Arkansas

Warning: The following opinion is provided for purposes of discussion only. We have not Shepardized™ this opinion, and do not know the subsequent disposition of this case nor whether the effect of the opinion has been overruled or superceded by other law.

Sands Apts., Inc. v. Bank of McCrory and Fletcher C. Lewis,
No. CA97-740 (Ark.App. 02/11/1998)

COURT OF APPEALS OF ARKANSAS, DIVISION THREE

February 11, 1998, Opinion Delivered

February 11, 1998, Filed

No. CA97-740

NOTICE: [*1]

NOT DESIGNATED FOR PUBLICATION. PLEASE REFER TO THE ARKANSAS RULES OF COURT.

PRIOR HISTORY: AN APPEAL FROM WOODRUFF COUNTY CIRCUIT COURT. NO. CIV-96-73. HONORABLE HARVEY YATES, CIRCUIT JUDGE.

DISPOSITION: AFFIRMED.

COUNSEL: JONES T. TINER, HARRISBURG.

OVERTON S. ANDERSON, LITTLE ROCK, DAVID A. LITTLETON, LITTLE ROCK.

JUDGES: MARGARET MEADS, Judge. Jennings and Crabtree, JJ., agree.

OPINIONBY: MARGARET MEADS

OPINION: MARGARET MEADS, Judge

Appellant Sands Apts., Inc., brings this appeal from an order granting summary judgment to appellees. The trial court found that appellant's action for slander of title was barred by the doctrines of res judicata and collateral estoppel. We affirm.

This case has its genesis in a chancery court action filed by appellee Bank of McCrory ("Bank") in 1992. The suit was filed against four members of the Peacock family, including James Peacock, and numerous corporations. According to appellant, the suit was a foreclosure action. In an order entered January 26, 1995, the chancellor found that James and Shawn Peacock had made fraudulent conveyances of property for the purpose of defeating liens held by the Bank. James and Shawn were found liable for the entire amount of indebtedness [*2] owed to the Bank -- $ 197,067.66. The order provided that execution could issue for all sums owed. In paragraph 29 of the order, the chancellor found as follows:Court finds that the anticipated or completed (depending on which testimony of James R. Peacock is use [sic]) transfer of stock and ownership in the Sands Apartments (stock and equity) to his son, Chris Peacock, and to his daughter Kelly Peacock, is a fraudulent conveyance to avoid creditors, enjoined, and set aside. James R. Peacock is enjoined from disposing of any interest (stock or otherwise) in the Sands Apartment until Bank has been paid in full.

Sometime after the entry of the above order, the Bank filed a motion to compel the delivery of stock in Sands Apts., Inc., for judicial sale. On August 9, 1996, the chancellor ordered the sale of stock and directed James Peacock to deliver to the court clerk all shares of stock in Sands Apts., Inc. The order contained the following language:

4. The Court specifically finds that irrespective of who James R. Peacock may have transferred this stock to, the Court has previously found a fraudulent transfer, and James R. Peacock has full control over all shares [*3] of the stock of Sands Apts., Inc.

5. The record indicates that defendant, James R. Peacock, has committed flagrant perjury relative to the ownership of the shares in Sands Apt, Inc [sic], for which sanctions may be applied after notice and hearing.

On September 4, 1996, Jackye Peacock, James Peacock's wife, submitted an affidavit to the chancery court in which she stated that, although neither she nor Sands Apts., Inc., were parties to the litigation, she would provide information to the court to show that the stock of Sands Apts., Inc., did not belong to James Peacock. Mrs. Peacock stated that from the date of incorporation of Sands Apts., Inc., she had owned the entire 300 shares of stock in the corporation. She produced a stock certificate dated August 5, 1992, showing her as owner of the 300 shares.

On September 26, 1996, the Bank and its attorney, appellee Fletcher Lewis, filed a notice of lis pendens. The notice read as follows:

NOTICE IS HEREBY GIVEN that an action has [sic] is pending in the Chancery Court of Woodruff County, Arkansas, by the above-named Bank of McCrory against the above-named defendants and garnishees to trace and obtain execution on assets [*4] and as to the garnishees Bank of McCrory has reason to believe that garnishees listed above are persons indebted to the defendants or have in their hands or possession goods and chattels, moneys, credits, and effects belonging to the above listed defendants and Bank of McCrory has sued out writs of garnishment in favor of Bank of McCrory against the above listed garnishees that relate to the following described real property, to-wit:

[property description]

On October 15, 1996, Jackye Peacock responded on behalf of herself and Sands Apts., Inc., to the writs of garnishment referred to by the Bank in the lis pendens. In the responses, both Sands and Mrs. Peacock denied that they were indebted to the judgment debtors or that they had in their possession any goods belonging to the judgment debtors. In response to interrogatories propounded to her, Mrs. Peacock said that the Sands Subdivision was solely owned by her and not by the judgment debtors. Thereafter, the Bank filed a motion to compel Jackye Peacock to surrender all stock certificates in Sands Apts., Inc., and to set aside any transfer of stock certificates in Sands Apts., Inc., from James Peacock. In its motion, [*5] the Bank claimed that the certificate showing 300 shares of stock issued to Jackye Peacock on August 5, 1992, was a back-dated fraudulent transfer and that the corporation was, in fact, owned by James Peacock.

