Arkansas Supreme Court Chief Justice Jim Hannah

Arkansas Supreme Court Chief Justice Jim Hannah

Earlier this month, Chief Justice Jim Hannah announced his plans to retire early from his position on the Arkansas Supreme Court due to health issues.  Justice Hannah was first elected as an Associate Justice on the Arkansas Supreme Court in 2000 and later was elected to the Chief Justice position in 2004.

The following is Chief Justice Hannah’s Resignation Statement:

The people of Arkansas elected me to our state’s highest court in year 2000. I will be forever grateful. It is with great pride and pleasure that I have served on the Arkansas Supreme Court for over fourteen years, the last ten in the role of Chief Justice. In recent weeks I have been challenged by a significant health issue. Having the utmost respect for my job as Chief Justice and the business of the court, I have made a decision to tender my resignation effective at the end of August 31, 2015 to focus full-time on addressing my immediate health condition. There is no greater honor that a person can receive than to have another person place his or her trust and confidence in you. I want to thank the people of Arkansas who placed their trust and confidence in me and allowed me to serve them on their Arkansas Supreme Court. I sincerely appreciate the excellent staff that has worked with me. I have been privileged to work with some of the best district court judges, circuit court judges, appellate court judges, and justices in the country. I have also been privileged to work with our excellent Administrative Office of the Courts, its leadership and dedicated employees. Lastly, thank you to my wife Pat for her sacrifice and support.

Prior to his retirement, Justice Hannah was the longest-serving member of the Arkansas judiciary, having served as a judge for more than thirty-seven years.

Howard Brill

Professor Howard Brill

On Thursday of this week, Governor Asa Hutchinson appointed Professor Howard Brill to complete Chief Justice Hannah’s term on the Arkansas Supreme Court, which ends in 2016.  Professor Brill is the Vincent Foster University Professor of Legal Ethics and Professional Responsibility at the University of Arkansas School of Law.  He joined the law school in 1975.  Among his many achievements, Professor Brill is widely known in Arkansas as the author of Arkansas Law of Damages, which is routinely cited by Arkansas state and federal courts.  He has also authored Arkansas Professional and Judicial Ethics.  Professor Brill has previously served as a Special Justice on the Arkansas Supreme Court on several occasions.

Arkansas Supreme CourtJustice Paul Danielson announced last week that he does not plan to seek re-election as an Associate Justice of the Arkansas Supreme Court at the end of 2016.  Justice Danielson said that he was grateful for the opportunity to serve and commented that he would seek re-election were it not for an Arkansas law requiring judges to retire by age 70 so as not to lose their retirement benefits.

“I am eternally grateful to the people of Arkansas for allowing me the privilege of serving on this court for what will be ten years, after having served twelve years as a circuit judge,” Danielson said. “And it has been my honor and pleasure to work among such esteemed colleagues over the years. Were it not for the state law prohibiting me from seeking re-election without forfeiting my retirement benefits, I would continue to seek re-election as long as the good people of this State would have me.”

Within a few hours of Justice Danielson’s announcement, Circuit Court Judge Shawn Womack announced that he’ll run for Justice Danielson’s seat on the Arkansas Supreme Court in 2016.  Judge Womack, a former Arkansas lawmaker, is currently a circuit court judge in Mountain Home.

In re Guardianship of S.H., 2012 Ark. 245, 409 S.W.3d 307 (“S.H. I“) and In re Guardianship of S.H., 2015 Ark. 75 (“S.H. II“) both address the rule that applies when a parent who originally consents to a guardianship later seeks to terminate the guardianship.  In S.H. I (decided in 2012), the Arkansas Supreme Court set forth a two-step burden shifting analysis for determining whether to terminate a guardianship in such situations.  In S.H. II (which was the second appeal of the same case, decided in February 2015), the Arkansas Supreme Court clarified the burdens of proof that apply to each step in the analysis.  S.H. II was a split opinion, however, and for reasons that will be discussed in more detail below, there is some question as to which rule will apply in the future.  Therefore, this blog post analyzes the rule from both the majority opinion (which technically appears to be a plurality opinion) and the concurring opinion, along with a note regarding which rule might apply in the future.

