author: ROBERT L. BROWN, Justice.

text:
    STUTTGART REGIONAL MEDICAL CENTER v. John P. COX, James Shane Jones, Walter T. Cox, and State Farm Insurance Co., Inc.
    00-579
    33 S.W.3d 142
    Supreme Court of Arkansas
    Opinion delivered December 14, 2000

      Maxie G. Kizer, PA., for appellant.

      Ludwig Law Firm PLC, by: Gene A. Ludwig, for appellees.
   ROBERT L. BROWN, Justice.

Appellant Stuttgart Regional judgment denying it the sum of $31,540.74 for medical services rendered to appellee John P. Cox as well' as attorney’s fees and costs in the amount of $2,692.25. The Hospital further appeals from a We agree that the Hospital did have a valid, enforceable medical Hen, and we reverse and remand. Medical Center (hereinafter the Hospital) appeals from a denial of the enforcement of its medical Hen in the same amount.

The facts are that late at night on March 13, 1998, John P. Cox was a passenger in an automobile which was involved in an accident. The car was driven by appellee James Shane Jones, who apparently was at fault. Cox suffered a concussion with a coma, a lung contusion, an open back wound, and kidney damage. He received medical services from the Hospital on March 13 through March 20, 1998, and again on March 22, 1998.

At the time his treatment began on March 13, 1998, Cox’s mother signed a hospital form entitled “General Conditions of Admission and Consent,” and his father, Walter T. Cox, signed another form dated March 25, 1998 entitled “Stuttgart Regional Medical Center Payment Policy.” The General Conditions form included the following provision, entitled “Assignment of Insurance Benefits”:

I hereby assign to the hospital, physicians participating in my case and other licensed providers any and all rights and benefits to which I may be entitled arising out of any healthcare or liability insurance policy, Medicare or Medicaid. I hold the hospital harmless for any reduction in healthcare benefits by my insurance company resulting from noncompliance with any clause or condition contained in my policy which may require: Notification; Precertification; Prior or Retrospective Authorization; or Utilization Review of the medical service I receive. I am financially responsible for deductibles and co-insurance not covered by my policy.

The Payment Policy form included this statement:

Assignment of insurance benefits and authorization to release information. For valuable consideration, I/We hereby authorize payment directly to Stuttgart Regional Medical Center of the hospital benefits as set forth by the policy above and otherwise payable to me, but not to exceed the regular charges for this period of hospitalization. I understand that I am financially responsible for charges not covered by this assignment. I further direct my insurance company to forward their check directly to Stuttgart Regional Medical Center. I hereby authorize Stuttgart Regional Medical Center to release the information requested on this form, for insurance purposes.

On April 2, 1998, the Hospital filed a notice of medical lien with the Arkansas County Clerk pursuant to the Medical Nursing Hospital and Ambulance Service Lien Act (Medical Lien Act), Ark. Code Ann. §§ 18-46-101 through 18-46-117 (Supp. 1999), seeking the amount of $31,540.74 for medical services rendered to Cox. The notice was sent to John P. Cox, who was insured under a policy carried by his father, Walter T. Cox, with State Farm Insurance Company, Inc. At issue were two payments from State Farm Insurance: (1) a payment of $5,000 for medical benefits, and (2) a payment of $25,000 for underinsured motorist coverage. On September 29, 1998, the Hospital sued to enforce its medical lien and named John P. Cox, James Shane Jones, and State Farm Insurance Co., Inc., as parties defendant.

State Farm answered and sought dismissal of the complaint under Arkansas Rule of Civil Procedure 12(b)(6). State Farm further counterclaimed for interpleader against the Hospital and stated that it had tendered checks to Cox and the Hospital in the amounts of $5,000 and $25,000, which represented policy limits, and that Cox had failed to complete the agreed-upon settlement. State Farm also cross-claimed for interpleader against Cox and prayed for enforcement of their settlement. The circuit court subsequently ordered that the funds representing the insurance proceeds be paid into the Registry of the Court.

A bench trial ensued at which Cox argued that the Hospital was not entitled to the underinsurance benefits ($25,000). He further argued that he did not have any personal financial liability, until the Hospital had first filed claims with a health insurance provider for Cox’s father, CHAMPUS. The Hospital, on the other hand, contended that it had no legal requirement to file with CHAMPUS because it was not the primary insurance carrier. After the trial, the trial court entered a one-sentence order in which it said: “The Court hereby finds for the Defendants, John P. Cox, et al.”

In the Hospital’s two points raised in this appeal, it contends that (1) it was entitled to the value of medical services provided plus attorney’s fees, and (2) that it was entitled to enforcement of its medical lien to collect those amounts. Our standard of review for bench trials is whether the trial court’s findings were clearly erroneous or clearly against the preponderance of the evidence. Ark. R. Civ. P. 52(a). See also Ford Motor Credit Co. v. Ellison, 334 Ark. 357, 974 S.W.2d 464 (1998). This court reviews the evidence in the light most favorable to the appellee and resolves all inferences in favor of the appellee. See Ford Motor Credit Co. v. Ellison, supra. Disputed facts and determinations of the credibility of witnesses are within the province of the factfinder. See id.

The pertinent section of the Medical Lien Act reads as follows:

On compliance with the requirements of this chapter, a practitioner, a nurse, a hospital, and an ambulance service provider shall each have a Hen:
(1) For the value of the service rendéred and to be rendered by the practitioner, nurse, hospital, or ambulance service provider to a patient, at the express or impHed request of that patient or of someone acting on his behalf, for the rehef and cure of an injury suffered through the fault or neglect of someone other than the patient himself;
(2) On any claim, right of action, and money to which the patient is entided because of that injury, and to costs and attorneys’ fees incurred in enforcing that Hen.

Ark. Code Ann. § 18-46-104 (Supp. 1999). In Fort Smith Serv. Fin. Corp. v. Parrish, 302 Ark. 299, 789 S.W.2d 723 (1990), this court stated that the Medical Lien Act should be liberally construed to effectuate its purpose.

It is axiomatic that when a statute is plain and unambiguous, we determine legislative intent from the ordinary meaning of the language used. Ford v. Keith, 338 Ark. 487, 996 S.W.2d 20 (1999); Kildow v. Baldwin Piano & Organ, 333 Ark. 335, 969 S.W.2d 190 (1998). In the case at hand, we conclude that the language of § 18-46-104 is clear and unambiguous. The language of subsection 2 specifically states that the provider of “any claim, right of action, and money to which the patient is entided because of that injury” shall have a lien. Section 18-46-102(2) of the Medical Lien Act defines “claims” as “the claim of a patient: (A) [f]or damages from a tortfeasor; or (B) [f]or benefits from an insurer[.]” The term “any” preceding “claim, right of action, and money” is plain and unambiguous. John P. Cox received insurance benefits from his father’s auto insurer, State Farm: $25,000 for underinsured motorist-bodily injury coverage, and $5000 for medical benefits. Both payments were to be made as the result of Cox’s settlement with State Farm. In our judgment, these funds fall squarely within the language of § 18-46-104, when it speaks in terms of “claim, right of action, and money,” and the Hospital was unquestionably entitled to the funds because of the injuries Cox suffered through the fault or negligence of someone else. This is particularly true under our standard of liberal construction of the Medical Lien Act. See Fort Smith Serv. Fin. Corp. v. Parrish, supra.

Cox argues vigorously to this Court, as he did to the circuit court, that the Hospital was required to attempt collection of insurance benefits first from Cox’s medical insurer, CHAMPUS, and that this was a “condition precedent” to the enforcement of any lien. According to Cox, the Hospital’s cause of action is based on the two agreements which Cox’s parents signed when he was admitted to the Hospital. We disagree, however, that the Hospital’s cause of action sounded in contract and was premised on the two Hospital agreements signed by Cox’s parents. Reading the Hospital’s complaint, there can be no doubt that the sole cause of action was to enforce its lien.

In addition, we disagree that the two agreements placed an obligation on the Hospital to collect against any particular insurer in any particular order. In Robinson v. City of Pine Bluff, 224 Ark. 791, 276 S.W.2d 419 (1955), this Court recognized that “[a]n assignment is an expression of intention by assignor that his rights shall pass to the assignee.” Robinson, 224 Ark. at 794, 276 S.W.2d at 421 (quoting Brewer v. Harris, 147 Kan. 197, 75 P.2d 287; 4 Words and Phrases 493). This Court defined “assignment” as “the setting over, or transferring, the interest a man hath in anything to another.” See id., 276 S.W.2d at 421 (quoting Edison, et al. v. Frazier, 9 Ark. 219). The two agreements which were executed by Cox’s mother and father assigned over Cox’s rights and benefits under any healthcare, liability, or car insurance policies he might possess. But neither assignment imposed any duty on the Hospital to file with any particular insurance, much less in any order of priority. Both assignments merely granted the Hospital the right to any benefits available and guaranteed that the assignor would be liable for any remaining debts due. In short, neither assignment precludes the Hospital from enforcing its lien against the underinsured motorist proceeds.

