text:
    Harold THOMPSON and Donna Thompson v. CITY of SILOAM SPRINGS, Arkansas
    97-626
    969 S.W.2d 639
    Supreme Court of Arkansas
    Opinion delivered May 28, 1998

      Woodruff Law Firm, by: Marsha C. Woodruff, for appellants.

      Harrington, Miller & Neihouse, P.A., by: Stephen D. Stitt, Wayne Krug, and William F. Merlins, Jr., for appellee/crossappellant.
   W.H. “Dub” Arnold, Chief Justice.

The appellants, Harold Thompson and Donna Jean Thompson, as husband and wife, filed a suit for inverse condemnation against the appellee, City of Siloam Springs. The Thompsons owned and operated a sale barn that caught fire on July 10, 1994. In their complaint and amended complaint, the Thompsons alleged that the Siloam Springs Fire Department breached its duty to respond quickly and appropriately to the fire and intentionally pulled down the walls of the barn’s office, which resulted in a major portion of the structure being destroyed. The Thompsons further alleged that the City arbitrarily and without just cause refused to grant their request for a permit to rebuild and rezone the property and continue their livestock auction business. According to the Thompsons, these actions amounted to a “taking” of their property in violation of Ark. Const, art. 2, § 22. In their prayer for relief, the Thompsons sought damages against the City, including punitive damages, in the amount of $1,600,000.00. They appeal an order of the Benton County Circuit Court granting summary judgment in the City’s favor. The City cross appeals the denial of their request for attorney’s fees. We affirm.

The facts as set out in the Thompsons’ complaint and amended complaint are as follows. Prior to the July 10, 1994, fire, the Thompsons had owned and operated their livestock auction business at 1007 West Tulsa Street for some eighteen years. During this time, the City’s zoning board rezoned the property, but permitted the Thompsons to continue to operate the sale barn as a nonconforming use. In late 1993 and early 1994, the Thompsons had negotiated with the City to sell their 6.74 acres and the sale barn. Five days before the fire, the city directors had discussed the proposed purchase of the sale barn at their board meeting. On the night of the fire, emergency telephone calls were made to the fire department at approximately 9:00 p.m.; however, no fire trucks arrived at the scene for more than twenty minutes, and no water was put on the fire for almost thirty minutes, even though the fire department was located only twelve blocks away. During the final stages of the fire, the firefighters pulled the walls of the office portion of the sale barn to the ground.

Following the fire, the City’s zoning board refused to grant the Thompsons’ request for a budding permit to rebuild or to rezone the sale-barn property. In addition to their claims for inverse condemnation, negligence, and “intentional acts and omissions,” the Thompsons claimed, in their original complaint filed in Benton County Circuit Court, that the City’s acts and omissions violated their civil rights under 41 U.S.C. § 1983 and their rights under the Fourth and Fourteenth Amendments to the United States Constitution. On the City’s motion, the case was moved to the United States District Court for the Western District of Arkansas. After the Thompsons amended their complaint removing the federal causes of action, both parties agreed to remove the case to state court.

Following discovery, the City filed a motion for summary judgment. On February 19, 1997, the trial court entered an order granting the motion. Specifically, the trial court found that Ark. Code Ann. § 21-9-301 (Repl. 1996) barred the Thompsons’ negligence claim due to the City’s lack of liability insurance. Regarding their inverse-condemnation claim, the trial court concluded that the Thompsons were required to prove an intentional taking by the City amounting to a substantial deprivation for a public benefit. The Thompsons’ proof, according to the trial court, did not include evidence of repeated conduct or a history of action or inaction on the part of the fire department or other City officials. The trial court further found that the City was not hable for the firefighters’ alleged acts of “intentionally letting the Thompsons’ property burn down, causing it to burn down, knocking walls in,” absent some proof that the firefighters were acting pursuant to an order or written or implied City policy or directive. It was the trial court’s conclusion that the Thompsons failed to meet the City’s proof with their own proof that such a policy existed, as the City presented affidavits of the Fire Chief and City Administrator denying the existence of such a policy to take or devalue the Thompsons’ property. Furthermore, the trial court determined that the Thompsons had failed to show a substantial deprivation, as they had failed to appeal the zoning commission’s denial of their application to rebuild. Finally, the trial court found that the Thompsons failed to prove that their alleged taking resulted in a public benefit, concluding that “[t]he general feeling that the City would be better and more beautiful without a sale barn operating in the middle is not material or real enough to go to the jury.” The Thompsons now appeal this order.

Direct appeal Summary judgment

The Thompsons do not challenge the trial court’s ruling that their negligence claim against the City is barred by § 21-9-301. Rather, they claim that fact questions exist regarding whether the City’s intentional acts and omissions amounted to a taking of their property. Particularly, the Thompsons claim that fact questions exist with respect to (1) whether they negotiated with the City for the sale of their property prior to the date of the fire; (2) whether there was an intentional delay in the fire department’s response to 911 calls; and (3) whether the fire department attempted to save the building. The Thompsons further assert that the trial court improperly decided fact questions and mixed questions of law and fact when making its determination that no taking occurred.

We have often stated the guidelines under which we review the granting of motions for summary judgment:

Summary judgment should be granted only when it is clear that there is no genuine issue of material fact to be litigated. Kelley v. National Union Fire Ins. Co., 327 Ark. 329, 937 S.W.2d 660 (1997). A summary judgment should not be granted when reasonable minds could differ as to the conclusions they could draw from the facts presented. Brunt v. Food 4 Less, Inc., 318 Ark. 427, 885 S.W.2d 894 (1994). The burden of proving there is no genuine issue of material fact is upon the movant, and all proof submitted must be viewed favorably to the party resisting the motion. Wyatt v. St. Paul Fire & Marine Ins., 315 Ark. 547, 868 S.W.2d 505 (1994). Any doubts and inferences must be resolved against the moving party. Kelley v. National Union Fire Ins. Co., 327 Ark. 329, 937 S.W.2d 660 (1997). When the movant makes a prima facie showing of entitlement, the respondent must meet proof with proof by showing a genuine issue of material fact. Brunt v. Food 4 Less, Inc., 318 Ark. 427, 885 S,W.2d 894 (1994).

Wilson v. J. Wade Quinn Co., 330 Ark. 306, 308, 952 S.W.2d 167 (1997). We have further emphasized that allegations in a complaint are not proof for summary judgment purposes. Country Corner Food & Drug, Inc. v. First State Bank and Trust, 332 Ark. 645, 966 S.W.2d 894 (1998); Wheeler v. Phillips Development Corp., 329 Ark. 354, 947 S.W.2d 380 (1997); Porter v. Harshfield, 329 Ark. 130, 948 S.W.2d 83 (1997); Guthrie v. Kemp, 303 Ark. 74, 793 S.W.2d 782 (1990).

Regarding the Thompsons’ claim for inverse condemnation, we discussed this cause of action in National By-Products v. City of Little Rock, 323 Ark. 619, 916 S.W.2d 745 (1996):

Article 2, section 22 of the Arkansas Constitution provides that “[t]he right of property is before and higher than any constitutional sanction; and private property shall not be taken, appropriated or damaged for public use, without just compensation therefor.” We have interpreted this provision to require compensation for a taking when a municipality acts in a manner which substantially diminishes the value of a landowner’s land, and its actions are shown to be intentional. Robinson v. City of Ashdown, 301 Ark. 226, 783 S.W.2d 53 (1990). A conspectus of the law on inverse condemnation is as follows:
As originally conceived and developed, the concept of inverse condemnation was a remedy for physical taking of private property without following eminent domain procedures. “Fault” has nothing to do with eminent domain, and it is not bare trespass or negligence which results in inverse condemnation but something which amounts to a de facto or common law “taking.” J. Sackman & P. Rohan, Nichols on Eminent Domain, 8.1[4] (Rev. 3d ed. 1985, Supp. 1987). Inverse condemnation is thus a cause of action against a governmental defendant to recover the value of property which has been taken in fact by a governmental entity although not through eminent domain procedures.

323 Ark. at 624, quoting Robinson v. City of Ashdown, 301 Ark. 226, 230, 783 S.W.2d 53 (1990).

In support of their argument, the Thompsons cite the Robinson case, which involved the City of Ashdown’s prolonged failure to remedy a sewage overflow onto the Robinson’s property. Concluding that the continuing trespass or nuisance onto the Robinson’s land continued long after the City of Ashdown was put on notice of it, we held that the Robinsons had stated a case for inverse condemnation under Ark. Const. art. 2, § 22:

We want it to be clear that our holding here is based on Ark. Const. art. 2, § 22, which provides, “The right of property is before and higher than any constitutional sanction; and private property shall not be taken, appropriated or damaged for public use, without just compensation therefor.” When a municipality acts in a manner which substantially diminishes the value of a landowner’s land, and its actions are shown to be intentional, it cannot escape its constitutional obligation to compensate for a taking of property on the basis of its immunity from tort action.

While we have not provided a definitive statement of what constitutes a taking, we have noted the following definition in City of Fayetteville v. Stanberry, 305 Ark. 210, 214, 807 S.W.2d 26 (1991):

A taking is described as damage that will substantially oust the owner and deprive him of all beneficial enjoyment thereof; will substantially abridge the owner’s rights to such an extent as to deprive him of his right; will be an interference with or disturbance of property rights resulting in injuries which are not merely consequential or incidental; a taking is determined by the character of the invasion and not by the amount of damage resulting from it, as long as the damage is substantial.

See 26 Am. Jur. 2d Eminent Domain 157, What Constitutes a Taking (and cases cited therein) (1966 and Supp. 1990).

