The Entertainment and Leisure Corporation, Melvyn Bell, and Belvedere Enterprises, Inc. v. Razorback Entertainment Corporation

DIVISION I

NOT DESIGNATED FOR PUBLICATION

ARKANSAS COURT OF APPEALS

JUDGE TERRY CRABTREE

CA00-876

May 16, 2001

THE ENTERTAINMENT AND

LEISURE CORP., MELVYN BELL, and AN APPEAL FROM GARLAND COUNTY

BELVEDERE ENTERPRISES, INC. CHANCERY COURT

APPELLANTS NO. 99-1182-III

V.

HONORABLE VICKI S. COOK,

RAZORBACK ENTERTAINMENT CHANCELLOR

CORP.

APPELLEE APPEAL DISMISSED

This is an appeal from the Garland County Chancery Court's award of specific performance of an agreement to sell Belvedere Country Club and other real property in Garland County. We dismiss the appeal as premature because this case involves multiple parties and multiple claims that have not been adjudicated and a certification pursuant to Ark. R. Civ. P. 54(b) has not been made.

Jake Prince, signing as president of appellee Razorback Entertainment Corporation, and appellant Melvyn Bell, signing as president of appellant The Entertainment and Leisure Corporation (hereafter "TELCOR"), signed a document entitled "Offer and Acceptance" inJuly 1999. Bell is also the president of appellant Belvedere Enterprises, Inc. (hereafter "BEI"). In the offer and acceptance, TELCOR agreed to sell the property and appellee

agreed to immediately accept management responsibility for it and to make certain improvements to it. The purchase price was $2,500,000. Closing was to occur within 180 days.

In August 1999, Bell informed appellee that the agreement was terminated due to appellee's purported default in performance. Appellee immediately filed a complaint for specific performance of the contract and a lis pendens. On February 9, 2000, Bell conveyed the property to DHC Resort, LLC. At trial on February 10, 2000, appellants did not reveal the existence of the deed to DHC Resort. At 4:40 p.m., on February 10, 2000, Darlene Carvin, Bell's former wife, and Dar-C Corporation filed a motion in intervention with an attached complaint against Bell, BEI, TELCOR, Frontier Partners, Inc., Hot Springs Title Co. (the closing agent), Simon Hughes, Jr., and the United States of America. The intervenors sought a judgment establishing an equitable lien on the real estate or the sales proceeds; adjudicating the Internal Revenue Service's right to a lien on the property in dispute or the sales proceeds; setting aside certain fraudulent transfers made by the defendants; and piercing the corporate veil of BEI and TELCOR. They sought injunctive relief and damages. The intervenors alleged that Bell had breached the terms of the settlement agreement entered in his divorce from Carvin by failing to obtain her release from a debt to the Oklahoma Industrial Finance Authority. They also alleged that Carvin and Bell were jointly and separately obligated to the United States of America for a tax liability in excess of $2 million, which had been reduced to judgment. They contended that Bell had,without adequate consideration, assigned to TELCOR all of the benefits that he was to receive from the settlement agreement.

According to the intervenors, Simon Hughes owns all of the outstanding shares of stock in Frontier Partners. They alleged that Bell had conveyed all of his interest in TELCOR to Frontier Partners and that all of the proceeds from the sale to appellee would be paid to Frontier Partners. The intervenors stated that Hughes and Bell had illegally used the corporate facade of Frontier Partners and that, if appellee's complaint were granted, TELCOR would receive proceeds that would then go to Frontier Partners to be disbursed by Hughes, to the detriment of Bell's creditors. The intervenors requested that the assets from this sale be made available to the creditors of Bell, including intervenors, to satisfy the debt to the IRS and to the Oklahoma Industrial Finance Authority. The intervenors also requested that the corporate veils of TELCOR and BEI be pierced and that their assets be made available for the payment of Bell's creditors. They asserted an equitable lien on the property or the sales proceeds and a declaration of the relative priority of their lien and that of the IRS. They asked that the net proceeds from the sale be paid into the registry of the court pending a final adjudication of the parties' rights. Appellants resisted the motion to intervene on the ground that it was untimely.