I. Legal Background

SH II addresses situations where a parent consents to another person (typically a family member) serving as the guardian of his or her child, and then later that parent seeks to terminate that guardianship.  This can arise in a number of circumstances, such as when a parent must leave the country to serve in the military (Witham v. Beck, 2013 Ark. App. 351) or when a parent is overcoming a drug problem (Crenshaw v. Crenshaw, 2012 Ark. App. 695).

A. Abolition of the Material Change in Circumstances Standard

For many years, appellate courts in Arkansas had “equate[d] a petition to terminate a guardianship to a change of child custody among natural parents.” Smith v. Thomas, 373 Ark. 427, 432, 284 S.W.3d 476, 479 (2008).  As a result, in order for a parent to terminate a guardianship, the parent was required to prove that there had been a material change in circumstances. Graham v. Matheny, 2009 Ark. 481, 6, 346 S.W.3d 273, 277 (2009).  In Graham, the Arkansas Supreme Court recognized that “there is confusion regarding the standard to be used in termination-of-guardianship cases.” Id. at 14, 346 S.W.3d at 280-81.  Therefore, the Arkansas Supreme Court took the opportunity to set forth five principles that apply in termination of guardianship cases.  Perhaps the most significant of those principles was that “a change-of-custody analysis using the material-change-of-circumstances standard should not be done in termination-of-guardianship cases.” Id. at 15, 346 S.W.3d at 281.

The Court in Graham noted that the guardianship statute, which provides that “[a] guardianship may be terminated by court order . . . [if] the guardianship is no longer necessary or for the best interest of the ward,” is a disjunctive test. See Ark. Code Ann. § 28-65-401(b)(3).  Nevertheless, the Arkansas Supreme Court still held that even if there is evidence that a guardianship is no longer necessary, the best interests of the child must still be examined.  The concurrence in Graham, written by Justice Hannah, joined by Justice Danielson, made the point that the statute is a disjunctive statate and argued that “[u]pon remand, the circuit court should be ordered to determine whether if for any reason, the guardianship is no longer necessary or for some other reason it is no longer in the best interest of [the ward] that the guardianship continue.” Graham, 2009 Ark. 481, at 19, 346 S.W.3d at 283 (Hannah, C.J., concurring).

The concurrence, in a footnote, made one other point: That the parties had not raised the question of whether the guardianship statute as written violated parents’ constitutional rights to the custody and control of children. Id. at 18, 346 S.W.3d at 282 (Hannah, C.J., concurring).  Specifically, the concurrence made reference to Troxel v. Granville, 530 U.S. 57, 120 Sup. Ct. 2054 (2000), in which the Arkansas Supreme Court had held in a grandparent visitation case that “there is a presumption that fit parents act in the best interests of their children.”  The Arkansas Supreme Court had also recognized this principle in a grandparent visitation case, holding that “a fit parent is given a presumption that he or she is acting in a child’s best interests.” Linder v. Linder, 348 Ark. 322, 72 S.W.3d 841 (2002).

Less than three years after the decision in Graham v. Metheny was handed down, the Arkansas Supreme Court would address head-on the issue of parental rights in the context of a termination of a consensual guardianship.

Read More…

Strother v. Strother

In Strother v. Strother, 2015 Ark. App. 196, the Arkansas Court of Appeals recently held that a decree that “does not contain a final award of custody” is not an appealable order.  A review of Strother, along with several other cases on this topic, reveals that the line between a final custody order and a temporary custody order is not always clear, so attorneys should be cautious before choosing not to appeal from what might appear to be a temporary custody order.