As the trial court correctly concluded, the Thompsons’ proof does not support their claim for inverse condemnation. While the Thompsons offered proof that they entered into negotiations with the City for the sale of their property prior to the fire, we have held that mere plotting or planning in anticipation of an improvement does not constitute a taking where the government has not imposed a restraint on the use of the property. National By-Products v. City of Tittle Rock, 323 Ark. at 626. Although the Thompsons submitted proof, through the affidavits of Jeff Rich, April Rich, Larry Anderson, Darren Holland, and Deputy Fire Chief David Williams, and the fire department’s records, that there was a delay in the response to the telephone calls reporting the fire, this evidence, when taken as true, does not demonstrate that the firefighters acted with malice or intentionally failed in their duties to attempt to extinguish the fire. While these facts would present a jury question on the issue of negligence, the Thompsons have not appealed the trial court’s ruling that a claim of negligence is barred by §21-9-301.

The Thompsons further claim that there is a fact question as to whether the fire department attempted to save the building. In support of this claim, the Thompsons refer to Mr. Anderson’s affidavit, in which he claims that the firefighters did not spray the roof of the barn until it had already fallen. They also point to Mr. Thompson’s affidavit, in which he asserts that, when the fire “rekindled” the following morning, the firefighter who arrived at the scene was “upset” and stated, “Let the damned thing burn down,” as well as City Administrator Mark Latham’s statement that “the City has taken [Mr. Thompson] out of business.” The Thompsons further question why their check writer came into the possession of the fire department and why firefighters tore down the walls of the building while fighting the blaze. None of this evidence, however, when viewed in a light most favorable to the Thompsons, supports a claim that the City damaged the Thompson’s barn in such a way as to substantially oust them and deprive them of ail beneficial enjoyment of their property. Mr. Thompson’s affidavit, in which he states that an investigation concluded that the fire was caused by an electrical problem in the thermostat, was controverted. Unlike Robinson v. City of Ashdown, supra, in which the plaintiffs there demonstrated that the City’s failure to remedy a prolonged sewage flooding problem substantially reduced the value of their home, there was evidence in the present case that the Thompsons continue to use the property and have operated a lumber sales business on the site since May of 1995. See City of Fort Smith v. Anderson, 241 Ark. 824, 410 S.W.2d 597 (1967) (reversing a jury award resulting from a single sewage overflow into the landowners’ home that was a onetime occurrence.)

Finally, the Thompsons have failed to offer proof that the City received some public benefit. See Barrett v. Poinsett County, 306 Ark. 270, 811 S.W.2d 324 (1991). While the Thompsons claim that City regarded their barn as a nuisance, the uncontroverted affidavits of both City Administrator Mark Latham and Mayor Moose Van Poucke demonstrated that the City received no such benefit. Simply put, the Thompsons have not shown that the City ever took possession of their property. See National By-Products v. City of Little Rock, supra. Moreover, the decision to deny the Thompsons a permit to rebuild the sale barn was that of the City’s zoning commission. The Thompsons failed to exhaust their administrative remedies when they chose not to appeal the commission’s decision. See Regional Health Care Facilities, Inc. v. Rose Care, Inc., 322 Ark. 780, 912 S.W.2d 406 (1995). We conclude that, on the proof submitted, any damages sustained by the Thompsons were insufficient to support an action for inverse condemnation. When viewing the proof submitted in a light most favorable to the Thompsons, we cannot say that the City’s actions constituted a taking of the Thompsons’ property.

Cross appeal Denial of attorney’s fees

On cross-appeal, the City claims that the trial court erred in failing to award it attorney’s fees. As a general rule, attorney’s fees are not allowed in Arkansas unless expressly authorized by statute. Wynn v. Remet, 321 Ark. 227, 902 S.W.2d 213 (1995). However, in any civil action in which the court having jurisdiction finds that there was a complete absence of a justiciable issue of either law or fact raised by .the losing party or his attorney, the court may award an attorney’s fee in an amount not to exceed $5,000, or ten percent of the amount in controversy. Id.

The relevant statute, Ark. Code Ann. §16-22-309 (Repl. 1994), provides in pertinent part:

(a) (1) In any civil action in which the court having jurisdiction finds that there was a complete absence of a justiciable issue of either law or fact raised by the losing party or his attorney, the court shall award an attorney’s fee in an amount not to exceed five thousand dollars ($5,000), or ten percent (10%) of the amount in controversy, whichever is less, to the prevailing party unless a voluntary dismissal is filed or the pleadings are amended as to any nonjusticiable issue within a reasonable time after the attorney or party filing the dismissal or the amended pleadings knew, or reasonably should have known, that he would not prevail.
***
(b) In order to find an action, claim, setoff, counterclaim, or defense to be lacking a justiciable issue of law or fact, the court must find that the action, claim, setoff, counterclaim, or defense was commenced, used, or continued in bad faith solely for purposes of harassing or maliciously injuring another or delaying adjudication without just cause or that the party or the party’s attorney knew, or should have known, that the action, claim, setoff, counterclaim, or defense was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification, or reversal of existing law.

From our review of the record, we cannot say that the trial court abused its discretion in disallowing fees under this standard. While the Thompsons’ counsel was in error in asserting that the facts supported a claim for inverse condemnation, there was nothing to indicate that this argument was made in bad faith or that it was made solely for the purpose of harassing or of maliciously injuring the City. See e.g., Lawson v. Sipple, 319 Ark. 543, 893 S.W.2d 757 (1995). Under these circumstances, we affirm the trial court’s denial of the City’s request for attorney’s fees.

Affirmed.


source: Caselaw Access Project

author: David Newbern, Justice.

license: Public Domain

text:
    B.J. McADAMS v. Melvin ELLINGTON
    97-917
    970 S.W.2d 203
    Supreme Court of Arkansas
    Opinion delivered May 28, 1998

      Appellant, pro se.

      Marcus Vaden and Ron Tullos, for appellee.
   David Newbern, Justice.

This case involves B.J. McAdams’s claims against four separate parties: 1) Alma Lee McAdams, 2) Loyd Stanley and Stanley Jewelers Gemologist (“Stanleys”), 3) Keith Mittledorf, and 4) Melvin Ellington. All of the claims arise from property ownership disputes and other matters that have been the subjects of marital litigation between Mr. McAdams and Alma Lee McAdams. The Chancellor found that Mr. McAdams had no rights in the items at issue. We affirm the Chancellor’s decision with respect to the claims against the Stanleys, but we must reverse as to the claims against the other defendants.

B.J. and Alma Lee McAdams married in 1976. When they divorced in 1985, they entered a property-settlement agreement. That agreement is not included in Mr. McAdams’s abstract of the record, but undisputed testimony indicated that Ms. McAdams received a 1979 Lincoln, real property in North Little Rock, a diamond necklace, and a diamond ring pursuant to the agreement. In 1989, B.J. and Alma McAdams remarried.

In 1993, the McAdamses again divorced and entered a second property-settlement agreement in which Ms. McAdams agreed to return the diamond ring to Mr. McAdams. They also agreed that Mr. Vaden, an attorney apparently representing both parties, would retain custody of the ring. Later that year, they joindy petitioned, again represented by Mr. Vaden, for annulment of the divorce decree.

Later, Mr. McAdams filed a claim against Ms. McAdams and Mr. Ellington in which he alleged that conveyances that Ms. McAdams made to third parties were void because he had rights to the conveyed property. In particular, he alleged that Ms. McAdams’s conveyance of real property to herself and Mr. Ellington was void because it violated his homestead and curtesy rights. He also alleged that Ms. McAdams’s conveyances to Mr. Ellington of the 1979 Lincoln and a diamond from the diamond necklace were void because they were marital assets. Mr. McAdams alleged that Ms. McAdams’s conveyance of three diamonds from the ring to the Stanleys was void because he and Ms. McAdams agreed to honor the 1993 property-settlement agreement pursuant to which he retained a property interest in the diamonds.

Mr. McAdams also alleged that Keith Mittledorf purchased the diamonds from the Stanleys, and he sought an order requiring that Mr. Mittledorf return the diamonds to him or, in the alternative, restitution. Ms. McAdams argued that she owned both the real property and the personal property based on the 1985 property-settlement agreement.

1. The Stanleys

In his second amended complaint, Mr. McAdams alleged that the Stanleys were liable for fraud pursuant to Title 18, Ark. Code Ann., and the Arkansas Fraudulent Conveyance Act, Ark. Code Ann. §§ 4-59-201 through 4-59-207 (Repl. 1996) because they purchased three diamonds from Ms. McAdams for less than their appraised value, without asking for proof of ownership, and replaced the diamonds with cubic zirconia. Mr. McAdams also alleged that he wrote the Stanleys seeking restitution, and they refused. Mr. McAdams asked for $40,000, referred to as “restitution” at one point and as “damages” at another, and $80,000 in punitive damages on the ground that the fraud was willful. Mr. McAdams argues that the Chancellor erred in dismissing his claim for fraud and fraudulent conveyance against the Stanleys. We affirm on this point.

The Stanleys moved to dismiss the complaint on the ground that it did not meet the requirements of Ark. R. Civ. P. 9(b) which requires statement of the circumstances constituting fraud with particularity. The Stanleys also argued that the Chancellor lacked jurisdiction to hear a claim for monetary damages, citing Ark. R. Civ. P. 12(h)(3). After hearing oral arguments regarding the Stanleys’ motion, the Chancellor granted the motion and dismissed the complaint without stating the basis for the ruling.

Mr. McAdams argues that his complaint against the Stanleys alleges specific facts constituting fraud. We disagree and hold that even if jurisdiction in chancery court was proper, the Chancellor properly dismissed the second amended complaint because Mr. McAdams failed to allege the circumstances constituting the fraud claim with particularity. See Ark. R. Civ. P. 9(b).