Because the finding of the circuit court is clearly at odds with the Medical Lien Act, we reverse the circuit court’s order and remand for entry of an order consistent with this opinion. We recognize that because of its first order denying a lien to the Hospital, the circuit court has not considered an award of attorney’s fees and costs. On remand, appropriate attorney’s fees and costs shall be awarded in accordance with § 18-46-104(2).

Reversed and remanded.

       According to the Hospital’s trial brief, Cox was injured by a third party, namely James Shane Jones. According to Cox’s brief in response to the Hospital’s trial brief, liability benefits have already been paid by the tortfeasor’s insurance carrier.

       In subsequent amended complaints, the Hospital corrected the name of the insurance carrier to State Farm Mutual Automobile Insurance Company and added Walter T. Cox as a defendant.


source: Caselaw Access Project

author: Annabelle Clinton Imber, Justice.

license: Public Domain

text:
    L.R. TUCKER v. Melton HOLT, Tax Collector
    00-517
    33 S.W.3d 110
    Supreme Court of Arkansas
    Opinion delivered December 14, 2000

      Appellant, pro se.

      Hale, Fogleman & Rogers, by: Joe M. Rogers, for appellee.
   Annabelle Clinton Imber, Justice.

Appellant L.R. Tucker owns three lots within the city of West Memphis. Two of the lots are improved, and the third. lot is vacant and unimproved. On or about October 9, 1996, Mr. Tucker tendered payment to the Crittenden County Tax Collector for real property taxes assessed against the lots during the 1995 tax year. Thereafter, the tax collector, appellee Melton Holt, Jr., notified Mr. Tucker that his payment could not be processed until he paid an additional amount due as the result of a “grass cut Hen” imposed against the unimproved lot. The City of West Memphis had mowed or cut the vegetation on Mr. Tucker’s unimproved lot on July 23, 1995, and then on December 7, 1995, the City Council of West Memphis passed a resolution imposing a grass-cutting lien in the amount of $75.66 on the property pursuant to Ark. Code Ann. §§ 14-54-901 — 904 (Repl. 1998). Mr. Tucker failed to satisfy the grass-cutting lien, and the tax collector refused to accept a partial payment of taxes for the tax year 1995. In October of 1997, Mr. Tucker again tendered payment to the tax collector for real property taxes assessed against the lots during the 1996 tax year. The tax collector again refused to accept this payment until Mr. Tucker paid the 1995 delinquent taxes, including the grass-cutting lien.

On November 10, 1997, Mr. Tucker filed a petition in the Crittenden County Chancery Court seeking a writ of mandamus to compel the tax collector to accept the payment he had tendered for his real property taxes. His petition also asked the chancery court to enjoin the tax collector from demanding future payment in excess of the amount due for real property taxes. Each party moved for summary judgment in the chancery court. Before ruling on the motions, however, the chancellor concluded that subject matter jurisdiction did not He in chancery court. The case was then transferred to the Crittenden County Circuit Court. The circuit court eventually held a hearing on the motions for summary judgment and entered an order in which it cited this court’s holding in Howell v. Lamberson, 149 Ark. 183, 231 S.W. 872 (1921) and directed the tax collector to accept payment from Mr. Tucker for the general taxes assessed on the property for the tax years 1995 through 1998 without penalty or interest and without requiring Mr. Tucker to pay the grass-cutting lien. The circuit court also upheld the constitutionality of Ark. Code Ann. §§ 14-54-901 — 904 and found (a) that the City of West Memphis properly followed sections 14-54-901 — 904 in enacting its ordinance and in referring the grass-cutting lien to the county tax collector for enforcement, and (b) that the tax collector properly followed the statutory scheme set forth in section 14-54-904 in including the grass-cutting lien on the tax statement sent to Mr. Tucker. Finally, the circuit court ruled that “the tax collector is authorized to proceed in accordance with applicable state law in enforcing the collection of such tax in the event the plaintiff refuses to pay the tax in accordance with this ruling.” This later ruling by the circuit court is the focus of Mr. Tucker’s appeal.

For his first point on appeal, Mr. Tucker argues that the circuit court erred in finding that the tax collector is authorized to enforce collection of the grass-cutting lien for the municipality. Specifically, Mr. Tucker contends that sections 14-54-901 — 904 provide the tax collector with no authority to collect the grass-cutting Hen for the City of West Memphis. We disagree.

Section 14-54-901 provides that incorporated towns and cities of the first and second class are empowered to order the owners of lots within their towns or cities to cut weeds on their property “after the town or city has provided therefore by an ordinance to that effect.” Section 14-54-903 states:

(a) If the owner of any lot or other real property within an incorporated town or city shall neglect or refuse to remove, abate, or eliminate any condition as may be provided for under an ordinance passed by the city or town as provided for in § 14-54-901, after having been given seven (7) days’ notice in writing to do so, then the town or city is authorized to do whatever is necessary to correct the condition and to charge the cost thereof to the owner of the lots or other real property.
(b) The town or city is given a hen against the property for the costs.

With regard to enforcing the aforementioned Hen, section 14-54-904 provides, in relevant part:

(a) The Hen provided for in 14-54-903 may be enforced and cohected in either one of the following manners:
(1) At any time within eighteen (18) months after work has been done, by an action in the chancery court; or
(2) The amount of the hen provided in 14-54-903 may be determined at a hearing before the governing body of the municipality held after thirty (30) days’ written notice by certified mail to the owner of the property if the name and whereabouts of the owner are known. If the name of the owner cannot be determined, then the amount will be determined only after publication of notice of the hearing in a newspaper having a bona fide circulation in the county where the property is located for one (1) insertion per week for four (4) consecutive weeks. The determination of the governing body is subject to appeal by the property owner in the chancery court. The amount so determined at the hearing, plus ten percent (10%) penalty for collection, shall be certified by the governing body of the municipality to the tax collector of the county where the municipality is located, and placed by him on the tax books as delinquent taxes, and collected accordingly. The amount, less three percent (3%) thereof, when so collected shall be paid to the municipality by the county tax collector.

(Emphasis added.) Based on the plain language of these statutes, it is clear that the tax coHector has authority to coHect the grass-cutting lien for the City of West Memphis.

Mr. Tucker also argues that those statutory provisions only authorize the county tax coHector to coHect such a Hen after (1) an appropriate ordinance has been adopted by the city, and (2) the governing body of the city has certified the amount of the Hen to the tax coHector for placement on the books and coUection. See Ark. Code Ann. §§ 14-54-901 — -904. The record in this case indicates that both of those contingencies occurred. In 1990, the City Council of West Memphis passed ordinance No. 1385 that orders property owners to cut weeds and grass on their property. If a property owner fails to comply with the order, the ordinance also authorizes the city to do whatever is necessary to correct the condition and charge the cost thereof to the owner. On December 7, 1995, after due notice to property owners as required by Ark. Code Ann. § 14-54-904(a)(2), the city council passed resolution number 1463 that certified “the amounts of Hens imposed on certain properties for grass cutting contracted by the City of West Memphis pursuant to Ordinance 1385.” Included in that resolution was the Hen on Mr. Tucker’s unimproved lot in the amount of $75.66 for grass cutting services performed on July 23, 1995. Thus, the appropriate ordinance was passed by the city coundl and the city’s governing body properly certified the amount of the Hen to the county tax coHector for coUection. Accordingly, the tax coHector had authority to pursue collection of the hen from Mr. Tucker, and the trial court did not err in so holding.

In further argument, Mr. Tucker suggests that section 14-54-904 does not provide the tax collector with any authority to collect the lien from him because that provision is not specifically contained in the “Taxation Code” of Arkansas. In other words, he argues that the tax collector may only perform those duties enumerated in the Arkansas tax code, and may not perform duties assigned to the tax collector by statutes that appear elsewhere in the Arkansas Code. Mr. Tucker fails to cite any authority to support his argument. We will not consider assertions of error that are unsupported by convincing legal authority unless it is apparent without further research that the argument is well-taken. Rainey v. Hartness, 339 Ark. 293, 5 S.W.3d 410 (1999).

As a second point for reversal, Mr. Tucker asserts that the trial court erred “in fading to find that codection by the county tax collector of the amount of a levy based on a municipal ordinance, as a tax, fads to comply with the requirements of provisions of Article 16, section 5, of the State Constitution, which prescribe that property shall be taxed according to value.” Article 16, section 5, of the Arkansas Constitution provides, in relevant part: “All real and tangible personal property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the State.” Mr. Tucker contends that the imposition of the lien on his property violates this constitutional provision because the amount of the lien has no relation to the value of the property. Mr. Tucker’s argument is -without merit. Article 16, section 5, of the Arkansas Constitution refers to property taxes. Mr. Tucker’s property taxes are not in dispute here; rather, this case involves an alternative means by which the City of West Memphis and similar cities and towns may recover their costs for “cutting unsightly weed lots when the property owner neglects to do so.” Emergency Clause of Act 339 of 1979. The hen against Mr. Tucker’s property relates to a fee for services that is imposed in the government’s exercise of its police power; whereas, a tax is imposed for general revenue purposes. City of Marion v. Baioni, 312 Ark. 423, 850 S.W.2d 1 (1993). Mr. Tucker admitted in his motion for summary judgment that the grass-cutting Hen is “for a fee, not a tax.”

