Forever Green Athletic Fields, Inc. v. Lasiter Constr., Inc.

• Decision Date: 22 June 2011
• Docket Number: No. CA 10–1049.,CA 10–1049.
• Citation: 2011 Ark. App. 347,384 S.W.3d 540
• Parties: FOREVER GREEN ATHLETIC FIELDS, INC. d/b/a ProGreen, Keith Day, David Ripka, Progreen Sport Surfaces, LLC, and Raymond Fritz, Appellants/Cross–Appellees v. LASITER CONSTRUCTION, INC., Appellee/Cross–Appellant.
• Court: Arkansas Court of Appeals

2011 Ark. App. 347

384 S.W.3d 540

FOREVER GREEN ATHLETIC FIELDS, INC. d/b/a ProGreen, Keith Day, David Ripka, Progreen Sport Surfaces, LLC, and Raymond Fritz, Appellants/Cross–Appellees

v.LASITER CONSTRUCTION, INC., Appellee/Cross–Appellant.

No. CA 10–1049.

Court of Appeals of Arkansas.

May 11, 2011.

Rehearing Denied June 22, 2011.

Cade Lee Cox, David W. Sterling and David Grace, Northern Little Rock, AR, Jason Coley and Daniella Gordon, Philadelphia, PA, for appellant.

ROBERT J. GLADWIN, Judge.

[Ark. App. 1]Appellant Forever Green Athletic Fields, Inc. (Forever Green) and appellant Progreen Sport Surfaces, LLC (PSS) separately appeal the circuit court's June 4, 2008 order, which denied their motions for judgment notwithstanding the verdict but granted appellee/cross-appellant Lasiter Construction, Inc. (Lasiter Construction) a new trial on its breach-of-contract claims. Lasiter Construction cross-appeals the court's denial of a new trial on its third-party beneficiary claim and the denial of its motion for judgment notwithstanding the verdict. The parties raise a total of nine points on appeal and cross-appeal. We affirm on direct appeal, and we affirm on cross-appeal.

[Ark. App. 2]Background

These parties became involved with one another in 2004, when Forever Green bid on several construction projects in Arkansas to supply and install ProGreen ¹ synthetic grass football fields for the Batesville and Rogers School Districts, Pulaski Academy, Shiloh Christian School, and the University of Arkansas (collectively referred to as the “projects”). Forever Green was awarded the bid for the projects but subsequently learned it could not act as the contractor because it did not have a proper contractor's license. Lasiter Construction was awarded the bids, and it negotiated with Forever Green to obtain ProGreen materials for use on the projects.

In 2006, Forever Green sued Lasiter Construction for the unpaid balance of the materials it supplied. Lasiter Construction answered and counterclaimed for cost overruns that it contended Forever Green agreed to be responsible for and for claims it received by assignment from the University of Arkansas for problems it had with its synthetic fields. Lasiter Construction also filed a third-party complaint against appellant PSS and other third-party defendants contending that they were jointly and severally responsible as partners with Forever Green for Lasiter Construction's claims against Forever Green. PSS answered and counterclaimed against Lasiter Construction and filed a third-party complaint against Lasiter Construction's president, Michael Lasiter, claiming various tortious conduct for [Ark. App. 3]bringing PSS into the lawsuit. A seven-day trial was held and the issues were submitted to the jury on interrogatories, resulting in a judgment entered April 25, 2008, that denied all the claims and counterclaims of all the parties and awarded no damages. Motions were filed by the parties for judgment notwithstanding the verdict or, in the alternative, for a new trial. An order entered June 4, 2008, denied all motions for judgment notwithstanding the verdict but granted Lasiter Construction a new trial on its breach-of-contract claims. This appeal followed.

I. Arguments on Direct Appeal

A. New Trial

We first address the argument by both Forever Green and PSS that the circuit court erred in granting Lasiter Construction a new trial. We disagree.

In its counterclaim, as amended, Lasiter Construction alleged that Forever Green was responsible for the cost overruns associated with the projects. Forever Green defended on the basis that the alleged agreement that it would be responsible for cost overruns was unenforceable because of the statute of frauds. The statute of frauds, codified at Arkansas Code Annotated section 4–59–101(a)(2) (Repl.2001), provides in pertinent part:

Unless the agreement, promise, or contract, or some memorandum or note thereof, upon which an action is brought is made in writing and signed by the party to be charged therewith, or signed by some other person properly authorized by the person sought to be charged, no action shall be brought to charge any ... [p]erson, upon any special promise, to answer for the debt, default, or miscarriage of another.