To establish fraud, a plaintiff must show: (1) a false representation of 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 rebanee upon the representation; (4) justifiable reliance upon the representation; and (5) damage suffered as a result of the reliance. Scollard v. Scollard, 329 Ark. 83, 947 S.W.2d 345 (1997). Mr. McAdams did not allege facts sufficient to satisfy those elements.

As to Mr. McAdams’s allegation that the conveyance was fraudulent pursuant to the Arkansas Fraudulent Conveyance Act, Ms. McAdams’s sale of diamonds to the Stanleys clearly does not constitute a fraudulent conveyance as described in Ark. Code Ann. § 4-59-204 because Mr. McAdams is not a creditor of Ms. McAdams.

2. Mr. Mittledorf

Mr. McAdams argues that the Trial Court erred in dismissing his motion for a default judgment against Keith Mittledorf, who allegedly bought the diamonds from the Stanleys. In his fourth amended complaint, Mr. McAdams alleged that the Stanleys sold the diamonds that they bought from Ms. McAdams to Mr. Mittledorf. Mr. McAdams asked that the Chancellor order Mr. Mittledorf to turn over the diamonds to him, or, in the alternative, pay restitution. On November 19, 1996, Mr. McAdams moved for default judgment against Mr. Mittledorf based on his alleged failure to file a timely answer.

Mr. McAdams alleged that service via certified mail, restricted delivery requested, was attempted on Mr. Mittledorf who refused delivery. He alleged that he filed the return of summons with the refused returned envelope attached. He also alleged that he mailed a cover letter with a copy of the complaint, summons, and interrogatories by first class mail to Mr. Mittledorf at his residence. He alleged that the envelope was opened and returned to him. Attachments to the motion included the amended summons with the envelope stamped “return” and marked “refused,” and the cover letter with the envelope marked “refused, return to sender.”

Arkansas R. Civ. P. 4(d)(8) states, in part, as follows:

Service pursuant to this paragraph shall not be the basis for the entry of a default or judgment by default unless the record contains a return receipt signed by the addressee or the agent of the addressee or a returned envelope, postal document or affidavit by a postal employee reciting or showing refusal of the process by the addressee. If delivery of mailed process is refused, the plaintiff or attorney making such service, promptly upon receipt of notice of such refusal, shall mail to the defendant by first class mail a copy of the summons and complaint and a notice that despite such refusal the case will proceed and that judgment by default may be rendered against him unless he appears to defend the suit. Any such default or judgment by default may be set aside pursuant to Rule 55(c) if the addressee demonstrates to the court that the return receipt was signed or delivery was refused by someone other than the addressee.

The Chancellor denied the motion because Mr. McAdams did not have a document establishing that the service was refused specifically by Mr. Mittledorf. Mr. McAdams’s exhibits satisfied Rule 4; thus, we reverse on this point.

3. Mr. Ellington and Ms. McAdams

In his motion to disqualify Mr. Vaden as the attorney for Ms. McAdams and Mr. Ellington, Mr. McAdams contended that Mr. Vaden represented both McAdamses in preparing and filing the 1993 property-settlement agreement and the annulment of the divorce decree. He also contended that Mr. Vaden accepted fees pursuant to that representation from both parties and was made custodian of the diamond ring at issue for a period of time. It was also alleged that Mr. Vaden acted as attorney for Ms. McAdams and Mr. Ellington in preparing and filing the real-property deed and represented Mr. Ellington and Ms. McAdams in other actions involving Mr. McAdams as a party.

Attached to the disqualification motion were several exhibits including (1) the 1993 property-settlement agreement, (2) the 1993 joint petition for annulment of decree of divorce which was submitted and signed by Mr. Vaden, (3) a letter from Mr. Vaden to Ms. McAdams indicating that he represented her in the annulment of the divorce, (4) a 1993 check written by Mr. McAdams to Mr. Vaden, (5) a 1994 warranty deed from Alma Lee McAdams to herself and Melvin Glenn Ellington with the words “Prepared By Marcus Vaden” written at the bottom, and (6) a 1995 letter from Mr. Vaden to Mr. McAdams enclosing a file-marked copy of Ms. McAdams’s and Mr. Ellington’s answer to Mr. McAdams’s complaint.

In his order denying Mr. McAdams’s motion, the Chancellor simply stated that Mr. McAdams faded to show that a conflict existed. The exhibits to the motion for disqualification are sufficient for us to conclude that the Chancellor was in error.

In Nance v. Ark. Dep’t of Human Servs., 316 Ark. 43, 870 S.W.2d 721 (1994), we stated that even though the Model Rules are designed to regulate the practice of law, and to provide a mechanism for disciplining attorneys and not to form the basis of substantive law decisions, we cite the Model Rules from time to time as having an effect on the outcome of litigation. Rule 1.9(a) of the Model Rules of Professional Conduct states as follows:

A lawyer who has formerly represented a chent in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interest are materially adverse to the interests of the former chent unless the former chent consents after consultation.

“The underlying question is whether the lawyer was so involved in the matter that the subsequent representation can be justly regarded as a changing of sides in the matter in question.” Model Rule 1.9, cmt. 2.

An attorney is disqualified from representing a party in an in an adversary proceeding when,

(1) the moving party was previously represented by the attorney whose disqualification he now seeks; (2) the matters embraced within the pending suit are substantially related to the matters or the cause of action for which the attorney previously represented the moving party; and (3) the attorney is representing an adversary of the movant party in the pending suit. [Emphasis in original.]

Gipson v. Brown, 288 Ark. 422, 431, 706 S.W.2d 369, 374 (1986) (quoting Heathcoat v. Santa Fe Internat’l Corp., 532 P.Supp. 961 (E.D. Ark. 1982)) (remanding to the chancellor with instructions to conduct a hearing to determine whether our statutes override the religious doctrine, polity or practice of the church as protected by the federal and state constitutions). See Gipson v. Brown, 295 Ark. 371, 749 S.W.2d 297 (1988) (dismissing the appeal on the basis that an examination of the issues on appeal resulted in the “impermissible entanglement of this court in ecclesiastical matters”). In Martindale v. Richmond, 301 Ark. 167, 782 S.W.2d 582 (1990), we upheld a determination of our Committee on Professional Conduct that Model Rule 1.9 was violated by an attorney who represented one party in a divorce proceeding that was ultimately dismissed and then later represented the other party in seeking an increase in child-support payments after the parties were divorced even though the attorney did not represent either party in the suit in which they were divorced.

Mr. Vaden represented both Mr. and Ms. McAdams in their 1993 joint petition for the annulment of their divorce decree. There is also evidence to support Mr. McAdams’s allegation that Mr. Vaden represented both parties in their 1993 property-settlement agreement and divorce decree because Mr. Vaden is named as the custodian of personal property referred to in the agreement. Both the 1993 property-settlement agreement and the subsequent divorce annulment are substantially related to the present lawsuit, which concerns, in part, the parties’ rights to personal property that was the subject of the 1993 agreement. The substantial relationship is also implicated in Mr. McAdams’s argument that he has ownership rights in personal property at issue because he and Ms. McAdams later agreed to honor the 1993 property-settlement agreement.

Although Mr. McAdams’s claim to the real property conveyed by Ms. McAdams to herself and Mr. Ellington is based on homestead and curtesy rights rather than the 1993 property-settlement agreement, there is an appearance of impropriety in Mr. Vaden’s representation of Mr. Ellington and Ms. McAdams against Mr. McAdams in this matter. Likewise, there is an appearance of impropriety in Mr. Vaden’s representation of Ms. McAdams against Mr. McAdams’s claim that she maliciously prosecuted him in retaliation for his posting of eviction notices to the tenants at the rental property that he claimed an interest in based on homestead and curtesy rights.

There is no evidence of an intent on Mr. Vaden’s part to use against Mr. McAdams confidences or information from the prior instances in which he represented both parties. Nevertheless, we cannot countenance the subsequent representation of Ms. McAdams by Mr. Vaden because of the appearance of impropriety. See Martindale v. Richmond, 301 Ark. 167, 782 S.W.2d 582; Berry v. Saline Memorial Hosp., 322 Ark. 182, 907 S.W.2d 736 (1995) (stating we continue to recognize the “appearance of impropriety” standard in disqualification cases).

Affirmed in part; reversed and remanded in part.

Imber, J., not participating.


author: Tom Glaze, Justice.

text:
    Travis HAMILTON and Holly Hamilton, Jimmy Martin and Dortha Martin, Gary Adair and Belinda Adair, Doyle Claypool and Anne Claypool, Thelbert Hamilton and Ima Hamilton, Sharon Hejna, and Douglas Martin v. ARKANSAS POLLUTION CONTROL & ECOLOGY COMMISSION
    97-900
    969 S.W.2d 653
    Supreme Court of Arkansas
    Opinion delivered May 28, 1998

      McMath, Vehik, Drummond & Harrison, P.A. by: Samuel E. Ledbetter, for appellants.

      W. Martin Eisele, Jr., for appellee.
   Tom Glaze, Justice.

This appeal is from the Yell County Circuit Court’s decision, affirming the Arkansas Pollution Control & Ecology Commission’s August 23, 1996 Minute Order No. 96-43, which granted Fred Hale’s application and permit to operate a liquid animal-waste-disposal system designed to service a “nursery-pig” type hog farm. On March 26, 1993, the Commission had previously denied a similar application by Hale under Minute Order No. 93-34, but that application involved a “swine-finishing” or “adult” hog farm. On the same March 26, 1993 date, the Commission also entered Minute Order No. 93-55, which provided the Commission’s decision denying Hale’s application did “not bar any subsequent application by [Hale].” No one appealed either the 93-34 or the 93-55 order.

