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In Ford Motor Company v. Washington, 2012 Ark. 354 (“Ford II“), the Arkansas Supreme Court addressed whether a party’s statement in its notice of appeal that it abandons all pending but unresolved claims is effective as a dismissal against a stray party.  Ford II is the Court’s opinion on a petition for rehearing, so before examining that case, we need to discuss the original case first.

We addressed the case of Ford Motor Company v. Washington, 2012 Ark. 325, (“Ford I“) in a previous blog post.  As discussed in that post, the plaintiff in that case sued three parties: the driver of a vehicle, the manufacturer of the vehicle, and the dealership that sold the vehicle.  The plaintiff settled with the driver, and an order was entered dismissing the driver with prejudice.  The plaintiff moved for a voluntary nonsuit against the dealership, and the motion was granted orally, but no order was ever entered dismissing the dealership.

In Ford I, the plaintiff prevailed at the trial level against the manufacturer, but when the manufacturer appealed, the Arkansas Supreme Court refused to hear the appeal for lack of a final order.  (Although not mentioned in Ford I, the Ford II opinion indicates that both parties filed notices of appeal/cross-appeal.)  The Arkansas Supreme Court held that the nonsuit against the dealership was ineffective because there was no written order dismissing the dealership.  In response to this decision, the plaintiff and the manufacturer-defendant jointly petitioned the Court for a rehearing, basing their argument on Searcy County Counsel for Ethical Gov’t v. Hinchey, 2011 Ark. 533.

In Hinchey, the plaintiffs alleged that the county judge had sold a piece of equipment to two buyers without following the statutory requirements for such a sale.  The lawsuit named both the county judge and the buyers as defendants.  The county judge filed a motion for summary judgment, which was granted.  The plaintiffs appealed, but the Arkansas Supreme Court refused to hear the appeal because the circuit court’s order granting the county judge’s motion for summary judgment did not dismiss the complaint against the buyers.

In its opinion in Hinchey, the Arkansas Supreme Court observed that the plaintiff had failed to include a statement in its notice of appeal that it abandoned any pending but unresolved claim.  Rule 3(e)(vi) of the Arkansas Rules of Appellate Procedure–Civil requires that this statement be included in all notices of appeal.  The rule provides that such a statement in the notice of appeal “operate[s] as a dismissal with prejudice effective on the date that the otherwise final order or judgment appealed from was entered.”

The Reporter’s Notes to the amendment to the rule state the purpose as follows:

This amendment will cure a recurring finality problem.  Too often–after the parties have paid for the record, filed it, and filed all their briefs on appeal–the appellate court will discover that what appears to be a final order or judgment is not final because a pleaded claim, counterclaim, or cross-claim remains unadjudicated.  This kind of stray claim destroys finality and renders an otherwise final order or judgment unappealable. E. g., Ramsey v. Beverly Enters., Inc., 375 Ark. 424, 291 S.W.3d 185 (2009); Rigsby v. Rigsby, 340 Ark. 544, 11 S.W.3d 551 (2000); Brasfield v. Murray, 96 Ark. App. 207, 239 S.W.3d 551 (2006). These stray claims often appear to have been forgotten by the parties or abandoned even though no order resolved them. It wastes parties’ and courts’ scarce resources to have two appeals in these situations.

In Hinchey, the Arkansas Supreme Court stated that if the plaintiff had included this statement in its notice of appeal, the statement “would have operated as a dismissal with prejudice of its claim against [the buyers],” meaning there would have been a final order and the court would have been able to hear the appeal.

With this background in mind, we now move back to a discussion of Ford II.  In Ford II, the plaintiff had included the required abandonment language in its notice of cross-appeal.  Therefore, both parties argued that the language operated as a dismissal of all of the plaintiff’s claims against the dealership.

The Arkansas Supreme Court disagreed.  The Court noted that both the text of the rule itself and the Reporter’s Notes refer to unresolved and/or stray “claims,” but not “parties.”  The Court also noted that the cases cited in the Reporter’s Notes addressed unresolved claims, and that none of those cases involved stray parties.  Based on this, the Arkansas Supreme Court held that “[t]he Rule does not . . . allow an appealing party to dismiss a party from the action by such a statement in a notice of appeal or notice of cross-appeal.”  The Court further held that “Rule 3 requires appellants and cross-appellants to abandon pending and unresolved claims, but it does not permit appellants and cross-appellants to dispose of parties in the same fashion.”

Finally, the Arkansas Supreme Court addressed its prior statement in Hinchey that seemed to indicate that such a statement in the notice of appeal would act as a dismissal of any stray parties.  Rather than attempting to distinguish the two cases, the Court simply held that the “statement in Hinchey was merely dicta.”

The result of this decision is that even if an appealing party includes the abandonment language (from Rule 3(e)(vi) of the Arkansas Rules of Appellate Procedure–Civil) in its notice of appeal, stray parties must have been dismissed in writing in order for the order to be final.  The abandonment language simply will not operate to dismiss stray parties from a lawsuit.

Related Posts:

• Oral Order Dismissing a Party Not Sufficient to Create Final Order (Ford I)
• Rule 54(b)(5) and the Rule of Unintended Consequences: Yet Another Rule 54(b) Trap
• Rule 54(b) Strikes Twice in the Same Case
• The Rule 54(b) Trap: Dealing with Non-final Orders in Cases with Multiple Claims or Multiple Parties
• Rule 54(b) Certification Requires Showing of Undue Hardship Without Interlocutory Appeal
• Arkansas Court of Appeals Dismisses Case without Prejudice for Lack of Final Order; Court Notes that Only Documents From the Record May be Included in an Appellant’s Addendum

–Andy Taylor