Rogers v. General Electric Company

• Decision Date: 25 April 1972
• Docket Number: No. F-72-C-6.,F-72-C-6.
• Parties: R. T. ROGERS, Plaintiff, v. GENERAL ELECTRIC COMPANY, Defendant.
• Court: U.S. District Court — Western District of Arkansas

341 F. Supp. 971

R. T. ROGERS, Plaintiff, v. GENERAL ELECTRIC COMPANY, Defendant.

No. F-72-C-6.

United States District Court, W. D. Arkansas, Fayetteville Division.

April 25, 1972.

John Lineberger, of Wommack & Lineberger, Fayetteville, Ark., for plaintiff.

William Stocks, Fort Smith, Ark., for defendant.

OPINION

JOHN E. MILLER, Senior District Judge, sitting by designation.

The plaintiff, a citizen of Arkansas and resident of the Western District, filed his complaint herein on January 28, 1972, seeking judgment in excess of $10,000, exclusive of interest and costs, for damages alleged to have been sustained by him growing out of litigation in the Circuit Court of Benton County, Arkansas.

On February 23, 1972, the defendant, a corporation organized under the laws of New York with its principal office in New York, filed its answer to the complaint denying all allegations therein.

Jurisdiction is based upon diversity of citizenship and the amount in controversy. The substantive law of Arkansas applies.

On March 28, 1972, defendant filed its motion for summary judgment in accordance with Rule 56, Fed.R.Civ.P., in which it alleged that the pleadings, depositions, answers to interrogatories, admissions, together with affidavits, show that there is no genuine issue as to any material fact, and that it is entitled to judgment as a matter of law.

On April 14, 1972, plaintiff filed his response to the motion of defendant and alleged that an examination of the record demonstrates that there are genuine issues of material fact and that the defendant is not entitled to judgment as a matter of law. The parties have served and submitted elaborate briefs in support of their respective contentions.

The court has thoroughly examined the entire record, the evidence, the contentions of the parties, and the briefs submitted in support thereof, and is convinced that there is no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law.

Although findings are not necessary on the motion for summary judgment, 6 Moore's Federal Practice, 2d Ed., § 56.0211, p. 2046, the parties are entitled to know the reasons upon which the judgment of the court are based. The reasons are apparent to anyone when the applicable law is applied to the incontrovertible facts.

On his brief the plaintiff contends that there are genuine issues of material fact with respect to the following:

"(1) Whether General Electric had probable cause to sue Mr. Rogers and to continue to prosecute the suit after it became evident that the suit had no merit.

(2) Whether General Electric maliciously prosecuted the action against Mr. Rogers.

(3) Whether General Electric communicated any facts pertaining to Mr. Rogers to its attorney, and if so what those facts were.

(4) Whether General Electric Company used reasonable diligence to ascertain the truth.

(5) Whether General Electric relied in good faith upon the advice it received from counsel.

(6) Whether the Benton County suit against Mr. Rogers was terminated by Order of the Court."

The following facts are uncontroverted.

On August 13, 1970, the defendant, General Electric Company (General Electric), commenced its action in the Circuit Court of Benton County, Arkansas, against Hiwasse Homes, Inc., (Hiwasse), seeking to recover the sum of $19,178.08, the amount claimed to be due for merchandise sold and delivered to Hiwasse. Prior to the commencement of the action, General Electric contacted Mr. William M. Stocks, a duly qualified and licensed attorney of Fort Smith, Arkansas. In the letter to Mr. Stocks was a statement of the account and two checks that it had received from Hiwasse upon which payment had been refused because of insufficient funds. General Electric requested and instructed Mr. Stocks as follows:

"Please make collection of the account in our behalf. We will leave the manner to your discretion. If we have any right of replevin or seizure available under the prevailing law in the State of Arkansas, please exercise in our behalf."

