Bill Bates d/b/a Clear Water Drilling v. David Gilbert d/b/a Gilbert's Hardrock Drilling

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JOSEPHINE LINKER HART, JUDGE

DIVISION I

BILL BATES d/b/a CLEAR WATER DRILLING

APPELLANT

V.

DAVID GILBERT, d/b/a GILBERT'S HARDROCK DRILLING

APPELLEE

CA02-869

April 16, 2003

APPEAL FROM THE POLK COUNTY CIRCUIT COURT

[NO. E-2000-115]

HONORABLE GAYLE K. FORD,

CIRCUIT JUDGE

AFFIRMED

Appellant Bill Bates appeals the trial court's order finding that he had breached the contract for the sale of his well-drilling business to appellee, David Gilbert, d/b/a Gilbert's Hardrock Drilling. For reversal, appellant argues (1) that the trial court erred by failing to find that the covenant not to compete was void and unenforceable; (2) that there was no substantial evidence to support a finding that appellant had breached the contract by aiding and assisting Mark Bates in establishing a well-drilling business; and (3) that, assuming there was a breach of a valid contract, the trial court erred by awarding $5,000 in nominal damages plus court costs and attorney's fees. We affirm.

On September, 29, 1995, the parties entered into a contract whereby appellant agreed to sell to appellee and his wife all inventory, equipment, tools, business, and good will of Bates Water Well Drilling for a purchase price of $195,000. Appellant was to continue working for the business for thirty days from the date of the agreement to help train appellee,

and appellant's son, Mark Bates, was to continue working for the business for a period of six months. The contract included the following covenant not-to-compete clause in paragraph four, which provided:

As part of the consideration for the sale and purchase of the business, BILL BATES and his son, MARK BATES, both agree that they shall not engage in, establish, assist, or advise any other business that would be in direct competition with BATES WATER WELL DRILLING for a period of five years from the date of this Agreement, and within a 200 mile radius of Mena, Arkansas.

The only signatories to the contract were appellant, his wife Wanda Bates, appellee, and his wife Tawana Gilbert.

On April 13, 2000, appellee filed a breach of contract suit asserting that appellant and Mark Bates had breached the covenant. The trial court found that appellant had breached the covenant and awarded nominal damages, court costs, and attorney's fees. Further, the trial court found that Mark Bates was not bound by the agreement and dismissed him as a party to the suit. From that order comes this appeal.

The standard of review in a bench trial is whether the trial judge's findings were clearly erroneous. Schueck v. Burris, 330 Ark. 780, 957 S.W.2d 702 (1997). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made. Wade v. Arkansas Dep't of Human Servs., 337 Ark. 353, 990 S.W.2d 509 (1999).

First, appellant asserts that the trial court erred in failing to find that the contract between the parties was against public policy and was therefore void and unenforceable. Appellant argues that the only purpose of the covenant not-to-compete clause was to createas an unreasonable restraint on competition and form a monopoly in the well-drilling business in the geographical area. This public policy argument, however, was not raised before the trial court. We have repeatedly stated that an argument which is raised for the first time on appeal is not properly preserved for this court's review and will not be addressed. Marsh & McLennan of Arkansas v. Herget, 321 Ark. 180, 900 S.W.2d 195 (1995). Also, appellant failed to obtain a ruling on this issue from the trial court, and his failure to do so precludes our consideration of the issue on appeal. Kangas v. Neely, 346 Ark. 334, 57 S.W.3d 694 (2001).

Second, appellant argues that there was not sufficient evidence to support a finding that he substantially or materially breached the contract with appellee by aiding and assisting Mark Bates in establishing a competitive well-drilling business. Appellant admitted at trial that he had driven a drilling truck from Pennsylvania for Mark Bates when Mark established his well-drilling business. Further, appellant stated that he had worked on the equipment before Mark began drilling a well. Appellant also testified that he had visited drill sites with Mark when he was drilling a well and that he kept his dump truck and backhoe on the property of Clear Water Drilling.

Appellant explained that the reason he drove a drilling truck from Pennsylvania to Mena, Arkansas, was to have his own personal well drilled, and it was "simply a mechanical act" which anyone could have performed. Further, appellant attempted to minimize the testimony of Earnest Roberts, a former employee of appellant and a current employee of appellee, who stated that appellant attempted to persuade him to work for Mark Bates ratherthan appellee. Appellant argued that such action by him is irrelevant because Roberts did not leave his employment with appellee. Likewise, he excuses work that he performed on a well for Michael Glenn Wells by arguing that the trial court's reliance on a transaction he made with Wells was misplaced because he had an agreement with Wells to install a pump on his property in return for air-conditioning work by Wells prior to the date of the sale. We disagree.

Appellant made a trip to Pennsylvania and drove a well-drilling truck to Arkansas for his son. Although appellant seeks to minimize the importance of this action, this equipment is essential to the well-drilling business. Likewise, appellant's efforts to hire appellee's trained employees is a substantial act to further his son's well-drilling business. These factors, together with appellant's high profile presence at work sites, establish a substantial breach of the covenant not-to-compete, and we cannot say that the trial court's determination that appellant had breached the contract with appellee by assisting Mark Bates in establishing a competitive business is clearly erroneous.

Last, appellant argues that the trial court erred as a matter of law in awarding $5,000 in nominal damages and $1,500 in attorney's fees. Citing Riley v. Shamel, 249 Ark. 845, 462 S.W.2d 228 (1971), appellant states that under Arkansas law $5,000 is not "nominal." In support of this argument, appellant relies on Riley, where our supreme court held that an award of $5,000, was "a sum far in excess of the average annual per capita income in Arkansas," and that to a motorist who had sustained personal injuries and property damage in a collision between his half-ton truck and the defendants' automobile, the $5,000 awardwas substantial rather than nominal. Id. at 847, 462 S.W.2d at 229. Also, appellant asserts that there were no factual bases to support the trial court's award of $1,500 in attorney's fees because there was no itemized fee schedule or invoice or time log.

In Cathey v. Arkansas Power and Light Co., 193 Ark. 92, 97 S.W.2d 624 (1936), our supreme court stated that "[n]ominal damages ... may vary almost indefinitely, depending somewhat on the amount of recovery, and on the circumstances of each particular case." Id. at 96, 97 S.W.2d at 626. Here, appellant sold appellee the well-drilling business for $195,000. Appellee testified that as a result of the competitive business of Mark Bates, his business suffered $114,000 in lost profits. Based on the evidence in this case, the trial court's award of $5,000 in nominal damages was not clearly erroneous when that award is compared to the purchase price of $195,000 or the alleged lost profits of $114,000.

As for appellant's challenge to the award of attorney's fees, we note that Arkansas Code Annotated section 16-22-308 (Repl. 1999) provides for attorney's fees in certain civil actions as follows:

In any civil action to recover on an open account, statement of account, account stated, promissory note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services, or breach of contract, unless otherwise provided by law or the contract which is the subject matter of the action, the prevailing party may be allowed a reasonable attorney fee to be assessed by the court and collected as costs.

An award of attorney's fees will not be set aside absent an abuse of discretion by the trial court. Stilley v. James, 347 Ark. 74, 60 S.W.2d 410 (2001). We cannot say that the trial court abused its discretion in awarding $1,500 to appellee for attorney's fees; therefore, weaffirm.

Affirmed.

Bird and Crabtree, JJ., agree.