Patricia Stevens, Best Care Health Services, Best Care Hospice of Arkansas, and Best Care Hospice Services v. Robert Levi Wilmoth, Jr.

ca01-519

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JOHN MAUZY PITTMAN, JUDGE

DIVISION III

CA01-519

February 20, 2002

PATRICIA STEVENS, BEST CARE

HEALTH SERVICES, BEST CARE AN APPEAL FROM MILLER COUNTY

HOSPICE of ARKANSAS, and CHANCERY COURT

BEST CARE HOSPICE SERVICES NO. E-99-507-2

APPELLANTS

V. HONORABLE JAMES SCOTT HUDSON, JR.

CHANCELLOR

ROBERT LEVI WILMOTH, JR.

APPELLEE AFFIRMED AS MODIFIED

Patricia Stevens, who is the sole proprietor of Best Care Health Services, a/k/a Best Care Hospice of Arkansas, a/k/a Best Care Hospice Services (Best Care), has appealed from a decree ordering specific performance of a two-year employment contract with appellee Robert Wilmoth, Jr., and awarding damages to Mr. Wilmoth. She has also appealed from the chancellor's finding that she is in contempt of court. We affirm the decree awarding Mr. Wilmoth specific performance of the contract, affirm the award of damages as modified, and affirm the chancellor's finding of contempt.

In the contract, which became effective January 1, 1998, Ms. Stevens promised to employ Mr. Wilmoth, a registered nurse, as the hospice's administrator and as a nurse at an annual salary of $48,000 and to provide health insurance for him and his dependents. The

contract provided that, at the end of 1999, she would transfer ownership of the business to him. Ms. Stevens retained the right to terminate Mr. Wilmoth for habitual neglect or willful breach of duty. In August 1999, Ms. Stevens terminated Mr. Wilmoth.

Mr. Wilmoth filed this action in October 1999 for specific performance and for reimbursement of his monetary losses. Ms. Stevens argued at trial that his termination was justified because of his failure to follow the hospice's policy regarding the disposal of narcotic drugs, particularly after the death of a patient, Nora Scott. Mr. Wilmoth stated that he had consistently followed the hospice's policies. He said that he had been prevented from following the usual procedure for disposing of Ms. Scott's drugs. He said that her family was angry at him and would not allow him to return to their house because they did not like the conditions at the mortuary that he had recommended. Ms. Stevens admitted that Mr. Wilmoth had not been welcome at Ms. Scott's house and testified that she later sent another nurse to dispose of the drugs. He said that, when he first came to the hospice, it had only two patients. He stated that, as administrator, he worked hard to build its business and that, at the end of those two years, it was the largest hospice organization in the Texarkana area. Mr. Wilmoth testified that he worked between eighty and ninety hours per week and did most of the patient care. He said that, when Ms. Stevens fired him, he had worked there 565 days and had to work 100 more days before the business would be his.

Mr. Wilmoth presented the testimony of Rick Lindsey, a certified public accountant who is certified in business valuation. He stated that, based upon Mr. Wilmoth's pay stubs, he had expended $3,869.44 for insurance premiums that Ms. Stevens had failed to pay. He calculated Mr. Wilmoth's lost earnings, less what he had earned at other employment, at $10,570. Mr. Lindsey also said that he had calculated the value of Mr. Wilmoth's loss of the hospice's business for approximately a year at $28,009, using the direct-market-data method.

At the conclusion of the trial, the chancellor stated that he would grant specific performance to Mr. Wilmoth. He found that Mr. Wilmoth had substantially performed under the contract and said that he had not waived the relatively minor issue of reimbursement for his health insurance premiums. He also credited Mr. Wilmoth's testimony about what had happened when Ms. Scott died and found scant evidence of negligent performance of duty and no willful breach of contract. On January 25, 2001, the chancellor entered an order granting specific performance to Mr. Wilmoth and directing Ms. Stevens to immediately transfer the business to him. This order also directed Ms. Stevens to pay Mr. Wilmoth $3,869.44 for breach of her agreement to pay the health insurance premiums, $28,009 for the loss of business opportunity in 2000, and $10,917 for Mr. Wilmoth's lost wages in 1999. The chancellor later granted Mr. Wilmoth $21,105 for attorney's fees and $248.28 in costs.

