Charles Rhoads v. Alex Lacy

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

KAREN BAKER, JUDGE

DIVISION IV

CHARLES RHOADS

APPELLANT

V.

ALEX LACY

APPELLEE

CA01-58

NOVEMBER 7, 2001

APPEAL FROM THE WASHINGTON COUNTY CIRCUIT COURT

[NO. CIV1998-26]

HONORABLE KIM MARTIN SMITH, CIRCUIT JUDGE

AFFIRMED

Appellant, Charles Rhoads, appeals from the decision of the Washington County Circuit Court denying his motion for a new trial. Appellant's sole argument on appeal is that the trial court erred in prohibiting introduction of a settlement proposal at trial. We affirm.

Appellant was in a cattle breeding partnership, The Benchmark Beefmasters Partnership, with appellee, Alex Lacy. The partners engaged in the hi-tech artificial insemination breeding of purebred cattle through a technical artificial insemination process. Appellant testified that in 1993 they needed to purchase additional cattle to be implanted with the embryos to boost cattle production and that he agreed to borrow the entire amount of money required for the cattle purchase and appellee promised to repay him for one-half of the purchase price ($15,802.50) within two or three months.

Ultimately, the partnership was dissolved by agreement of the parties. Prior to trial, the partnership's assets and liabilities had been divided between the two parties. Despite the dissolution,appellant testified that appellee had failed to pay his one-half of the cattle purchase per the oral

agreement. Appellee denied that he was in debt to appellant for the cattle. Rather, the appellee's position was that the parties had agreed that appellee would balance out the capital contributions to the partnership by contributing free services, hay, and management to the partnership.

At trial, appellant's counsel attempted to introduce an attorney-generated draft of a settlement proposal prepared in anticipation of the partnership dissolution. The settlement proposal was drafted by appellee's previous attorney, and the proposal was not signed or notarized. Further, although the proposal discussed the dissolution of the partnership, it did not mention a prior debt, referring instead to equalizing the capital in the partnership. The trial court denied admission of the settlement proposal, and ultimately the jury ruled in appellee's favor. Appellant filed a motion for a new trial based on the trial judge's refusal to admit the settlement proposal; the motion was denied.

The decision of whether to grant or deny a motion for a new trial lies within the sound discretion of the trial court, and this court will not reverse that decision absent an abuse of discretion. Miller v. State, 328 Ark. 121, 942 S.W.2d 825 (1997) (citing Jones v. State, 321 Ark. 649, 907 S.W.2d 672 (1995)). In order to succeed in a motion for new trial, the moving party has the burden of developing and presenting evidence sufficient to show that a new trial is warranted. Kristie's Katering, Inc. v. Ameri, 72 Ark. App. 102, 35 S.W.3d 807 (2000).

Appellant argues the trial court erred in denying his motion for a new trial because the court prohibited introduction of appellant's "proffered exhibit #3," the settlement proposal. Appellant correctly notes that Arkansas Rule of Evidence 408 (2001) is not a blanket prohibition against the admission of all evidence concerning offers to compromise. Wal-Mart Stores v. Londagin, 344 Ark. 26, 37 S.W.3d 620 (2001). Rule 408 does, however, provide that such evidence when offered toprove "liability for, invalidity of, or amount of the claim or any other claim," is inadmissible. Edwards v. Stills, 335 Ark. 470, 984 S.W.2d 366 (1998).

Appellant asserts that the settlement proposal was offered to impeach appellee's credibility and should not have been excluded under Rules 408 and 403. The trial court found the proposal was inadmissible for two reasons. First, the document was clearly a settlement proposal. Second, the document came from appellee's previous lawyer, rather than directly from appellee. Appellant concedes in his brief that the document was a settlement proposal and was offered to prove appellee's liability on the oral agreement. Appellant's brief states, "[t]his is classic impeachment evidence, because it recognizes an obligation, under whatever name, to [a]ppellant for the entire amount of $15,802.50, because it cites a debt starting in November 1993, instead of on March 1994, by the listing of an interest rate of 10%." Clearly, there was no abuse of discretion by the trial court in prohibiting the admission of the settlement proposal, which appellant sought to introduce for the very purpose prohibited by Rule 408.

The trial court prohibited introduction of the proposal on the additional basis that the proposal came from appellee's previous attorney, rather than directly from appellee. Appellant contends this was an admission by a party-opponent from his agent. The real issue is whether an admission made during settlement negotiations is admissible. Missouri Pac. R.R. Co. v. Ark. Sheriff's Boy's Ranch, et. al., 280 Ark. 53, 655 S.W.2d 389 (1983); Ark. R. Evid. 408. In support of his assertion, appellant relies on Missouri Pacific, which is easily distinguished from the case at hand. In Missouri Pacific, a witness, who was not a party, was allowed to testify that during settlement negotiations of a different claim an agent of the railroad stated that, in order to save money, the railroad had a policy of settling claims for fire damages rather than expending money to prevent the fires. (Emphasis added.) Here, appellee was a party to the suit, and the settlementnegotiations concerned the same claim. Therefore, appellant's reliance on Missouri Pacific is misplaced.

At any rate, evidence must be relevant under Rule 401, as well as admissible under Rules 402 and 403. See McKenzie v. Tom Gibson Ford, Inc., 295 Ark. 326, 749 S.W.2d 653 (1988). In addition to Rule 408, the trial court relied on Rule 403 in denying appellant's motion. Specifically, the trial judge stated that "[a]t best it is confusing or misleading as to whether this document refers to a debt or the capital contribution and I think it is clearly talking about the dissolution of the partnership . . . and that under The Arkansas Rules of Evidence, Rule 403 its probative value is outweighed by the possibility of confusion or misleading as to the jury." The determination of whether the probative value of evidence is substantially outweighed by its prejudicial effect is left to the sound discretion of the trial court, and absent a manifest abuse of that discretion, the trial court's decision will not be disturbed. Sexton Law Firm, P.A. v. Milligan, 329 Ark. 285, 948 S.W.2d 388 (1997).

We hold that there was no abuse of discretion in this case, and that the trial court's denial of the motion for a new trial was proper.

Affirmed.

Hart and Vaught, JJ., agree.