In Strother, the dad and mom had married in 2001, and the mom had filed for divorce in 2013.  In her complaint for divorce, the mom sought joint legal custody, with her having primary physical custody.  The court appointed an attorney ad litem, and eventually held a hearing “on the divorce and custody issues.”  The court then issued a letter opinion in which it granted the couple joint legal custody, and granted the mom primary physical custody.

With respect to custody issues, the circuit court’s order stated as follows:

[T]his court finds that the aforesaid orders of this court in regards [to] custody and other issues concerning the aforesaid two (2) minor children are temporary in nature; that an attorney ad litem will be appointed to represent the aforesaid two (2) minor children; that Defendant shall be solely responsible for payment of all attorney fees and expenses which will [be] owed to the attorney ad litem; and that issues concerning permanent orders in regard [to] custody and other issues concerning the aforesaid two (2) minor children will be determined in the future by agreement of the parties or by order of the court.

The Court of Appeals in this case examined whether this was an appealable order.  Rule 2(d) of the Arkansas Rules of Appellate Procedure–Civil provides that “[a]ll final orders awarding custody are final appealable orders.”  In other words, even if an order granting divorce isn’t otherwise considered a final order, if the order is final with respect to custody, then it will be final for purposes of appealing the custody determination.

In Strother, the Court of Appeals held that the order was not a “final order[] awarding custody.”  The Court of Appeals noted that “the order specifically states that issues of custody ‘are temporary in nature’ and that ‘issues concerning permanent orders in regard [to] custody . . . will be determined in the future.'”  Therefore, the Court of Appeals dismissed the appeal until a final custody award is entered.

In its opinion in Strother, the Court of Appeals cited to an Arkansas Supreme Court case, Gilbert v. Moore, 364 Ark. 127, 216 S.W.3d 583 (2005).  In that case, the trial court had entered an emergency ex parte order granting temporary custody of the couple’s child to the father.  Four days later, the trial court held a short hearing and ordered the custody of the child remain with the father, and that the mother was to receive weekend visitation.  The trial court stated from the bench:

I signed an Ex Parte Order a few days ago which placed the temporary custody in the Plaintiff, the father. I really don’t know where this child is better off long term. I guess that’s something that is going to have to be resolved at a later date. I presume both of these parties want long term custody of this child. I may or may not be right about that. In the meantime I’m going to leave the Ex Parte Order in effect; however, the child shall spend each weekend with his mother beginning 6:00 p.m. on Friday and ending on 6:00 p.m. on Sunday. And when counsel and the parties are ready for this case to be heard in its entirety on its merits thoroughly by myself or somebody, probably somebody else, and hopefully make the right decision on where this child should grow up, then that’s what will happen.

The trial court went on to state from the bench that the order would be “on a temporary basis the child should stay with the father during the week and the mother during the weekends until this case can be resolved on its merits.”  The order itself was not quite as specific as to the temporary nature of the order, but did state that custody would remain with the father “at this time.”

In Gilbert, the Arkansas Supreme Court held that the custody order was a temporary order and therefore not appealable.  This, however, is where the note of caution comes in.  The Arkansas Supreme Court held that “[w]hether a custody order is final or temporary is not dependent upon the style of the order,” and that “custody orders styled as temporary may be nonetheless final for purposes of appeal if the issue of custody was decided on the merits and the parties have completed their proof.”  In Gilbert, the basis of the holding appears to have been that “the issue of custody ha[d] yet to be determined on its merits and . . . the parties ha[d] not completed their proof on the issue.”

This seems to be consistent with previous cases cited by the Arkansas Supreme Court in Gilbert.  Although those cases predate the addition of “final orders awarding custody” to the list of appealable orders (that amendment was adopted in 1999), the holdings are still informative.  In those three cases, the key issue seems to whether there has been a final hearing on the merits.  In Sandlin v. Sandlin, for example, the Arkansas Supreme Court held that the order in that case was not appealable because “the main issue, that of custody,” had not been decided. 290 Ark. 366, 719 S.W.2d 433 (1986).  The Arkansas Supreme Court noted that it had previously held that “there can be no appeal . . . until the proof has been completed and the order entered.” Similarly, in Jones v. Jones, the Arkansas Court of Appeals held that a custody order “is final for purposes of appeal if the the issue of custody was decided on the merits and the parties have completed their proof.” 41 Ark. App. 146, 852 S.W.2d 325 (1993).