The appellants, concerned citizens and residents of the community where Hale’s hog farm is to be situated, appeal the Commission’s Order No. 96-43, which granted Hale’s second application. Appellants assert that, in applying the doctrine of res judicata and collateral estoppel, the Commission’s prior Minute Order No. 93-34 constituted an absolute bar to Hale’s second action, since the second claim was the same as Hale’s first. In short, appellants argued before the Commission and on appeal to the circuit court that the Commission’s earlier Minute Order No. 93-34, denying Hale’s initial application, became final under Ark. Code Ann. § 8-4-213 (1993), because Hale failed to appeal from that order, and the doctrine of res judicata precluded Hale and the Arkansas Department of Pollution & Ecology from reopening the decision. The Commission, and the circuit court on appeal, rejected the appellants’ contention. Appellants continue their same res judicata argument in their appeal to us. We affirm.

When reviewing administrative decisions, we uphold such decisions if they are supported by substantial evidence and are not arbitrary, capricious, or characterized by an abuse of discretion. Moreover, the appellate courts direct their review toward the agencies’ decisions because such agencies are better equipped by specialization, insight through experience, and more flexible procedures than courts, to determine and analyze legal issues affecting their agencies. See Enviroclean, Inc. v. Arkansas Pollution Control & Ecology Comm’n, 314 Ark. 98, 858 S.W.2d 116 (1993). To be invalid as arbitrary or capricious requires that the Commission’s decision lacks a rational basis or relies on a finding of fact based on an erroneous view of the law. Id.

In arguing the doctrine of res judicata prohibits the Pollution Control & Ecology Commission from considering whether to issue Hale a permit for a disposal system for the same location the Commission previously denied in Order 93-34, appellants cite Gurley v. Mathis, 313 Ark. 412, 856 S.W.2d 616 (1993). The Gurley holding, however, gives us little insight in resolving the instant dispute, other than the Gurley court’s discussion of res judicata which was found inapplicable to the facts there. In short, the United States Environmental Protection Agency (EPA) brought suit against Gurley Refining Co. to enforce certain environmental actions provided for under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). During the pendency of the federal action, the State Department of Pollution Control & Ecology resolved its differences with the EPA and the State Department and its Commission ordered the Gurley Refining site to be added to Congress’s Remedial Action Trust Fund (RATF) Priority List. The State’s action permitted it to expend monies from the State’s Hazardous Substance Remedial Action Trust Fund to help pay for the monitoring and maintenance of the Gurley site. Gurley Refining Co. appealed the State’s decision to add Gurley’s waste site to the RATF Priority List. The State Pollution Control & Ecology Commission argued Gurley’s claims were barred by res judicata, since the federal district court ruled on the same issues as Gurley raised in its state appeal. Our court set out the rule that res judicata bars relitigation of a subsequent suit when (1) the first suit resulted in a final judgment on the merits, (2) the first suit was based upon proper jurisdiction, (3) the first suit was fully contested in good faith, (4) both suits involve the same claim or cause of action, and (5) both suits involve the same parties or their privies. Id. at 424. The Gurley court conceded that the federal district court decision did not bar Gurley’s action because both actions did not involve the same parties or their privies, although some of the same issues had been previously litigated.

Appellants argue that res judicata does apply to the facts here because each of the five elements fisted above are present. They submit that the Commission agrees that four of the foregoing elements exist, but disagrees that element four is present. Unlike the appellants, the Commission asserts Hale’s second application involves a different claim than the one made in his first application.

We first should say that we agree that, when an administrative board or commission acts judicially or quasi-judicially, its decision may be res judicata in a second proceeding involving the same question. See North Hills Memorial Gardens v. Simpson, 238 Ark. 184, 381 S.W.2d 462 (1964); Earp v. Benton Fire Dep’t, 52 Ark. App. 66, 914 S.W.2d 781 (1996). Our court has related, however, that it is not convinced that all the technical rules that make up the common-law doctrine of res judicata should apply with equal force to administrative proceedings. Simpson, 238 Ark. at 185, 381 S.W.2d at 464. In the way of explanation, the Simpson court stated the following:

[A] decision at common law is conclusive not only of those matters that were actually litigated, but also of those questions that were within the issues and might have been explored. The rule ought not to apply to the decision of a law body such as the Cemetery Board. Rest Hill’s original application was denied on one ground only. At the second hearing the board considered additional matters, including the accessibility of the Rest Hills site, its beauty as compared to that of North Hills, and the various facilities that Rest Hills means to provide. A chapel, a mausoleum, and a crematory were included in the applicant’s long-range plans. An important consideration is “the need or desirability from the public standpoint of the proposed cemetery.” If there is really a need for the proposed cemetery, as the board found, then the public interest should not be thwarted merely because Rest Hills did not present all its available evidence at the first hearing. The plea of res judicata was correctly rejected.

238 Ark. at 186, 381 S.W.2d at 464. In accord with our rule in Simpson, other jurisdictions have held that res judicata will apply only if the second application is not supported by new facts, changed conditions, or additional submissions by the applicant. See Thomson v. Dept. of Environmental Reg., 511 So.2d 989 (Fla. 1987); see also Whelden v. Board of County Com’rs, 782 P.2d 853 (Colo. App. 1989) (the doctrine of res judicata may be applied to an administrative proceeding in a proper case, but when substantial changes in facts or circumstances occur subsequent to the earlier hearing, the doctrine is not applicable).

Appellant’s argument tends to ignore Order 93-55, which specifically directed that the Commission’s Order 93-34 did not bar any subsequent application. Moreover, as mentioned earlier, appellants never appealed 93-55, perhaps because 93-55 appears consistent with Ark. Code Ann. § 8-4-213(b), which allows the Commission to modify or rescind its actions. Section 8-4-213(b), too, seems quite consistent with this court’s declaration in Simpson that, in some circumstances, additional matters not previously considered could be offered in a second application.

The major error in appellants’ argument is that they wish to diminish the fact that Hale’s second application relates to a different business or operation, albeit located at the same proposed site as was provided in Hale’s first application. Also, appellants fail to acknowledge the significance of the fact that, after the Commission denied Hale’s original application, the Commission promulgated a new Regulation 5 which formally specifies the siting and separation requirements with which an applicant must comply in order to obtain a permit for a liquid animal-waste-management system. That regulation’s expressed purpose is intended to protect water quality and the public health and to abate odor. Among other requirements, an applicant’s facility must have a waste-management plan and a site-management plan for each land application site prepared by either a professional engineer-registered in the State, the USDA Soil Conservation Service, or a water quality technician of the water conservation district approved by the Department.

The Commission further listed other significant differences it and its administrative hearing officer considered when deciding to grant Hale a permit for his nursery-pig farm after denying him one for an adult-hog operation. Those primary differences are as follows:

(1) The total amount of nitrogen generated by the [second application] is approximately 34,000 pounds per year as opposed to [Hale’s first] proposal of 96,579 pounds per year.
(2) The problem of the sedimentation and holding basins being constructed in a moderately permeable soil horizon has been addressed in [Hale’s second application] by construction of a clay cutoff trench down gradient of the basins.
(3) Land application of the waste during those times when the soil is saturated is specifically not allowed. If properly operated, adequate storage is available to hold the waste during those times.

In determining whether res judicata applies in a situation where it is doubtful if a second action is for the same cause of action as the first, our court, in Thornbrough, Commr. v. Barnhart, 232 Ark. 862, 340 S.W.2d 569 (1960), quoting from Chiotte v. Chiotte, 225 Ark. 101, 279 S.W.2d 296 (1955), stated the following and controlling rule: “[T]he test generally applied is to consider the identity of facts essential to their maintenance, or whether the same evidence would sustain both .... If, however, the two actions rest upon different set of facts ... a judgment in one is no bar to the maintenance of the other.” Here, the Commission found that Hale’s two applications were not based on the same nucleus of facts, and from the evidence and facts recited by the Commissioner as reviewed hereinabove, we cannot say that evidence was insubstantial or that the Commission abused its discretion in so finding.

In conclusion, we mention appellants’ passing argument that Hale’s application essentially means the new “nursery-pig” farm will not protect the water in the surrounding area, but will only reduce such pollution. Of course, the instant case concerns only the issue of the applicability of res judicata, and does not deal with whether Hale’s permit will, contrary to the laws protecting water quality, pollute the soil and water surrounding Hale’s farm. Obviously, that is a question the Department of Pollution Control & Ecology must address if it later becomes ah issue. Concerning the issue now before us, we affirm the Commission’s decision that res judicata is not a bar to Hale’s second application, and that the Department appropriately granted his permit.

       Appellants had also contested Hale’s first application.

       Section 8-4-213 provides as follows:
      (a) If no appeal is taken from an order, rule, regulation, or other decision of the Arkansas Pollution Control and Ecology Commission as provided in Ark. Code Ann. §§ 8-4-222 — 8-4-229, or if the action of the commission is affirmed on appeal, then the action of the commission in the matter shall be deemed conclusive, and the validity and reasonableness thereof shall not be questioned in any other action or proceeding.
      (b) However, this section shall not preclude the authority of the commission to modify or rescind its actions.


author: Annabelle Clinton Imber, Justice.

text:
    James C. LEVER v. STATE of Arkansas
    CR 97-1463
    971 S.W.2d 762
    Supreme Court of Arkansas
    Opinion delivered May 28, 1998

      Val P. Price, for appellant.

      Winston Bryant, Att’y Gen., by: Mac Golden, Asst. Att’y Gen., for appellee.
   Annabelle Clinton Imber, Justice.

