Cite as 2012 Ark. App. 292
ARKANSAS COURT OF APPEALS
DIVISION II
No. CA11-1056
Opinion Delivered
P. J. TRANSPORTATION, INC., PHILIP
JOHNSTON, CATHERINE
JOHNSTON, PHILIP âDUSTYâ
JOHNSTON, & MICHAEL DUROW
APPELLANTS
April 25, 2012
APPEAL FROM THE MARION
COUNTY CIRCUIT COURT
[CV-2010-136-4]
HONORABLE GORDON WEBB,
JUDGE
V.
FIRST SERVICE BANK
APPELLEE
AFFIRMED
DAVID M. GLOVER, Judge
On January 14, 2011, an agreed judgment was entered in favor of Appellee First
Service Bank (the âbankâ) regarding Note Nos. 4000433 (against Appellant Cathy
Johnston/$16,778.00); 400510 (against Appellants Cathy and Philip Johnston/$30,225.64);
4000403 (against Appellants Cathy and Philip Johnston/$30,206.75); 4000312 (against
Appellant P. J. Transportation, Inc./$22,078.46); 4000427 (against Appellant P. J.
Transportation,
Inc./$20,251.00);
and
4000349
(against
Appellant
Philip
Johnston/$43,304.01). The agreed order also addressed other items of personal property,
costs, attorneyâs fees, and pre- and post-judgment interest rates.
Further, the agreed
judgment ordered that Cathy Johnston, Philip Johnston, and P. J. Transportation, Inc.,
âshall, pursuant to Ark. Code Ann. § 16-66-221, file with the clerk of the court on or
before forty-five days from the date of this judgment a schedule, verified by affidavit, of all
Cite as 2012 Ark. App. 292
of their property, both real and personal, and shall specify the particular property which
they claim as exempt under the provisions of the law.â
On the same date, an amended default judgment was entered in favor of the bank
against appellants Philip âDustyâ Johnston and Michael Durow on Note No. 4000349 in
the amount of $43,304.01, plus interest and attorneyâs fees.
The amended default
judgment also addressed other items of personal property and ordered that âPhillip âDustyâ
Johnston and Michael D. Durow shall, pursuant to Ark. Code Ann. § 16-66-221, file with
the clerk of the court on or before forty-five days from the date of this judgment a
schedule, verified by affidavit, of all of their property, both real and personal, and shall
specify the particular property which they claim as exempt under the provisions of the
law.â
On March 1, 2011, the bank filed a petition for contempt, alleging that the
appellants had failed to file their schedules of assets as ordered by the trial court. The
petition was served on the attorney who represented all five defendants, and an answer to
the petition was filed on March 21, 2011. A hearing on the petition was held June 1,
2011, at which time attorneys for both sides presented their arguments with no witnesses.
At the outset of the hearing, the trial court confirmed with counsel that he was
representing all five of the appellants in the contempt matter. Following the hearing, the
trial court denied appellantsâ motion to dismiss, issued a letter opinion on June 16, 2011,
and entered an order on June 28, 2011, holding each of the appellants in contempt and
ordering each of them to pay $200 to the bank for a total of $1,000 in attorneyâs fees to
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compensate the bank for having to pursue the petition for contempt. No other fines or
jail time were ordered, and appellants were given an additional thirty days in which to
comply with the trial courtâs original order to file their schedules of assets with the circuit
court clerk.
Appellants raise three points in this appeal, contending that the trial court erred 1)
in holding appellants in contempt because the petition for contempt was not verified and
the trial court never issued an order citing the appellants into court for contempt, 2) in
finding a Texas resident in contempt for failure to comply with Arkansas Code Annotated
section 16-66-221, and 3) in finding a domestic corporation in contempt for failure to
comply with section 16-66-221.1 We affirm.
For their first point of appeal, appellants contend that the trial court erred in
holding them in contempt for failure to comply with Arkansas Code Annotated section
16-66-211 because the bankâs petition for contempt was not verified, and the trial court
never issued an order citing them into court for contempt. We disagree.
The bank acknowledges that the petition for contempt was not verified and that
the trial court never entered an order to show cause that ordered appellants to appear in
court and answer for their failure to file the schedules of assets as they had been ordered to
do in the January 14, 2011 judgments. However, appellants cite no statute or rule that
1
Appellants do not challenge the basic validity of the trial courtâs finding of contempt
under the reasoning set forth in Applegate v. Applegate, 101 Ark. App. 289, 275 S.W.3d 682
(2008). Therefore, we do not address the issue nor do we decide this appeal on that basis.
