Riceland Foods, Inc. v. Pearson, 08–999.

• Decision Date: 10 December 2009
• Docket Number: No. 08–999.,08–999.
• Parties: RICELAND FOODS, INC., Appellant, v. Randy PEARSON, and Carolyn Walker, Co–Trustees of the Moore Inter Vivos Trust, and Bob Burress, Appellees/Cross–Appellants, v. St. Francis County Farmers Association and Riceland Foods, Inc., Cross–Appellees.
• Court: Arkansas Supreme Court

2009 Ark. 520

357 S.W.3d 434

RICELAND FOODS, INC., Appellant,

v.Randy PEARSON, and Carolyn Walker, Co–Trustees of the Moore Inter Vivos Trust, and Bob Burress, Appellees/Cross–Appellants,

v.St. Francis County Farmers Association and Riceland Foods, Inc., Cross–Appellees.

No. 08–999.

Supreme Court of Arkansas.

Oct. 29, 2009.Rehearing Denied Dec. 10, 2009.

Barrett & Deacon, A Professional Association, by: Ralph W. Waddell, and Brandon J. Harrison, Jonesboro, for appellant Riceland Foods, Inc.

Fogleman & Rogers, by: Joe M. Rogers, West Memphis, for appellees/cross-appellants Randy Pearson & Carolyn Walker, Co-trustees of the Moore Inter Vivos Trust.

John D. Bridgforth, P.A., by: John D. Bridgforth, Forrest City, for cross-appellee St. Francis County Farmers Association.JIM HANNAH, Chief Justice.

This appeal requires us to consider whether, pursuant to Arkansas's landlord-lien statute, Arkansas Code Annotated section 18–41–101 (Repl.2003), a purchaser of crops has a duty to make a reasonable investigation or inquiry as to whether the seller of crops is a tenant or owner of the farmland on which the crops were produced. The cross-appeal concerns attorneys' fees and the application of a setoff.

Appellant Riceland Foods, Inc., appeals the circuit court's order holding Riceland liable for rent that tenant Bob Burress did not pay, under a farm lease that Burress entered into with appellees Randy Pearson and Carolyn Walker, co-trustees of the Moore Inter Vivos Trust (“the Trust”). Riceland contends that the circuit court erred as a matter of fact and law when, pursuant to section 18–41–101, it entered judgment against Riceland. Riceland claims that the Trust's statutory lien is not enforceable against Riceland because Riceland bought rice from Burress in good faith and without notice that Burress was a tenant who had failed to pay rent to the Trust. Riceland also claims that the circuit court erred when it entered judgment against Riceland and required Riceland to satisfy the judgment before separate appellant St. Francis County Farmers Association (“SFCFA”) did so.

On cross-appeal, the Trust contends that the circuit court erred in failing to award the Trust reasonable attorneys' fees against Riceland and SFCFA. The Trust further contends that the circuit court erred when it granted Riceland and SFCFA a setoff for a settlement paid by Cargill, Inc., a former party to the suit.

We assumed jurisdiction of this case because it involves a substantial question of law concerning the interpretation of an act of the General Assembly. Thus, our jurisdiction is pursuant to Arkansas Supreme Court Rule 1–2(b)(6) (2009). We reverse and remand on direct appeal and affirm on cross-appeal.

The Trust leased 1138 acres of farmland it owned in St. Francis County to Bob Burress, for a period of five years commencing in 2005 for cash rent of $95,550 per year. Burress did not pay $57,330 of the rent for the crop year 2005 that was due on January 10, 2006. The Trust brought suit against Burress, SFCFA, Riceland, and Cargill. The Trust sought judgment for the unpaid rent against tenant Burress and secured creditor, SFCFA, which financed Burress's crop and had obtained proceeds from the crop. In addition, the Trust sought judgment from Riceland and Cargill, because they had purchased all the rice and soybeans grown on the Trust's land and paid the proceeds to Burress and SFCFA.

In an amended complaint, the Trust also sought attorneys' fees and costs. Burress filed a counterclaim against the Trust, and the Trust filed a second amended complaint against Burress seeking damages for his farming methods.

The circuit court bifurcated the lien and rent issues from the rest of the case. The court convened a jury trial, and the jury returned a verdict against Burress in the amount of $4125 for “other elements of damage.” Prior to trial, the Trust settled its claim against Cargill, so the claims against Cargill were dismissed with prejudice.