On February 6, 2001, the chancellor found Ms. Stevens in contempt of court for taking steps to close the business rather than transfer it to Mr. Wilmoth as he had ordered and sentenced her to jail. He suspended her sentence until February 8, 2001, so she could purge herself of contempt and set another hearing for that day. At that hearing, the parties announced that they had reached an agreement concerning the disposition of the business's personal property. The chancellor then issued an order giving Ms. Stevens until February 15, 2001, to purge herself of contempt and directing Mr. Wilmoth to request another hearing on that issue if she did not do so. Ms. Stevens has appealed from all aspects of the decree and from the contempt orders.

Standard of Review

Ms. Stevens has raised six points on appeal, all of which attack the sufficiency of the evidence to support the chancellor's findings of fact. We review chancery cases de novo on the record but will not reverse a finding by the chancellor unless it is clearly erroneous. O'Fallon v. O'Fallon, 341 Ark. 138, 14 S.W.3d 506 (2000).

Breach of Contract

Ms. Stevens asserts error in the chancellor's decision to grant Mr. Wilmoth the remedies set forth in the decree. Specific performance is an equitable remedy that compels performance of a contract on the precise terms agreed upon by the parties. Dossey v. Hanover, Inc., 48 Ark. App. 108, 891 S.W.2d 67 (1995). Because it is an equitable remedy, courts of equity are allowed some latitude in granting or withholding that relief, depending upon the equities of a particular case. Id. Whether or not specific performance should be awarded in a particular case is a question of fact for the chancellor. Id. On appeal, the question before us is whether the chancellor's decision to grant specific performance was clearly erroneous. Id. The remedy of specific performance is particularly appropriate when an agreement to sell an ongoing business has been breached. See Stacy v. Lin, 34 Ark. App. 97, 806 S.W.2d 15 (1991). Although, strictly speaking, legal damages are not awarded when specific performance is decreed, the court may give the injured party credit for any losses occasioned by the delay. Id. The money payments to equalize losses occasioned by the delay have been referred to as "equitable compensation," and are to be distinguished from damages awarded for breach of contract. Id.

Ms. Stevens argues that Mr. Wilmoth's failure to comply with the business's policy on the disposal of Ms. Scott's drugs was a willful breach of his employment contract that was sufficient to release Ms. Stevens from her contractual obligations to him. When performance of a duty under a contract is contemplated, any non-performance of that duty is a breach. Zufari v. Architecture Plus, 323 Ark. 411, 914 S.W.2d 756 (1996). As a general rule, the failure of one party to perform his contractual obligations releases the other party from her obligations. Stocker v. Hall, 269 Ark. 468, 602 S.W.2d 662 (1980). A relatively minor failure of performance on the part of one party does not, however, justify the other in seeking to escape any responsibility under the terms of the contract; for the defendant's obligation to perform to be discharged, the plaintiff's breach must be material. TXO Prod. Corp. v. Page Farms, Inc., 287 Ark. 304, 698 S.W.2d 791 (1985).

The chancellor obviously considered Mr. Wilmoth's failure to oversee the disposal of Ms. Scott's drugs to be minor, because he found that Mr. Wilmoth had substantially performed his obligations under the contract and that he was persuaded that Mr. Wilmoth had not willfully breached it. The chancellor also stated that this was a credibility issue. We will defer to the chancellor's evaluation of the credibility of the witnesses. O'Fallon v. O'Fallon, supra. Given Mr. Wilmoth's explanation of his reason for not overseeing the disposal of Ms. Scott's drugs, along with his description of his successful efforts to increase the hospice's business, the chancellor's findings in this regard are not clearly erroneous. Accordingly, the chancellor did not err in requiring Ms. Stevens to fulfill her obligations under the contract.

Health Insurance Premiums

The chancellor awarded Mr. Wilmoth judgment for $3,869.44 for Ms. Stevens's failure to pay his health insurance premiums as she had promised. Ms. Stevens admits that she agreed to provide health insurance for Mr. Wilmoth and his dependents. She contends, however, that the amount awarded is not supported by the evidence and that Mr. Lindsey's opinion regarding these damages was without a reasonable basis. She argues that Mr. Lindsey's calculations, which were based upon figures taken from Mr. Wilmoth's pay stubs, bore no relation to the $502 cost for premiums to which Mr. Wilmoth had testified.

