Patrick J. Booth and Juanita P. Booth v. Riverside Marine Remanufacturers, Inc.

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DIVISION II  CA07­119  November 14, 2007  PATRICK J. BOOTH and  JUANITA P. BOOTH  APPELLANTS  v.  RIVERSIDE MARINE  REMANUFACTURERS, INC.  APPELLEE  AN APPEAL FROM PULASKI COUNTY  CIRCUIT COURT  [No. CV03­9863]  HONORABLE TIMOTHY D. FOX,  CIRCUIT JUDGE  REVERSED AND REMANDED  1  This is the second appeal in this breach­of­contract case.  Following remand from the  first appeal, appellee Riverside Marine Remanufacturers, Inc., moved for summary judgment.  The Pulaski County  Circuit Court granted the summary judgment and appellants Patrick  Booth (Pat) and Patsy Booth (Patsy) bring this appeal, asserting that there are genuine issues  of material fact remaining. We agree and reverse and remand.  The following background is taken from the earlier opinion.  Pat founded  Riverside in the 1970s and was its majority shareholder. [His  son,]Tom was the only other shareholder. In August 2001, Pat entered into a stock  purchase agreement with Riverside and Tom whereby he would sell 169 shares to  Tom. Riverside would redeem another 120 shares. Also as part of the sale, Pat and  Riverside entered into a consulting agreement which provided, inter alia, that Pat  would receive “[c]ompany paid health insurance for he and his wife and such health  insurance shall continue for the life of [Pat] and the life of [Pat’s] wife, Patsy Booth.” 1  Riverside Marine Remfrs., Inc. v. Booth, 93 Ark. App. 48, 216 S.W.3d 611 (2005).  The  consulting agreement further provided that it would expire upon Pat’s death,  provided that Riverside would continue health insurance coverage for Patsy until her  death. The consulting agreement was specifically mentioned in the stock purchase  agreement and incorporated by reference therein.  In July 2002, Riverside’s insurance agent, with Tom’s approval, wrote a letter  to Pat, stating that, because Pat was not a full­time Riverside employee, it was illegal  under federal law to carry him on Riverside’s group policy. The letter also suggested  alternative  coverages.  On  February  20,  2003,  Tom  notified  Riverside’s  insurance  carrier  that,  effective March 1, 2003, Pat and Patsy were to be dropped from the  group  policy.  Pat  and  Patsy  obtained  other  coverage,  for  which  Riverside  has  continued to pay.  Pat  and  Patsy  filed  suit  against  Riverside  in  August  2003,  alleging  that  Riverside had breached the consulting agreement by providing less favorable benefits.  The complaint sought damages for their additional out­of­pocket expenses, together  with specific performance of the consulting agreement. In the alternative, they sought  reformation of the consulting agreement. Riverside answered, denying that it had  breached the consulting agreement and stating that the agreement required only that  it provide health coverage, not group coverage.  93 Ark. App. at 49­50, 216 S.W.3d at 612­13.  Following  remand,  Riverside  moved  for  summary  judgment,  asserting  that  the  consulting  agreement’s  provision  regarding  “company  paid  health  insurance”  was  unambiguous and did not require a particular type or level of insurance. The motion also  asserted that Riverside had continued to pay for the Booths’ health insurance. The Booths  responded by asserting that the consulting agreement was ambiguous and that there were  material issues of fact to be determined. In their response, the Booths presented testimony  from the earlier bench trial to the effect that Pat and Riverside agreed that the insurance  benefits would remain at the same level as the group coverage that was in effect at the time  the consulting agreement was executed. Riverside presented testimony that there was never  any discussion that the coverage would be equal to or better than the group coverage in effect 2  in August 2001. It also presented testimony that there was a conscious decision made not to  specify the level of benefits because it could later bind Riverside with respect to the level of  coverage it provided its employees.  On  October  11,  2006,  the  circuit  court  entered  an  order  finding  that  the  phrase  “company paid health insurance” was not inherently  ambiguous; that the phrase did not  contain  a  latent  ambiguity;  and  that  there  was  no  mutual  mistake  in  the  drafting  of  the  provision. The court also found that it was undisputed that Riverside has at all relevant times  paid for health insurance for the Booths. Accordingly, the court granted Riverside’s motion  2  for summary judgment and dismissed the complaint.  The Booths timely appealed.  The  Booths  raise  two  points  on  appeal,  contending  that  the  circuit  court  erred  in  finding that the consulting agreement was unambiguous and that the circuit court erred in  finding that there was no clear and convincing evidence of mistake.  Summary judgment is appropriately granted by a circuit court only when there are no  genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter  of law. Wallace v. Broyles, 331 Ark. 58, 961 S.W.2d 712 (1998). Once the moving party has  established a prima facie entitlement to summary judgment, the opposing party must meet  proof with proof to demonstrate the existence of a material issue of fact. Id. On appellate  review, this court determines if summary judgment was appropriate based on whether the 2  The  circuit  court  subsequently  awarded  Riverside  attorney’s  fees  and  costs  of  $36,934.50. The Booths filed an amended notice of appeal from the fee award. However,  they  do  not  make  a  separate  argument  as  to  the  fee  issue.  Instead,  they  note  that,  if  the  summary judgment is reversed, Riverside is no longer the prevailing party and would not be  entitled to fees.  3  evidentiary items presented by the moving party in support of the motion leave a material  fact unanswered. Id. This court reviews the evidence in a light most favorable to the party  against whom the motion was filed, resolving all doubts and inferences against the moving  party. Id. Our review focuses not only on the pleadings but also on the affidavits and other  documents. Id.  In their first point on appeal, the Booths argue that the phrase “company paid health  insurance” is ambiguous. Riverside argues, and the circuit court agreed, that the term is not  ambiguous. Based on its finding that the term was unambiguous, the circuit court concluded  that Riverside had not breached the agreement because it had continued to pay for health  insurance  for  the  Booths.  However,  in  concluding  that  Riverside  had  not  breached  the  consulting agreement, the circuit court went too far in deciding the motion for summary  judgment because the Booths’ claim is that Riverside breached the consulting agreement by  failing to provide the same level of benefits as existed at the time of the execution of the  3  consulting agreement.  The  Booths’ claim cannot be decided simply by reference to the  agreement because that agreement is silent on the level of benefits to be provided. By its  silence on this term, the contract as a whole was rendered ambiguous. See Lee v. Hot Springs  Vill. Golf Schs., 58 Ark. App. 293, 951 S.W.2d 315 (1997). The ambiguity is heightened  because the phrase “and such health insurance shall continue for the life of [the Booths]” 3  This reliance on a certain level of benefits serves to distinguish the present case from  Twombly v. Association of Farmworker Opportunity Programs, 63 F. Supp. 2d 69 (D. Me.  1999), rev’d in part on other grounds, 212 F.3d 80 (1st Cir. 2000), relied upon by Riverside.  In Twombly, the district court noted that, in opposing a motion for summary judgment, the  plaintiff/employee did not offer any proof that she contemplated a certain level of benefits  in the coverage provided. 63 F. Supp. 2d at 72­73.  4  could refer to the group coverage in effect at the time of the agreement. However, it could  also refer to new insurance that was to be purchased under the consulting agreement, which  would not necessarily be group coverage. And, because there is ambiguity in the contract,  a question of fact remains as to the parties’ intent. Id. Therefore, the circuit court erred in  granting Riverside’s motion for summary judgment. Id.  Because we reverse on the Booths’ first point, we need not address their second point  concerning mutual mistake.  Reversed and remanded.  HART and MILLER, JJ., agree. 5 

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