Mr. Tucker also insists that an unidentified “statutory requirement that all taxes must be ‘adopted at a special or general election by the qualified electors of the city or in the area of the county where the tax is to be imposed, as the case may be’ should be met.” Because he again fails to cite any authority to support his contention, we need not address the argument on appeal. Rainey v. Hartness, supra. In any event, Ark. Code Ann. § 14-54-903 authorizes the imposition of a lien in order for a municipality to recover a fee for the cost of providing services that the property owner refuses to perform. City of Marion v. Baioni, supra.

For his third point on appeal, Mr. Tucker argues that “the trial court erred in failing to find that there is no statutory authority winch authorizes or permits the county tax collector to add amounts for taxes to the county tax book, nor to demand payment for amounts for taxes not stated in the county tax book.” In support of his contention, Mr. Tucker cites several statutory provisions. First, Ark. Code Ann. § 26-28-108 (Repl. 1997) states that the clerk of the county court is to make out and deliver the tax books to the tax collector, thereby authorizing the tax collector to collect the taxes. Next, Ark. Code Ann. § 26-28-305 (Repl. 1997) provides that the tax collector’s duties are (1) to make changes to the tax books after the assessor files the final abstract of the tax books “as authorized by the assessor by a two-part change form;” (2) to prepare the tax statements and tax receipts and collect the taxes; and (3) to prepare and certify the monthly and final distributions of all current and delinquent taxes collected by the tax collector. Finally, Ark. Code Ann. § 26-2-110 (Repl. 1997) states: “If any collector shall collect taxes not stated on the tax book or shall collect a greater amount than is therein stated, except as authorized by this act, he shall be guilty of a Class C felony.” Mr. Tucker claims that the tax collector is prohibited from collecting the city’s grass-cutting lien because the county tax collector may only collect those amounts that are stated on the tax books, and the tax collector may not add amounts to the tax books. These claims are also without merit.

Section 14-54-904(a)(2) specifically provides that the amount of the Hen shall be certified by the governing body of the municipality to the county tax collector, “and placed by him on the tax books as delinquent taxes, and collected accordingly.” By that statute, the General Assembly has given the tax collector the authority to place the hen amount on the tax books as delinquent taxes and then to collect that amount accordingly. Thus, when Mr. Tucker states that “there is no statutory authority which authorizes or permits the county tax collector to add amounts for taxes to the county tax book,” he is clearly mistaken. Likewise, Mr. Tucker is mistaken when he states that the tax collector illegally demanded payment for taxes not stated on the tax books in violation of section 26-2-110. Section 14-54-904(a) (2) requires that the amount of the lien be placed on the tax books by the tax collector before it can be collected. Mr. Holt, the Crittenden County Tax Collector, swore by affidavit that he entered the grass-cutting lien on the 1995 tax book. We therefore conclude that the tax collector followed the statutory procedure for collection of the lien and did not illegally demand payment for taxes not stated on the tax books in violation of section 26-2-110.

In his final point on appeal Mr. Tucker contends that the grass-cutting lien amounts to an illegal exaction pursuant to the provisions of Article 16, section 13, of the Arkansas Constitution. He asserts that the lien constitutes an illegal exaction because “a tax ... was never levied, assessed or extended on the tax records” and was instead “manually stamped on the tax book” by the county tax collector. In other words, Mr. Tucker finds fault with the fact that the amount of the lien was “not stated on the county tax book, as prepared and delivered to [the tax collector] by the clerk of the county court” but was “unilaterally” added to the tax book by the tax collector. Such actions by the county tax collector, however, do not result in an illegal exaction. An illegal exaction is a tax that is either not authorized by law or is contrary to law. Hartwick v. Thorne, 300 Ark. 502, 780 S.W.2d 531 (1989). Here, the lien was specifically authorized by law in Ark. Code Ann. §§ 14-54-901— 904. A flaw in the assessment or collection procedure, no matter how serious from the taxpayer’s point of view, will not make the exaction illegal. Martin v. Couey Chrysler Plymouth, Inc., 308 Ark. 325, 824 S.W.2d 832 (1992). In this case, Mr. Tucker challenges one method for the enforcement and collection of the grass-cutting lien. Article 16, section 13, of the Arkansas Constitution was not intended to be a vehicle for such a grievance. Id. Accordingly, Mr. Tucker’s illegal-exaction argument is without merit.

Affirmed.

Glaze and Smith, JJ., concur.

       According to Mr. Tucker, he never raised or presented the issue of the constitutionality of Ark. Code Ann. §§ 14-54-901 — 904 to the trial court. Moreover, he asserts on appeal that the “question of the constitutionality of the statute is irrelevant.”

       The tax collector has not cross-appealed the trial court’s ruling, pursuant to Howell v. Lamberson, that he must accept payment from Mr. Tucker for the general taxes assessed on the property for the tax years 1995 through 1998 without penalty or interest and without requiring Mr. Tucker to pay the grass-cutting lien imposed by the City of West Memphis.

       Mr. Tucker did not exercise his right to appeal the city council’s determination of the amount of the grass-cutting lien as provided by Ark. Code Ann. § 14-54-904. Moreover, he does not dispute that amount in this case.

       Delinquent taxes on real property are collected according to the provisions of Ark. Code Ann. § 26-37-101 et seq. (Repl. 1997), which include the sale of tax-delinquent lands by the Commissioner of State Lands.


author: ANNABELLE Clinton Imber, Justice,

text:
    ULTRACUTS LTD.; Ultracuts Franchises, Inc. v. WAL-MART STORES, INC.; Wal-Mart Stores Canada, Inc.
    00-593
    33 S.W.3d 128
    Supreme Court of Arkansas
    Opinion delivered December 14, 2000

      Everett Law Firm, by: David D. Stills and John C. Everett; and Shemin Law Firm, by: Kenneth R. Shemin, for appellants.

      Ranae Bartlett, Jon B. Comstock, and Stephanie Gordon, for appellees.
   ANNABELLE Clinton Imber, Justice,

This appeal arises from an order of the Circuit Court of Benton County granting summary judgment to the appellees, Wal-Mart Stores, Inc., and Wal-Mart Canada, Inc. Appellants, Ultracuts Ltd., and Ultracuts Franchises, Inc., argue on appeal that the trial court improperly granted summary judgment, dismissing their claims of breach of contract and fraud, because questions of fact remained to be decided. Ultracuts further argues that the trial court improperly granted Wal-Mart’s motion to strike Ultracuts’ second amended complaint. Wal-Mart argues that summary judgment was properly granted and that the second amended complaint was properly dismissed.

The Ultracuts appellants are Canadian corporations operating hair salons throughout western Canada and the United States. The Wal-Mart appellees are retail organizations headquartered in Bentonville, Arkansas.

In 1994, Wal-Mart acquired all of the assets of Woolworth Canada, Inc., thereby gaining possession of 122 Woolco department stores, forty-three of which were located in western Canada, an area in which Ultracuts was a widely recognized leader in hair salon operations. Ultracuts alleged that its president, Meril Rivard, was contacted in 1995 by a realtor about the possibility of placing Ultracuts salons within Wal-Mart stores throughout western Canada. When Mr. Rivard expressed his interest in such an arrangement, Brad Messer, Wal-Mart’s international property manager at that time, forwarded four lease agreements to him. In September 1995, Mr. Rivard signed and returned a lease agreement for Wal-Mart store number 3116 in Grant Park, Winnipeg, Manitoba. Mr. Rivard became concerned, however, when the manager of the Grant Park Wal-Mart indicated that he would not honor the lease. Also within this same time period, Mr. Rivard had a conversation with Brian Luborsky, the president of a rival hair salon business called Magicuts. Mr. Luborsky informed Mr. Rivard that Magicuts was going to be placing salons within Wal-Mart stores in western Canada.

Concerns over these developments prompted Mr. Rivard to travel to Bentonville for a meeting with Mr. Messer on October 12, 1995. Mr. Rivard testified by deposition and affidavit that during this meeting Mr. Messer entered into an oral contract, termed the “Ultracuts Agreement,” on behalf of Wal-Mart in order to assuage Mr. Rivard’s concerns about doing business with Wal-Mart. In the Ultracuts Agreement, the two parties purportedly agreed that:

1. Ultracuts would occupy certain of the newly acquired WalMart stores in Western Canada as a licensee of the defendants for purposes of operating a hair salon business in such stores;
2. Wal-Mart would not place any other operator of a hair salon business in its stores in western Canada without first granting to Ultracuts the right to enter into a license agreement to occupy such stores; and,
3. Wal-Mart would not enter into a business relationship with any hair salon business other than Ultracuts within any market in which Ultracuts operates a hair salon business within one of the newly acquired Wal-Mart stores.

