Hauser v. Sims

• Decision Date: 25 April 2012
• Docket Number: No. CA 11–960.,CA 11–960.
• Citation: 423 S.W.3d 104,2012 Ark. App. 295
• Parties: John P. HAUSER and Ada Hauser, Appellants v. Derwin SIMS, Sr., and David L. Webber, Appellees.
• Court: Arkansas Court of Appeals

2012 Ark. App. 295

423 S.W.3d 104

John P. HAUSER and Ada Hauser, Appellants

v.Derwin SIMS, Sr., and David L. Webber, Appellees.

No. CA 11–960.

Court of Appeals of Arkansas.

April 25, 2012.

Charles T. Coleman, Gary D. Marts, Jr., Johnathan D. Horton, Wright, Lindsey & Jennings LLP, for appellants.

Sheila F. Campbell, P.A., North Little Rock, for appellees.

DOUG MARTIN, Judge.

Appellees Derwin Sims, Sr., and David L. Webber are assignees of two judgments previously owned by Forrest City Bank (FCB). In 2009, appellees sued appellants John and Ada Hauser, the judgment debtors, for the balances owed. The circuit court granted summary judgment to appellees and awarded them a total of $753,108.21. The Hausers appeal and argue that 1) the circuit court lacked personal jurisdiction over them; 2) they did not have the opportunity to complete discovery prior to the entry of summary judgment; 3) genuine issues of material fact remain as to the amount of the judgments and the amount of postjudgment interest; and 4) the summary-judgment order should be modified to conform to Arkansas law. We affirm the circuit court's exercise of personal jurisdiction over the Hausers but reverse and remand in all other respects.

I. Factual History

The Hausers were co-makers or guarantors on six loans obtained by their company, Commercial Group South, from FCB. The loans were evidenced by six notes totaling approximately $750,000 and were secured by real property and other collateral.

The loans were soon in default, and FCB sued the Hausers, Commercial Group South, and other entities in Lee County Circuit Court for amounts due. No answer was filed by the Hausers or Commercial Group South, which caused the court to enter two default judgments. The first, dated May 7, 2003, awarded FCB $739,052.51, plus interest and attorney fees, against John Hauser and Commercial Group South, jointly and severally, on all six loans. The second, dated July 16, 2003, added Ada Hauser as a judgment debtor on the two largest loans for a total of $537,839.01, plus interest and attorney fees.

Following entry of the judgments, FCB purchased several tracts of the collateral property at execution sales, for which the Hausers received credit against their judgment debt. Near this time, appellees, who were business associates of John Hauser, petitioned the circuit court to set aside Hauser's default judgment and filed a counterclaim against FCB. The dispute between appellees and FCB was eventually settled, and as part of the settlement agreement, FCB assigned its rights in the two Hauser judgments to appellees on September 6 and October 29, 2007.

In December 2007, appellees sued the Hausers in their new state of residence, Arizona, in an attempt to collect on the Arkansas judgments. The Arizona federal district court ruled that appellees' suit was barred by a four-year statute of limitations on the enforcement of foreign judgments. Appellees appealed to the United States Court of Appeals for the Ninth Circuit, which affirmed the district court's ruling in a memorandum opinion.

While awaiting the Ninth Circuit's decision, appellees filed a pleading against the Hausers in Lee County Circuit Court on March 23, 2009, titled “Complaint For Action On Judgment.” Appellees claimed that the Hausers still owed $671,115.85 on the 2003 judgments, and they sought a new judgment for that amount.¹ They later explained that they wanted a new judgment in order to obtain judgment in their own names and to clarify the amounts due under the original judgments.² The Hausers moved to dismiss appellees' complaint for lack of personal jurisdiction, asserting that they had lived in Arizona since 2004 and lacked sufficient minimum contacts with the state of Arkansas. The circuit court denied the motion to dismiss.

On March 19, 2010, appellees filed a motion for summary judgment, claiming that the Hausers owed $753,108.21 on the judgments as a matter of law (taking into account the continued accumulation of interest). The Hausers again responded that the circuit court lacked personal jurisdiction over them. They also argued that genuine issues of material fact remained as to the amounts due, both on the judgments and as postjudgment interest. In support of their response, they attached several documents purporting to show discrepancies in the judgment balances, especially in the calculation of credits following the sale of collateral. An affidavit from John Hauser stated that certain items pledged as collateral had not been accounted for in the credits shown by appellees.