The appellant, James Lever, was convicted of capital murder and sentenced to life imprisonment without parole. On appeal, Lever challenges the sufficiency of the evidence, and argues that there is no meaningful distinction between “premeditated and deliberated” capital murder under Ark. Code Ann. § 5-10-101(a)(4) (Repl. 1997) and “purposeful” first-degree murder under Ark. Code Ann. § 5-10-102(a)(2) (Repl. 1997). Finding no merit to either argument, we affirm.

On February 13, 1997, James Lever shot and killed Reuben Sheppard, Jr. At trial, Lever did not contest this fact, but instead argued that his actions constituted first-degree murder instead of capital murder. The relevant facts are as follows.

Around lunch time, on February 13, Lever asked his neighbor, Robert Rolland, if he could borrow his car. Rolland drove Lever towards a house on Fisher Street where the victim was allegedly visiting with some friends. As they approached the area, Rolland told Lever that he did not wish to drive any further. Rolland exited his vehicle and began walking home while Lever drove on towards Fisher Street. Several minutes later, Lever picked up Rolland and the two returned to Rolland’s apartment.

Lever then approached two of his friends, Tyson Oliver and Arlos Banks, who were installing a radio in a Honda parked in a nearby driveway. Lever asked Oliver and Banks if they had a gun he could borrow, and they responded in the negative. Oliver and Banks later told the police that Lever was angry because he had a disagreement with “Reuben” over money. Lever then went to Rolland’s apartment and asked if he could borrow a gun. Rolland gave Lever a .22 revolver loaded with five bullets. A few minutes later, Lever returned to Rolland’s apartment and asked if he could borrow Rolland’s gray Oldsmobile to go to the store to buy cigarettes. Rolland gave Lever the keys.

Around 5:00 p.m., Lever drove to Fisher Street where he saw Nathaniel Anderson standing on the street corner with some friends. Lever asked Anderson where everyone was, and Anderson pointed to a house on Fisher street. Lever specifically asked Anderson if Reuben Sheppard was there, and Anderson explained that he did not know. Lever then drove down the alley towards the house where he spotted Sheppard standing outside of a parked vehicle. Lever exited his car and began arguing with Sheppard. Kenny Pickett drove up and asked Lever if everything was all right. Pickett testified that Sheppard did not have a gun, and that he did not make any aggressive movements towards Lever. Lever then pulled out his .22 revolver, shot Sheppard four times in the chest and left side, and sped off in the gray Oldsmobile. Sheppard died later that day.

At the conclusion of the trial, the court instructed the jury on the elements of “premeditated and deliberated” capital murder under Ark. Code Ann. § 5-10-101 (a)(4) and “purposeful” first-degree murder under Ark. Code Ann. § 5-10-102(a)(2). After deliberating for two hours, the jury found Lever guilty of capital murder and sentenced him to life imprisonment without parole.

For his first argument on appeal, Lever contends that his conviction should be reversed because there is no meaningful distinction between capital murder under Ark. Code Ann. § 5-10-101(a)(4) and first-degree murder under Ark. Code Ann. § 5-10-102(a)(2). We find no merit to this argument because it has previously been rejected by this court on numerous occasions. See, e.g., Landreth v. State, 331 Ark. 12, 960 S.W.2d 434 (1998); Camargo v. State, 327 Ark. 631, 940 S.W.2d 464 (1997); Kemp v. State, 324 Ark. 178, 919 S.W.2d 943 (1996).

Next, Lever claims that there was insufficient evidence to support his conviction of capital murder under Ark. Code Ann. § 5-10-101(a)(4). The test for determining the sufficiency of the evidence is whether there is substantial evidence to support the verdict. Stewart v. State, 331 Ark. 359, 961 S.W.2d 750 (1998); Sanford v. State, 331 Ark. 334, 962 S.W.2d 335 (1998). Substantial evidence is direct or circumstantial evidence that is forceful enough to compel a conclusion one way or another and which goes beyond mere speculation or conjecture. Id. In making this determination, we review the evidence in the light most favorable to the State, as appellee, and consider evidence both properly and improperly admitted. Id.

As to the degree of proof necessary to establish capital murder under Ark. Code Ann. § 5-10-101(a)(4), we have said that because intent can rarely be proven with direct evidence, a jury may infer premeditation and deliberation from circumstantial evidence such as the type and character of the weapon used; the manner in which the weapon was used; the nature, extent, and location of the wounds inflicted; and the conduct of the accused. Lloyd v. State, 332 Ark. 1, 962 S.W.2d 365 (1998); Green v. State, 330 Ark. 458, 956 S.W.2d 849 (1997). Moreover, the necessary premeditation and deliberation is not required to exist for a particular length of time and may be formed in an instant. Green v. State, supra; Key v. State, 325 Ark. 73, 923 S.W.2d 865 (1996).

In this case, the evidence showed that Lever shot Sheppard four times in the chest area and side with a .22 revolver. According to an eyewitness, the victim did not have a gun or act aggressively towards Lever. There was also evidence that Lever spent approximately five hours obtaining a weapon, borrowing a car, and locating the victim. Finally, on the day of the crime Lever told several witnesses that he had a dispute with the victim over money. Hence, we hold that there was substantial evidence that Lever acted with a “premeditated and deliberated purpose” as required by Ark. Code Ann. § 5-10-101(a)(4).

In accordance with Ark. Sup. Ct. R. 4-3(h), the record has been reviewed for rulings decided adversely to Lever but not argued on appeal, and no reversible errors were found.

Affirmed.


text:
    John STAPLETON, Jr. v. M.D. LIMBAUGH CONSTRUCTION CO.
    97-1153
    969 S.W.2d 648
    Supreme Court of Arkansas
    Opinion delivered May 28, 1998

      Mashhum & Taylor, by: Timothy J. Myers and Odom & Elliot, by: Don R. Elliot, Jr., for appellant.

      Tramell Law Firm, by:. Robert D. Trammell, for appellee.
   Annabelle Clinton Imber, Justice.

The appellant, John Stapleton, Jr., filed a wrongful-death action against the appellee, M.D. Limbaugh Construction Co. The trial court granted summary judgment in favor of Limbaugh Construction because it found that Stapleton’s lawsuit was barred by the exclusive-remedy provision of the Workers’ Compensation Act as amended in 1993. Ark. Code Ann. § 11-9-105 (Repl. 1996). The trial court also held that the amended provision was constitutional. We agree with the first finding, but not with the latter holding. Accordingly, we reverse and remand.

The underlying facts of this case are undisputed. In 1995, Community Water Systems hired Limbaugh Construction to be the prime contractor for the construction of a foundation and water storage tank. Limbaugh Construction then hired NWA Steel Company, Inc. as a subcontractor on the project. John Stapleton, III, worked as a welder for NWA Steel.

On July 12, 1996, John Stapleton, III, fell from the scaffolding at the construction site and died two days later. Stapleton’s father, John Stapleton, Jr., settled his son’s workers’ compensation claim against NWA Steel for $10,000. Soon thereafter, Stapleton filed a wrongful-death action against Limbaugh Construction, as the prime contractor, and Community Water Systems, as the site owner, for negligently causing the death of his son.

On March 17, 1997, Limbaugh Construction filed a motion to dismiss alleging that Stapleton’s wrongful-death action was barred by the exclusive-remedy provision of the Workers’ Compensation Act, Ark. Code Ann. § 11-9-105(a), as amended by 1993 Ark. Acts 796, § 4. Limbaugh Construction attached to its motion an affidavit and a certified copy of the settlement order between NWA Steel and Stapleton, thereby converting its motion to dismiss into a motion for summary judgment. In his reply, Stapleton argued that the amended exclusive-remedy provision applied only when the prime contractor paid compensation benefits to the subcontractor’s employee, and that the amended provision violated Article 5, Section 32, of the Arkansas Constitution.

On June 30, 1997, the trial court granted summary judgment to Limbaugh Construction. In the order, the court found that Stapleton’s tort claim was barred by the amended exclusive-remedy provision of the compensation statute, and that the amended statute was constitutional. Accordingly, the court dismissed Stapleton’s tort action with prejudice. On July 17, 1997, the court granted Stapleton’s request for a voluntary dismissal without prejudice of his complaint against codefendant Community Water Systems. Stapleton filed a timely notice of appeal of the court’s order of summary judgment.

I. Standard of Review

The first issue we must resolve on appeal is what is the appropriate standard of review. Stapleton misconstrues the court’s order as a dismissal pursuant to Ark. R. Civ. P. 12(b)(6). As the trial court correctly noted in its order, NWA Steel’s Rule 12(b)(6) motion to dismiss was converted into a motion for summary judgment under Ark. R. Civ. P. 56 when the court considered affidavits and other documents outside of the pleadings. See McQuay v. Guntharp, 331 Ark. 466, 963 S.W.2d 583 (1998); Clark v. Ridgeway, 323 Ark. 378, 914 S.W.2d 745 (1996). As we have said on numerous occasions, summary judgment is appropriate when there are no genuine issues of material fact, and the moving party is entitled to judgment as matter of law. Edgin v. Entergy Operations, Inc., 331 Ark. 162, 961 S.W.2d 724 (1998); Sublett v. Hipps, 330 Ark. 58, 952 S.W.2d 140 (1997). In making this determination, we review the evidence in the light most favorable to the party resisting the motion and resolve all doubts and inferences against the moving party. Id.

II. Ark. Code Ann. § 11-9-105(a)

The next issue we must resolve is whether the trial court erred when it held that Ark. Code Ann. § 11-9-105(a), as amended in 1993, extends tort immunity to prime contractors when the subcontractor has paid compensation benefits to the injured employee.