If an expert's opinion is shown to be without a reasonable basis, it is subject to being stricken. Ford Motor Co. v. Massey, 313 Ark. 345, 855 S.W.2d 897 (1993). If, however, cross-examination shows that the testimony has a weak or questionable basis, that goes to the weight and credibility to be given the testimony rather than to its admissibility. Id. Also, we note that Arkansas law has never required exactness of proof in determining damages; if it is reasonably certain that some loss occurred, it is enough that damages can be stated only approximately if from the approximate estimates a satisfactory conclusion can be reached. Employers Ins. of Wausau v. Didion Mid-South Corp., 65 Ark. App. 201, 987 S.W.2d 745 (1999). In our opinion, the evidence adequately supports this award.

Ms. Stevens also argues that, because Mr. Wilmoth did not stop working for her after she stopped paying for the health insurance, he waived her breach of the contract. We disagree. Waiver is the voluntary abandonment or surrender by a capable person of a right known by him to exist, with the intent that he shall forever be deprived of its benefits. Bharodia v. Pledger, 340 Ark. 547, 11 S.W.3d 540 (2000); Bright v. Gass, 38 Ark. App. 71, 831 S.W.2d 149 (1992). Waiver may occur when one, with full knowledge of material facts,does something that is inconsistent with the right or his intention to rely upon that right; the relinquishment of the right must be intentional. Bharodia v. Pledger, supra. Whether a waiver occurred is a question of intent, which is usually a question of fact. Beal Bank, S.S.B. v. Thornton, 70 Ark. App. 336, 19 S.W.3d 48 (2000).

The chancellor found that the issue of the premiums was "relatively minor" and that Mr. Wilmoth had not waived his rights in that regard. Here, the evidence is clear that, after this breach, Mr. Wilmoth attempted to enforce his right to this insurance coverage to no avail. He testified that he chose to continue working after this breach to fulfill his contractual obligations. The chancellor's finding that Mr. Wilmoth did not waive Ms. Stevens's breach of contract is not clearly erroneous.

Loss of Opportunity

The chancellor based his award of $28,009 for Mr. Wilmoth's loss of business opportunity in the year 2000 on Mr. Lindsey's testimony and calculations. Ms. Stevens contends that this award should have been reduced by the amount of Mr. Wilmoth's earnings that year. We disagree. The fundamental flaw in Ms. Stevens's argument is that it is premised upon the erroneous characterization of the award as one for lost wages. The record is clear that this award of damages was for Mr. Wilmoth's loss of business opportunity, not for his lost wages.

Ms. Stevens also challenges the methodology used by Mr. Lindsey to calculate the loss. She argues that Mr. Lindsey should have considered the business's gross revenues, expenses, and net profits. Mr. Lindsey explained that he determined the business's value at the time of Mr. Wilmoth's termination, using direct market data. Then, he calculated thevalue of Mr. Wilmoth's loss of the business's use for approximately a year by multiplying the investment by nine and one-half percent. He stated that using this method gives one a realistic appraisal of the business's value, and that expenses and net profits have no relevance to it. We note that, in Stacy v. Lin, supra, we held that, where the trial court had granted specific performance of the sale of a restaurant, it erred in awarding the buyer damages based on lost profits, rather than for the delay in obtaining possession of the premises based on the fair rental value of the property. We find no error in the chancellor's crediting of Mr. Lindsey's methodology, calculations, and opinion.

Finally, we note that Mr. Wilmoth candidly concedes that the $28,009 figure in the decree for his loss of business opportunity differs slightly from the expert's report, which set the loss for 2000 at $27,839. In cases such as this, where the chancery record is fully developed and where the appellate court, on de novo review, can plainly see where the equities lie, we may enter the order that the chancellor should have entered. White v. White, 50 Ark. App. 240, 905 S.W.2d 485 (1995). In light of appellee's concession, we therefore modify the chancellor's order to provide that appellant shall pay appellee the sum of $27,839 for loss of opportunity of appellant's business for the year 2000.