In Chancellor v. Chancellor, 282 Ark. 227, 667 S.W.2d 950 (1984), the Arkansas Supreme Court held, based on the following, that the custody order was not final:

The record reflects that appellant has not yet completed her proof. The order in the present case did not terminate any cause or right, dismiss any party from the action or conclude their rights. By its very terms it is a temporary order. The court ordered an investigation of the respective homes and ordered that a report be made to the court. It is obvious the court did not intend to take final action on this matter based solely upon the fact that the mother may be living in adultery.

This brings us back to Strother.  In that case, it appears that there had, in fact, been a hearing on the merits.  The order, however, appears to have left custody open until an attorney ad litem could be appointed and could report back to the court.  In that sense, the issue of custody was still open.

The Takeaway

Based on these cases, attorneys should never assume that a custody order is temporary based solely on the fact that the order is styled as a “temporary” order. These cases make clear that there’s more to the analysis than simply what the order is styled.  Sometimes, it might not be entirely clear to counsel whether or not a custody order constitutes a “final order[] awarding custody.”  In those situations, the best course of action is probably to file a notice of appeal as a precaution.  Otherwise, the attorney risks allowing what appears to be a temporary order become a permanent, nonappealable order.

Arkansas Supreme Court An investiture ceremony is being held at the Arkansas Supreme Court today at 1:00 p.m. for the swearing in of three justices: Arkansas Supreme Court Justice Karen Baker, Arkansas Court of Appeals Judge Rhonda Wood, and Arkansas Court of Appeals Judge Robin Wynne.

Supreme Court Justice Karen Baker was originally elected to the Arkansas Supreme Court in 2010. She was re-elected last May to serve an eight-year term on that Court.

Court of Appeals Judge Rhonda Wood was elected to Position 7 on the Arkansas Supreme Court in May of 2014.  Judge Wood replaces Justice Hoofman, who was appointed to fill that position with the retirement of Justice Robert L. Brown at the end of 2012.  Justice Hoofman will, in turn, fill the vacancy left by Judge Wood on the Arkansas Court of Appeals.

Court of Appeals Judge Robin Wynne was elected to Position 2 on the Arkansas Supreme Court in May of 2014.  Judge Wynne will replace Justice Donald Corbin, who has held that position since 1990.  Governor Beebe has appointed Mike Kinard of Magnolia to replace Judge Wynne on the Arkansas Court of Appeals.

As we’ve previously discussed, the addition of Judge Rhonda Wood to the Arkansas Supreme Court will result in Arkansas being one of only a few states with a female majority court of last resort, which is a first for Arkansas as well.

Posted by: Andy Taylor | November 21, 2014

Were Your Arguments Made in Chambers Preserved for Appeal?

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.”

The Takeaway

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.

In Bank of the Ozarks v. Cossey, 2014 Ark. App. 581, the Arkansas Court of Appeals addressed the question of whether an order that appears to be a non-final order is still appealable under Ark. R. App. P. (2)(a)(12), which permits an appeal from almost all orders entered in probate cases.

Only a brief summary of the facts of this case is necessary.  In sum, there was a dispute about who was the trustee of the Hamilton Family Trust.  One of the beneficiaries of the trust, Ms. Cossey, filed a petition claiming that Bank of the Ozarks was the trustee and demanding an accounting from Bank of the Ozarks.  Bank of the Ozarks claimed it was not the trustee of the trust.  The circuit court held that Bank of the Ozarks had acted as trustee, and ordered Bank of the Ozarks to perform an accounting within 30 days.  Bank of the Ozarks appealed from this order, along with a separate order awarding attorney’s fees and costs to Ms. Cossey.