The Hausers also moved for additional discovery time pursuant to Rule 56(f) of the Arkansas Rule of Civil Procedure.³ They argued that the court had not yet ruled on their subpoena duces tecum directed to FCB, which sought production of the settlement agreement with appellees and other documents related to the loans and the credits from sales of collateral. FCB had moved to quash the subpoena on the grounds that the settlement agreement was confidential; that much of the information sought had already been provided to the Hausers in the Arizona litigation; and that the requests in the subpoena were “unreasonable and oppressive.”

Following a hearing on all motions, the circuit court ruled that no issues of fact remained and that appellees were entitled to judgment as a matter of law. The court also granted FCB's motion to quash the subpoena duces tecum but nevertheless directed the parties to arrange for the Hausers' counsel to inspect FCB's documents. The record does not indicate whether this inspection actually occurred. On July 29, 2011, the circuit court entered a second order that again granted summary judgment to appellees. The court ruled that it was entering new judgments against the Hausers for a total of $753,108.21, the precise amount sought in appellees' motion for summary judgment. The Hausers filed timely notices of appeal from both of the summary-judgment orders.

II. Personal Jurisdiction

The Hausers argue first that the circuit court lacked personal jurisdiction over them in this action seeking a new judgment. According to the Hausers, they moved from Arkansas in 2003, lived for a short time in Delaware, then moved to Arizona in March 2004. There, they registered to vote and obtained driver's licenses. They continued to own at least one piece of property in Arkansas, which appellees executed upon in 2008; but, other than that, they conducted no business in Arkansas and had no further contacts with the state.

Arkansas's long-arm statute provides that the courts of this state shall have jurisdiction of all persons to the maximum extent permitted by the Due Process Clause of the Fourteenth Amendment of the United States Constitution. Ark.Code Ann. § 16–4–101(B) (Repl.2010). Due-process jurisprudence holds that jurisdiction over a person may be exercised if the person has sufficient minimum contacts with the forum state and if the exercise of jurisdiction does not offend the traditional notions of fair play and substantial justice. John Norrell Arms, Inc. v. Higgins, 332 Ark. 24, 962 S.W.2d 801 (1998); Twin Springs Grp., Inc. v. Karibuni, Ltd., 2009 Ark. App. 649, 344 S.W.3d 100. The following five factors may be considered in determining the sufficiency of a defendant's contacts with the forum state: 1) the nature and quality of the contacts, 2) the quantity of the contacts, 3) the relation of the cause of action to the contacts, 4) the interest of the forum state in providing a forum for its residents, and 5) convenience of the parties. John Norrell Arms, supra. The defendant's contacts with the forum state must also be sufficient to cause him to reasonably anticipate being haled into court there. Yanmar Co., Ltd. v. Slater, 2012 Ark. 36, 386 S.W.3d 439. This “fair warning” requirement is satisfied if the defendant has purposefully directed his activities at residents of the forum state, and the litigation results from alleged injuries that arise out of or relate to those activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). It ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts. Yanmar, supra.

Our review of the Hausers' contacts with the state of Arkansas reveals that they are strong, both in quantity and quality. The Hausers entered into or guaranteed several loan contracts with an Arkansas bank and pledged Arkansas real estate as collateral. They defaulted on the loans, and an Arkansas court entered judgments against them. The judgment creditor then executed on collateral located within the state. Under Arkansas law, even a single contract can provide a basis for the exercise of jurisdiction over a nonresident defendant if there is a substantial connection between the contract and the forum state. Twin Springs, supra. It follows that the Hausers' substantial financial and legal connections with the state of Arkansas in this case meet the requirements for minimum contacts.

Further, the Hausers should not have been surprised to be haled into court in Arkansas, given that the judgments against them remain unsatisfied. See generally Williams Mach. & Fabrication, Inc. v. McKnight Plywood, Inc., 64 Ark.App. 287, 983 S.W.2d 453 (1998). Where a defendant has deliberately engaged in significant activities within a state or has created continuing obligations between himself and residents of the forum, he has manifestly availed himself of the privilege of conducting business there. Burger King, supra. Under such circumstances, the assertion of personal jurisdiction is to be expected.

There is also nothing in the exercise of personal jurisdiction over the Hausers that offends traditional notions of fair play and substantial justice. The Hausers owned property, obtained loans, conducted business, and had judgments entered against them in the state of Arkansas, all in connection with the...