Justia Contracts Opinion Summaries

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

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

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

Plaintiffs Mark and Karla Gibbs brought claims in the federal district court against, among other defendants, Corinthian Title, Jeffrey Brown, Shelley Hickson, and Christine Tueckes, for civil conspiracy. The above defendants argued that the federal district court did not have in personam jurisdiction over them because Arkansas's long-arm statute does not allow application of conspiracy jurisdiction. The federal district court certified to the Supreme Court the question of whether the use of the conspiracy theory of in personam jurisdiction violates the state's long-arm statute. The Court answered in the negative. Arkansas's long-arm statute does not limit the exercise of personal jurisdiction to certain enumerated circumstances and is therefore limited only by federal constitutional law. Because jurisdiction based on the conspiracy theory does not violate due process, the conspiracy theory of in personam jurisdiction does not violate Arkansas's long-arm statute.

Jay Carter appealed an order of the circuit court awarding Ernie and Karen Cline money damages pursuant to a jury verdict, in addition to attorneys fees and costs, on the Clines's complaint for breach of contract to purchase real estate. On appeal, Carter argued that Ark. R. Civ. P. 54(b) was not complied with, that the circuit court erred in denying Carter's motion for judgment notwithstanding the verdict, and that the award of costs and attorneys fees was warranted based on the jury's verdict. The Supreme Court remanded, holding it was precluded from reaching the merits of Carter's arguments due to a deficient abstract pursuant to Ark. Sup. Ct. R. 4-2(a)(5) and ordering Carter to file a substituted brief.

Megan Bradley, who was insured by State Farm, was injured in a motor-vehicle accident. State Farm paid $3844 in medical benefits to Bradley. State Farm then pursued a subrogation claim against the tortfeasor's insurer, Farmers Insurance. Bradley responded that the settlement with Farmers Insurance was not sufficient for her to be made whole. State Farm refused to release its subrogation claim. Bradley filed a petition for declaratory judgment and complaint for bad faith against State Farm and later filed an amended declaratory action to invalidate lien and complaint for injunctive relief, deceptive trade practices, bad faith and tortious interference with a contract. The circuit court dismissed count one of Bradley's amended pleading, finding (1) State Farm had a valid but unenforceable lien for sums paid to Bradley, (2) State Farm's right of subrogation arose at the time State Farm paid the medical benefits by operation of law, and (3) State Farm's right of subrogation is not enforceable until a subsequent judicial determination that Bradley was made whole by the settlement. The Supreme Court reversed and remanded for the reasons set forth on the same day in Riley v. State Farm Mutual Automobile Insurance Co.

Appellant brought an interlocutory appeal from the circuit courtâs denial of its motion to compel arbitration. The appellee argued that appellantâs appeal was untimely filed. To be timely, appellant was required to file its notice of appeal within thirty days of the order denying the motion to compel arbitration, which was entered on December 28, 2009. At issue was whether appellantâs January 4, 2010 motion to dismiss constituted a post-order motion that would have extended the time for filing the notice of the appeal under Ark. R. of App. P. Civ. 4(b). The Court concluded that because the motion substantively sought to correct procedural defects in a December 21, 2009 motion, the January 4 motion was not a new motion and was treated by the circuit court as one for reconsideration. Because it was a collateral motion, it did not extend the time for filing the notice of appeal. The Court held the appellantâs notice of appeal filed on March 19, 2010 was untimely and dismissed the appeal.

Appellant Baptist Health (Baptist) appealed the circuit courtâs order that granted Appellee Andre Hutsonâs class-certification motion. In her underlying claim, Appellee argued that Baptist breached a contractual obligation by assessing medical services at higher rates than its âregularâ rates. Appellee concluded that a class action suit was the only feasible method to address the allegation for over a thousand patients like her. Baptist argued that the circuit court abused its discretion by stretching the rules in order to certify the class action suit. The trial court agreed with Appellee, and certified the case as a class action. Upon review, the Supreme Court found that the trial court did not abuse its discretion and affirmed the lower courtâs decision.

Appellant Kim Crockett appealed the circuit courtâs order in favor of Appellee C.A.G. Investments, Inc. (CAG). CAG was created as an investment vehicle to provide funds to Omni Holding and Development Corporation (Omni). Omni operated a crop-dusting and farm-equipment export business. CAG purchased equipment and land for Omniâs operations and a house for Omniâs manager. Ms. Crockett became Omniâs sole stockholder, president and chairman of the board in 2005. CAG made a series of loans to Omni. The loans were secured by the property Omni used in the businessâ operation, and by the house in which Ms. Crockett lived. In late summer 2003, Omni suffered numerous financial difficulties, resulting in the deterioration of the business relationship between the management of CAG and Omni. While Omni contemplated filing for bankruptcy protection, CAG sought to recover the collateral pledged for the loans it had made to Omni. CAG asked Omni to remove all personal property Omni owned from the premises, and demanded to take possession of the real property. Omni refused to comply, and CAG sued for possession, believing the property to be unlawfully detained. The circuit court entered an order against Omni for unlawful detainer, and found that CAG was entitled to a writ of possession. Omni did not vacate the premises, and appealed the circuit courtâs order. The appellate court dismissed Omniâs appeal. Upon review, the Supreme Court affirmed the decisions of the circuit and appellate courts.