A writ of attachment was issued upon the complaint, and on the same date Mr. Stocks conferred with the attorney for Hiwasse, Mr. Ralph Williams of Bentonville, Arkansas, and accompanied by a Deputy Sheriff of Benton County, Arkansas, went to Gravette, the place of business and office of Hiwasse, to ascertain what property owned by Hiwasse was subject to attachment. There Mr. Stocks conferred with the plaintiff in the instant suit, R. T. Rogers, who was President and Managing Officer of Hiwasse. In that conference the various assets of Hiwasse were discussed, and Mr. Rogers stated that Hiwasse would assign certain property and accounts free of liens and execute a promissory note and security agreement to secure the payment of the promissory note if the writ of attachment was not served. As a result of the representations of Mr. Rogers concerning the value of the property to be included in the security agreement, Mr. Stocks, on the next day, August 14, 1970, obtained the permission of his client, General Electric, to release the writ of attachment. A note in the principal sum of $21,318.80, payable on or before 45 days from the date thereof, with interest at 6 percent per annum, was executed and secured by the security agreement on August 14, 1970.

Subsequent to the acceptance of the note and security agreement, the attorney for General Electric collected on the securities, other than the double wide mobile home, certain money, and on November 12, 1970, remitted the same to General Electric, leaving due, after crediting such collection, the sum of $14,683.76 on the note and $2,731.37 on open account, together with interest and attorney's fees. In the letter of transmittal, Mr. Stocks advised General Electric that he intended to press for further collection in connection with the double wide mobile trailer used as a home office, as well as other possible areas of collection.

Hiwasse defaulted in the payment of the note. Some of the directors of Hiwasse expressed doubts as to their authority to grant a lien on the double wide mobile home. On February 11, 1971, three months after default on the promissory note, General Electric filed an amended and substituted complaint in the Benton County Circuit Court, and the original suit on the account was dismissed without prejudice. United Housing of Arkansas, Inc., a subsequent assignee of Hiwasse, and the plaintiff in the instant case, R. T. Rogers, were made parties defendant to the amended and substituted complaint, in which plaintiff prayed for judgment for the sum due on the promissory note and for the sale of the property described in the security agreement.

In paragraph 8 of the amended and substituted complaint, General Electric alleged in the alternative that if the defendant Hiwasse Homes, Inc., had no right to grant to the plaintiff a first security interest in the double wide mobile home unit presently utilized as the company office at Gravette, Ark., the plaintiff was entitled to a personal judgment against the defendant, R. T. Rogers, for the following reasons:

"The defendant, R. T. Rogers, represented to plaintiff and its attorney at law that the defendant, Hiwasse Homes, Inc., was the owner of the said double wide trailer and that the said trailer was unencumbered and free of any and all claims and liens of other parties or persons; and in reliance upon said representations by the defendant, R. T. Rogers, the plaintiff accepted the promissory note and security agreement hereinabove described and took the necessary action to cause the writ of attachment to be stayed, and in the event the said representation was false, said Hiwasse Homes, Inc., did not have good title, free and clear of all liens and encumbrances, then the said plaintiff has been damaged in the amount of the value of said double wide mobile home trailer and should have judgment over and against the said R. T. Rogers in the full amount plus its costs, interest, and all other proper relief."

On August 20, 1971, Hiwasse filed its answer in which it admitted the execution of the note and security agreement, but denied "each and every other material allegation contained in the complaint, and that said complaint should be dismissed with prejudice and the defendant allowed to recover its costs herein expended."

R. T. Rogers filed a demurrer to the amended and substituted complaint on the ground that it did not state a cause of action against him.

General Electric filed a response to the demurrer, in which it alleged:

"Paragraph 8 of the amended complaint filed in this cause states in the alternative a cause of action against R. T. (Tony) Rogers for common law fraud, both actual fraud and legal or constructive fraud."

The demurrer was overruled, and on August 31, 1971, Rogers filed his answer to the amended complaint, in which he stated:

"That this defendant generally and specifically denies each and every material allegation set forth in said amended complaint."

On August 31 Mr. Lineberger, the attorney for Rogers, wrote Judge Enfield, State Circuit Judge, that he had not received a copy of the promissory note, financing statement, and security agreement executed by Hiwasse, and that he was advising Mr. Stocks that if he would furnish copies of the documents, that he might be in a position to amend the answer and narrow the issues involved. A copy of the documents was immediately furnished by Mr. Stocks, and Mr. Lineberger, as attorney for Rogers, on September 10, 1971, filed an amended answer in which he admitted that Exhibits A and B attached to the amended complaint were true and correct copies of the promissory note, financing statement and security agreement duly executed by defendant Hiwasse, and further admitted that the security agreement and financing statement were filed in the Office of the Circuit Clerk of Benton County and in the Office of the Secretary of the State of Arkansas, and...