harmony with Ark. Code Ann. § 9-27-338 (Supp. 1997), which mandates a permanency planning hearing, providing in pertinent part that:

(a) Twelve (12) months after the date the juvenile enters an out-of-home placement as defined by § 9-27-303(26), or earlier if ordered by the court, the court shall hold a permanency planning hearing in order to enter a new disposition in the case. At the hearing, based upon the facts of the case, the court shall enter one (1) of the following dispositions in accordance with the best interests of the juvenile:
(I) Return the juvenile to the parent, guardian, or custodianf.]

(Emphasis added.) Under § 9-27-341 (b), a chancery court may only consider a petition to terminate parental rights “if there is an appropriate permanency placement plan” for the juvenile. The “appropriate permanency placement plan” utilized by DHS in the present case was the return of the child to the mother, June Moore. This plan is among those listed in § 9-27-338. In our view, DHS continued to have legal custody of the child in the present case until April 10, 1997, when the chancery court entered an order permitting DHS to close its protective-services case and dismissed the action.

We conclude that the chancery court appropriately found clear and convincing evidence that the child was dependent-neglected as a result of abuse that was perpetrated by the appellant, who had been sentenced in a criminal proceeding for a period of time that would constitute a substantial period of the child’s life. Based on the foregoing, we affirm the termination of parental rights.

Affirmed.