AEC One Stop Group, Inc. v. Family Entertainment Superstores

ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION

DIVISION IV

CA04-913

September 21, 2005

AEC ONE STOP GROUP, INC. AN APPEAL FROM PULASKI COUNTY

APPELLANT CIRCUIT COURT

v. [NO. CV02-12254]

HONORABLE JOHN PLEGGE,

FAMILY ENTERTAINMENT CIRCUIT JUDGE

SUPERSTORES

APPELLEE AFFIRMED

Robert J. Gladwin, Judge

Appellant AEC One Stop Group, Inc., sued appellee Family Entertainment Superstores (dba Family Video) to collect $59,530.54 on an open account. Family Video counterclaimed for approximately $43,000 in overpayments, plus approximately $45,000 in return credits. After a bench trial, the judge ruled that neither party had established its claim by a preponderance of the evidence. AEC now appeals from that ruling.1 We affirm.

Family Video operated a chain of stores that sold or rented videos, DVDs, and other entertainment products. Over the years, it purchased several million dollars worth of these items from AEC. Billing was accomplished by AEC through invoices, and payments were remitted by Family Video with instructions to apply them to particular invoices as per the request of its president, Vincent Insalaco.

In 2001-2002, while it was in the process of selling its stores to Movie Gallery, Family Video fell behind on its payments to AEC. AEC sent Family Video a bill for a balance due of $487,000. Family Video remitted a check for approximately $427,000, claiming that as the true amount owed.

Because of this disagreement over the balance due, AEC sued Family Video on December 13, 2002, for $59,530.54. Family Video then filed its counterclaim as previously mentioned. At trial, the court heard the testimony of AEC's credit and collections manager, Rebecca D'Attilo; CPA Christina Brinkley; Vincent Insalaco; and CPA John Rogers. Each party also offered a number of extremely complex exhibits, which we will discuss hereafter. Following the presentation of evidence, the judge ruled as follows:

Here we have known, respectable business people. We have CPAs coming in and testifying on both sides. We have credible evidence from both sides.

In one instance, I'm asked to award one party $59,324 [sic]; on the other side, $87,629 on a counterclaim, if you include the costs of the 15 percent return for those three months as Mr. Rogers testified to.

And, as you lawyers know, in civil cases, a prevailing party must prevail by a preponderance of the evidence. And, quite frankly, I don't think either of you have preponderated with the evidence in this case, and that's what it takes to win a case.

And, therefore, it'll be the ruling of the Court that the Plaintiff [AEC] will take nothing on his complaint; the Defendant [Family Video] will take nothing on his counterclaim; and you will each pay your own costs and own attorney's fees.

AEC appeals from the above ruling and argues that the court's decision was "clearly against the weight of the evidence."

The standard of review of a circuit court's finding following a bench trial is whether that finding was clearly erroneous. Troutman Oil Co. v. Lone, 75 Ark. App. 346, 57 S.W.3d 240 (2001). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made. Smith v. Malone, 83 Ark. App. 99, 117 S.W.3d 643 (2003). AEC, as the appellant, has the burden of proving that the trial court's findings were clearly erroneous. See Scroggin v. City of Grubbs, 318 Ark. 648, 887 S.W.2d 283 (1994).

AEC also had the burden of proof at the trial level. Although its complaint included the affidavit of Rebecca D'Attilo verifying $59,530.54 as the balance due, Family Video's witnesses denied the correctness of that amount under oath, thereby requiring AEC to prove its account by other evidence. See Ark. Code Ann. § 16-45-104 (Repl. 1999).

AEC argues that it presented "well reasoned, articulate proof" that Family Video owes AEC $59,530.54. The relevant portion of that proof is as follows. Rebecca D'Attilo testified that she worked closely with Vincent Insalaco on the account. According to her, Insalaco would send her "payment packages" in which he would direct the application of his payments to certain invoices. She further said that when Family Video was sold to Movie Gallery, the balance due on Family Video's account was $487,000, which she calculated by applying Family Video's payments to the oldest invoices on the account rather than according to Insalaco's instructions. When D'Attilo told Insalaco that the balance due was $487,000, he replied that his books showed a balance of approximately $427,000, and he issued a check accordingly.

