Ison Properties, LLC v. Wood

• Decision Date: 31 March 2004
• Docket Number: No. CA 03-501.,CA 03-501.
• Citation: 156 S.W.3d 742,85 Ark. App. 443
• Parties: ISON PROPERTIES, LLC v. Chris R. WOOD and Debbie C. Wood, Husband and Wife, d/b/a Greers Ferry Marine & ATV, LLC.
• Court: Arkansas Court of Appeals

156 S.W.3d 742

85 Ark. App. 443

ISON PROPERTIES, LLC v.Chris R. WOOD and Debbie C. Wood, Husband and Wife, d/b/a Greers Ferry Marine & ATV, LLC.

No. CA 03-501.

Court of Appeals of Arkansas, Division IV.

March 31, 2004.

The Blagg Law Firm, by: Brad A. Cazort, Clinton, for appellant.

Terry J. Lynn, Heber Springs, for appellee.

JOHN B. ROBBINS, Judge.

Ison Properties, LLC, appeals from two rulings by the Cleburne County Circuit Court in this breach-of-contract action filed against it by appelleesChris Wood and Debbie Wood, d/b/a Greers Ferry Marine & ATV, LLC.After a jury trial, appellees recovered a judgment of $140,929.45 for appellant's failure to follow through with an agreement to purchase appellees' retail inventory of boats and recreational equipment.The three issues presented on appeal are whether the trial court erred in denying appellant's motion to dismiss for improper venue; whether it erred in striking appellant's affirmative defense of fraud; and whether it abused its discretion in refusing to amend the pleadings to conform to the evidence of fraud presented at trial.We affirm the trial court's decision in all respects.

In the fall of 2000, appellant entered into two agreements to buy appellees' boating and recreational vehicle business in Greers Ferry: one agreement concerned the purchase of appellees' real property, and the other dealt with the inventory.The agreement involved in this action is the inventory agreement dated November 9, 2000, wherein appellant agreed to purchase appellees' inventory of boats and other recreational vehicles, as described on a document labeled Schedule A that was attached to the contract.In paragraphs 3 and 4, the contract stated:

Buyer shall take whatever steps are necessary to assume the outstanding indebtedness with the respective suppliers of the equipment as identified on Schedule A....The assumption by Buyer of the outstanding indebtedness of the items described on Schedule A shall be the total consideration paid by Buyer to Sellers for the transfer of said property to Buyer from Sellers.

Schedule A listed, by lender, appellees' inventory of boats, setting forth each one's year model, serial number, and the balance due each lender.Although the total balances due to Heber Springs State Bank, Transamerica, and Bombardier were listed on those pages, all of the current principal and interest payments due at that time were not set forth.

After closing, Mr. Ison learned that, in order to transfer the outstanding indebtedness on the boats to him, the lenders required him to immediately pay the "curtailments," the amounts of principal that were then due.The total amount of curtailments due when the contract was signed was $57,892.42.Mr. Ison then refused to complete the purchase of the inventory, and appellees filed this action for breach of contract in Cleburne County.In response, appellant filed a motion to dismiss for improper venue, which was denied.In its answer, appellant asserted the affirmative defense of fraud, stating: "The Defendant affirmatively pleads that the Plaintiff committed acts of fraud in failing to disclose to the Defendant the amount of curtailments on the boat inventory."On the morning of trial, appellees filed a motion to strikeappellant's defense of fraud on the ground that it was not stated with the particularity required by Ark. R. Civ. P. 9(b).The trial court granted this motion, over appellant's objection.

At the conclusion of the trial, appellant moved to amend the pleadings to conform to the proof of fraudulent inducement introduced at trial.The trial court denied this motion and refused to instruct the jury on the issue of fraud.The jury returned a verdict for appellees in the amount of $140,929.45.Appellant has appealed from the judgment entered on that verdict.

In its first point, appellant argues that the trial court erred in denying its motion to dismiss for improper venue.Whether venue is appropriate in a particular county is a matter of law.River Bar Farms, LLC v. Moore,83 Ark.App. 130, 118 S.W.3d 145(2003);Two Bros. Farm, Inc. v. Riceland Foods, Inc.,57 Ark.App. 25, 940 S.W.2d 889(1997).As explained below, venue was proper in Cleburne County for a number of reasons.

Appellant argues that, based upon Ark.Code Ann. § 16-60-111(a)(1987), venue was proper only in Van Buren County, where its principal place of business is located.This statute provides: "An action on a debt, account, or note, or for goods or services may be brought in the county where the defendant resided at the time the cause of action arose."Appellant also contends that Ark.Code Ann. § 16-60-104(1987) requires the dismissal of this action for improper venue.It states in relevant part: "An action, other than those in §§ 16-60-101 — 16-60-103, against a corporation created by the laws of this state may be brought in the county in which it is situated or has its principal office or place of business, or in which its chief officer resides."Appellant states that, in addition to its principal place of business being in Van Buren County, its chief officer, John Ison, resides there.

Appellant, however, offered no proof about its principal place of business or the residence of its chief officer.When venue is questioned, there must be a determination on the facts; unless the pleadings on their face show that an action was commenced in the wrong county, a defendant objecting to the venue has the burden of proving the essential facts.Farmers Bank v. Fuqua Homes, Inc.,259 Ark. 38, 531 S.W.2d 23(1976).

Also, because it is undisputed that Mr. Ison was served by the Cleburne County Sheriff in Cleburne County, Ark.Code Ann. § 16-60-116(a)(1987) permits venue in that county.That statute provides: "Every other action may be brought in any county in which the defendant, or one (1) of several defendants, resides or is summoned."¹In Fraser Brothers v. Darragh Co.,316 Ark. 297, 871 S.W.2d 367(1994), the supreme court stated that an action based upon the nonpayment of a debt or breach of contract must be brought in the county of the defendant's residence or where the defendant is summoned.

Arkansas Code Annotated section 16-58-125(a)(1)(1987) also applies because appellant admitted in paragraph one of its answer to the complaint that it operates a boating and recreational vehicle business in Cleburne County.This statute states:

Any and all foreign and domestic corporations which keep or maintain in any of the counties of this state a branch office or other place of business shall be subject to suits in any of the courts in any of the counties where the corporation so keeps or maintains the office or place of business.

Arkansas Code Annotated section 16-58-125 supplements Ark.Code Ann. § 16-60-104.In American Savings & Loan Association v. Enfield,261 Ark. 796, 551 S.W.2d 552(1977), the supreme court explained:

It does not seem to us that the language of this section could any more clearly state that venue in an action against a domestic corporation can be laid in any county where the corporation maintains a branch office and that service of summons from any court held in such a county upon the person in charge of that office is sufficient to give that court jurisdiction.

261 Ark. at 801, 551 S.W.2d at 554.

In their treatise, Arkansas Civil Practice & Procedure§ 6-6, at 99-100 (3d ed. 2002), Justice David Newbern and Professor John Watkins explain the effect of section 16-58-125 as follows:

Another statute[in addition to Section 16-60-104], not codified with the venue provisions, expands these venue options.Under Ark.Code Ann. § 16-58-125(a)(1), corporations that maintain branch offices or other places of business are subject to suit in any county where such facilities are located.This statute has been held to supplement Ark.Code Ann. § 16-60-104, as has a similarly worded venue statute, Ark.Code Ann. § 16-60-105, that...