In order to folly understand this issue, a brief history of our Workers’ Compensation Act and the supporting cases is necessary. Prior to 1993, the exclusive-remedy provision provided that:

The rights and remedies granted to an employee subject to the provisions of this chapter, on account of injury or death, shall be exclusive of all other rights and remedies of the employee, his legal representative, dependents, next of kin, or anyone otherwise entitled to recover damages from the employer or any principal, officer, director, stockholder, or partner acting in their capacity as an employer on account of the injury or death, and the negligent acts of a co-employee shall not be imputed to the employer.

Ark. Code Ann. § 11-9-105(a) (1987) (amended 1993). Likewise, Ark. Code Ann. § 11-9-410 (1987) (amended 1993) provided that an employee’s claim for workers’ compensation benefits against his or her employer did not affect the employee’s right to file a tort action against a third party.

In contrast, Ark. Code Ann. § 11-9-402(a) (1987) provided, in relevant part, that:

Where a subcontractor fails to secure compensation required by this chapter, the prime contractor shall be liable for compensation to the employees of the subcontractor.

Thus, while sections 105 and 410 determined when a defendant could be liable for tort damages, section 402 established when a prime contractor could be held liable for workers’ compensation benefits.

We reconciled these three provisions of the Workers’ Compensation Act in Baldwin Co. v. Maner, 224 Ark. 348, 273 S.W.2d 28 (1954). In Baldwin, a subcontractor’s employee was injured while working on the prime contractor’s construction site. Id. The employee obtained workers’ compensation benefits from his employer, the subcontractor, and then filed a tort action against the prime contractor. Id. On appeal, the prime contractor argued that the tort action was barred by the exclusive-remedy provision, Ark. Stats. § 81-1304 (currently codified at Ark. Code Ann. § 11-9-105). Id. We held that, pursuant to Ark. Stats. § 81-1306 (currently codified at Ark. Code Ann. § 11-9-402), if the subcontractor fails to secure workers’ compensation benefits for its employees, the prime contractor becomes the “statutory employer” and must pay workers’ compensation benefits to the injured employee. Id. However, because the prime contractor becomes the “statutory employer” (under section 402) of the injured employee, the prime contractor is not a third party (under section 410), but instead is a quasi-employer or “statutory employer” entided to tort immunity under the exclusive-remedy provision (section 105). Id. In sum, we held in Baldwin that if a subcontractor fails to obtain workers’ compensation coverage, the prime contractor must pay workers’ compensation benefits, but not tort damages, to the injured employee. Id. In contrast, if the subcontractor pays its injured employee workers’ compensation benefits, the prime contractor never becomes the statutory employer, and thus is not liable for compensation benefits, but could be held liable for tort damages. Id. Because the subcontractor in Baldwin had paid workers’ compensation benefits to the injured employee, we held that the employee’s tort action against the prime contractor was not barred by the exclusive-remedy provision. Id.

Since the Baldwin decision was handed down in 1954, we have consistently held that a prime contractor is a statutory-employer and thus hable to a subcontractor’s employee for workers’ compensation benefits, but not tort damages, if the subcontractor failed to secure workers’ compensation benefits. Lewis v. Industrial Heating & Plumbing, 290 Ark. 291, 718 S.W.2d 941 (1986); Rowe v. Druyvesteyn Constr. Co., 253 Ark. 67, 484 S.W.2d 512 (1972). However, if the subcontractor pays workers’ compensation benefits to its injured employee, the prime contractor could be held liable in tort for the injuries to the subcontractor’s employee. See Construction Advisors, Inc. v. Sherrell, 275 Ark. 183, 628 S.W.2d 309 (1982).

In the case before us today, it is undisputed that NWA Steel, the subcontractor, paid workers’ compensation benefits to Staple-ton. Thus, under the old Baldwin rule, Limbaugh Construction, the prime contractor, never became the statutory employer, and thus Stapleton’s tort action against Limbaugh Construction would not be barred by the exclusive-remedy provision of the workers’ compensation act.

The General Assembly, however, altered the Baldwin rule when they amended the exclusive-remedy provision in 1993 by adding the following emphasized language to Ark. Code Ann. § 11-9-105(a):

The rights and remedies granted to an employee subject to the provisions of this chapter, on account of injury or death, shall be exclusive of all other rights and remedies of the employee, his legal representative, dependents, next of kin, or anyone otherwise entitled to recover damages from the employer, or any principal, officer, director, stockholder, or partner acting in his capacity as an employer, or prime contractor of the employer, on account of the injury or death, and the negligent acts of a coemployee shall not be imputed to the employer.

1993 Ark. Acts 796, § 6 (emphasis added). Although the legislature made numerous changes to the Workers’ Compensation Act in 1993, section 402, dealing with a prime contractor’s liability to a subcontractor’s employees, and section 410, defining a third party amenable to tort actions, remained substantially as they were at the time Baldwin was decided. Thus, we must resolve for the first time what the legislature intended when it added the phrase “or prime contractor of the employer” to the exclusive-remedy provision.

On appeal, Stapleton claims that despite the 1993 amendment to Ark. Code Ann. § 11-9-105, the old Baldwin rule applies such that the exclusive-remedy provision bars a tort action against a prime contractor only when the subcontractor has failed to pay workers’ compensation benefits to its injured employee. This interpretation, however, is contrary to our well-established rules of statutory construction.

The first rule of statutory construction, to which all others must yield, is to give effect to the intent of the legislature. Leathers v. Cotton, 332 Ark. 49, 961 S.W.2d 32 (1998). To accomplish this goal we must give the words of the statute their ordinary and usually accepted meaning. Id.; Social Work Licensing Bd. v. Moncebaiz, 332 Ark. 67, 962 S.W.2d 797 (1998). Second, statutes relating to the same subject should be construed in a harmonious manner if possible. Johnson v. State, 331 Ark. 421, 961 S.W.2d 764 (1998); Reed v. State, 330 Ark. 645, 957 S.W.2d 174 (1997). Finally, we must presume that the General Assembly did not intend to pass an act without a purpose. Reed v. State, supra.

Applying these rules of statutory construction, it is clear from the plain language of the 1993 amendment to Ark. Code Ann. § 11-9-105 that the General Assembly intended to extend tort immunity to prime contractors regardless of whether the subcontractor paid its injured employee workers’ compensation benefits. Otherwise the 1993 amendment would be meaningless.

Stapleton argues that this interpretation of section 105 is in conflict with section 402 which applies only when the subcontractor has paid its injured employee workers’ compensation benefits. Stapleton’s argument is without merit because it misconstrues the remedies available to the injured party under these two provisions. As previously explained, section 105 deals with tort liability, while section 402 provides for workers’ compensation benefits. Hence, sections 105 and 402 are harmonious.

Next, Stapleton argues that as a matter of public policy the prime contractor should not be granted absolute tort immunity under the exclusive-remedy provision because prime contractors will no longer have an incentive to provide a safe work site. This argument, however, ignores the fact that a negligent prime contractor may still be liable to a subcontractor’s employees for workers’ compensation benefits under section 402 if the work place is unsafe and the subcontractor has faded to secure workers’ compensation benefits. Moreover, it is well settled that it is for the legislature, not this court, to determine public policy. Teague v. State, 328 Ark. 724, 946 S.W.2d 670 (1997); Nabholtz Constr. Corp. v. Graham, 319 Ark. 396, 892 S.W.2d 456 (1995). In 1993, the legislature decided that as a matter of public policy prime contractors should be immune from tort liability even when the subcontractor has paid the injured employee workers’ compensation benefits, and we will honor that policy decision.

For these reasons, we hold that by amending section 105 in 1993, the General Assembly clearly intended to extend tort immunity to a prime contractor regardless of whether a subcontractor has paid workers’ compensation benefits to its injured employee. Accordingly, the trial court did not err when it held that Stapleton’s tort action against Limbaugh Construction was barred under the amended exclusive-remedy provision.

III. Constitutionality

Stapleton’s final argument is that the 1993 amendment to Ark. Code Ann. § 11-9-105(a) is unconstitutional because it grants tort immunity to a defendant who does not have an employment relationship with the injured party in violation of Article 5, Section 32, of the Arkansas Constitution. As we have said on several occasions, statutes are presumed constitutional, and the burden of proving otherwise is upon the challenger of the statute. ACW, Inc. v. Weiss, 329 Ark. 302, 947 S.W.2d 770 (1997); Ports Petroleum Co. v. Tucker, 323 Ark. 680, 916 S.W.2d 749 (1996).

Article 5, Section 32, of the Arkansas Constitution provides that:

The General Assembly shall have power to enact laws prescribing the amount of compensation to be paid by employers for injuries to or death of employees, and to whom said payment shall be made. It shall have power to provide the means, methods, and forum for adjudicating claims arising under said laws, and for securing payment of same. Provided, that otherwise no law shall be enacted limiting the amount to be recovered for injuries resulting in death or for injuries to persons or property; and in case of death from such injuries the right of action shall survive, and the General Assembly shall prescribe for whose benefit such action shall be prosecuted.

As amended in 1938 by Const. Amend. 26 (emphasis added).

In Brothers v. Dierks Lumber & Coal Co., 217 Ark. 632, 232 S.W.2d 646 (1950), we held that a prime contractor was a statutory employer of a subcontractor’s injured employee under Ark. Stats. 81-1306 (currently codified as Ark. Code Ann. § 11—9—402) because the subcontractor was unable to pay workers’ compensation benefits to its employee. Id. In response, the prime contractor argued that section 81-1306 was unconstitutional because it imposed workers’ compensation liability beyond the employer-employee relationship. Id. We explained that Article 5, Section 32, prevents the legislature from limiting recovery for injuries, but not from creating a new cause of action or right to recovery. Id. By passing section 81-1306, the General Assembly expanded, rather than limited, the remedies available to an injured employee by allowing him or her to recover from the prime contractor under certain circumstances. Id. For these reasons, we held in Brothers that Ark. Stats. 81-1306 was constitutional. Id.