Because his concerns had been addressed, Mr. Rivard testified that he then signed the three remaining lease agreements and delivered them to Mr. Messer for execution. Ultracuts then began expending large amounts of capital in preparation for entry into several Wal-Mart stores in western Canada. Mr. Messer denied entering into the oral contract described by Mr. Rivard.

On February 8, 1996, Ultracuts and Wal-Mart executed a “License Agreement” to be effective as of January 22, 1996, pertaining to the operation of Ultracuts’ hair salons inside stores operated by Wal-Mart Canada, Inc. The terms of the License Agreement specifically set out the rights and responsibilities of each party, including such issues as who will maintain and repair the premises, the right of access to the premises, the hours during which the Ultracuts salons will operate, the amount of insurance coverage to be maintained by Ultracuts, the type of business to be conducted in the licensed premises, the duration of the contract, and the terms of cancellation, renewal, and default. The amount of the monthly license fee to be paid by Ultracuts is specified on a store-by-store basis in the attached License Schedule, which is incorporated into the contract by its terms. Although only four Wal-Mart stores are designated as Licensed Premises in the License Schedule attached as Schedule “A,” the License Agreement anticipates other Licensed Premises being added to the agreement in the future. According to the terms of the contract, additional retail premises may be added to the agreement by executing a New Store License Schedule, which is attached to the License Agreement as Schedule “B” and incorporated into the contract by its terms. The License Agreement contains no provision granting Ultracuts the right of first refusal to license any space in Wal-Mart stores in western Canada in the future; nor does it contain any promise by Wal-Mart not to place Ultracuts’ competitors in Wal-Marts within the same market. The License Agreement does provide, in paragraph 22.01, that:

This Agreement constitutes the entire agreement between the parties regarding this Licensee’s use of the Licensed Premises. It is understood and agreed that there are no agreements, conditions, warranties, terms, representations, oral or written, statutory or otherwise, other than those contained herein, and that all prior conversations, understandings, agreements, statements, communications or agreements, oral or written, with respect to this Agreement are hereby superseded.

Following execution of the License Agreement, Ultracuts continued to prepare for expansion into the western Canada Wal-Mart stores by expanding its staff, obtaining increased financing, enhancing its computer capabilities, and foregoing other development opportunities. Ultracuts communicated regularly with Wal-Mart officials, keeping them informed of the progress made by Ultracuts toward fulfilling its agreement.

On September 18, 1996, Ultracuts filed a complaint against Wal-Mart alleging breach of contract and fraud. Ultracuts amended its complaint on February 27, 1997, again alleging that Wal-Mart was in breach of the October 12, 1995 oral contract and had committed fraud against Ultracuts by concealing information concerning a conflicting agreement between Wal-Mart and Magicuts that prevented Wal-Mart from performing as promised under the Ultracuts Agreement. Ultracuts requested specific performance and damages. Wal-Mart denied the existence of a valid oral contract and denied the allegation of fraud.

Mel Redman, head of Wal-Mart’s transition team in Canada, testified by deposition that in 1994 he entered into a contract with Magicuts, whereby Wal-Mart promised Magicuts the right of first refusal to license space for hair salons in Canadian Wal-Mart stores. Mr. Messer admitted that he was aware of the Magicuts agreement as early as November 1995, although Ultracuts alleges he knew of the conflicting agreement much earlier. His successor, Scott Robertson, acknowledged that he became aware of the Magicuts agreement as early as March 1996. Ultracuts has alleged that Wal-Mart committed fraud by withholding this information from it until after Ultracuts expended considerable amounts of money in anticipation of obtaining licenses to operate inside Wal-Mart stores in western Canada, even though Wal-Mart was aware of Ultracuts’ reliance on the Ultracuts Agreement.

On June 10, 1998, Wal-Mart filed a motion for summary judgment, asserting that there was no genuine issue of material fact before the trial court, and that the License Agreement’s integration clause precluded Ultracuts’ claim for breach of the alleged October 12, 1995 oral agreement. Subsequently, on October 16, 1998, Ultracuts filed a second amended complaint that again alleged breach of the October 12, 1995 oral agreement and fraud. In its second amended complaint, Ultracuts alleged for the first time that the oral agreement with Wal-Mart promised Ultracuts the right of first refusal to license any available space in Wal-Mart stores in western Canada, not just the right of first refusal to license available hair salon space. On October 29, 1998, Wal-Mart filed a motion to strike Ultracuts’ second amended complaint.

In an order entered on March 2, 1999, the trial court granted Wal-Mart’s motion for summary judgment and its motion to strike the second amended complaint. Specifically as to the second amended complaint, the trial court held that, although Wal-Mart had notice of and was not surprised by the new allegations, because the allegations were “significantly contradictory to other matter put in the record,” the motion to strike was granted.

The trial court granted summary judgment as to the claim for breach of contract because: (1) the alleged contract was missing an essential term, namely the time frame in which Wal-Mart must decide whether to place hair salons in its western Canadian stores; (2) there had been no actual breach of the alleged contract; (3) anticipatory repudiation was not appropriate to the facts of the case; (4) the alleged contract violated the statute of frauds because it created an interest in property and was not reduced to writing; (5) the case was not taken out of the statute of frauds by detrimental reliance or substantial performance; (6) a subsequent written contract was a fully integrated document which subsumed the alleged oral contract; and (7) the alleged agreement violates the rule against perpetuities.

The trial court granted summary judgment as to the claim of fraud because (1) any reliance by Ultracuts on the alleged statements of the defendants was not reasonable and (2) the written “License Agreement” integrated all prior and contemporaneous agreements and statements, so no claim of fraud could survive.

Holding that genuine issues of material fact remain to be decided, the Arkansas Court of Appeals reversed the trial court’s grant of summary judgment on all counts. Ultracuts Ltd. v. Wal-Mart Stores, 70 Ark. App. 169, 16 S.W.3d 265 (2000). The case is before us on petition for review; therefore, our jurisdiction is pursuant to Ark. Sup. Ct. R. 1-2(e).

“Summary judgment is to be granted by a trial court only when it is clear that there are no genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter of law.” Wallace v. Broyles, 331 Ark. 58, 66, 961 S.W.2d 712 (1998) (Wallace I) (citing Pugh v. Griggs, 327 Ark. 577, 824 S.W.2d 387 (1992)). The standard is whether the evidence is sufficient to raise a fact issue, not whether the evidence is sufficient to compel a conclusion. Id. (citing Caplener v. Bluebonnet Milling Co., 322 Ark. 751, 911 S.W.2d 586 (1995)). A fact issue exists, even if the facts are not in dispute, if the facts “may result in differing conclusions as to whether the moving party is entitled to judgment as a matter of law. . . . [I]n such an instance, summary judgment is inappropriate.” Wallace v. Broyles, 332 Ark. 189, 961 S.W.2d 712 (1998) (supplemental opinion denying rehearing) (Wallace II).

On review, this court determines if summary judgment was appropriate based on whether the evidence presented in support of summary judgment leaves a material question of fact unanswered. Wallace I, supra. This court views the evidence in a light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party.. Wallace I, supra. Our review focuses not only on the pleadings, but also on the affidavits and other documents filed by the parties. Id. (citing Angle v. Alexander, 328 Ark. 714, 945 S.W.2d 933 (1997)).

I. Breach of Contract

“A person may be liable for breach of contract if the complaining party can prove the existence of an agreement, breach of the agreement, and resulting damages.” Sexton Law Firm, P.a. v. Milligan, 329 Ark. 285, 298, 948 S.W.2d 388, 395 (1997); Rabalaias v. Barnett, 284 Ark. 527, 683 S.W.2d 919 (1985). In the present case, the trial court held that the October 12, 1995 oral Ultracuts Agreement was subsumed by the January 22, 1996 written License Agreement. Consequently, Ultracuts failed to assert the breach of a valid and enforceable contract between Ultracuts and Wal-Mart. We agree.

“It is a general proposition of the common law that in the absence of fraud, accident or mistake, a written contract merges, and thereby extinguishes, all prior and contemporaneous negotiations, understandings and verbal agreements on the same subject.” Farmers Coop. Assoc. v. Garrison, 248 Ark. 948, 454 S.W.2d 644 (1970). “This is simply the affirmative expression of the parol evidence rule.” Id. Only where an ambiguity is found within the contract may parol evidence be admitted. Rainey v. Travis, 312 Ark. 460, 850 S.W.2d 839 (1993). It may not be admitted to alter, vary, or contradict the written contract, but it may be admitted to prove an independent, collateral fact about which the written contract was silent. Id.