In a letter opinion dated February 23, 2000, the chancellor found that appellee was entitled to specific performance of the contract and directed that closing occur on or before March 3, 2000. She also stated: "Further, the court orders that pursuant to the Motion in Intervention that has been filed by Darlene Carvin and Dar-C Corporation in this matter thatall monies paid by the plaintiff shall be placed in the registry of the chancery clerk and held until the Motion in Intervention can be addressed by this court."

Closing did not take place as directed, and both sides accused the other of preventing it. Appellants filed a notice of appeal from the chancellor's letter opinion on March 6, 2000. Also on March 6, appellee filed a motion for contempt, alleging that appellants had refused to close on March 3 and had caused appellee's primary lender to refuse to disburse the funds. The deed to DHC Resort was recorded on March 9, 2000. On March 13, 2000, the chancellor entered a formal decree granting specific performance and incorporating her letter opinion. This decree stated: "Pursuant to the Motion in Intervention filed by Darlene Carvin and Dar-C Corporation in this matter, all monies paid by the Plaintiff shall be paid into the Registry of the Chancery Court and held until the Motion in Intervention can be addressed by this Court." On March 14, 2000, appellee filed an amended motion for contempt and a petition for cancellation of the deed to DHC Resort. Appellants filed a notice of appeal from the decree of specific performance on April 7, 2000. That same day, appellee filed a second amended motion for contempt, stating that it had learned that, on January 25, 2000, DHC Resort had given a mortgage on the property in dispute.

Another hearing was held on April 10, 2000. At its conclusion, the chancellor stated that the motion to intervene of right under Arkansas Rule of Civil Procedure 24(a) was timely and should be granted. She added: "Now, whether or not [the intervenors] will be entitled to any of those proceeds is for another day. That's something that certainly we would have to have a hearing concerning ...." The chancellor entered an order on May 16, 2000, wherein she granted the motion to intervene and held appellants in contempt. Shedirected appellants to perform the agreement and appointed the clerk as commissioner to convey the property. She also set aside the deed to DHC Resort. The next day, appellants filed another notice of appeal. On August 16, 2000, the chancellor awarded attorney's fees to appellee under Ark. Code Ann. § 16-22-308 (Repl. 1994). Appellants' appeal of that order has been consolidated with the other issues raised in this appeal.

Appellants contend that the chancellor erred in ordering specific performance because the offer and acceptance did not amount to a binding contract and because appellee was not ready, willing, and able to perform; in canceling the deed to DHC Resort; in finding that a certain condominium unit was part of the property to be conveyed; in finding appellants in contempt; in granting the motion to intervene; in failing to dismiss appellee's complaint because it was not qualified to do business in the state of Arkansas; and in awarding appellee attorney's fees. We are unable, however, to reach the merits of this appeal because the chancellor has not yet entered a final appealable order.

For an order to be final, it must dismiss the parties from the trial court, discharge them from the action, or conclude their rights to the subject matter in controversy; an order must be of such a nature as to not only decide the rights of the parties, but also to put the court's directive into execution, ending the litigation or a separable part of it. Reed v. Arkansas State Highway Comm'n, 341 Ark. 470, 17 S.W.3d 488 (2000). An order is not final when it adjudicates fewer than all of the claims or the rights and liabilities of fewer than all of the parties, whether presented as claims, counterclaims, cross-claims, or third-party claims. Koonce v. Mitchell, 341 Ark. 716, 19 S.W.3d 603 (2000); Office of Child Support Enforcement v. Willis, 341 Ark. 378, 17 S.W.3d 85 (2000); Maroney v. City of Malvern, 317Ark. 177, 876 S.W.2d 585 (1994); Ark. R. Civ. P. 54(b). The underlying policy of this rule is to avoid piecemeal appeals; even though an issue on which a court renders a decision might be an important one, an appeal will be premature if the decision does not, from a practical standpoint, conclude the merits of the case. Norman v. Norman, 342 Ark. 493, 30 S.W.3d 83 (2000); Koonce v. Mitchell, supra.