In Baldwin Co. v. Maner, 224 Ark. 348, 273 S.W.2d 28 (1954), we further explained that Article 5, Section 32, “gives the legislature the power to limit the amount of recovery only in cases where the there is an employer-employee relationship.” (Emphasis added.) By virtue of Ark. Stats. 81-1306, the legislature created a statutory employment relationship between the prime contractor and the subcontractor’s employees when the subcontractor could not pay workers’ compensation benefits. Id. Under these facts, we held that the legislature could limit the employee’s recovery against the prime contractor to workers’ compensation benefits without running afoul of the Arkansas Constitution. Id.

Baldwin and Brothers dealt with the constitutionality of section 402, and not section 105, as is challenged in this case. However, these cases are helpful to the resolution of our issue because they establish that the General Assembly may limit tort liability only when there is an employment relationship between the parties. As previously discussed, the prime contractor in this case is not the statutory employer pursuant to section 402 because the subcontractor paid workers’ compensation benefits to its injured employee. As mentioned in Baldwin, because there is no real or quasi-employment relationship between Stapleton and Limbaugh Construction under the facts of this case, the legislature cannot, pursuant to Article 5, Section 32, limit Stapleton’s right to recover tort damages against Limbaugh.

This result is equitable because under the facts of this case Stapleton cannot recover workers’ compensation benefits from Limbaugh under section 402 because Limbaugh is not the statutory employer. Stapleton also cannot recover tort damages from Limbaugh because section 105, as amended in 1993, gives the prime contractor absolute immunity from tort actions. Thus, Stapleton has no remedy against Limbaugh for its alleged negligence.

For these reasons, we hold that Ark. Code Ann. § 11-9-105(a), as amended by 1993 Ark. Acts 796, § 4, is unconstitutional as applied in this case because it grants tort immunity to a prime contractor even when there is no statutory employment relationship with the injured employee. Accordingly, the order of dismissal is reversed, and the case remanded for further consideration of Stapleton’s wrongful-death action against Limbaugh Construction.

Reversed and remanded.


author: Per Curiam.

text:
    Antonio AYERS v. STATE of Arkansas
    CR 97-368
    968 S.W.2d 591
    Supreme Court of Arkansas
    Opinion delivered May 28, 1998

      R.S. McCullough, for appellant.
    No response.
   Per Curiam.

Attorney R.S. McCullough, counsel for appellant Antonio Ayers, appeared for a hearing before this court on May 14, 1998, to show cause why he should not be held in contempt for fading to file his client’s brief on or before March 25, 1998, a final extension date, as previously ordered. Ayers v. State, 333 Ark. 116, 968 S.W.2d 591 (1998).

During the hearing conducted on May 14, 1998, we accepted Mr. McCudough’s gudty plea for fading to file his client’s brief prior to the final extension date of March 25, 1998. Mr. McCullough has taken responsibility for his fadure to file the brief, but he has also submitted certain materials and statements in mitigation when making his plea.

Based upon the foregoing, we hold that R.S. McCullough is in contempt for fading to file his client’s brief in a timely manner, and we fine him $250.00. A copy of this opinion wid be forwarded to the Committee on Professional Conduct.


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    Hughey E. JOLLY v. ESTATE of Ernestine Owen JOLLY, Deceased
    97-1316
    970 S.W.2d 221
    Supreme Court of Arkansas
    Opinion delivered June 4, 1998

      Bachelor, Newell & Oliver, by: Stephen D. Oliver, for appellant.

      Roachell Law Firm, by: Travis Creed, for appellee.
   David Newbern, Justice.

This appeal was certified to us by the Arkansas Court of Appeals to resolve a question of first impression. Ernestine Owen bought a truck. The title to the truck showed the owners as “Hughey E. Jolly, Jr., or E.L. Owen.” Thereafter Mr. Jolly and Ms. Owen married. They entered an antenuptial agreement, each relinquishing any rights in the separate property of the other. Their separate properties were listed in the agreement, and the lists did not include the truck. Ms. Jolly, formerly E.L. Owen, died. Mr. Jolly remained in possession of the truck and had the title converted to show him as sole owner. Ms. Jolly’s daughter, serving as executrix of her estate, obtained an order from the probate court requiring Mr. Jolly to appear for examination to discover assets, specifically directed to the truck. After a hearing on the matter, the probate judge ruled that the estate of Ms. Jolly owned a one-half interest in the truck. Mr. Jolly appealed, contending that he and Ms. Jolly had owned the truck jointly with right of survivorship, and thus he became the owner upon her death. We cannot reach the issue as the probate court lacked jurisdiction to try the title to the truck.

The probate court lacks jurisdiction to try title to property claimed by a “stranger” to the estate, i.e., one who has no claim as a beneficiary of the estate or the personal representative. In Snow v. Martensen, 255 Ark. 1049, 505 S.W.2d 20 (1974), we dealt with a title contest between the administratrix of an estate, claiming property in her own right and not as a beneficiary or on behalf of the estate, and persons who were beneficiaries. We held that the administratrix, although claiming the property in her own right was not a “stranger” to the estate, and thus probate court had jurisdiction of the subject matter. We followed that case with Hilhurn v. First State Bank of Springdale, 259 Ark. 569, 535 S.W.2d 810 (1976), in which the mother of the decedent filed exceptions to the inventory of the decedent’s estate. She claimed that certain property listed as part of the estate belonged to her and that an undelivered deed purporting to convey property from her to the decedent had been surreptitiously obtained by the heirs. No question as to the subject-matter jurisdiction issue was raised by the parties, but we raised it. We overruled cases that had suggested that the jurisdiction issue could be waived and held that, as the decedent’s mother was a “stranger” to the estate, the probate court lacked jurisdiction to determine title to the property in question. We distinguished the Snow decision on the basis that the claimants there were not “third parties.”

It is clear that Mr. Jolly is a “stranger” or “third party” to the probate proceedings as he has no claim in the estate of Ms. Jolly and is not acting as executor of the estate. As the probate court lacked jurisdiction of the matter at hand, so does this court. Lawhon v. State, 328 Ark. 335, 942 S.W.2d 864 (1997) (“If the trial court lacks jurisdiction, the appellate court also lacks jurisdiction.”); Craig v. Taylor, 323 Ark. 363, 915 S.W.2d 257 (1996) (“When the trial court lacks subject-matter jurisdiction, the appellate court also lacks jurisdiction.”). The case is remanded to the probate court for transfer to the proper court. See Ark. R. Civ. P. 12(h)(3).

Reversed and remanded.


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    Pamela F. SKOKOS v. Theodore C. SKOKOS
    95-1029
    968 S.W.2d 26
    Supreme Court of Arkansas
    Opinion on granting of rehearing delivered June 4, 1998

      Henry Hodges and Staley & Marshall, by: Robert L. Robinson, Jr., for appellant.

      Dover & Dixon, P.A., by: Judson C. Kidd, for appellee.
   David Newbern, Justice.

Pamela F. Skokos, the appellant, and Theodore C. Skokos, the appellee, each have filed a petition for rehearing following our decision in Skokos v. Skokos, 332 Ark. 520, 968 S.W.2d 26 (1998). The parties seek to clarify whether, upon remand, the Chancellor should redetermine the fair market value of their shares in the Little Rock Cellular Partnership (“the Little Rock company”) in addition to the value of their shares in Atlantic Cellular/New Hampshire RSA One, Limited Partnership (“the New Hampshire company”). In a separate motion, Ms. Skokos asks for her costs and attorney’s fees on appeal.

We grant Ms. Skokos’s petition for rehearing and hold that the Chancellor shall redetermine the value of the parties’ shares in both cellular-telephone companies. We deny Ms. Skokos’s motion for costs and attorney’s fees.

1. Shares in cellular-telephone companies

In Skokos v. Skokos, supra, we held that the Chancellor abused her discretion when she excluded the testimony of Matthew Fox, Ms. Skokos’s expert witness, regarding the fair market value of the parties’ shares in the New Hampshire company. We reversed the Chancellor’s determination of the value of those shares and remanded for a new hearing.

Ms. Skokos raised an additional argument, however, that the Chancellor had erred by terminating her cross-examination of Thomas Buono, Mr. Skokos’s expert witness. Mr. Buono had testified to the value of the parties’ shares in the New Hampshire company and the Little Rock company. The Chancellor interrupted Ms. Skokos’s counsel’s cross-examination of Mr. Buono and allowed Mr. Buono to leave the courtroom in order to board an airline flight. Ms. Skokos argued that the ruling constituted an abuse of discretion and required reversal. We concluded that it was unnecessary to address the point in view of our holding with respect to the exclusion of Mr. Fox’s testimony.

It was error for us to have concluded that our reversal on the point concerning Mr. Fox’s testimony would resolve the question whether the value of the parties’ shares in both cellular-telephone companies was required to be relitigated on remand. As Mr. Fox’s testimony addressed only the New Hampshire company, the reversal on the basis of the failure to allow him to testify has no effect upon the valuation of the Little Rock company. It was, therefore, necessary for us to address Ms. Skokos’s point concerning the Chancellor’s decision to truncate the cross-examination of Mr. Buono. We grant rehearing on this point and hold that the Chancellor abused her discretion when she terminated the cross-examination.