Ultracuts alleged that Wal-Mart breached the October 12, 1995 oral Ultracuts Agreement that purportedly granted Ultracuts certain rights pertaining to the future licensing of available space in Wal-Mart stores in western Canada. On January 22, 1996, the two parties entered into a written “License Agreement” that included provisions pertaining to the future licensing of retail space within Wal-Mart stores in Canada. Ultracuts argues that the License Agreement does not contain the whole agreement between the parties, but merely pertains to the licensing of the four stores specified on the License Schedule. Although the License Agreement does provide for the contemporaneous licensing of space in four stores in western Canada, it is not limited to that purpose. The explicit language of the agreement clearly dictates the terms' under which future licensing agreements between Wal-Mart and Ultracuts will be reached; that is, the agreement provides a framework within which Wal-Mart will grant Ultracuts licenses to operate hair care salons in its stores. Likewise, the term “Licensed Premise” is defined to apply to “those stores [sic] which a license schedule has been executed by the parties from time to time.” (Emphasis added.) The language of the contract is unambiguous. It contains no agreement to allow Ultracuts the right of first refusal to license available space, nor does it contain an agreement by Wal-Mart not to license space to competitors of Ultracuts within the same market. Even if these terms were part of a valid oral agreement between the parties prior to the License Agreement, all prior oral agreements relating to the process of Ultracuts licensing space in Wal-Mart stores were superseded by the written License Agreement. We will not resort to parol evidence to alter the terms of that agreement by enforcing portions of the oral agreement not incorporated into the written License Agreement.

Ultracuts argues alternatively that parol evidence is admissible in this matter because fraud creates an exception to the parol evidence rule. Ultracuts further argues that fraud was alleged. “The rule of evidence forbidding the addition, alteration or contradiction of a written instrument by parol testimony of antecedent and contemporaneous negotiations does not apply where there is an issue of fraud in the procurement of the writing.” Hamburg Bank v. Jones, 202 Ark. 622, 624, 151 S.W.2d 990 (1941). Thus, the fraud that must be alleged in order to avoid the parol evidence rule is fraud in the procurement of the contract. Ultracuts has not alleged that the January 22, 1996 License Agreement was procured by fraud. Rather, Ultracuts has alleged that Wal-Mart committed fraud when it failed to disclose to Ultracuts in a timely manner that it was unable to honor the Ultracuts Agreement, causing Ultracuts to expend large amounts of money in reliance upon the agreement. Ultracuts’ allegation amounts to a separate tort claim of fraud. It did not plead an exception to the parol evidence rule. We therefore hold that the alleged oral agreement between Wal-Mart and Ultracuts merged into the subsequent written contract, rendering the October 12, 1995 oral agreement invalid and unenforceable. As a result, we affirm the trial court’s grant of summary judgment on the claim of breach of contract.

II. Fraud

Ultracuts next argues that the trial court erred by granting summary judgment on the claim of fraud because the question of whether Ultracuts reasonably relied upon the representations made by Wal-Mart was a question of fact that remains to be decided. Ultracuts alleged that Wal-Mart committed fraud when it faded to disclose to Ultracuts that it had a second contract precluding it from honoring its agreement to offer Ultracuts the right of first refusal to license space in all western Canadian Wal-Mart stores.

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 rebanee. 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).

Golden Tee, Inc. v. Venture Golf Schools, Inc., 333 Ark. 253, 266, 969 S.W.2d 625 (1998).

The trial court granted summary judgment on the fraud claim because it found as a matter of law that any reliance by Ultracuts on the statements and promises made by Wal-Mart was not reasonable and that, because the alleged oral agreement was subsumed by the fully integrated License Agreement, no claim of fraud could survive merger.

For the reasons previously stated, we agree with the trial court that the Ultracuts Agreement no longer existed following the execution of the License Agreement on January 22, 1996. See Farmers Coop. Assoc. v. Garrison, supra. Accordingly, Ultracuts could not justifiably rely upon any representations by Wal-Mart following that date. However, genuine issues of fact remain to be decided regarding Ultracuts’ fraud claim preceding the execution of the January 22, 1996 License Agreement.

Ultracuts alleged in its complaints that on October 12, 1995, Wal-Mart promised, in part, to offer any available license space in its stores in western Canada to Ultracuts before offering it to any other provider of hair care services. Ultracuts further claimed in its complaint that, in reliance upon Wal-Mart’s representations, it obtained increased levels of financing, hired new staff, updated its computer systems to accommodate additional stores, ordered new equipment and trade fixtures for installation in the new stores, traveled extensively to examine new store premises, and refrained from other investment and expansion opportunities to preserve capital for the expansion into Wal-Mart. In response to Wal-Mart’s motion for summary judgment, Ultracuts provided an affidavit from its president, Meril Rivard, and attached documents detailing the monetary expenditures Ultracuts claimed to have made in reliance upon WalMart’s representations. These documents contain numerous expenditures allegedly incurred by Ultracuts between October 12, 1995, and January 22, 1996. In connection with its fraud claim, Ultracuts also alleged that Mr. Messer knew about the conflicting agreement with Magicuts no later than November 1995; but, with full knowledge that Ultracuts was acting in reliance on Wal-Mart’s assurances, he nevertheless failed to notify Ultracuts about the conflicting agreement, and he continued to tell Ultracuts in December 1995 that several store locations in western Canada would be available to Ultracuts.

Clearly, fact questions are presented that preclude summary judgment as to the fraud claim. The trial court erred when it held as a matter of law that Ultracuts’ reliance was unreasonable and granted summary judgment accordingly. See Van Dyke v. Glover, 326 Ark. 736, 745, 934 S.W.2d 204 (1996). We therefore reverse the grant of summary judgment as to the claim of fraud to the extent that Ultracuts may have relied upon representations made by WalMart prior to execution of the January 22, 1996 License Agreement.

III. Motion to Strike

Ultracuts also appeals from the order of the trial court granting Wal-Mart’s motion to strike its second amended complaint. The trial court found that Wal-Mart had not been surprised by the allegations contained in the second amended complaint and made no finding of other prejudice. The trial court ordered the pleading stricken anyway because it contained terms inconsistent with previous pleadings.

“[ A] party may amend his pleadings at any time without leave of the court. Where, however, upon motion of an opposing party, the court determines that prejudice would result or the disposition of the cause would be unduly delayed because of the filing of an amendment, the court may strike such amended pleading or grant a continuance of the proceeding.” Ark. R. Civ. P. 15(a). A trial court is vested with broad discretion in allowing or denying amendment to pleadings. Stoltz v. Friday, 325 Ark. 399, 926 S.W.2d 438 (1996). However, “a party should be allowed to amend a pleading at any time as long as it does not prejudice his adversary.” Milne v. Milne, 266 Ark. 900, 587 S.W.2d 229 (1979). A trial court abuses its discretion if it strikes an amended pleading in the absence of prejudice to the opposing party. Webb v. Workers’ Compensation Comm’n, 286 Ark. 399, 692 S.W.2d 233 (1985). In the instant case, the trial court made no finding of prejudice, but ordered the complaint stricken anyway. This was an abuse of discretion. Webb v. Workers’ Comp. Comm’n, supra. We therefore reverse the trial court’s order striking the second amended complaint filed by Ultracuts.

Affirmed in part; reversed and remanded in part.

Corbin, J., not participating.

       We recognize that Ultracuts has raised several alternative arguments for the reversal of the summary judgment. However, because we have held that summary judgment was appropriately granted based upon the doctrine of merger, the alternative arguments for reversal become moot.


author: LAVENSKI R. SMITH, Justice.

text:
    Lila Kay BURNETTE v. PERKINS & ASSOCIATES
    00-607
    33 S.W.3d 145
    Supreme Court of Arkansas
    Opinion delivered December 14, 2000

      Hill Gilstrap Perkins Trotter & Warner, by: Scott C. Trotter, for appellants.

      Rose Law Firm, a Professional Association, by: Michael N. Shannon, for appellee.
   LAVENSKI R. SMITH, Justice.

Appellants Lila Kay Burnette, Ron Smith, Fallon Snyder, William Johnston, Bobby Bice, J. Terrance O’Brien, and R.L. Wyles, Commissioners of Cedar Mountain Sewer Improvement District No. 43 of Garland County, Arkansas, and Cedar Mountain Sewer District No. 43 (“Cedar Mountain”), appeal a Garland County chancery judgment entered on an order denying their motion for attorney’s fees. The appellants sought attorney’s fees under Ark. Code Ann. § 16-22-308, which authorizes courts to award attorney’s fees to prevailing parties in certain specified contract actions. They did so following the court’s grant of their motion to dismiss the appellee’s, Perkins & Associates (“Perkins”), contract action. The trial court ruled that its dismissal of the Perkins complaint without prejudice was not sufficient to bestow “prevailing party” status on the appellants under Ark. Code Ann. § 16-22-308. We agree with the trial court ruling and affirm.

Facts

This litigation arises from the formation of Cedar Mountain Sewer District No. 43 and plans for construction of a sewer collection system. It appears Cedar Mountain retained Perkins to furnish engineering services for the project. On May 12, 1999, Perkins filed a Petition for Injunction and for Appointment of a Receiver in Garland County Chancery Court. Perkins alleged that on August 21, 1997, Cedar Mountain entered into a contract in connection with forming the sewer district and installing a sewage collection system, that appellee fulfilled its obligations under the contract, and that fees and costs due it totaling $207, 633.72 remain unpaid. Additionally, Perkins sought interest, as well as fees and costs. Perkins did not attach the contract to the petition, nor include contract terms in the petition.