On or about the same time the Bank's motion to compel was filed, appellant Sands Apts., Inc., filed a complaint in Woodruff County Circuit Court against the Bank and its attorney, Fletcher Lewis. Appellant alleged slander of title, claiming that it had entered into a contract on September 13, 1996, for the sale of real property and that, due to appellees' having filed the lis pendens, it had been unable to obtain title insurance or to complete the sale. According to the complaint, the Bank filed the lis pendens in an effort to have Jackye Peacock pay a judgment owed by her husband.

Meanwhile, in the chancery case, the chancellor held a hearing on December 12, 1996, on the Bank's motion to compel. According to the order entered as a result of that hearing, "no attorneys appeared of record for either Sands Apts., Inc., or Jackye Peacock, although Lohnes T. Tiner entered a limited appearance on behalf of Jackye Peacock for the purpose of entering into a stipulation with [*6] plaintiff as to what Jackye Peacock's testimony would be were she to testify as a witness." The order also contained the following findings of fact and conclusions of law by the chancellor:

(1) This Court has previously found and determined as set out in its decree filed January 26, 1995, and in its order for judicial sale of all stock in Sands Apts., Inc., filed August 9, 1996, that James R. Peacock owned not only all of the stock, but all of the equity in Sands Apts., Inc., and that he had been, at all times relevant hereto, in effective control of Sands Apts., Inc., and its equity and its stock. That decree and at order were entered as final, appealable decrees and orders of the Court from which no appeals were perfected.

(2) The evidence presented at the December 12, 1996, hearing served to reinforce the court's view that its findings of fact and conclusions of law as expressed in its final orders and decrees described above were and are correct.

...

(4) If James R. Peacock has transferred any stock certificates to Jackye Peacock or to anyone else, those transfers constitute fraudulent conveyances which should be, and are, hereby set aside.

(5) Jackye Peacock was and is [*7] merely the alter ego of James R. Peacock with respect to Sands Apts., Inc., and its stock, equity, and assets.

(6) In view of the facts that James R. Peacock has had not only ownership, but effective control of all of the stock and all of the stock certificates and all of the equity in Sands Apts., Inc., at all times relevant hereto, he, therefore, had the ability to produce all such shares and all such stock certificates in compliance with this Court's order of August 9, 1996, at any time he chose to do so.

On December 19, 1996, in the circuit court action, appellees filed a motion for summary judgment. In the motion, appellees argued that the appellant's claim for slander of title was barred by the doctrines of res judicata and collateral estoppel. Appellant responded to the motion arguing that since neither Jackye Peacock nor Sands Apts., Inc., were made parties to the chancery action, any finding by the chancellor affecting them or their property was done without procedural due process.

On March 18, 1997, the circuit judge entered summary judgment in favor of appellees. The judgment incorporated a letter opinion in which the judge determined that the "findings of the Chancery [*8] Court that James R. Peacock is the owner of Sands bars the Complaint herein under the doctrine of res judicata." The court also found that the complaint would be barred by the doctrine of collateral estoppel. Appellant filed a timely notice of appeal from the circuit court's judgment and argues on appeal that neither the doctrine of res judicata nor collateral estoppel barred its complaint for slander of title. Appellees argue that either doctrine should operate to bar appellant's complaint. Because we hold that appellant's claim is barred by collateral estoppel, we need not address the issue of res judicata.

Collateral estoppel is based on the policy of limiting litigation to one fair trial on an issue and is applicable only when the party against whom the decision is being asserted had a full and fair opportunity to litigate the issue in question. Coleman's Serv. Center, Inc. v. Federal Deposit Ins. Corp., 55 Ark. App. 275, 935 S.W.2d 289 (1996). The party asserting collateral estoppel has the burden of demonstrating that the precise issue on which it claims the other party is bound was decided in the previous case. Smith v. Roane, 284 Ark. 568, 683 S.W.2d 935 (1985). Four [*9] criteria must be met to establish a bar by collateral estoppel: (1) the issue sought to be precluded must be the same as that involved in the prior litigation; (2) that issue must have been actually litigated; (3) that issue must have been determined by a valid and final judgment; and (4) the determination must have been essential to the judgment. Arkansas Dep't of Human Servs. v. Dearman, 40 Ark. App. 63, 842 S.W.2d 449 (1992). Each of these criteria has been met in this case. The particular issue sought to be precluded, i.e., the ownership of Sands Apts., Inc., was resolved in the chancery litigation. As can be seen by reference to the chancery court orders quoted herein, the chancellor expressly determined that James Peacock was the sole owner of Sands Apts., Inc. As that issue was actually litigated in the chancery case, the second of the criteria has been met also.

