Ballard Grp., Inc. v. BP Lubricants United States, Inc.

• Decision Date: 19 June 2014
• Docket Number: No. CV–13–976.,CV–13–976.
• Citation: 2014 Ark. 276,436 S.W.3d 445
• Court: Arkansas Supreme Court
• Parties: The BALLARD GROUP, INC., Appellant v. BP LUBRICANTS USA, INC., and Tracy Curtis King, Appellees.

2014 Ark. 276

436 S.W.3d 445

The BALLARD GROUP, INC., Appellant

v.BP LUBRICANTS USA, INC., and Tracy Curtis King, Appellees.

No. CV–13–976.

Supreme Court of Arkansas.

June 19, 2014.

The Kester Law Firm, Fayetteville, by: Charles M. Kester; and Kelley Law Firm, Rogers, by: Glenn E. Kelley, for appellant.

Friday, Eldredge & Clark, LLP, Little Rock, by: Christopher Heller, Tory H. Lewis, and R. Christopher Lawson, for appellees.

DONALD L. CORBIN, Justice.

Appellant, The Ballard Group, Inc. (Ballard), appeals the second amended order of the Benton County Circuit Court dismissing with prejudice its first amended complaint against Appellees, Tracy Curtis King (King) and her employer BP Lubricants USA, Inc. (BP), for failure to state a claim upon which relief could be granted. For reversal, Ballard contends that the circuit court erroneously granted the dismissal because its first amended complaint sufficiently pleaded claims for breach of contract, misappropriation of trade secrets, tortious interference with a contract and business expectancy, and civil conspiracy. In addition, Ballard contends that any dismissal granted should have been without prejudice. The Arkansas Court of Appeals certified this case as one involving a significant question of law concerning the interpretation of a court rule, specifically the two-dismissal component of Rule 41(b) of the Arkansas Rules of Civil Procedure. Jurisdiction is therefore properly in this court pursuant to Arkansas Supreme Court Rule 1–2(b)(5) and (d) (2013). We affirm that part of the second amended order dismissing with prejudice the breach-of-contract claim, and we reverse and remand the parts of the order dismissing with prejudice the claims relating to trade secrets, tortious interference, and civil conspiracy.

I. Procedural History

Appellant initiated the present litigation by filing a complaint against King and BP that alleged four causes of action: breach of contract, misappropriation of trade secrets, tortious interference with a contract and with a business expectancy, and civil conspiracy. The complaint described Ballard as a marketing firm, which for over twenty-five years had provided marketing services, such as the planning and executing of promotional and educational events for customers, employees, and vendors of Wal–Mart at various Wal–Mart Stores. The complaint referenced a marketing event known as the “Smart Driver Tour,” which was designed to promote various automotive products that were manufactured or distributed by Wal–Mart vendors described as “Tour Sponsors,” such as Meguiar's, Michelin, BP, and JCI/Everstart. The complaint alleged that, in addition to the Smart Driver Tour, which was classified as a Primary Event, there was an additional Primary Event known as the Wal–Mart Vendor Fair, and that these two Primary Events accounted for a substantial portion of Ballard's annual business. The complaint also alleged that significant additional business routinely occurred every year from additional and supplemental promotions known as “Spinoff Events” that were assigned as a matter of routine practice to the firm servicing the Primary Events. According to the complaint, Ballard had a series of contracts with BP for these marketing events, and Ballard attached as exhibits to the complaint written contracts for the years 2008 and 2009.

The gist of the complaint was that King, at all times acting within the scope of her employment at BP, designed and executed a nepotistical plan in which her brother, Jason Curtis (Curtis), would be employed by Ballard, obtain Ballard's trade secrets and proprietary information, and then use that information to begin working at Threads Production, Inc. (Threads), which was a new company formed with King's influence to employ King's brother and her husband and to compete with Ballard for the business of BP and other vendors. Threads and Curtis are not parties to this case, although the complaint does allege that in separate litigation Ballard obtained a preliminary injunction to restrain Curtis from misappropriating trade secrets.

King and BP jointly filed a motion to dismiss the complaint pursuant to Rule 12(b)(6) of the Arkansas Rules of Civil Procedure, asserting that Ballard had failed to plead facts upon which relief could be granted against either BP or King. King and BP argued that Ballard's complaint consisted primarily of legal conclusions rather than specific facts. The circuit court entered an order granting the motion to dismiss on all four causes of action and giving Ballard thirty days to file an amended complaint. The circuit court later entered an “Order to Reinstate,” declaring that the court's intent in issuing the previous order of dismissal was to allow the matter to remain open until the thirty days for Ballard to file an amended complaint had expired.