On June 3, 1999, the commissioners filed a Motion to Dismiss or in the Alternative for more Definite Statement. In that motion, Cedar Mountain asserted that the petition contained only vague and conclusory terms that were insufficient as to the alleged contract and damages such that relief thereon could not be granted. In the alternative, they moved for a more definite statement. Perkins responded and attached a copy of the contract to its response. The trial court held a hearing on August 2, 1999, and took the motion under advisement. On August 16, 1999, the trial court entered an order requiring Perkins to amend its complaint by naming the actual party defendant and by complying with Rule 10(d) of the Arkansas Rules of Civil Procedure within twenty days. Perkins filed an amendment to its complaint on August 16, 1999, making Cedar Mountain Sewer District No. 43 of Garland County a party and attaching a copy of the contract to comply with Rule 10(d).

On August 25, 1999, the commissioners and the sewer district filed a Renewed Motion to Dismiss, alleging the amendment to the petition failed to comply with the court’s order in that it did not identify the actual party defendant, as Rule 10(d) requires. They also asserted that the amendment to the complaint failed to satisfy the time requirement in the order, which required an amended complaint be filed within twenty days. A hearing was held on October 4, 1999. By an order entered November 9, 1999, the trial court granted the dismissal motion but did so without prejudice.

On November 19, 1999, appellant filed their motion for attorney’s fees under Ark. R. Civ. P. 54(e)(1) and Ark. Code Ann. § 16-22-308, asserting they were the prevailing party in an action on a contract. Following a hearing on January 19, 2000, the trial court found appellants were not a prevailing party as required under Ark. Code Ann. § 16-22-308. An order and judgment on the motion for attorney’s fees were filed February 10, 2000. This appeal followed.

Standard of Review

As a chancery case, we review the instant case de novo. This court has been precise in stating what de novo review entails:

Equity cases are tried de novo on appeal upon the record made in the chancery court, and the rule that this court disposes of them and resolves the issues on that record is well established; the fact that the chancellor based his decision upon an erroneous conclusion does not preclude this court’s reviewing the entire case de novo. An appeal in a chancery case opens the whole case for review. All of the issues raised in the court below are before the appellate court for decision and trial de novo on appeal in equity cases involves determination of fact questions as well as legal issues. The appellate court reviews both law and fact and, acting as judges of both law and fact as if no decision had been made in the trial court, sifts the evidence to determine what the finding of the chancellor should have been and renders a decree upon the record made in the trial court. The appellate court may always enter such judgment as the chancery court should have entered upon the undisputed facts in the record.

Conagra, Inc. v. Tyson Foods, Inc., 342 Ark. 672, 30 S.W.3d 725 (2000); Ferguson v. Green, 266 Ark. 556, 587 S.W.2d 18 (1979) (citations omitted). We do not reverse a finding of fact of the chancery court unless we conclude that the chancery court has clearly erred. Bendinger v. Marshalltown Trowell Co., 338 Ark. 410, 994 S.W.2d 468 (1999); Saforo & Assoc., Inc. v. Porocel Corp., 337 Ark. 553, 991 S.W.2d 117 (1999). We have said, in addition, that a finding is clearly erroneous when, even though there is evidence to support it, the appellate court is left with the definite and firm conviction that a mistake has been made. Bendinger; Conagra, Inc. This case also involves statutory interpretation of Ark. Code Ann. §16-22-308, which we also review de novo. Stephens v. Arkansas Sch. For the Blind, 341 Ark. 939, 20 S.W.3d 397 (2000).

“The Prevailing Party” under Ark. Code Ann. § 16-22-308

Appellants assert they are allowed fees under Ark. Code Ann. § 16-22-308 (Repl. 1999), “attorney’s fees in certain civil actions.” The statute provides:

In any civil action to recover on an open account, statement of account, account stated, promissory note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services, or breach of contract, unless otherwise provided by law or the contract which is the subject matter of the action, the prevailing party may be allowed a reasonable attorney fee to be assessed by the court and collected as costs.

(Emphasis added.) Clearly, attorney’s fees are allowable in a contract action. Whether they are granted and in what amount are within the discretion of the trial judge, and the exercise of that discretion will be upheld unless it is abused. Quachita Trek and Development Company v. Rowe, 341 Ark. 456, 17 S.W.3d 491 (2000); Chrisco v. Sun Ind., Inc. 304 Ark. 227, 800 S.W.2d 717 (1990). Jones v. Abraham, 341 Ark. 66, 15 S.W.3d 310 (2000); New Hampshire Ins. Co. v. Quilantan, 269 Ark. 359, 601 S.W.2d 836 (1980); Equitable Life Assur. Society v. Rummell, 257 Ark. 90, 514 S.W.2d 224 (1974); Federal Life Ins. Co. v. Hase, 193 Ark. 816, 102 S.W.2d 841 (1937); Met. Cas. Ins. Co. v. Chambers, 136 Ark. 84, 206 S.W. 64 (1918).

The Commissioners and the sewer district contend that the trial court abused its discretion by finding that they were not the prevailing party under the statute. They obtained a dismissal without prejudice when Perkins failed to comply with the court’s order to amend its complaint by identifying the party defendant and attaching a copy of the contract at issue. Thus, a judgment of dismissal was entered in this case, but on procedural issues rather than on the merits. The question then becomes whether the judgment of dismissal without prejudice qualifies appellants as prevailing parties under the statute.

We have no previous decision with a holding directly on point. However, the case of Marsh & McLennan of Arkansas v. Herget, 321 Ark. 180, 900 S.W.2d 195, (1995), discusses the issue in dicta. In Marsh, the appellant asserted that the purpose of Ark. Code Ann. § 16-22-308 is to make the prevailing party whole. After denying that proposition as being without authority, the court went on to state, “The statute itself requires only that, unless otherwise provided by law or the contract which is the subject matter of the action, the movant must have prevailed on the merits of one of the causes of action enumerated in the statute.” Marsh, supra. While this statement of the court is dicta, as the commissioners and the sewer district point out, it may nonetheless be persuasive and useful. City Of Bryant v. Springhill Water and Sewer, 295 Ark. 333, 749 S.W.2d 295 (1988). We find the language in Marsh to be persuasive and consequently hold, consistent with the trial court, that one must prevail on the merits in order to be considered a prevailing party under Ark. Code Ann. § 16-22-308. A dismissal without prejudice does not sufficiently conclude the matter such that a determination of the prevailing party can be stated with certainty. The potential for further litigation on the same issues with possibly contrary outcomes precludes the identification of a prevailing party for purposes of the statute.

Our holding is based upon our construction of the relevant Arkansas statute, but we also note that federal courts construing similar language in 42 U.S.C. § 1988 have discussed the meaning of prevailing party and adopted a view that requires the prevailing party be granted some relief on the merits of his claim. Particularly, Hewitt v. Helms, 482 U.S. 755 (1987), contains a relevant discussion. In Hewitt, appellant prisoner Helms, who was placed in administrative segregation in prison, brought a § 1983 action alleging deprivation of due-process rights because the decision was based upon a hearsay statement of an unidentified informant. The informant alleged he had seen Helms strike a prison guard during a prison riot. Ultimately, Helms received a declaration by the court that his due-process rights had been violated, but received no damages due to a finding of qualified immunity. Nonetheless, he brought a motion for attorney’s fees under 42 USC § 1988, which discusses proceedings in vindication, such as a motion for attorney’s fees after a § 1983 action. In its analysis, the U.S. Supreme Court stated:

In order to be eligible for attorneys’ fees under §1988, a litigant must be a ‘prevailing party.’ whatever the outer boundaries of that term may be, Helms does not fit within them. Respect for ordinary language requires that a plaintiff receive at least some relief on the merits of his claim before he can be said to prevail. (Citation omitted). Helms received no relief.

Helms, 482 U.S. at 759-760. The court'went on to note that in a judicial process the plaintiff seeks damages or some change in position by the defendant, and regardless of how that is achieved, by settlement, trial, or otherwise, the plaintiff then is the prevailing party. We note that other state courts that have been faced with this issue have not all agreed with this analysis. However, we hold that prevailing party contemplates at least some adjudication on the merits of the actions and, accordingly, affirm.

Affirmed.

       Dicta consists of statements and comments in an opinion concerning some rule of law or legal proposition not necessarily involved nor essential to determination of the case in hand, and lacks the force of an adjudication. Garrett v. Andrews, 294 Ark. 160, 741 S.W.2d 257 (1987). Obiter dictum is mere comment and not a decision of the court, and therefore not binding.

       Our conclusion is also consistent with language in Gill v. Transcriptions, Inc., 319 Ark. 485, 892 S.W.2d 258 (1995). There, tills court stated that the court of appeals had addressed the issue of who is the prevailing party in litigation under § 16-22-308 in ERC Mortgage Group, Inc. v. Luper, 32 Ark. App.19, 795 S.W.2d 362 (1990), and then quoted a discussion from that case that there can be only one prevailing party and that is “the party in whose favor the verdict compels a judgment....” This seems to infer the merits must be reached to at least some degree.