Mr. Wilmoth's Lost Wages

Ms. Stevens further argues that the $10,917 the chancellor awarded Mr. Wilmoth for his lost wages in 1999 was without a reasonable basis. She asserts that, because Mr. Wilmoth's compensation according to the contract was $48,000, he would have earned another $13,000 before the end of the year. Against that figure, she argues, Mr. Wilmoth's earnings at other employment should be offset, making the proper remainder $8,432. In response, Mr. Wilmoth points out that he was actually paid $52,000 per year, rather than the $48,000 written in the contract, and would have earned $17,000 if Ms. Stevens had not breached the contract. Mr. Wilmoth contends that Mr. Lindsey miscalculated this figure at $10,570 and that, after subtracting his earnings of $4,268 in other employment, the award should have been $12,367.

When the cause and existence of damages have been established by the evidence, recovery will not be denied merely because the damages are difficult to ascertain. Taylor v. Green Mem'l Baptist Church, 5 Ark. App. 101, 633 S.W.2d 48 (1982). The supreme court has some latitude in this area and has not insisted on exactness of proof. Dr. Pepper Bottling Co. v. Frantz, 311 Ark. 136, 842 S.W.2d 37 (1992). If it is reasonably certain that some loss has occurred, it is enough if it can be stated only proximately. Id. We believe the evidence presented at trial was more than sufficient to support the award for this element of Mr. Wilmoth's loss.

Attorney's Fees

Ms. Stevens further argues that, because the chancellor erred in holding her liable to Mr. Wilmoth for breach of contract, he also erred in awarding him attorney's fees. She doesnot, however, dispute the amount of the fees awarded. Arkansas Code Annotated section 16-22-308 (Repl. 1999) provides that in a civil action for breach of contract, the prevailing party may be allowed a reasonable attorney's fee. Ouachita Trek and Dev. Co. v. Rowe, 341 Ark. 456, 17 S.W.3d 491 (2000). The trial court's decision regarding attorney's fees will be reversed only if an abuse of discretion is shown. See Jones v. Abraham, 341 Ark. 66, 15 S.W.3d 310 (2000). Because we are affirming the chancellor's decree, we also affirm the award of attorney's fees.

Contempt

Ms. Stevens also appeals from the chancellor's finding that she was in contempt of court for failing to fully transfer the business to Mr. Wilmoth. At the conclusion of the trial on the merits on January 17, 2001, the chancellor ruled from the bench that he was granting Mr. Wilmoth's request for specific performance of the employment contract. Immediately thereafter, appellant informed all the patients that she was going out of business; helped them transfer to other hospices; removed all of Best Care's office equipment, furniture, and business records from the rented office space where the business had been located; and discontinued the business's telephone service. On Mr. Wilmoth's motion, Ms. Stevens was found to be in contempt of court for doing so, and was ordered to pay attorney's fees and costs related to the contempt proceeding.

Ms. Stevens contends that the chancellor erred in finding her in contempt because the chancellor's verbal order was not couched in definite terms as to the duties imposed on her. We do not agree.

A court's contempt power may be wielded not only to preserve the court's power and dignity and to punish disobedience of the court's orders, but also to preserve and enforce the parties' rights. Hart v. McChristian, 344 Ark. 656, 42 S.W.3d 552 (2001). Where a party is punished for civil contempt, we will not reverse the trial court's order unless it is arbitrary or against the weight of the evidence. Id.

The chancellor ruled at the conclusion of the trial that he would order specific performance of the contract to transfer the business to Mr. Wilmoth, and Ms. Stevens's subsequent actions were utterly inimical to that ruling. Although it is true that a person may not be held in contempt for violating a court order unless the command is express and the order is in definite terms as to the duties imposed on him, Hodges v. Gray, 321 Ark. 7, 901 S.W.2d 1 (1995), we think that Ms. Stevens's post-trial efforts to dismantle the business in the present case were so completely antithetical to the chancellor's order to transfer the business to Mr. Wilmoth that no person of ordinary intelligence could reasonably have believed that such actions were permissible.

Affirmed as modified.

Bird and Roaf, JJ., agree.