The circuit court, sitting as trier of fact on equity matters, ordered

That plaintiff recover judgment from defendant, Bob Burress, in the sum of $4,125 plus interest thereon at the rate of ten percent (10%) per annum from entry of judgment until paid and defendant, Bob Burress's counterclaim against plaintiff be and is dismissed with prejudice;

That plaintiff recover judgment from the defendant, Bob Burress, for $57,330 plus interest thereon from January 10, 2006 until entry of judgment at the rate of 10.25% per annum, and post judgment interest on $57,330 plus accrued interest less $2500 credit for settlement paid by Cargill, Inc. to plaintiff from date of entry of judgment until paid at the rate of 10% per annum until paid, together with attorney's fees of $14,000 plus costs of $3,517.19, which shall also accrue interest at the rate of 10% per annum from entry of judgment until paid, for all of which execution may issue;

That if the defendant, Bob Burress, does not pay the judgment for rent owing of $57,330 less credit of $2500 plus interest on $57,330 at the rate of 10.25% per annum from January 10, 2006 until entry of judgment, less credit from $2500 paid by the defendant, Cargill, Inc., to plaintiff plus post judgment interest on such sums until paid at the rate of 10% per annum, for all of which execution may issue;

That if the defendant, Bob Burress, does not pay the sums awarded against him herein within ten (10) days from the date of entry of judgment herein, excluding the $4,125 awarded to plaintiff against defendant, Burress, and the award of attorney's fees and cost to plaintiff against defendant Burress, or if defendant, Riceland Foods, Inc., does not pay the sums awarded against it herein within ten (10) days after entry of judgment, then plaintiff is entitled to judgment against defendant, St. Francis Farmers Association for $57,330 plus pre-judgment interest at the rate of 6% per annum from January 10, 2006 until entry of judgment, less credit for $2500 paid by the defendant, Cargill, Inc., to plaintiff, plus post judgment interest on such sums until paid, for all of which execution may issue.

Subsequent to these findings, SFCFA paid the Trust certain monies and received from the Trust a satisfaction of judgment and release of all claims. Riceland appeals, and the Trust cross-appeals against Riceland and SFCFA.¹

I. Direct Appeal

A. Mootness

Before addressing the merits of Riceland's arguments, we must determine whether this appeal is moot. On appeal, Riceland claims that this court should reverse and vacate the circuit court's judgment requiring it to pay approximately $57,000 to the Trust if the judgment was not first satisfied by Burress. Although Burress did not satisfy the judgment, SFCFA has done so regarding the landlord-lien issues that affected Riceland. Riceland contends that this satisfaction does not, however, moot this appeal because the satisfaction and release of claims is expressly restricted to SFCFA and because Riceland now faces potential contribution or indemnity claims from SFCFA based on the joint judgment that placed Riceland ahead of SFCFA on the liability scale. Indeed, SFCFA has stated in its brief on appeal that, depending on the outcome of this case, it will enforce its rights of contribution and indemnity against Riceland.

As a general rule, the appellate courts of this state will not review issues that are moot. Cotten v. Fooks, 346 Ark. 130, 55 S.W.3d 290 (2001). To do so would be to render advisory opinions, which this court will not do. Id. We have generally held that a case becomes moot when any judgment rendered would have no practical legal effect upon a then-existing legal controversy. Id. In other words, a moot case presents no justiciable issue for determination by the court. Shipp v. Franklin, 370 Ark. 262, 258 S.W.3d 744 (2007). Here, our judgment in this case would have a practical legal effect upon an existing controversy, namely whether Riceland could be liable to SFCFA. Accordingly, we turn to the arguments on appeal.

B. Brief Overview of Arkansas's Landlord–Lien Statute

In 1868, the General Assembly enacted Arkansas's landlord-lien statute, which provided in relevant part: “That every landlord shall have a lien upon the crop grown upon the demised premises in any year for rent that shall accrue for such year, and such lien shall continue for six months after such rent shall become due and payable.” See Act of July 23, 1868, No. 67, § 1, 1868 Ark. Acts 245, 245. The statute has remained mostly unchanged since its inception. ² In 2001, the General Assembly enacted a revised Article 9 of the Uniform Commercial Code. See Act of Apr. 10, 2001, No. 1439, 2001 Ark. Acts 5464. In doing so, the legislature inadvertently changed the law regarding landlords' liens, making such liens subject to application of the Uniform Commercial Code. See Act of Feb. 3, 2003, No. 32, § 1, 2003 Ark. Acts 95, 96. Accordingly, in 2003, the General Assembly enacted Act 32, titled “An Act to Restore this State's Traditional System for Establishing Landlords' Liens on Crops and to Exempt Landlords' Liens on Crops from the Uniform Commercial Code–Secured Transactions; and for Other Purposes.” Id. The General Assembly explained the purpose of the Act as follows:

The General Assembly has determined that by the enactment of Act 1439 of 2001 it inadvertently changed the law regarding landlords' liens on crops. It is the intent of this act to correct that inadvertent change, remove landlords' liens on crops from the application of the Uniform Commercial Code, reestablish Arkansas Code 18–41–101 and 18–41–103 as the law applicable to landlords' liens on crops, and thereby make landlords' liens under Arkansas Code 18–41–101 and 18–41–103 superior to all other liens on the same collateral.Id. at 96.

The current version of section 18–41–101 provides:

(a) Every landlord shall have a lien upon the crop grown on the demised premises in any year for rent that shall accrue...