On appeal, the Court of Appeals first addressed the question of whether the order requiring an accounting was a final order.  The court held that “[a]n order that contemplates further action by a party or the court is not a final, appealable order.” Because this order required Bank of the Ozarks to perform an accounting, and because there would likely be additional oversight and rulings by the circuit court, the Court of Appeals held that this was not a final order.

The Court of Appeals then turned its attention to Ark. R. App. P. (2)(a)(12) and Ark. Code Ann. § 28-1-116, which together permit appeals from almost all orders in probate cases.  In fact, the Court of Appeals held that “[w]e have interpreted section 28-1-116(a) to allow an immediate appeal from almost any probate order.”  However, the issue in this case related to who should be the trustee of the Hamilton Family Trust, a question governed by Ark. Code Ann. § 28-73-701.  The question, then, is whether this statute is part of the probate code.  Based on the notes to Ark. Code Ann. § 28-1-101, which lists the statutes that make up the probate code, the Arkansas Court of Appeals held that the statute applicable to this case (which was not included in the list) was not part of the Arkansas Probate Code.  The Court of Appeals also examined Ark. Code Ann. § 28-1-104, which lists the types of cases that are considered to be probate cases.  Although this statute was originally designed to set the jurisdictional guidelines when there were separate circuit, chancery, and probate courts, the Court of Appeals held that the statute is still applicable when determining appellate jurisdiction.  Because trust matters are not included in the list of matters considered to be probate matters, the Court of Appeals held that the issues in Bank of the Ozarks were not probate matters.

Having concluded that the trust dispute in Bank of the Ozarks was not a probate matter, a final order was required.  Because there was no final order, the Court of Appeals dismissed the appeal.  The Court did, however, give some guidance to the parties as to how to proceed.  The Court suggested in its opinion that a Rule 54(b) certificate (pursuant to which the parties may appeal from a non-final order) might allow the order to become appealable, although the Court of Appeals was very careful not to “comment[] on the propriety of a Rule 54(b) certificate . . .”  Nevertheless, it’s probably a safe bet that this case will soon be before the Court of Appeals again—this time with a Rule 54(b) certificate.

The Arkansas Supreme Court began its fall 2014 term with two decisions rendering arbitration clauses unenforceable in Arkansas state courts where such clauses contain no mutuality of obligation.

Regional Care of Jacksonville, LLC v. Henry

Arbitration Clause

On September 11, 2014, the Arkansas Supreme Court affirmed the Pulaski County Circuit Court’s decision to deny a nursing-home facility’s motion to compel arbitration due to the absence of mutuality of obligation in the nursing-home facility’s admission agreement. See Regional Care of Jacksonville, LLC v. Henry, 2014 Ark. 361.  In Regional Care of Jacksonville, LLC, the nursing-home facility’s admission agreements contained arbitration clauses that excluded from the requirement of arbitration “a dispute over billing or collecting for services.” Id. at 3.

The Arkansas Supreme Court noted that to have mutuality of contract, “an obligation must rest on each party to do or permit to be done something in consideration of the act or promise of the other; that is, neither party is bound unless both are bound.” Id. at 7.  The Court also observed that “[t]here is no mutuality of obligation where one party uses an arbitration agreement to shield itself from litigation, while reserving to itself the ability to pursue relief through the court system.” Id.

The Court found that the nursing-home facility’s arbitration clause lacked mutuality of obligation because it reserved the right to litigate billing or collection disputes, thereby excluding from arbitration the only likely claim it might have against a resident while strictly limiting the residents to arbitration.  Because the arbitration clause imposed no real obligation on the nursing-home facility to arbitrate its own claims, the Arkansas Supreme Court held that the arbitration clause could not be enforced.

Alltel Corporation and Alltel Communications, Inc. v. Rosenow

The following week, on September 18, 2014, the Court handed down a 4-3 decision in Alltel Corp. v. Rosenow, 2014 Ark. 375.  The majority opinion in that case determined that Alltel’s arbitration agreement was not enforceable because it lacked mutuality of obligation.

