Curtis v. Partain

• Decision Date: 04 May 1981
• Docket Number: No. 80-293,80-293
• Citation: 272 Ark. 400,614 S.W.2d 671
• Parties: Tom CURTIS et al., Petitioners, v. Honorable David PARTAIN, Circuit Judge, Respondent.
• Court: Arkansas Supreme Court

Page 671

614 S.W.2d 671

272 Ark. 400

Tom CURTIS et al., Petitioners, v. Honorable David PARTAIN, Circuit Judge, Respondent.

No. 80-293.

Supreme Court of Arkansas.

May 4, 1981.

Bethell, Callaway & Robertson, Donald P. Callaway, Fort Smith, for petitioners.

Shaw & Ledbetter, Fort Smith, for respondent.

HICKMAN, Justice.

We are asked to prohibit the Sebastian County Circuit Court form enforcing a pretrial order requiring Tom Curtis to disclose his latest financial statement and his federal tax returns for the past three years. We grant the writ only because we deem the matter to be of first impression and of general interest to all trial courts.

Larry Carter and several other individuals sued Tom Curtis, August Khilling, George Pollan, and Ather Dorse, who were officer, directors, and stockholders of Consolidated Builders, Inc., a bankrupt construction company. The complaint alleged that the construction contract was made with Consolidated and $61,625.00 was paid on that contract, of which only some $5,300.00 was used by Consolidated to pay materialmen, suppliers, and laborers; the rest was diverted and used by the stockholders and officers in connection with the construction of buildings owned by the officers and in payment of unrelated corporation expenses. The complaint alleged a fraudulent scheme which resulted in unjust enrichment. In addition to asking for judgment for the $56,000.00 contract damages, the complaint asked for $100,000 in punitive damages against all four officers, jointly and severally.

Motions were filed asking that all four officers produce their financial statements and tax returns. On the advice of counsel Tom Curtis refused, and on this refusal the issues focus. The complaint was amended to ask for punitive damages against Tom Curtis only, dropping that claim against the other three officers. The only additional allegation of wrongdoing against Curtis was that he used the contract money to build tennis courts on his private property "as well as other projects." All other allegations remained. The sole reason given for needing the tax records and financial statement was to use the information in connection with the claim for punitive damages.

Curtis resisted the motion to produce his financial records for four reasons: The complaint did not state a cause of action for punitive damages; a prima facie case for punitive damages must be made before a defendant can be ordered to disclose personal financial information; by electing to sue only one of several defendants for punitive damages, the claim for such damages is waived; and, Curtis's tax records are privileged and are not evidence of financial worth.

The trial judge deemed the complaint sufficient, found that the claim for punitive damages was not waived since only one, not all defendants were being sued for punitive damages, and the evidence was relevant to Curtis's financial worth. The judge found the request for information as too broad and only ordered Curtis to produce his latest financial statement and his last three years' tax returns. The court also entered a protective order prohibiting the information from being used for any purpose other than in this suit. No mention was made in the court's order of the necessity for a prima facie showing of proof in order to receive punitive damages.

Curtis brings this action asking for a writ of prohibition. The four questions presented to us are the following: Is a writ of prohibition proper in this case? Have the claimants made a proper claim for punitive damages? Have the claimants waived their claim for punitive damages by seeking to prove those damages against only one defendant? and, Are tax returns relevant evidence of financial worth?

Ordinarily we would not issue a writ of prohibition in such a case. Such a writ is discretionary and is most often used when the trial court has no jurisdiction, has clearly exceeded its authority, or there are no disputed facts and the writ is clearly warranted. Webb v. Harrison, 261 Ark. 279, 547 S.W.2d 748 (1977). Here, the court's order was essentially a pretrial discovery order, discretionary, and within our rules. See Ark.R.Civ.P. 26(b) (1). However, this case involves issues that ought to be resolved for the benefit of the trial courts and presents questions of first impression. Therefore, we grant the writ which will prohibit the trial court from enforcing the order unless the parties amend their pleadings and a hearing is held.

The California Supreme Court has used this procedure to review interim orders in discovery matters which ordinarily would not be reviewed until after the case was tried and was appealed. Oceanside Union School District v. Superior Court, 58 Cal.2d 180, 23 Cal.Rptr. 375, 373 P.2d 439 (1962). We deem such a procedure proper in extraordinary cases. Once the trial court acts again in this case pursuant to our instructions, no appeal will lie from that order.

The complaint does not state a cause of action for punitive damages. It simply alleges that the plaintiffs were defrauded and the four officers diverted contract money to their personal benefit. There is no allegation of willful or malicious conduct on the part of these four officers. Generally punitive damages are not recoverable in actions for breach of contract. Deming v. Buckley's Art Gallery, 196 F.Supp. 246 (D.C.Ark.1961). That is the rule in most jurisdictions and there are few exceptions. See 5 Corbin on Contracts 438 (1964); 11 Williston on Contracts 210 (3d ed....