When the order appealed from reflects that further proceedings are pending, which do not involve merely collateral matters, such as attorney's fees, the order is not final. Harold Ives Trucking Co. v. Pro Transp., Inc., 341 Ark. 735, 19 S.W.3d 600 (2000). A collateral action is an action that does not make any direct step toward final disposition of the merits of the case, will not be merged in the final judgment, is not an ingredient of the cause of action, and does not require consideration with the main cause of action. Marsh & McLennan of Ark. v. Herget, 321 Ark. 180, 900 S.W.2d 195 (1995).

As appellants point out, the granting of a motion to intervene after judgment can also be included as part of an appeal from a final judgment. In Arkansas Best Corp. v. General Electric Capital Corp., 317 Ark. 238, 878 S.W.2d 708 (1994), the supreme court stated:

If the ruling on the motion to unseal the settlement agreement were merely a motion in the course of litigation not yet final, we would dismiss the appeal. Here, however, the litigation is final. A judgment has been entered. Although the ruling on the motion we treat as one to intervene came after the final judgment, it is a part of the litigation which resulted in that final determination and is a part of the judgment, thus we consider it final and appealable pursuant to Ark. R. App. P. 2(a)(1).

317 Ark. at 243, 878 S.W.2d at 710.

In Arkansas Best Corp. v. General Electric Capital Corp., the trial judge had denied the relief requested by the intervenor. Here, however, the chancellor has made no decisionregarding the many claims raised by the intervenors. Generally, for an order to be final for purposes of appeal, the claims of an intervenor must not be left unadjudicated. Maroney v. City of Malvern, supra. Although Rule 54(b) provides that the trial court may direct final judgment with regard to fewer than all of the claims or parties by an express determination, supported by specific factual findings, that there is no just reason for delay, the chancellor did not make such a determination here. "An order is not appealable when it fails to mention an intervenor's claim and contains no recitation of facts which would allow a piecemeal appeal under Ark. R. Civ. P. 54(b)." Richardson v. Rodgers, 329 Ark. 402, 404, 947 S.W.2d 778, 779 (1997). Accord Kinkead v. Spillers, 327 Ark. 552, 940 S.W.2d 437 (1997); Martin v. National Bank of Commerce, 316 Ark. 83, 870 S.W.2d 738 (1994); South County, Inc. v. First W. Loan Co., 311 Ark. 501, 845 S.W.2d 3 (1993).

In Kinkead v. Spillers, supra, the supreme court dismissed an appeal because it found no mention of the disposition of the claim of an intervening lienor in a property dispute between two other parties. The court noted that, although there was no question that intervention had been granted, it could not tell what had happened to the claim in intervention. In South County, Inc. v. First Western Loan Co., supra, the supreme court dismissed an appeal because the trial judge's decision made no mention of the intervenor's claim, nor did the record reflect its disposition, if any. The supreme court also dismissed an appeal in Martin v. National Bank of Commerce, supra, because the chancellor had not disposed of the intervenor's claim to an interest in the property divided by the trial court.

Here, the intervenors' claims of an interest in the property or the proceeds of sale, which have not been decided, cannot be described as collateral matters.1 See Martin v. National Bank of Commerce, supra. Therefore, there has not been a final judgment entered from which an appeal can be taken. Because the chancellor has not made the determination required by Rule 54(b), we are constrained to dismiss this appeal without prejudice.

Dismissed.

Stroud, C.J., and Hart, J., agree.

1 In their complaint, the intervenors raised the issue of an IRS lien on the property or the proceeds of sale. Apparently, the IRS has taken steps to enforce its interest. At the February 10, 2000, hearing, Jackie Hitt, with Hot Springs Title Co., testified that she had been placed on written notice by the IRS of its claim against Bell and its lien against the property in dispute. She said that, without a resolution of the IRS's claim, closing could not take place.