The Court’s decision was not based on the language found in the arbitration clause itself, but on the language found in another provision in the same contract that read, “[I]f we do not enforce any right or remedy available under this Agreement, that failure is not a waiver.” Rosenow, 2014 Ark. 375, at  8.  According to the majority opinion, that contract provision meant that Alltel was clearly reserving for itself “the option of pursuing remedies other than arbitration, without the consequence of waiver.” Id.  The Court noted that Alltel had reserved for itself a protection that was not extended to the customer:

Succinctly put, Alltel provided itself with an “out” to the required arbitration; Alltel customers, such as Rosenow, however, were limited to pursuing relief against Alltel in the form of arbitration, while Alltel alone was provided absolution if it chose to pursue an alternate remedy.

Id.

Justice Goodson wrote the dissenting opinion, joined by Justices Baker and Hoofman.  Among other things, the dissenting Justices took issue with the basis for the majority’s ruling on the mutuality of obligation issue.  According to the dissent, “the majority affirms the circuit court’s ruling on mutuality of obligation for a reason that the parties have not developed and on which the circuit court has not ruled.” Id. at 15.  The dissenting opinion explained that Rosenow had argued that the lack of mutuality of obligation existed because of Alltel’s past actions of utilizing the services of collection agencies and filing lawsuits against customers to collect on delinquent accounts.  According to the dissenting opinion, the circuit court had determined that Alltel’s arbitration agreement “imposed no real liability on Alltel because Alltel had previously ignored it.”

The dissent claims that “the majority has reached well beyond the limited issue presented on appeal, which is based on Alltel’s conduct and not a specific provision within the contract.” Id. at 16.

The majority’s response is included in the following footnote:

While the dissent takes issue with our decision in this matter using the analysis that we do, the question presented to this court is whether the circuit court erred in finding a lack of mutuality of obligation. The issue of mutuality of obligation was raised to, and ruled on by, the circuit court. Although we have reached the same result as the circuit court in a different manner, the result, conclusion, or decision is the same—mutuality of obligation is lacking. Had we determined that any other element required for a valid contract was not present, then we would have contravened our precedent. But, to be clear, we have in no way raised an issue sua sponte, because the mutuality-of-obligation issue is squarely before us.

Id. at 9 n.5.

The Takeaway

Following these recent decisions, parties should expect any questionable arbitration clause to be contested in litigation in an Arkansas state court.  Although the Federal Arbitration Act (FAA) might be applicable, it is state contract law that ultimately decides whether an arbitration clause will be enforced in state court.  These recent decisions indicate that the Arkansas Supreme Court will be hesitant to allow an arbitration clause to be enforced where there is no mutuality of obligation.  Under Arkansas contract law, arbitration clauses either bind both parties or neither party is bound to such an agreement.  Although there was some dispute among the members of the Court as to how the Rosenow case should have been decided, it seems fairly certain that where an arbitration clause is clearly one-sided (thereby imposing no real obligation to arbitrate on one party to the agreement, as was the case in Regional Care of Jacksonville, LLC) the Court seems to be in agreement that such an arbitration clause will not be enforceable.

Be aware that a similar argument will not fly in an Arkansas federal court. See Enderlin v. XM Satellite Radio Holdings, Inc., No. 4:06-CV-0032 GTE, 2008 WL 830262, at *10 (E.D. Ark. Mar. 25, 2008) (holding that “Arkansas law requiring mutuality within the arbitration paragraph itself is preempted by the FAA because it places the arbitration clause on unequal footing with other contract terms that do not each have to be mutual.”); see also Southeastern Stud & Components, Inc. v. American Eagle Design Build Studios, LLC, 588 F.3d 963 (8th Cir. 2009).  In Regional Care of Jacksonville, LLC, The Arkansas Supreme Court acknowledged these federal decisions and expressed its disagreement with them. 2014 Ark. 361, at 11-12 n.7.