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requires a contempt petition to be verified and accompanied by an affidavit in every
situation before a trial court may move forward on a petition for contempt. Moreover,
the cases that they rely upon are either distinguishable or support the trial courtâs action.
In its letter opinion, the trial court addressed the primary case that the appellants relied
upon, Nelson v. Nelson, 20 Ark. App. 85, 723 S.W.2d 849 (1987), and explained:
At that hearing, the Defendants asserted that because the Petition for
Contempt was unverified and not accompanied by an attached Affidavit, that the
Petition for Contempt was not properly before the Court. [Counsel] argued that
the case Nelson v. Nelson, [citation omitted] stands for the proposition that if a
Contempt Petition is not verified that the proper procedures have not been
formalized to proceed. The Court has taken the time to read, not only the Nelson
decision, but most of the case law cited in the Nelson decision that stands for the
proposition asserted by the defense. The gist of the case law holds that what is
required of the Court before it can hold someone in contempt or punish for
contempt is there must be Notice given to the party or parties to be held in
contempt and they must be fully informed about the allegations against them and
have an opportunity to respond in Court.
It appears to this Court that all of those requirements have been met in the
case now before the Court. The parties were served with the Petition for
Contempt filed by the Petitioner which clearly sets out the accusations against
them. Likewise, each of the parties appeared in Court, represented by counsel . . . ,
and had their day in Court asserting their defenses. The primary case that [counsel]
relies on, Nelson v. Nelson, . . . in which the Court of Appeals sets out both the
Rule that [counsel] asserts, also holds the fact that if all the requirements of prior
notice and being informed of the accusations and the opportunity to be in court are
met then the Court can go ahead and find the parties in contempt and punish, even
though the original Petition was unverified. In essence, [counselâs] own case stands
against him in this Courtâs opinion.
We agree with the trial courtâs assessment of what the cases relied upon by appellants hold
with respect to verified petitions and affidavitsâthey are not essential in every situation
before a court may move forward on a petition for contempt.
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Rather, the primary
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concerns for a trial court to consider are that the alleged contemnors have notice of the
contempt allegations, that they be fully informed of the allegations of contempt, and that
they have the opportunity to defend themselves. See also Hilton Hilltop, Inc. v. Riviere, 268
Ark. 532, 597 S.W.2d 596 (1980); Henderson v. Dudley, 264 Ark. 697, 574 S.W.2d 658
(1978).
Here, the trial court had ordered the appellants to file their schedules of assets with
the court clerk within forty-five days from the date of the judgments. Therefore, the trial
court was not dependent upon affidavits or verified petitions in this case because all the
court had to do was examine the court clerkâs files and see that the schedules had not been
filed within forty-five days to establish a prima facie case of contempt. Though the failure
to obey the trial courtâs order did not technically happen in the courtâs presence, it came
exceedingly close. Moreover, the appellants were served with a copy of the contempt
petition, which set out the facts, and they were informed of the basis for contempt in the
petition. They answered the petition. They were represented by counsel and had an
opportunity to defend at the hearing on the petition. Accordingly, we are not convinced
by appellantsâ arguments under this point of appeal that the trial court erred in holding
appellants in contempt.
Appellantsâ remaining two points of appeal can best be discussed together. They
contend that the trial court erred in finding Phillip âDustyâ Johnston, a Texas resident,
and P. J. Transportation, Inc., a domestic corporation, in contempt because, they argue,
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Arkansas Code Annotated section 16-66-221 is not applicable to either of these parties.
We disagree.
In both the agreed judgment and the amended default judgment, the court ordered
designated parties to file on or before forty-five days from the date of each judgment
schedules, verified by affidavit, of all of their property, both real and personal, specifying
the particular property that they claimed as exempt under the provisions of the law. Both
judgments specifically referenced section 16-66-221.
One judgment was an agreed
judgment, and no appeal was taken from either. The time for making the arguments
under these two points of appeal has passed. We cannot address them on their merits in
the context of an appeal from a finding of contempt for failure to obey the trial courtâs
order. When a judgment becomes final, it is protected by the common-law principle of
res judicata, and the findings and orders of the decree cannot later be collaterally attacked.
Nelson v. Nelson, supra.
Affirmed.
HART and GRUBER, JJ., agree.
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