At some point, D'Attilo sent Insalaco a 122-page payment history, which listed invoice numbers, invoice amounts, invoice dates, the amounts paid by Family Video, the dates of payment, and the Family Video check numbers, which were illegible in some instances. The final three pages of the exhibit contained a list of unpaid invoices totaling $59,530.54. Although D'Attilo testified at one point that the discrepancy in payment involved only about twenty invoices, the exhibit lists approximately eighty-eight unpaid invoices.

After receiving the payment history, Insalaco objected to D'Attilo applying his remittances to the oldest invoices and asked instead that they be applied as per his instructions. Moreover, Family Video sent D'Attilo a 124-page spreadsheet listing invoices numbers, invoice amounts, the amounts paid by Family Video, and the dates of payment. The spreadsheet included several "special notes" referencing double payments, triple payments, or duplicate invoices. As a result, the spreadsheet showed that Family Video had overpaid the account by $43,082.88.

After receiving the spreadsheet from Family Video, D'Attilo went back and applied every check to the invoices as per Insalaco's instructions, after which, according to her, she still arrived at a balance of approximately $59,000. However, the exhibits she introduced on this point are difficult to harmonize with her testimony. One exhibit lists the total of unpaid invoices as $133,993.05. Another exhibit mirrored the final three pages of D'Attilo's initial payment history, showing the eighty-eight unpaid invoices totaling $59,530.54. However, D'Attilo also introduced an exhibit, which, as best we can tell, is a list of paid invoices, and its cover page contains the figure of $54,910.05 as being "included on the list of unpaid invoices."

Despite these rather confusing exhibits, D'Attilo testified that she worked through the listings on the exhibits to make sure that Family Video was given all the credits to which it was entitled, and she still arrived at a balance due of $59,530.54.

For the defendant's case, Vincent Insalaco testified that he received a statement from AEC in 2002 listing numerous invoices and amounts due. He said that the statement did not include any amounts due on invoices dated prior to November 23, 2001, which was inconsistent with one of AEC's exhibits that listed balances due on several invoices prior to that date. Additionally, Insalaco entered two exhibits into evidence consisting of copies of checks for large amounts. These were accompanied by lists showing that many of the invoices for which AEC sought payment in the initial payment history had been paid. On cross-examination, however, Insalaco admitted that one of AEC's exhibits indicated that Family Video was given credit for some of the money it paid.

Following the presentation of testimony and exhibits, the trial judge ruled that neither party had proved its case by a preponderance of the evidence. We cannot say that the trial judge's ruling was clearly erroneous. AEC had the burden of proving by a preponderance of the evidence that approximately $59,000 was due on the account. A preponderance of the evidence means the greater weight of the evidence - the evidence which, when weighed with that opposed to it, has more convincing force and is more probably true and accurate. See Chandler v. Baker, 16 Ark. App. 253, 700 S.W.2d 378 (1985). The evidence presented in this case was difficult, if not impossible, to comprehend, and often contradictory as well. AEC's own exhibits showed differing amounts due, some of which conflicted with D'Attilo's testimony. Further, the trial judge may well have found that Insalaco's testimony cast at least some doubt on the accuracy of AEC's accounting. AEC's protestations that Insalaco did not offer competent testimony regarding Family Video's claim to credits is not relevant - the judge did not award Family Video any credits and in fact agreed that Family Video did not prove its case. The question is whether AEC demonstrated that it was owed a balance due of approximately $59,000. Given the state of the proof in this matter and AEC's lack of a convincing argument on appeal, we find no basis for reversing the trial court's conclusion that AEC did not prove its case by a preponderance of the evidence.

Affirmed.

Pittman, C.J., and Glover, J., agree.

1 Family Video does not cross-appeal.