Ruth R. Remmel Rev. Trust v. Regions Finan.

• Decision Date: 12 April 2007
• Docket Number: No. 06-616.,06-616.
• Citation: 369 Ark. 392,255 S.W.3d 453
• Parties: The RUTH R. REMMEL REVOCABLE TRUST; Ruth R. Remmel; Mary Remmel Wohlleb; The Raymond R. & Margarita Remmel Revocable Trust; The Roland R. Remmel Irrevocable Life Trust; The Beth Wohlleb Trust #1; The Beth Wohlleb Trust #2; The Sara Wohlleb Trust #1; The Sara Wohlleb Trust # 2; The Ariana Maria Remmel Trust # 1; The Ariana Maria Remmel Trust # 2; The Carina E. Remmel Trust # 1; The Carina E. Remmel Trust #2; The Remington Rebsamen Remmel Trust # 1; The Remington Rebsamen Remmel Trust # 2; and The 1997 Roland R. Remmel Revocable Living Trust, Appellants, v. REGIONS FINANCIAL CORPORATION and Allen J. McDowell, Appellees.
• Court: Arkansas Supreme Court

255 S.W.3d 453

369 Ark. 392

The RUTH R. REMMEL REVOCABLE TRUST; Ruth R. Remmel; Mary Remmel Wohlleb; The Raymond R. & Margarita Remmel Revocable Trust; The Roland R. Remmel Irrevocable Life Trust; The Beth Wohlleb Trust #1; The Beth Wohlleb Trust #2; The Sara Wohlleb Trust #1; The Sara Wohlleb Trust # 2; The Ariana Maria Remmel Trust # 1; The Ariana Maria Remmel Trust # 2; The Carina E. Remmel Trust # 1; The Carina E. Remmel Trust #2; The Remington Rebsamen Remmel Trust # 1; The Remington Rebsamen Remmel Trust # 2; and The 1997 Roland R. Remmel Revocable Living Trust, Appellants, v. REGIONS FINANCIAL CORPORATION and Allen J. McDowell, Appellees.

No. 06-616.

Supreme Court of Arkansas.

April 12, 2007.

Rehearing Denied May 17, 2007.

Eichenbaum, Liles & Heister, P.A., by James H. Penick and Christopher O. Parker, Little Rock, AR, for appellants.

Kaplan, Brewer, Maxey & Harralson, P.A., by Philip E. Kaplan, Little Rock, AR, for appellee Allen J. McDowell.

Friday, Eldredge & Clark, LLP, by William A. Waddell, Jr., Little Rock, AR, for appellee Regions Financial Corporation.

JIM GUNTER, Justice.

This appeal arises from a March 20, 2006, order, entered by the Pulaski County Circuit Court, granting a motion to confirm arbitration awards filed by Appellee Regions Financial Corporation (Regions), against Appellants, The Ruth R. Remmel Revocable Trust, Ruth R. Remmel, as trustee, and other trusts and individuals related to the Ruth R. Remmel family, including The Raymond R. & Margarita Remmel Revocable Trust; The Roland R. Remmel Irrevocable Trust; The Beth Wohlleb Trust # 1 and Trust # 2; The Sara Wohlleb Trust #1 and Trust #2; The Ariana Maria Remmel Trust # 1 and Trust # 2; The Carina Elizabeth Remmel Trust # 1 and # 2; The Remington Rebsamen Remmel Trust # 1 and Trust # 2; and the 1997 Roland R. Remmel Revocable Living Trust. Appellants (collectively "the Remmels") also appeal an April 14, 2006, order dismissing with prejudice their third-amended complaint. We affirm the circuit court's rulings.

I. Facts

In 1928, Rebsamen Insurance Corporation (Rebsamen), an insurance brokerage corporation, was established in Little Rock by Raymond Rebsamen. Throughout the years, Rebsamen was privately held until February 5, 2001. On February 5, 2001, the Remmels and Regions entered into a stock-purchase agreement ("SPA") for the sale of Rebsamen's entire stock to Regions. The transaction closed within a few days of the Remmels signing the agreement.

On March 12, 2003, the Remmels filed a complaint for damages against Regions, Phil Herrington, a director of Rebsamen and the Remmels' financial advisor, and Appellee Allen J. McDowell, Rebsamen's chief executive officer, president, and chairman. In the Remmels' complaint, they alleged that, in 1999, Herrington and McDowell made contact with prospective purchasers of Rebsamen, but withheld this information from Rebsamen's Board of Directors, and conspired to cause Rebsamen to be sold to Regions for below fair value. The Remmels alleged several intentional torts, including breach of fiduciary duty against Herrington and McDowell; tortious interference with business expectancy and facilitation of breach of fiduciary duty against Regions; conversion against Herrington and McDowell; violation of the Arkansas Trade Secrets Act, found at Ark. Code Ann. §§ 4-75-601 through 4-75-607 (Repl.2001); unjust enrichment; deceit against Herrington and McDowell; constructive fraud against Herrington and McDowell; conspiracy; and negligence against Herrington and McDowell. The Remmels later voluntarily dismissed their claims against Herrington and filed a separate lawsuit against him.

On April 21, 2003, Regions filed the first of three motions to compel arbitration, pursuant to Section 8.11 of the SPA. On September 18, 2003, the circuit court denied Regions's motion to compel arbitration, finding that the complaint contained claims outside the arbitration clause. Additionally, on September 18, 2003, the circuit court entered an order dismissing the Remmels' claims for conversion, unjust enrichment, and misappropriation of trade secrets.

On January 20, 2004, Regions filed a second motion to compel arbitration, which McDowell later joined. On April 22, 2004, the Remmels filed a second-amended complaint, and on April 27, 2004, a supplemental second-amended complaint was filed. The Remmels' second-amended complaint included allegations of several intentional tort claims, including, inter alia, violation of the Arkansas Securities Act, codified at Ark.Code Ann. §§ 23-42-101 through 23-42-509 (Repl.2000).

On May 10, 2004, Regions filed a renewed motion to compel arbitration in response to the Remmels' second-amended complaint and supplemental second-amended complaint. McDowell joined Regions's motion by separate pleading. On July 7, 2004, the circuit court entered an order staying all issues and claims with respect to Regions's claims. Further, the circuit court granted Regions's motion to compel arbitration and denied McDowell's motion. The court further ruled that, because the SPA between Regions and the Remmels involved interstate commerce, the arbitration commenced pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 through 16 (2000 & Supp. III 2003). On July 21, 2004, the circuit court entered a separate order referring the joint counterclaim of Regions and McDowell to arbitration. Additionally, on July 21, 2004, the Remmels filed a third-amended complaint, realleging the claims set forth in the second-amended complaint filed on April 22, 2004. A consent order was entered on July 22, 2004, in which all claims against McDowell were referred to arbitration. The parties further agreed that the arbitration of the claims would be consolidated with the arbitration proceeding involving the Remmels and Regions.

On November 28, 2004, the Remmels filed an amended claim with the American Arbitration Association, and Regions filed an answer on December 17, 2004. The Remmels' claims were arbitrated in an evidentiary hearing before an arbitrator. On September 12, 2005, the arbitrator entered an interim award in which the arbitrator denied the Remmels' claims in their entirety, and Regions's counterclaim was denied in its entirety. Specifically, the arbitrator denied the Remmels' following claims: (1) breach of fiduciary duty against McDowell; (2) tortious interference with contract, business relations and expectancy; facilitation of breach of fiduciary duty; and breach of fiduciary duty, confidence, and trust against Regions; (3) conversion against McDowell; (4) violation of the Arkansas Trade Secrets Act; (5) unjust enrichment; (6) fraudulent concealment against McDowell; (7) fraud against McDowell; (8) fraudulent concealment against Regions; (9) violation of the Arkansas Securities Act against Regions; (10) violation of the Arkansas Securities Act against McDowell; (11) constructive fraud against Regions; (12) conspiracy; (13) negligence against McDowell. On November 17, 2005, the arbitrator entered a final award dealing with attorneys' fees. On December 8, 2005, the Remmels filed a motion to vacate the arbitration award on the basis that "the clear and specific intent of the parties not to arbitrate the tort claims," and "the award was outside the scope of the arbitrator's authority, which is derived solely from the parties' agreement." After a hearing on the matter, the circuit court denied the Remmels' motion to vacate, finding that (1) the claims against Regions were properly ordered to arbitration under the SPA and the FAA; (2) the Remmels voluntarily agreed to arbitrate their claims against McDowell; and (3) the Remmels waived any argument regarding the scope of the arbitration by failing to raise that issue in the arbitration proceeding. On February 9, 2006, the circuit court entered an order denying the Remmels' motion to vacate. The circuit court entered a judgment on March 20, 2006, confirming the arbitration awards.

The circuit court held a hearing on April 7, 2006, to consider Regions's motion to dismiss the Remmels' third-amended complaint. On April 14, 2006, the circuit court made the following findings: (1) the arbitration award, including the interim award, was res judicata as to the facts and claims asserted in the third-amended complaint against Regions and McDowell; (2) the third-amended complaint was also barred by collateral estoppel as to Regions based upon the arbitration award in favor of McDowell; (3) the court incorporated prior orders dismissing the Remmels' claims for conversion, misappropriation of trade secrets, and unjust enrichment; and (4) the court denied arguments regarding an issue of standing. On April 19, 2006, the Remmels filed a supplemental and amended notice of appeal. The Remmels now appeal the March 20, 2006, and April 14, 2006, orders.

II. Arbitrability of the Remmels' claims against Regions

For their first point on appeal, the Remmels argue that the circuit court erred in affirming the arbitration awards in its March 20, 2006, order. They contend that their suit for damages, alleging intentional business torts, should not be forced into arbitration, thereby depriving them of a trial by jury. Further, the Remmels assert that the SPA, by its terms, excludes their tort claims in their second- and third-amended complaints. No argument is advanced by the Remmels that there is no agreement, but rather they contend that the SPA does not create a binding arbitration of their tort claims.

In response, Regions argues that the circuit court properly ruled that its referral of the case to arbitration was proper under the FAA. Specifically, Regions contends that the Remmels were bound by arbitration when they amended their complaint to include the breach-of-employment-contract claim against McDowell. Thus, Regions asserts that McDowell's breach of contract led to the alleged intentional torts, thereby bringing those claims within the purview of Article...