[Ark. App. 4]Ark.Code Ann. § 4–59–101(a)(2). Forever Green contends that an agreement for it to be responsible for cost overruns is within the statute of frauds because it is an agreement to answer for the debt, default, or miscarriage of another, in this case, the installation subcontractors.

Prior to giving the instructions on the statute of frauds, the circuit court expressed some concern over whether they were supported by the evidence. The court nevertheless gave the requested instructions as follows:

The Statute of Frauds requires that certain contracts be in writing. Included in those contracts that must be in writing are promises to answer for the debt, default or miscarriage of another. In other words, if one is to guarantee the work of another, the contract must either be in writing or accompanied by some additional consideration, not included in the primary contract between the parties.

If you find that Forever Green promised Lasiter to be responsible for cost overruns, then the Statute of Frauds may apply.

An oral undertaking to answer for the debt of another without any new consideration is a collateral undertaking and not enforceable under the Statute of Frauds. However, an oral contract is considered original and enforceable when the agreement is based on new consideration or benefit moving to the promisor.

When considering whether the undertaking is collateral or original, you should look to the words of the promise, the situation of the parties, and the circumstances surrounding the transaction. If you find that Forever Green promised to be responsible for cost overruns, you then must decide whether that promise was a collateral promise to the promise to supply the materials for the fields. If it was collateral, then you must decide whether Lasiter offered any additional consideration. If the promise was collateral, no consideration was conferred by Lasiter to Forever Green and there is no clear writing evincing the same, that promise is barred by the Statute of Frauds, and Forever Green cannot be bound by same.

[Ark. App. 5]Lasiter Construction objected to the giving of the statute-of-frauds instruction, contending that the statute of frauds did not apply because the agreement as to cost overruns was original to the agreement and not collateral.² The court submitted two special interrogatories asking the jury to decide whether the terms of the agreement were as Lasiter Construction asserted and whether Forever Green's agreement to be responsible for cost overruns was barred by the statute of frauds. The jury answered both interrogatories in the affirmative.³ Lasiter Construction filed a motion for judgment notwithstanding the verdict or, alternatively, a motion for new trial. The circuit court found that there was insufficient evidence to establish that the agreement as to the cost overruns was collateral to the original agreement and granted the motion for a new trial based on Arkansas Rule of Civil Procedure 59(a)(8).

A Rule 59(a)(8) motion may be used to determine if it was an error of law in giving instructions to the jury. See Coca–Cola Bottling Co. v. Priddy, 328 Ark. 666, 945 S.W.2d 355 (1997). In reviewing the circuit court's grant of a motion for new trial, the test is whether the circuit court abused its discretion. Carlew v. Wright, 356 Ark. 208, 148 S.W.3d 237 (2004). A showing of abuse of discretion is more difficult when a new trial has been granted [Ark. App. 6]because the party opposing the motion will have another opportunity to prevail. Id. Abuse of discretion in granting a new trial means a discretion improvidently exercised, i.e., exercised without due consideration. Razorback Cab of Fort Smith, Inc. v. Martin, 313 Ark. 445, 856 S.W.2d 2 (1993).

The real issue before us is not whether Forever Green agreed to answer for the debt or default of the installation subcontractors, but whether it is being sued upon its own obligation outside of the statute of frauds. Our courts have long recognized that a promise is not within the statute of frauds where the main purpose of the promissor was to serve some purpose of his own, even though the effect is to be responsible for the debt of another. See Oil City Iron Works v. Bradley, 171 Ark. 45, 283 S.W. 362 (1926); S.R.H. Robinson & Son Contracting Co. v. Twin City Bank, 103 Ark. 219, 146 S.W. 523 (1912); Gale v. Harp, 64 Ark. 462, 43 S.W. 144 (1897); Chapline v. Atkinson, Co., 45 Ark. 67 (1885).

Forever Green and PSS rely on Michael Lasiter's testimony that the agreement between Lasiter Construction and Forever Green “morphed” over time and was, therefore, a forbidden modification of an agreement required to be in writing. However, that presupposes that the agreement was required to be in writing in the first instance. They also stress the fact that the contract between Lasiter Construction and the installation subcontractor was not entered into until after the agreement between Forever Green and Lasiter Construction was made to argue that the agreement on cost overruns was collateral to the original agreement and, therefore, within the statute of frauds. However, Lasiter's testimony actually supports the argument that the cost-overrun provision was part of the [Ark. App. 7]original agreement and not for the primary benefit of the installation subcontractor, because the evidence shows Forever Green wanted a presence in Arkansas and could not establish that presence without having a contractor's license. Lasiter Construction knew that Forever Green could not do the installation on these projects itself and offered to serve as project manager for a fee if Forever Green would be responsible for all cost overruns, thereby...