       Other federal courts addressing the issue of prevailing party where the merits have not been reached have also denied attorney’s fees. See, Keene Corp. v. Cass, 908 F.2d 293 (8th Cir. 1990). There, the Eighth Circuit Court of Appeals found that where a complaint has been dismissed for lack of subject matter jurisdiction, fees under 42 U.S.C. § 1988 were not recoverable because the defendant had not prevailed over the plaintiff on any issue central to the merits of the litigation. More on point is Szabo Food Services, Inc. v. Canteen Corp., 823 F.2d 1073 (7th Cir. 1987), wherein the Seventh Circuit Court of Appeals found a dismissal without prejudice under Rule 41(a) is unlike a dismissal with prejudice under Rule 41(b), which enables the defendant to say he has ‘prevailed.’ The court noted that under a dismissal without prejudice, the defendant remains at risk because the plaintiff may refile the action.

       The Oregon Court of Appeals in Cedar Lodge Ltd. v. Elliott, 115 Or. App. 688, 839 P.2d 757 (1992), considered a dismissal without prejudice entered by the court on its own motion. As to fees and the requirement in their statute that the party receiving them have prevailed, the court stated, “Irrespective of who moved for dismissal, a judgment was entered and the case was terminated... The case was concluded, and the defendant prevailed.” The Supreme Court of Hawaii in Wong v. Takeuchi, 88 Haw. 46, 961 P.2d 611 (1998), stated, “Usually the litigant in whose favor the judgment is rendered is the prevailing party... Thus, a dismissal of the action, whether on the merits or not, generally means that defendant is the prevailing party.” An argument can be made that whether the dismissal is with or without prejudice, that fees ought to be due. Where the issue arises from a contract and fees are sought under 16-22-308, the plaintiff who brings an action and fails to bring it to trial, for whatever reason, has compelled the defendant to expend money in defense of the action, and by a dismissal, for whatever reason, has at the least staved off the litigation and in that sense has prevailed. The Supreme Court of Maine stated that in determining who the prevailing party was indicated they would make a ‘functional analysis’ to examine the whole lawsuit and determine which party was the winner and which the loser. Dodge v. United Services Auto Ass’n., 417 A.2d 969, 975 (Me. 1980).


author: Lavenski R. Smith, Justice.

text:
    Willie GREEN v. STATE of Arkansas
    CR 99-323
    33 S.W.3d 485
    Supreme Court of Arkansas
    Opinion delivered December 14, 2000

      John Wesley Hall, Jr., for appellant.

      Mark Pryor, Att’y Gen., by: Mac Golden, Ass’t Att’y Gen., for appellee.
   Lavenski R. Smith, Justice.

Willie Leon Green appeals the denial of his petition for postconviction relief under Ark. R. Crim. P. 37. A Pulaski County jury convicted Green of first-degree murder in the death of Little Rock Police Detective Joseph Fisher and for the attempted capital murder of Little Rock Police Detective Frederick Lee. Green was sentenced to consecutive terms of life imprisonment plus thirty years for the crimes. Green makes one argument on appeal. He argues that the trial court clearly erred when it did not find ineffective assistance of counsel based on his attorney’s failure to object to a question about perjury by the trial judge to a defense witness.

Facts

On February 7, 1995, police obtained a search warrant for Green’s residence in furtherance of a narcotics investigation. The detectives arrived on the scene at approximately 7:55 p.m. According to police, they yelled in unison at the top of their voices, “Police, search warrant, police,’’and they then immediately broke open the door with the use of a battering ram. Upon entry, Green fired a pistol he kept on his person, killing Detective Fisher and seriously wounding Detective Lee. Green testified that he carried the pistol for protection due to a robbery one month previous. During that intrusion, robbers wearing ski masks broke through the door in a manner similar to that used by police. Green’s girlfriend, Donna Finney, was present in the living room when the police entered. Finney thus became an important trial witness.

At Green’s trial, Finney testified both as a state witness and on Green’s behalf. On direct examination, the State questioned Finney regarding Green’s drug involvement. In response, Finney denied that Green sold drugs out of the apartment. She acknowledged, however, that she had previously agreed with detectives during an interview that Green sold crack cocaine from the apartment. She explained the contradiction by asserting that her earlier statement was not true and that she was afraid at that time. Finney also acknowledged that she had told police that Green had communicated to her his fear of being raided by narcotics police but recanted that statement as well.

Thereafter, Green’s counsel began to cross-examine Finney about her statement. However, following a prosecution objection as to scope, the court interposed and the following exchange took place:

The COURT: ...But Ms. Finney, are you aware of what perjury is?
The Witness: Huh-uh.
The COURT: Pegury is lying in an official proceeding, which this is. Not telling the truth. The consequences of that are that if you are convicted, you can be sent to the penitentiary from three to ten years and fined up to $10,000.
You are now under oath and you are sworn to tell the truth. Do you understand that?

Green’s counsel did not object to the court’s question and statement to Finney. Nor did he seek a mistrial. This court affirmed Finney’s direct appeal holding that substantial evidence supported the jury’s verdict and that his counsel failed to preserve the issue of the judge’s comment by not making a contemporaneous objection. In the Rule 37 hearing, the attorney testified, “It just went by me.”

Standard of Review

Where the issue is ineffective assistance of counsel, the reviewing court must indulge in a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance. Thomas v. State, 330 Ark. 442, 954 S.W.2d 255 (1997). To rebut this presumption, the petitioner must show that there is a reasonable probability that, but for counsel’s errors, the factfinder would have had a reasonable doubt respecting guilt, i.e., that the decision reached would have been different absent the errors. Id. A reasonable probability is one that is sufficient to undermine confidence in the outcome of the trial. Id. In making a determination on a claim of ineffectiveness, the totality of the evidence before the factfinder must be considered. Chenowith v. State, 341 Ark. 722, 19 S.W.3d 612 (2000). This court will not reverse the denial of post-conviction relief unless the trial court’s findings are clearly erroneous or clearly against the preponderance of the evidence. Jones v. State, 340 Ark. 1, 8 S.W.3d 482 (2000); State v. Dillard, 338 Ark. 571, 998 S.W.2d 750 (1999); Noel v. State, 342 Ark. 35, 26 S.W.3d 123 (2000).

Ineffective Assistance of Counsel

The oft-repeated criteria for assessing the effectiveness of counsel were first enunciated by the United States Supreme Court in Strickland v. Washington, 466 U.S. 668 (1984). Strickland provides that when a convicted defendant complains of ineffective assistance of counsel he must show that counsel’s representation fell below an objective standard of reasonableness and that but for counsel’s errors the result of the trial would have been different. Id. We have adopted the rationale of Strickland and held that:

To prevail on any claim of ineffective assistance of counsel, the petitioner must show first that counsel’s performance was deficient. This requires a showing that counsel made errors so serious that counsel was not functioning as the “counsel” guaranteed the petitioner by the Sixth Amendment. Secondly, the petitioner must show that the deficient performance prejudiced the defense, which requires a showing that counsel’s errors were so serious as to deprive the petitioner of a fair trial.

Thomas v. State, 330 Ark. 442, 954 S.W.2d 255 (1997); Reynolds v. State, 341 Ark. 387, 18 S.W.3d 331 (2000).

Law of the Case

Green contends that we are now compelled to hold that the trial court’s comment to Finney was error by the law-of-the-case doctrine. In our opinion on Green’s direct appeal, this court stated, “There is no doubt that the trial court intimated that it found the testimony of Ms. Finney not to be believable.” Green v. State, 330 Ark. 458, 956 S.W.2d 849 (1997). This court in that opinion went on to discuss other prior cases involving impermissible comments on the evidence by the court. The court, however, then concluded the issue could not be reached, noting our consistent rejection of the plain error rule, and noting Green had not objected and none of the Wicks exceptions applied. (See Wicks v. State, 270 Ark. 781, 606 S.W.2d 154 (1980). In response, the State argues that the Green court’s statement was obiter dicta that may be ignored by this court on this appeal on the Rule 37 petition. We agree with the State.

The law-of-the-case doctrine does dictate that a decision made in a prior appeal may not be revisited in a subsequent appeal. Mode v. State. 234 Ark. 46, 350 S.W.2d 675 (1961). We have long held that a decision in a prior appeal becomes the law of the case. Bowman v. State, 93 Ark. 168, 129 S.W. 80 (1909). This is true even if the decision was wrongly decided. Rankin v. Schofield, 81 Ark. 440, 98 S.W. 674 (1905). The conclusion of the court in one opinion becomes the law of the case on subsequent proceedings on the same cause and the matter is res judicata. Perry v. Little Rock & Fort Smith Railway Cp., 44 Ark. 383, 395 (1884). The doctrine requires that matters decided in the first appeal be considered concluded. The doctrine is not inflexible and does not absolutely preclude correction of error, but it prevents an issue already decided from being raised in a subsequent appeal unless the evidence materially varies between the two appeals. Carmargo v. State, 337 Ark. 105, 987 S.W.2d 680 (1999).