Further Reading

If you’re interested in reading more on this topic, I recommend the following law review article:  Katherine B. Church, Arkansas and Mandatory Arbitration: Is the Feeling Really Mutual?, 65 Ark. L. Rev. 343 (2012).

Arkansas Supreme CourtLack of Final Order Prevents Arkansas Supreme Court from Issuing a Stay of Pulaski County Circuit Court’s Ruling in Same-Sex Marriage Case

The Arkansas Supreme Court handed down a decision late this afternoon dismissing without prejudice the appeal taken by the State from the Pulaski County Circuit Court’s recent decision declaring Arkansas’s ban on same-sex marriage unconstitutional.

According to the per curiam decision, the circuit court’s order was not final because it failed to adjudicate all the claims or to otherwise include a Rule 54(b) certificate, which would allow an interlocutory appeal from an otherwise non-final order.

Arkansas Supreme Court Essentially Holds That a Stay is Unnecessary Because There is No Order Striking Down Licensing Statute

The Arkansas Supreme Court also denied the State’s plea for the Court to help alleviate confusion among circuit clerks by granting a stay pursuant to the Supreme Court’s superintending authority.  The Court noted that because the circuit court had not issued a ruling with respect to Arkansas Code Annotated Section 9-11-208(b) (Repl. 2009), “License not issued to persons of the same sex,” the circuit court’s order had no effect on that statute and its prohibition against circuit and county clerks issuing same-sex marriage licenses.

Although the Pulaski County Circuit Court’s decision struck down as unconstitutional two state statutes that ban marriages by people of the same sex (Arkansas Code Annotated Sections 9-11-107, “Validity of foreign marriages” and 9-11-109, “Same sex marriage void”), it failed to rule on Arkansas Code Annotated Section 9-11-208(a)(1)(B), which provides, “A license shall not be issued to a person to marry another person of the same sex, and no same-sex marriage shall be recognized as entitled to the benefits of marriage.”  It appears that this means that that statute is still in effect, so the practical effect of this ruling appears to be that circuit clerks are prohibited from issuing licenses to same-sex couples until the circuit court clarifies its ruling.

The Court’s full decision is available here: Arkansas Supreme Court Same-Sex Marriage Decision.

Posted by: Andy Taylor | May 14, 2014

Arkansas Supreme Court Releases Election Decisions

Two big decisions from the Arkansas Supreme Court today (actually several, but four of them are about the same issue).  We will update the blog with more information later, but summaries of the decisions follow.  We’re getting these out quickly, so please let us know if you read the opinions and have a different understanding.

Supreme Court Holds Candidates for Judicial Office not Disqualified for Delinquency in Paying Dues

The Supreme Court held that (1) a suspension for failure to pay dues is not the same as not having a license; and (2) that suspending an attorney without notice is a violation of Due Process.  Justice Hart wrote separately, concurring in part and dissenting in part.  She agreed with point 1, which she argued made point 2 moot.  Justice Corbin dissented on both points, and would have held that a delinquency makes a candidate ineligible.

Here are PDFs of the opinions:

CV-14-367 Fox

CV-14-358 Bailey

CV-14-370 Byrd

CV-14-369 Foster

Supreme Court Allows Voter ID Law to Remain in Place (For Now); Strikes Down Rules Relating to Absentee Voters

On what appear to be procedural grounds, the Arkansas Supreme Court struck down a circuit court opinion holding that Arkansas’s voter ID law was unconstitutional.  The Court held that the constitutionality of the statute was not properly before the Circuit Court.  Presumably, this leaves open the question of whether the law could be attacked in the future.  The Arkansas Supreme Court also held that the Arkansas State Board of Election Commissioners had acted outside the scope of its authority when it promulgated rules allowing for provisional ballots for absentee ballots, where the statute did not expressly allow for such a rule.

Here is a PDF of the opinion:

CV-14-371 Voter ID

 

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