Simpson Hous. Solutions Llc v. Hernandez

• Decision Date: 19 November 2009
• Docket Number: No. 08–396.,08–396.
• Citation: 2009 Ark. 480,347 S.W.3d 1
• Parties: SIMPSON HOUSING SOLUTIONS, LLC, et al., Appellants,v.Juan C. HERNANDEZ et al., Appellees.
• Court: Arkansas Supreme Court

2009 Ark. 480

347 S.W.3d 1

SIMPSON HOUSING SOLUTIONS, LLC, et al., Appellants,

v.Juan C. HERNANDEZ et al., Appellees.

No. 08–396.

Supreme Court of Arkansas.

Oct. 8, 2009.Rehearing Denied Nov. 19, 2009.

Conner & Winters, LLP, by: Robert L. Jones, III, Fayetteville, and Laser Law Firm, P.A., by: J. Cotten Cunningham, Little Rock, for appellant Simpson Housing Solutions, LLC.Hirsch Law Firm, P.A., by: E. Kent Hirsch, Springdale; The Evans Law Firm, by: Marshall Dale Evans, Fayetteville; Odom Law Firm, P.A., by: Alan L. Lane, Fayetteville; Jeff Slaton; and, Hawkins Law Firm, P.A., by: Cindy L. Hawkins, Springdale for appellees.ROBERT L. BROWN, Justice.

This is an interlocutory appeal from the circuit judge's order granting class certification for one subclass (Subclass A) and denying class certification for another subclass (Subclass C). Appellants have appealed the order relating to Subclass A, and appellees have cross-appealed the order concerning Subclass C. Some of the cross-appellees have also moved to dismiss the cross-appeal. We affirm the order of the circuit judge and deny the motions to dismiss.

The plaintiffs in this matter are former residents of the Springdale Ridge Apartments (“Springdale Ridge”) in Springdale. They filed a complaint against various defendants regarding the alleged presence of dangerous levels of carbon monoxide in the apartment units and subsequently amended that complaint three times. The plaintiffs and putative class representatives (appellees and cross-appellants), as set forth in the Fourth Amended Complaint, are:

• Juan and Dalia Hernandez—Residents of Springdale Ridge from August 2003 to the present.

• Mark and Jennifer Raabe—Residents of Springdale Ridge from July 13, 2002 to February 2003.

• Melanie Cash—Resident of Springdale Ridge from December 30, 2003 to September 1, 2004.

• Michael Cline—Resident of Springdale Ridge from May 3, 2003 to August 16, 2004.

• Donna Hays—Resident of Springdale Ridge from October 2003 to September 2004.

The defendants, as set forth in the Fourth Amended Complaint, are:

The Owners/Managers (hereinafter “Simpson”) (appellants and cross-appellees)

• Simpson Housing Solutions, LLC—Parent Entity of Deer Run, Fox Run, and Affordable Multi–Family.¹

• Simpson Housing Limited Partnership, LLLP—Unclear from the record but appears to be part of Simpson Housing Solutions, LLC.

• Deer Run Limited Partnership—Current or Former Owner of Springdale Ridge.

• Fox Run Limited Partnership of Springdale—Current or Former Owner of Springdale Ridge.

• Affordable Multi–Family, LLC—General Partner of Fox Run and Deer Run.

• Walling Development, a/k/a Walling Development Co. and a/k/a Walling Development, Inc.—Developer and former owner of Springdale Ridge.²

• Pinnacle Realty Management Co., a/k/a Pinnacle Realty Management, Inc.—Former Management Company of Springdale Ridge.

• Heather Hardcastle—Manager of Springdale Ridge.

Builders (cross-appellees)

• Atlas Construction of Arkansas, LLC—General Contractor of Springdale Ridge.³

• A.R. Mays Construction, Inc., f/k/a Devcon, Inc., a/k/a Devcon by A.R. Mays Construction—General Contractor of Springdale Ridge until September 2001.

• L & L Plumbing and Heating, Inc.—Subcontractor involved in the building of Springdale Ridge.

Architects (cross-appellees)

• Architecture Design & Development—Designed Springdale Ridge.

• Thomas O'Neill—Principal and individual who provided the engineering plans for Springdale Ridge.

• Jerry Verdin—Provided the engineering plans for the project.

Other (cross-appellees)

• Arkansas Western Gas Company (“AWG”)—Public utility company that provided the hot water heaters and the heating, ventilation, and air conditioning (“HVAC”) units and natural gas to Springdale Ridge.