Regarding the finality of the chancery judgment, the first chancery decree in this case awarded judgment to the Bank of McCrory for a definite amount and ordered that execution could issue. Subsequent orders directed that the stock of Sands Apts., Inc., be sold in a judicial sale, that a commissioner be appointed, [*10] and that the place and the terms of the sale be set. Where a decree decides the rights to property and directs it to be delivered up or directs it to be sold, and the complainant is entitled to have it carried into immediate execution, the decree must be regarded as final to that extent, although it may be necessary for a further decree to adjust the account between the parties. Alberty v. Wideman, 312 Ark. 434, 850 S.W.2d 314 (1993). In any event, for purposes of issue preclusion, a final judgment includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect. Restatement 2d Judgments § 13 (1982).

We hold that the chancery orders in this case are final for purposes of collateral estoppel. However, appellant questions the validity of the chancery orders on the grounds that neither Sands Apts., Inc., nor Jackye Peacock was made a party to the chancery action, thereby rendering the chancery orders void as to them. Appellant correctly states that a void judgment has no preclusive effect. See Sides v. Kirchoff, 316 Ark. 680, 874 S.W.2d 373 (1994). This due process argument was raised by appellant [*11] below, but a ruling on the issue was never obtained from the trial court. We are precluded from addressing matters that were not brought to the attention of the trial court for a ruling. Britton v. Floyd, 293 Ark. 397, 738 S.W.2d 408 (1987). However, even if we were to reach the merits of the issue, appellant's argument fails. Jackye Peacock, by an affidavit submitted to the chancery court and by her answers to a writ of garnishment and her answers to interrogatories, had notice of and participated in the chancery action. She had the opportunity to fully challenge the issue of ownership of Sands Apts., Inc. Appellant was also a participant in the chancery proceeding with regard to the issue of ownership in that it answered a writ of garnishment. Further, the chancellor found that Jackye Peacock was an alter ego of James Peacock with respect to Sands Apts., Inc. Based upon the foregoing, we hold that the various chancery orders relating to ownership of Sands Apts., Inc., are valid.

The final requirement for the application of collateral estoppel is that the determination of the issue in question must have been essential to the judgment. The chancellor's findings with regard to [*12] ownership of Sands Apts., Inc., was essential to the question of what property could be executed upon to satisfy the judgment. Certainly, the order entered in August 1996 and the order entered as a result of the December 12, 1996, hearing dealt almost exclusively with the issue of ownership of stock in Sands Apts., Inc. Therefore, we hold that the final criterion has been satisfied.

Finally, appellant argues that collateral estoppel should not apply because the parties in the chancery action were not the same as the parties in the circuit court action. The requirement of mutuality of parties has been abandoned by most jurisdictions for collateral estoppel. Fisher v. Jones, 311 Ark. 450, 844 S.W.2d 954 (1993). But see Coleman's Serv. Center, Inc. v. Federal Deposit Ins. Corp., supra; Arkansas Dep't of Human Servs. v. Dearman, supra. However, even if privity is required, appellant is so identified with the interests of James Peacock, who was a party to the chancery action, that the privity requirement is met. See generally Maloy v. Stuttgart Memorial Hospital, 316 Ark. 447, 872 S.W.2d 401 (1994); Carrigan v. Carrigan, 218 Ark. 398, 236 S.W.2d 579 (1951); American Investors [*13] Life Ins. Co. v. Hudson, 55 Ark. App. 360, 935 S.W.2d 594 (1996), cert. denied, 138 L. Ed. 2d 1015, U.S. , 117 S. Ct. 2512 (1997); Arkansas Dep't of Human Servs. v. Dearman, supra.

Affirmed.

Jennings and Crabtree, JJ., agree.

The legal opinions are a matter of public record (that's how we got them), and as such there can be no defamation for republishing them. Sometimes, however, legal opinions are reversed, vacated, or significantly modified, etc., and we do not discover this fact until somebody points it out to us. As we do not desire to publish inaccurate or outdated information, if a legal opinion has been reversed, vacated, or significantly modified, please advise us of this fact immediately, by fax to (877) 698-0678 or you may also send regular postal correspondence to Riser Adkisson LLP at 1827 Powers Ferry Road, Building One, Suite 200, Atlanta GA 30339.