Courts developed the doctrine to maintain consistency and avoid reconsideration of matters once decided during the course of a single continuing lawsuit. Fairchild v. Norris, 317 Ark. 166, 876 S.W.2d 588 (1994). The doctrine requires that matters decided in a prior appeal be considered concluded. Camargo v. State, 337 Ark. 105, 987 S.W.2d 680 (1999); Davis v. State, 325 Ark. 96, 925 S.W.2d 768 (1996); Mauppin v. State, 314 Ark. 566, 865 S.W.2d 270 (1993). While a decision of the court will not be disturbed because it is law of the case under res judicata, the court is not bound by a conclusion stated as obiter dictum, even if couched in terms that infer the court reached a conclusion on a matter. This is so because obiter dictum is mere comment and not a decision of the court, and therefore not binding as the law of the case under res judicata. In an opinion, the court may sustain by comment an argument presented by obiter dictum. Peeples v. State, 305 Ark. 338, 808 S.W.2d 331 (1991). However, a comment on the evidence does not rise to a decision or holding by the court. Smith v. City of Little Rock, 279 Ark. 4, 648 S.W.2d 454 (1983).

Where discussion or comment in an opinion is not necessary to the decision reached therein, the discussion or comment is an obiter dictum. Nashville Livestock Common v. Cox, 302 Ark. 69, 787 S.W.2d 664 (1990). In Couch v. State, 274 Ark. 29, 621 S.W.2d 694 (1981), the court noted that even though the opinion stated, as obiter dictum, that upon retrial an instruction on first-degree murder ought to be given, that was not a point in issue and thus not binding. Dicta consists of statements and comments in an opinion concerning some rule of law or legal proposition not necessarily involved nor essential to determination of the case in hand, and they lack the force of an adjudication. Garrett v. Andrews, 294 Ark. 160, 741 S.W.2d 257 (1987). “We point this out so that the dicta in one decision will not be seized on as the ratio decidendi in the next decision....” McLeod, Comm. Of Revenues v. J. E. Dilworth Co., 205 Ark. 780, 171 S.W.2d 62 (1943).

Without question, this court in the prior opinion stated that the trial court was expressing its conclusion that Finney’s testimony was unbelievable. However, this court then held that Green’s failure to object prevented appellate review of the propriety of the comment. Therefore, this court’s holding did not turn on the trial court’s comment but upon failure to preserve. The court’s decision would have been the same in the absence of the statement characterizing the trial judge’s comments. The opinion did not reach the issue of the trial court’s comment and hence was not actually decided. No adjudication took place that would bind this court now. Consequently, we hold that the law-of-the-case doctrine does not apply to this appeal.

We now turn our attention to the trial court’s comments. The judge’s comment can be summarized as an inquiry as to whether Finney knew what pequry was, an explanation of pequry, and then inquiry as to whether Finney understood she was sworn to tell the truth. The issue becomes whether the judge’s comments were error, and then if so, whether the failure to object constitutes ineffective assistance of counsel.

With respect to the duties of a judge, this court has stated, “[W]e have consistently acknowledged the great influence that a trial judge has on jurors. He must, therefore, refrain from impatient remarks or unnecessary comments which might indicate his personal feelings or which might tend to influence the minds of jurors to the prejudice of a litigant. See Oglesby v. State, 299 Ark. 403, 773 S.W.2d 443 (1989).” Jones v. State, 301 Ark. 530, 785 S.W.2d 218 (1990). This court in that same case went on to note, “[T]he trial judge is the one person who controls the conduct of all participants in the course of a trial, from beginning to end, and instructs the jury regarding the law which must be applied to the facts.” Id.

Hence, a judge presiding at a trial should manifest the most impartial fairness in the conduct of the case. Chapman v. State, 257 Ark. 415, 516 S.W.2d 598 (1974); Jones v. State, 301 Ark. 530, 785 S.W.2d 218 (1990). In Miller v. State, 239 Ark. 836, 394 S.W.2d 601 (1965), this court stated, “[W]e believe it would be a good practice for all courts to refrain from making any statement, other than a judicial ruling, that might have a tendency to influence a jury in arriving at a verdict in a pending case.” Further, “[i]n a jury trial there is probably no factor that makes a more indelible impression on a juror than the attitudes, statements and opinions of the trial judge. To them, his word is the law. McMillan v. State, 229 Ark. 249, 314 S.W.2d 483 (1958). The trial judge should always preside with impartiality and must be cautious and circumspect in his language, for it is the jury that is the sole judge of the facts and the credibility of witnesses. Fechheimer-Kiefer Co. v. Kempner, 116 Ark. 482, 173 S.W. 179 (1915); Sharp v. State, 51 Ark. 147, 10 S.W. 228, 14 Am. St. Rep. 27 (1889). Because of his influence with the jury, remarks by the trial judge may tend to prejudice a litigant by destroying the weight and credibility of testimony in his behalf in the minds of the jury. Although the judge may not intend to give an undue advantage to one party, his influence may quite likely produce that result. Fuller v. State, 217 Ark. 679, 232 S.W.2d 988 (1950); Seale v. State, 240 Ark. 466, 400 S.W.2d 269 (1966); McMillan v. State, supra.” West v. State, 255 Ark. 668, 672, 501 S.W.2d 771 (1973). A judge is not to charge a jury as to matters of fact. Ark. Const, art. 7, § 3. This prohibition applies to remarks of a judge that go to the credibility and the weight of testimony. West, 255 Ark., at 672-673; Fuller v. State , 217 Ark. 679, 683, 232 S.W.2d 988 (1950); St. Louis S.W. Ry. Co. v. Britton, 107 Ark. 158, 169, 154 S.W. 215 (1913).

The court’s statements came just as the State had completed its direct examination of Finney, in which she testified in direct contradiction to her statement to police. It appears to us that the comment was made to encourage Finney to carefully consider her testimony to avoid a perjury charge and not to communicate the jury the court’s disbelief of her. While the court’s comments were improvident, they are not as egregious as comments cited by this court in the past in cases where reversible error was found. In its brief, the State notes a number of cases including discussion of impermissible judicial comments about witnesses such as “like a crawfish does, backwards,” Jones v. State, 166 Ark. 290, 265 S.W. 974 (1924); “Well it is just taking up the time of the jury for nothing,” Fuller v. State 217 Ark. 679, 232 S.W.2d 988 (1950); and where a judge stated to defense counsel he would put him “right down there where he is,” Divanovich v. State, 271 Ark. 104, 607 S.W.2d 383 (1980). In these cases reversible error was found. The judge’s comment certainly highlighted the inconsistencies in Finney’s testimony to that extent was error.

However, our analysis does not end there. In order to obtain relief under Rule 37, appellant must not only show ineffective assistance of counsel, but must also show that had counsel acted effectively, there was a reasonable probability that the defendant would have been acquitted. Sasser v. State, 338 Ark. 375, 993 S.W.2d 901 (1999). Ineffective assistance of counsel cannot be established merely by showing that an error was made by counsel or by revealing that a failure to object prevented an issue from being addressed on appeal. Huls v. State, 301 Ark. 572, 785 S.W.2d 467 (1990). In Huls, this court found that even if a timely objection at trial could have prevented the jury from hearing a witness’s testimony, the testimony, when taken with the entire evidence presented at trial, did not lead to a conclusion that there was a reasonable probability that the jury would have acquitted petitioner if the witness had not testified. In making a determination on a claim of counsel’s ineffectiveness, we must consider the totality of the evidence presented to the judge or jury. Id.; Thomas, supra.

Green had to rely on Finney’s testimony, along with his own, to rebut evidence the police announced their entry. The judge’s comment did litde more than note what was already obvious, that Finney’s testimony was at such variance with her statement as to call her veracity into question. So, while the court’s comment may have been error, under the totality of the evidence we are not lead to the conclusion that there was a reasonable probability that the jury would have acquitted Green absent this comment by the judge.

The instant case is distinguishable from the two cases on which appellant most strongly relies, Watkins v. State, 222 Ark. 444, 261 S.W.2d 274 (1953), an Arkansas case and Sosebee v. Leeke, 293 S.C. 531, 362 S.E.2d 22 (1987), a South Carolina case. In Watkins, the trial court’s comments went beyond a simple definition of peg'ury and included threats of prosecution for peg'ury, and this court held that the trial judge’s comments actually had the effect of intimidating or coercing the witness. No such intimidation or coercion is evident or even alleged here.

The Sosebee case is also distinguishable on its facts. There, the trial judge integected comments characterizing the witness testimony for the obvious purpose of bolstering her credibility. The judge responded to defense counsel’s objection to a witness’s testimony by stating, “It isn’t something she made up between then and now, as you suggested.” Clearly, the South Carolina court there made a direct evaluative assessment of the nature of a witness’s testimony. That is not present in the instant case. Given the totality of the circumstances, we hold that appellant has not shown that there is a reasonable probability, but for counsel’s unprofessional errors, that the outcome of the trial would have been different. Thus, the trial court’s denial of relief under Rule 37 is affirmed.

Affirmed.