According to the Fourth Amended Complaint, in April 2001, tenants began to move into the newly constructed Springdale Ridge Apartments under lease agreements entered into with Simpson. The facility was not completed until 2003. Springdale Ridge includes multiple buildings and has 192 separate units. The complaint alleges that the design for the HVAC and hot-water systems was flawed when the building was constructed, which resulted in dangerous levels of carbon monoxide in the individual apartment units. The complaint further alleges that many residents, including some of the class representatives, were alerted by in-home detectors to high levels of carbon monoxide in their units. These residents allegedly told management, AWG, the Springdale Fire Department, and others about the carbon-monoxide readings.

During 2002, according to the complaint, AWG tested some of these individual units upon notification and discovered varying levels of carbon monoxide. Some levels were elevated, and others were not. After testing, AWG either shut off the gas or returned service. On January 24, 2004, after reports to the Springdale Fire Department of elevated carbon-monoxide levels, AWG inspected apartment units and reported problems with the “make-up air supply.” AWG, however, reactivated natural-gas service to Springdale Ridge.

On August 8, 2004, Melanie Cash reported that her carbon-monoxide alarm had sounded, and, in response, the Springdale Fire Department and the Springdale Building Inspector's Office tested each unit in her building for carbon monoxide.⁴ Some of the tests revealed the presence of carbon monoxide.

On August 10, 2004, Michael Cline called the Springdale Police Department to respond to his carbon-monoxide-detector alarm. The police responders did some initial testing, which resulted in a decision by the police department, AWG, and Springdale Ridge management to conduct more extensive testing. The subsequent tests revealed that there were high levels of carbon monoxide in most of the units examined.⁵ AWG then shut off the gas to all of the facilities at Springdale Ridge. The Springdale Building Inspector posted a “red tag” notice on each apartment, stating that the building was “unsafe.”

On August 14, 2004, AWG reconnected gas to the Springdale Ridge facilities, but the HVAC units remained disconnected until December 12, 2004, while repairs were being made. Some residents apparently moved out of their apartments during the four months in which the HVAC units were inoperative, and others remained. Springdale Ridge took various steps to mitigate the inconvenience to the residents, which included providing meals while the gas was disconnected, working with a local church to provide showers and transportation, providing washers and dryers, and paying for hotel rooms. Springdale Ridge also did not charge any rent during the week that the gas was turned off.

The procedural history of this case is lengthy and complex. The named plaintiffs/appellees, representing a putative class, originally filed a class action against various defendants on September 2, 2004, alleging various causes of action. Many of the defendants filed cross-claims against each other, and the plaintiffs/appellees filed multiple amended complaints and motions for class certification. On June 30, 2006, the plaintiffs/appellees filed a Fourth Amended Complaint and Second Amended Motion for Class Certification, which are the pleadings that give rise to the instant appeal. In that complaint, Subclass A plaintiffs/appellees brought claims for breach of contract and fraud against Simpson, and Subclass C plaintiffs/appellees brought various tort claims against Simpson and the remaining defendants/ cross-appellees.⁶

The circuit judge held a four-day certification hearing. On June 13, 2007, she issued Findings of Fact and Conclusions of Law, as required by Arkansas Rule of Civil Procedure 23. Some of the defendants filed a motion for reconsideration or, in the alternative, for additional findings of fact and conclusions of law. The circuit judge scheduled another hearing, and on September 5, 2007, she entered an order amending her findings of fact and conclusions of law and a class certification order, conditionally certifying Subclass A and denying certification for Subclass C.

The class-certification order defines Subclass A as “all current or former lessees of Springdale Ridge Apartments I and II located within Springdale, Washington County, Arkansas.” ⁷ The order states that Subclass A “seeks claims for breach of implied covenant of good faith and fair dealing, breach of contractual obligation to maintain, repair, and inspect, failure of consideration, and fraud” against Simpson. According to the Fourth Amended Complaint, plaintiffs/appellees prayed for a refund of rental payments with respect to the breach-of-contract and fraud claims and punitive damages for the fraud claims. Subclass C, which was not certified, was defined as “all current or former residents, current or former tenants, or current or former occupants of Springdale Ridge Apartments I and II located within Springdale, Washington County, Arkansas.” Subclass C brought claims for outrage, negligence, and strict liability against Simpson; negligence against AWG, the Architects, and the Builders; and wrongful death against all defendants. Subclass C also sought to have the Civil Justice Reform Act of 2003 declared unconstitutional and unenforceable. The prayer for relief in the Fourth Amended Complaint for the Subclass C tort claims was for a determination of liability only, independent of determinations relating to causation and damages.

I. Rule 23.

In order to certify a class, the trial judge must find that the plaintiff has met the requirements of Arkansas Rule of Civil Procedure 23, which states:

(a) One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties...