Arkansas Realtors Association v. Real Forms, LLC
Any attorney who has spent much time practicing in court knows that many arguments and rulings are made in chambers (and off the record). The question, then, is how to preserve arguments made in chambers. The Arkansas Supreme Court’s recent decision in Arkansas Realtors Association v. Real Forms, LLC provides some guidance. 2014 Ark. 385. Although the opinion does not include a definitive method to preserve such arguments, the takeaway is that attorneys must find a way to make the argument on the record.
The facts of Arkansas Realtors Association are a bit complicated and have been simplified for purposes of this blog post. In sum, the Arkansas Realtors Association (“ARA”) had been in a long-term contract with Robert Bodily to create desktop software that allowed ARA members to draft contracts electronically. The ARA later entered into a contract with Real Forms, LLC (technically, it was a predecessor company) to create an online version of the software. The two programs were apparently not compatible, so the ARA ultimately entered into a contract with Real Forms, LLC (“Real Forms”) to create both a desktop version and an online version of the software.
A number of disputes arose between the ARA and Real Forms, including disputes about the time of delivery, whether the software met the ARA’s needs, and regarding the fact that Real Forms had not obtained errors & omissions (E & O) insurance as required by the contract. The ARA ultimately sent a notice of termination to Real Forms. Real Forms sued the ARA, and the ARA filed a counterclaim. The jury ultimately returned a verdict in favor of Real Forms for $150,000.
The ARA raised several points in its appeal, but for purposes of this blog post, the relevant point that was raised related to the ARA’s motions in limine. Prior to trial, Real Forms filed two motions in limine (one to exclude lay-witness opinion testimony regarding whether the software was flawed, and another to exclude evidence of insurance), and the ARA filed three motions in limine (one to exclude evidence of Bodily’s contract with the ARA, one to exclude the interpretation of contract terms by a software development expert witness, and one to exclude evidence of the number of hours worked by the owners of Real Form.
On the first day of trial, the court held an off-the-record hearing in chambers regarding the motions in limine. After returning from chambers, the court ruled on-the-record regarding the insurance motion in limine, but did not make any reference to any of the four remaining motions in limine at that time.
On appeal, the ARA argued that the circuit court had erred by not making a record prior to trial regarding the motions in limine. The ARA relied on Administrative Order No. 4, which provides that, “[u]nless waived on the record by the parties, it shall be the duty of any circuit court to require that a verbatim record be made of all proceedings . . . pertaining to any contested matter before the court or the jury.” The Arkansas Supreme Court has previously held that this rule is “mandatory,” and that a party’s silence on this issue does not constitute an implied waiver of this requirement. Thompson v. Guthrie, 373 Ark. 443, 447, 284 S.W.3d 455, 457 (2008), George v. State, 356 Ark. 345, 151 S.W.3d 770 (2004). The Arkansas Supreme Court has also held, however, that the burden of bringing up a record sufficient to demonstrate error rests with the appellant. Hankins v. Dep’t of Fin. & Admin., 330 Ark. 492, 954 S.W.2d 259 (1997).
In this case, the Arkansas Supreme Court rejected the ARA’s argument that the case should be remanded to complete the record, holding that the ARA had not been prejudiced by the off-the-record discussion. In reaching its conclusion, the Arkansas Supreme Court looked at each of the ARA’s three motions in limine individually. With respect to the first motion in limine (to exclude evidence of Bodily’s contract with the ARA), there had been a sidebar (apparently on the record) regarding the Bodily contract and what counsel could and could not ask during testimony regarding that contract. With respect to the second motion in limine (to exclude testimony from the software expert regarding contract terms), the circuit court had actually sustained the ARA’s objection to such testimony during that expert’s testimony. With respect to the third motion in limine (to exclude the number of hours worked by the owners of the company), the ARA had never objected during trial when testimony was given on this point.
Based on this sequence of events, the Arkansas Supreme Court held that “given these specific circumstances, we adhere to our rule that Appellant was required to bring a record sufficient to demonstrate error, and we cannot say that Appellant was prejudiced by the circuit court’s failure to follow Administrative Order No. 4.”
There are a few points worth making in light of this opinion. First, off-the-record discussions are quite commonplace, so the question is how to preserve the issue. In light of this opinion, it appears that even if a motion in limine has been filed and denied, counsel must object on-the-record once the evidence sought to be excluded is admitted. Although there would appear to be instances in which the Arkansas Supreme Court might remand a case to require the record to be completed in similar circumstances (the Arkansas Supreme Court appears to have limited the holding in this case to “these specific circumstances”), if the issue is important enough, an on-the-record objection is vital to preserving the issue. That leads to the second point, which is that this decision to object has to be balanced against the negatives of objecting (namely, irritating the jury). In this case, it appears that counsel did not consider the testimony in question to be vital to the case (this particular point was the fourth of four points on appeal in the ARA’s brief, and took up about 2 of the brief’s 30 pages). Therefore, the decision not to object was quite possibly a strategic decision in this five-day jury trial. If, however, a ruling in chambers is more important to a case, counsel should make every effort to make an objection on the record and to obtain a ruling on the record.