Ballard timely filed a first amended complaint asserting the same four causes of action and pleading additional facts. BP and King filed a motion to dismiss the first amended complaint pursuant to Rule 12(b)(6), noting that the first amended complaint was substantially the same as the original complaint because it stated primarily legal conclusions rather than specific facts from which a jury could find for Ballard on any of its claims. The circuit court entered an order granting the motion to dismiss all four causes of action based on its failure to plead sufficient facts upon which relief could be granted. The order did not state whether the dismissal was to be with or without prejudice.

Ballard then filed a motion to clarify or correct the order to reflect that the dismissal would be without prejudice and for Ballard to plead further and file a second amended complaint within thirty days. The circuit court entered an order, essentially granting Ballard's request to clarify. This order was dated July 15, 2013, and stated that the Rule 12(b)(6) dismissal of the first amended complaint was being granted without prejudice for Ballard to plead further by August 12, 2013.

BP and King then filed a motion for reconsideration of the July 15 order, arguing that the July 15 order was a second dismissal and therefore should have been granted with prejudice pursuant to the “two-dismissal” rule in Rule 41(b). The circuit court then entered a “Second Amended Order Granting Motion to Dismiss” dated August 2, 2013, essentially granting BP's motion for reconsideration and then reflecting that the July 15 order was to be a dismissal with prejudice pursuant to Rule 12(b)(6) and Rule 41(b).

Ballard filed a motion for reconsideration of the second amended order, which the circuit court denied by written order. This appeal followed.

Ballard presents two points on appeal. First, Ballard challenges the circuit court's determination that the second Rule 12(b)(6) dismissal was subject to the two-dismissal component of Rule 41(b). Second, Ballard challenges the merits of the circuit court's ruling on the motion to dismiss pursuant to Rule 12(b)(6). We address the merits of the Rule 12(b)(6) dismissal first, because if we determine that the dismissal was erroneously granted, then there would be only one dismissal and any opinion expressed on the two-dismissal rule would be advisory. If, however, we determine that the circuit court correctly decided the merits of the Rule 12(b)(6) dismissal, then there would arguably be two dismissals, and we would then need to address Ballard's argument concerning the two-dismissal rule.

II. Standard of Review

Generally speaking, the granting of both a Rule 12(b)(6) dismissal and a Rule 41(b) dismissal are reviewed under the abuse-of-discretion standard. J.B. Hunt, LLC v. Thornton, 2014 Ark. 62, 432 S.W.3d 8 (Rule 12(b)(6)); Jonesboro Healthcare Ctr., LLC v. Eaton–Moery Envtl. Servs., Inc., 2011 Ark. 501, 385 S.W.3d 797 (Rule 41(b)). However, when this court must construe a court rule, our appellate review is de novo. Jonesboro Healthcare Ctr., 2011 Ark. 501, 385 S.W.3d 797. Thus, in this case, we must determine whether the circuit court abused its discretion in dismissing the complaint; if it did not, then we determine whether the circuit court erred in applying the two-dismissal rule as expressed in Rule 41(b).

III. The Merits of the Rule 12(b)(6) Dismissal

In determining whether the circuit court abused its discretion in dismissing Ballard's complaint pursuant to Rule 12(b)(6), we treat the facts alleged in the complaint as true and view them in the light most favorable to the plaintiff. J.B. Hunt, 2014 Ark. 62, 432 S.W.3d 8. We construe the pleadings liberally and resolve all reasonable inferences in favor of the complaint. Id. This court has summarized the requirements for pleading facts as follows:

Arkansas has adopted a clear standard to require fact pleading: “a pleading which sets forth a claim for relief ... shall contain (1) a statement in ordinary and concise language of facts showing that the pleader is entitled to relief ...” ARCP Rule 8(a)(1). Rule 12(b)(6) provides for the dismissal of a complaint for “failure to state facts upon which relief can be granted.” This court has stated that these two rules must be read together in testing the sufficiency of the complaint; facts, not mere conclusions, must be alleged. In testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and pleadings are to be liberally construed. Id.;ARCP Rule 8(f).

Brown v. Tucker, 330 Ark. 435, 438, 954 S.W.2d 262, 264 (1997) (citation omitted) (quoting Malone v. Trans–States Lines, Inc., 325 Ark. 383, 386, 926 S.W.2d 659, 661 (1996) (quoting Hollingsworth v. First Nat'l Bank & Trust Co., 311 Ark. 637, 639, 846 S.W.2d 176, 178 (1993))). This court's rules require fact pleading, and a complaint must state facts, not mere conclusions, in order to entitle the pleader to relief. Ark. R. Civ. P. 8(a) (2013); Perry v. Baptist Health, 358 Ark. 238, 189 S.W.3d 54 (2004)....