Kent E. Mullins and Michelle Mullins v. Joseph R. Ward and Evela Ward

ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION
DIVISION IV

KENT E. MULLINS AND MICHELLE MULLINS

APPELLANTS

V.

JOSEPH R. WARD AND EVELA WARD

APPELLEES

CA 03-34

OCTOBER 8, 2003

APPEAL FROM THE JEFFERSON COUNTY CIRCUIT COURT

[NO. CV-2000-301-3-5]

HONORABLE FRED D. DAVIS, III,

JUDGE

AFFIRMED

Terry Crabtree, Judge

The Jefferson County Circuit Court granted a default judgment to the appellees, Joseph and Evela Ward, and awarded them $10,875 in compensatory damages and $10,000 in punitive damages for fraud and breach of contract against the appellants, Kent and Michelle Mullins. On appeal, appellants raise three issues for our review: (1) whether the circuit court, acting as a court of law, lacked jurisdiction to hear an equitable matter; (2) whether the trial court erred in failing to apply Indiana law; and (3) whether the trial court erred in granting damages on a default judgment without providing appellants a hearing on the issue of damages. We affirm.

In August of 1998, appellants listed their residence located in Indiana with a realtor. The next month they moved to Pine Bluff, Arkansas, where they resided for approximately two years. After moving to Arkansas, appellants executed a disclosure in connection with their Indiana home, which contained numerous affirmative representations concerning the absence of defects in the water and septic system. In the disclosure, appellants indicated that the septic field/bed at the residence was "Not Defective." The disclosure was executed on September 26, 1998. On May 4, 1999, appellees purchased the residence from appellants for $79,900. At that time, appellants signed another disclosure stating that "the condition of the property is substantially the same as it was when the Sellers Disclosure form was originally provided to the Buyer." All paperwork in connection with the sale of the residence was mailed to appellants in Arkansas for execution.

According to appellees' complaint filed May 15, 2000, appellees moved into the residence and learned that contrary to the representations made by appellants, the septic system was defective, and that as a result, the residence flooded after heavy rainfalls. Appellees claimed that appellants had resided in the home for nine years before selling it, and that appellants knew or should have known of the defective septic system. Appellees' complaint also alleged that appellants were guilty of fraudulent concealment and misrepresentation of material facts, upon which appellees relied to their detriment and damage. Appellees requested relief including compensatory damages of $11,000 and punitive damages of $50,000.

Appellants were served with this lawsuit, but they never filed an answer. On July 13, 2000, appellees submitted and filed an affidavit in support of a default judgment. On July 14, 2000, the default judgment in favor of appellees was entered by the trial court. The default judgment awarded appellants $10,875, representing the cost estimate for curing the defects to the residence. In addition, the trial court found appellants' actions to be fraudulent and awarded appellees $10,000 in punitive damages.

Appellant filed two motions to set aside the default judgment. The first was filed on October 18, 2000, and was later quashed. The second was filed on December 17, 2001. On April 12, 2002, the trial court held a hearing on the motion to set aside the judgment. In a letter opinion filed on August 14, 2002, the trial judge denied the motion. The trial judge specifically found that appellants' delay in responding to the complaint was not excusable; that jurisdiction was proper due to the subject matter of the lawsuit and personal service upon appellants; that service on appellants in the original complaint was proper; and that the default judgment was properly entered against appellants.

For appellants' first point on appeal, they claim that the circuit court, acting as a court of law, lacked jurisdiction to hear this case as it involved an equitable matter. Subject-matter jurisdiction is always open for review, cannot be waived, can be questioned for the first time on appeal, and can even be raised by the appellate court. Terry v. Lock, 343 Ark. 452, 37 S.W.3d 202 (2001). Therefore, we will address the appellants' argument and determine whether the circuit court was without subject-matter jurisdiction.

Appellants contend that this is an equitable matter. To the contrary, it is a case involving fraud and breach of contract sounding in a court of law. In their complaint, appellees alleged that appellants made affirmative misrepresentations in the property disclosure form and fraudulently concealed material facts about the residence. Appellees sought "damage[s] in an amount equal to the cost of excavating and constructing an adequate and proper septic system." Additionally, appellees prayed for punitive damages in the amount of $50,000 and attorney's fees. With this in mind, the trial judge made the following comments from the bench:

The suit appears to be one for breach of contract and/or for fraud, fraudulent concealment and misrepresentation. . . . Its not like it is a suit for specific performance. . . It is a suit for alleged money damages by virtue of the contractual relationship between these parties.

"[A] plaintiff may sue in equity to rescind and if equity acquires jurisdiction for this purpose, it can proceed to order such monetary restitution as may be appropriate." Malakul v. Altech Arkansas, Inc., 298 Ark. 246, 766 S.W.2d 433 (1989). Here, however, appellees never sought to rescind the contract. In Compute-A-Call, Inc. v. Tolleson, 285 Ark. 355, 687 S.W.2d 129 (1985), our state supreme court held, "Money damages are the only damages asked in this case. The remedy at law is adequate. The chancellor erred in refusing to transfer the case to circuit court[.]" In the case at bar, appellants sought only money damages. Therefore, the circuit court had jurisdiction to hear the case. See generally Ark. Const. art. 7, § 11; Ark. Code Ann. § 16-13-201 (1987).

For appellants' second point on appeal, they contend that the trial court erred in failing to apply Indiana law. The issue of whether the trial court should have applied Indiana law to the proceedings was not raised below. Appellants did not make any contention regarding choice of law in their motion to set aside, and they did not assert it at the hearing. Appellants are procedurally barred from raising this argument on appeal. Barclay v. First Paris Holding Co., 344 Ark. 711, 42 S.W.3d 496 (2001). It is well settled that to preserve arguments for appeal, even constitutional ones, the appellant must obtain a ruling below. Wilson v. Neal, 332 Ark. 148, 964 S.W.2d 199 (1998).

For appellants' final point on appeal, they argue that the trial court erred in granting damages on a default judgment without providing appellants a hearing on the issue of damages. Again, appellants failed to make this argument below. Appellants did not complain to the trial court in their motion to set aside the default judgment that they were not afforded a hearing on the issue of damages. Furthermore, appellants did not bring this to the attention of the trial court during the hearing on the motion. Therefore, appellants' argument is not preserved for appeal. See Wilson, supra.

Affirmed.

Vaught and Baker, JJ., agree.