Non-Profit Telemedia, Inc. and N.P.T. Administrative Services, Inc. v. Fran D. Clark

ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION

DIVISION I

NON-PROFIT TELEMEDIA, INC. and N.P.T. ADMINISTRATIVE SERVICES, INC.

APPELLANTS

V.

FRAN D. CLARK

APPELLEE

CA03-306

January 28, 2004

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT

CV 01-9884

HON. GREG KITTERMAN, SPECIAL CIRCUIT JUDGE

REVERSED AND REMANDED

Larry D. Vaught, Judge

Appellants bring this appeal from a judgment entered by the trial court in favor of appellee. They raise two arguments on appeal: (1) that the trial court erred in finding in favor of appellee based on the theory of quantum meruit because there was insufficient proof of the elements of quantum meruit and because the issue of quantum meruit was never properly raised by appellee; (2) that the trial court erred in refusing to allow them to present their case on reconsideration. We hold that appellants waived any argument that appellee failed to properly raise the issue of quantum meruit but that the trial court erred in granting judgment in favor of appellee without allowing appellants to present their case. Therefore, we reverse and remand.

Appellant Non-Profit Telemedia, Inc. (NPT) was a corporation owned by Kerry D'Amato, Arlene Stalnaker, Melissa McCown, and Walt Smith. In September of 1999, after approximately nine years of business, the FBI closed down the business. Appellant N.P.T. Administrative Services, Inc. owned the building in which NPT operated. Appellee Fran Clark was the sister of Kerry D'Amato, who was the president of NPT. She came to Little Rock at the time the FBI closed NPT down and took part in shareholder meetings in which they discussed whether they would try to re-open the business. In order to do so, the shareholders would have to contribute $114,000 to pay the employees. Only D'Amato, Stalnaker, and McCown wanted to continue the business, so each had to pay $38,000 to keep the business alive. Stalnaker and McCown each gave $38,000, but D'Amato did not have the money. Clark showed an interest in helping because she thought the business could survive. She testified that she offered to put in a portion of what was needed as an investment in the company; she called her credit union in Columbus, Georgia and had it wire $38,000 to the N.P.T. Administrative Services account. That account was the only asset not seized by the FBI. After Clark wired the money, the shareholders continued discussions. Smith tried to sell his shares to Clark, but he wanted too much money. Clark testified that if Smith relinquished his shares, she would have taken them and filled his shoes as a partner in return for her investment in the company.

Clark testified that when she left Little Rock to return home to Georgia, she did not have anything to evidence the nature of the $38,000 transaction. After returning home, she talked to her brother and found out that the $38,000 would be treated as a loan that would be repaid within a year. Clark never received any loan documentation, although she testified that someone indicated that there would be documentation. She testified that she never indicated that the money was a gift or that she gave it to her brother; she recalled that someone from the corporation promised her that the loan would be repaid. Clark testified that her brother was president of the company until April 2001, and she filed suit in May 2001 to recover her $38,000. Her first amended complaint indicated that appellants owed her $38,000 based on an oral agreement to loan money.

At the conclusion of Clark's case, which consisted only of her testimony and some documentary evidence, appellants moved for a directed verdict on the ground that she failed to prove an oral contract. Appellants argued that there was no testimony of an agreement to loan money, but merely that Clark's brother's company was in trouble and needed help and she was willing to help. There was nothing to show that her offer was accepted or that there was any consideration given to her. They alleged there was nothing to show that the transaction was anything more than a gift in the absence of evidence of consideration. In response to the motion, Clark's counsel stated that there was enough evidence to defeat the motion to dismiss because "$38,000 was not small change. It's not paying ten, twenty, five dollars and even on a quantum meruit theory, if it's not considered, if the court does not see fit to see an oral contract." Appellants' counsel objected to appellee's raising an equity argument in response to the motion for directed verdict. The court allowed appellee's counsel to finish the argument, which was simply that Clark put her money directly into N.P.T. Administrative Services's bank account.

The court granted the motion for directed verdict on the basis that there was no evidence that anyone with authority accepted her offer or that there was any consideration given in exchange for the money. An order was entered October 9, 2002. Previously on September 30, 2002, appellee filed a motion for reconsideration asking the trial court to consider her quantum meruit argument. Appellee argued that the issue was raised at trial and that the pleadings were amended to conform to the proof. A hearing on the motion to reconsider took place on October 21, 2002, where counsel for the parties argued their positions.

In ruling on the motion for reconsideration, the trial court found that appellee still failed to prove an oral contract, but stated that appellee properly raised the issue of quantum meruit at trial and that the trial court was wrong in not considering it at that time. Appellants' counsel asked that they be allowed to put on their evidence to defend the quantum meruit theory, but the trial court denied the request and granted appellee judgment in the amount of $38,000, finding that appellee had met her burden of proof on the issue. An order was entered on December 3, 2002, and appellants filed a timely notice of appeal.

Appellants raise two arguments on appeal. First, they contend that the trial court erred in finding in favor of appellee based on the theory of quantum meruit because there was insufficient proof of the elements of quantum meruit and because the issue of quantum meruit was never properly raised by appellee. Second, appellants argue that the trial court erred in refusing to allow them to present their case on reconsideration.

The standard that we apply when reviewing a judgment entered by a circuit court after a bench trial is well established. We do not reverse unless we determine that the circuit court erred as a matter of law or we decide that its findings are clearly against the preponderance of the evidence. Riffle v. United Gen. Title Ins. Co., 64 Ark. App. 185, 984 S.W.2d 47 (1998).

We first address appellants' contention of whether appellee properly raised the issue of quantum meruit. Appellee's counsel raised the quantum meruit issue both in his opening statement and in response to appellants' motion for summary judgment. In addition, appellants waived this argument on appeal because at the hearing on the motion for reconsideration, appellants' counsel stated, "We are not objecting to the ruling on Rule 15 [amendments to conform to the proof]. All we are saying is we'd like the opportunity for you to hear our witnesses' testimony before you rule whether there was or was not unjust enrichment as to the corporation."

Appellants also contend that the trial court erred in refusing to allow appellants to present their case on reconsideration of appellee's quantum meruit argument. Appellee raised the issue of quantum meruit in her opening statement and the argument was also raised in defense of the appellants' motion for directed verdict. Although the argument was not recognized by the trial court at trial, the court decided to consider it on the petition for reconsideration. Thus, had the court made the decision at trial, appellants would have had the opportunity to present evidence in defense. Rule 50 of the Arkansas Rules of Civil Procedure provides that a party may move for directed verdict at the close of the evidence offered by an opponent and may offer evidence in the event that the motion is not granted. Here, if the court had considered the quantum meruit theory at trial, appellants would have had the chance to proceed with their case. Instead, the court granted the motion for directed verdict on the contract theory, which it also upheld on reconsideration, and the appellants had no reason to present its case at trial.

Appellee responds to appellants' argument that they should have been allowed to present their case upon reconsideration by saying that the issue turned into a summary judgment motion. Summary judgment determinations are decided on pleadings and depositions, etc., and an opposing party has the opportunity to defend. See Ark. R. Civ. P. 56.

We hold that the trial court erred as a matter of law in entering a judgment in favor of appellee on her quantum meruit argument without allowing appellants the opportunity to present their case. Therefore, we reverse the trial court's judgment and remand for trial. We do not reach appellants' argument that there was insufficient proof of the elements of quantum meruit because the issue was never fully developed before the trial court.

Reversed and remanded.

Pittman and Neal, JJ., agree.