Our cases require a trial judge “to permit a full, fair and reasonable cross-examination of a witness.” Arkansas State Hwy. Comm’n v. Dean, 247 Ark. 717, 720, 447 S.W.2d 334, 336 (1969), citing Helena Cotton Oil Co. v. Harrington, 170 Ark. 654, 280 S.W. 630 (1926). “Courts should be especially liberal in allowing full and complete examination of an expert witness.” Id. at 721, 447 S.W.2d at 336, citing Arkebauer v. Falcon Zinc Co., 178 Ark. 943, 12 S.W.2d 916 (1929).

Here, the Chancellor terminated the cross-examination of an expert witness in order to facilitate the witness’s travel plans. It also appears that the Chancellor’s decision was motivated by a desire to expedite the proceedings. Athough neither concern is trivial, “the right of a Etigant to fuEy and properly cross-examine an adverse witness is more important and should not be abridged, even for the sake of expedition.” Arkansas State Hwy. Comm’n v. Dean, 247 Ark. at 720, 447 S.W.2d at 336, citing Trammell v. State, 193 Ark. 21, 97 S.W.2d 902 (1936).

Thus, we hold that the ChanceEor abused her discretion by (1) excluding Mr. Fox’s testimony, and (2) terminating Ms. Skokos’s cross-examination of Mr. Buono. Therefore, on remand, the ChanceEor shaE redetermine the fair market value of the parties’ shares in the New Hampshire company and the Little Rock company.

2. Costs and attorney’s fees

Ms. Skokos’s separate motion requests an award for appeal costs under Ark. Sup. Ct. R. 6-7 and an award for attorney’s fees for services performed by her counsel on appeal. We deny her motion.

According to Ark. Sup. Ct. R. 6-7(d), we “may assess appeal costs according to the merits of the case” where, as here, the appeal arises from a chancery court and the decree is affirmed in part and reversed in part. In addition, we have inherent authority in divorce cases to award attorney’s fees for services rendered on appeal. See Jones v. Jones, 327 Ark. 195, 938 S.W.2d 228 (1997). See generally Howard W. Brill, Arkansas Law of Damages § 11-6, at pp. 165-66 (3d ed. 1996).

The points of appeal on which Ms. Skokos prevailed are important ones, but there are others on which she did not prevail. In addition, Ms. Skokos has given us no invoices or hourly fee figures upon which to calculate attorney’s fees. Finally, although we declined to mention it in our initial opinion, we considered the abstract of the record presented by Ms. Skokos to have been repetitious and otherwise excessive, although not “flagrantly deficient.” See Ark. Sup. Ct. R. 4-2(b)(3). We deny the motion and direct that each party will be responsible for his or her own costs and attorney’s fees.


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    Jimmy Dale SWINK, Jr., and First American Securities, Inc. v. Gerald GIFFIN; Kenneth R. Harter; Stephen Blake Murchison; Jack A. Burney, Jr.; John E. Locke, Jr.; Gene Allen; Tony Alexander; VSI, Inc.; John Doe Trader I; John Doe Trader II; and John Doe Trader III
    97-667
    970 S.W.2d 207
    Supreme Court of Arkansas
    Opinion delivered June 4, 1998

      McHenry Law Firm, by: Donna Wolfe McHenry and Robert M. McHenry, for appellants.

      Wood & Lockhart, PLC, by: W. Kirby Lockhart, for appellees.
   David Newbern, Justice.

The appellees were traders who worked for appellant Jimmy Dale Swink, Jr., and his securities firm, appellant First American Securities, Inc. (“FASI”). The appellees “walked out” to start their own securities business and allegedly took with them the “customer list” that they had used while working at FASI. Mr. Swink, Jr., and FASI sued the appellees for misappropriation of a trade secret (the customer list) in violation of Ark. Code Ann. §§ 4-75-601 to 4-75-607 (Repl. 1996); breach of individual confidentiality agreements; intentional interference with business expectancies; and conversion. The plaintiffs brought additional claims against appellee Gerald Giffin for breach of stock-sale and purchase agreements; breach of fiduciary duty; and misrepresentation. The plaintiffs sought damages and injunctive relief and also requested that a constructive trust be imposed upon profits made by the defendants from the use of the customer list.

The Chancellor denied the appellees’ motion for summary judgment, and the case proceeded to trial. At the conclusion of the plaintiffs’ case, the defendants moved for a directed verdict or to dismiss, asserting that there had been no proof that the plaintiffs even owned the list in question and that, in any event, the requested relief was barred by laches.

The Chancellor agreed that the plaintiffs failed to make a prima facie case of ownership of the list and thus “directed a verdict” on the misappropriation and conversion claims relating to the list. As the only evidence of damages introduced by the plaintiffs related to the list, and as they had failed to show that they owned the list, the Chancellor also directed a verdict on the other claims. She ruled in the alternative that the defendants were entitled to a directed verdict on the basis of laches.

Although the Chancellor and the parties referred to the defendants’ motion as one for “directed verdict,” we will discuss it as a motion to dismiss as contemplated by Ark. R. Civ. P. 50(a) for chancery and other bench trials. The question, generally, is whether the plaintiffs presented a prima facie case, just as in jury trials where a verdict may be in prospect. Our holding is that the dismissal was premature, and thus we reverse and remand the case.

i. Prima facie case

Jimmy Swink, Jr., testified that he had bought the customer list from his father, Jimmy Swink, Sr., as part of a “package deal” purchase of assets that had belonged to Mr. Swink, Sr.’s securities firm, Swink & Company, Inc. He testified that he had given his parents promissory notes totalling $240,000 for the assets.

Attorney Pat James, who had represented both of the Swinks and FASI, testified that Mr. Swink, Sr., had acquired the customer list from Swink & Company, Inc., and that Mr. Swink, Jr., acquired it from Mr. Swink, Sr.

In her order of dismissal, the Chancellor referred to the lack of any documentation whatever to indicate that Mr. Swink, Jr., was the owner of the customer list. She also referred to expert testimony presented by the plaintiffs to the effect that the customer list was worth $1,000,000. There was evidence that a securities-dealer license worth $50,000 was included in the $240,000 “package deal.” She found it incredible that the “package” could have included a $1,000,000 asset, as it would have been purchased for less than $200,000.

While we understand that the Chancellor’s action was based upon her assessment of the credibility of the testimony presented by the plaintiffs, it was error for her to have made that assessment prior to the conclusion of the evidentiary portion of the trial. In a long line of cases, beginning with Werbe v. Holt, 217 Ark. 198, 229 S.W.2d 225 (1950), we have held that a chancellor’s duty in the circumstance presented here is to review the defense motion for dismissal at the conclusion of the plaintiffs’ case by deciding whether, if it were a jury trial, the evidence would be sufficient to present to the jury. Although the Werbe case was decided when the rule in effect was found in Act 470 of 1949, Ark. Stat. Ann. § 27-1729 (Repl. 1962), and considered a motion called “demurrer to the evidence,” both Rule 50(a) and the old statute permit the granting of a dismissal only when the plaintiff’s evidence is insufficient to go forward, i.e., to constitute a prima facie case for relief.

In Neely v. Jones, 232 Ark. 411, 337 S.W.2d 872 (1960), we recited the same rule as in the Werbe case. The matter was remanded, and after hearing very little additional evidence and conducting a view of property with respect to which there was a boundary dispute, the Chancellor reached the same result as he had originally declared. On appeal, the plaintiff argued our decision was law of the case in favor of the plaintiff and posed the following: “We would like to know just what is the difference between a chancellor sustaining a demurrer to certain evidence and deciding litigation the same way on the same evidence.” In response, Justice George Rose Smith wrote for a unanimous court:

There is a very important difference. Ever since the decision in Werbe v. Holt [citation omitted], we have consistently held that a demurrer to the plaintiffs evidence should be sustained only if that proof, viewed in its most favorable light, would present no question of fact for a jury if the case were being tried at law. In such a situation the chancellor does not exercise fact-finding powers that involve determining questions of credibility or of the preponderance of the evidence. Brock v. Bates, 227 Ark. 173, 297 S.W.2d 938 [1957]. [Emphasis supplied.]

Neely v. Jones, 234 Ark. 812, 813, 354 S.W.2d 726, 727 (1962). Other cases in which we have reached the same result include Minton v. McGowan, 253 Ark. 945, 490 S.W.2d 136 (1973); Pults v. Pults, 236 Ark. 434, 367 S.W.2d 120 (1963); and Wood v. Brown, 235 Ark. 500, 361 S.W.2d 67 (1962).

The record in this case shows that the defendants challenged the right of the plaintiffs to recover because the plaintiffs had not shown ownership of the customer list. Although they do so on appeal, at the trial the plaintiffs did not challenge the assumption that ownership was required for them to recover but responded with arguments that they had presented prima facie evidence of ownership. The only issue we reach on this point is that the plaintiffs had indeed, primarily through the testimony of Mr. Swink, Jr., established a prima facie case on the issue of ownership.

2. Laches

Concerning the Chancellor’s alternative basis for dismissal of the plaintiff’ complaint, we need only say that the defendants did not present evidence showing that they had changed their position to their detriment in reliance upon the plaintiffs’ delay of eighteen months in bringing their claim. Laches requires a demonstration of prejudice to the party alleging it as a defense resulting from a plaintiff s delay in pursuing a claim. Gordon v. Wellman, 265 Ark. 914, 582 S.W.2d 22 (1979); Shelton v. Daniel, 236 Ark. 454, 366 S.W.2d 709 (1963); Welborne v. Preferred Risk Ins. Co., 232 Ark. 828, 340 S.W.2d 586 (1960).

The defendants in this case apparently sought to satisfy the prejudice element of the laches defense by arguing that they had built up a good business using the customer list. To us, that seems to be the virtual opposite of prejudice.

Reversed and remanded.

Imber, J., not participating.

Special Justice Ted N. Drake joins in this opinion.