Arthur L. Bone v. Richard A. Barnard and Terry Barnard
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NOT DESIGNATED FOR PUBLICATION
ARKANSAS COURT OF APPEALS
DIVISION I
No.
CA07-1177
Opinion Delivered
S EPTEMBER 10, 2008
ARTHUR L. BONE
APPELLANT
V.
RICHARD A. BARNARD and TERRY
BARNARD
APPELLEES
APPEAL FROM THE PULASKI
COUNTY CIRCUIT COURT
[NO. CV2006-11629]
HONORABLE JAY MOODY, JUDGE
AFFIRMED
ROBERT J. GLADWIN, Judge
Appellant Arthur L. Bone appeals the May 14, 2007 order and August 2, 2007
judgment filed in Pulaski County Circuit Court granting the dismissal of his complaint and
granting judgment in favor of appellees Richard and Terry Barnard. Appellant maintains that
the trial court erred in granting appellees’ motion for summary judgment, in granting appellees’
prayer for damages for abuse of process, and in dismissing appellant’s counterclaim for
foreclosure. We affirm the trial court’s ruling on each point.
The parties entered into a promissory note and mortgage when appellees agreed to
purchase from appellant certain real property located in Sherwood, Arkansas, described as Lot
16, Block 9, Grandview Subdivision, Sherwood, Pulaski County, Arkansas. The note, signed
on December 14, 1990, stated that appellees agreed to purchase the property for $24,000,
together with interest of ten percent per annum, with monthly payments of $225 beginning
July 1, 1990, until the note was paid in full. Appellant brought suit on the note and mortgage
in a foreclosure complaint filed October 6, 2006, alleging that appellees had failed to make a
$1,000 down payment and monthly payments. Appellees counterclaimed on October 30,
2006, alleging that a down payment had been paid. Further, appellees claimed to have paid
a judgment on behalf of appellant in the amount of $5,500, plus interest, which amount was
to be credited against the promissory note. Appellees further alleged that appellant initiated
two groundless foreclosure actions against them to wrongfully obtain their property. These
suits were not successful.
Appellees state that appellant claims to have obtained a foreclosure against them in early
2006; however, appellees deny having ever been served with notice of such a proceeding.
Appellees claim that appellant had a practice of refusing to cash the check payments he received
from them on the property. After a confrontation at the property in March 2006, appellees
began placing the payments in an escrow account. Appellees claim to have suffered damage
due to appellant’s malicious prosecution of civil proceedings against them and claim that
appellant is guilty of abuse of process because of his either having obtained a fraudulent
foreclosure decree or initiating a baseless foreclosure action.
Appellant answered the counterclaim and filed a motion to dismiss.
Appellees
responded with a first amended and substituted counterclaim filed December 21, 2006, which
explains that appellant filed suit in Jacksonville Municipal Court in January 1993 against
appellees for failure to show proof of payments on their mortgage. That suit was dismissed
with prejudice on April 28, 1993, for lack of prosecution. On October 22, 1993, appellant
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assigned his interest in the mortgage and note to Margaret Landis. Landis then assigned all of
her interest to Investor’s Finance Company. Another foreclosure action was filed on February
25, 1999, alleging a principal balance due of $24,222.98. That action was dismissed on May
31, 2000, for lack of prosecution.
On March 10, 2006, appellant initiated a statutory
foreclosure against appellees in spite of the fact that appellant had assigned his right, title and
interest on October 22, 1993, and was not entitled to utilize statutory foreclosure procedures.
Appellees never received any notice of such a proceeding, learning of it through third parties
who had seen the statutory foreclosure notice run in the Daily Record. Appellees also claimed
appellant misrepresented his continued ownership of the note and mortgage and deliberately
and intentionally induced them to make payments to him, when he no longer had an interest
in the property. Appellees sought damages for this alleged fraud.
Appellees filed a motion for summary judgment on March 27, 2007, alleging that they
were entitled to dismissal of the foreclosure complaint and $27,675, which was the amount
appellant admitted to having collected from appellees since 1993, when he in fact assigned his
right, title, and interest in the note and mortgage to Margaret Landis. Appellant responded that
he entered into a “straw person” transaction wherein he conveyed to Margaret Landis all of
his right, title, and interest in and to the promissory note and deed of trust, who then
immediately conveyed it back to Investors Finance Company. The assignment was recorded
on December 22, 1997. Appellant argued that this assignment was in effect a conveyance back
to him because Investors Finance Company was an unincorporated trade style used by him for
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a time in the late 1990s. He claims that, therefore, no fraud was practiced against appellees.
The trial court granted appellees’ motion to dismiss appellant’s complaint and denied
their motion for damages. An order was filed to this effect on May 14, 2007. Appellant then
obtained a correction assignment from Margaret Landis, and on May 25, 2007, a counterclaim
was filed by appellant which mirrored his complaint for foreclosure. Appellees filed a motion
to dismiss the counterclaim, arguing that it was inappropriate and not provided for by the
Arkansas Rules of Civil Procedure. Because the counterclaim was filed within twenty days
from the trial date, the trial court ruled that its filing was untimely and dismissed it. The trial
court granted judgment to appellees on their counterclaim for abuse of process in the amount
of $2,500, but denied their claims for fraud, conversion, and malicious prosecution. This
appeal timely followed.
Summary Judgment
Summary judgment is to be granted by a circuit court only when it is clear that there
are no genuine issues of material fact to be litigated, and the party is entitled to judgment as
a matter of law. Bennett v. Spaight, 372 Ark. 446, ___ S.W.3d ___ (2008). Once the moving
party has established a prima facie entitlement to summary judgment, the opposing party must
meet proof with proof and demonstrate the existence of a material issue of fact. See id. On
appellate review, we determine if summary judgment was appropriate based on whether the
evidentiary items presented by the moving party in support of the motion leave a material fact
unanswered. See id. We view the evidence in a light most favorable to the party against whom
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the motion was filed, resolving all doubts and inferences against the moving party. See id. Our
review focuses not only on the pleadings, but also on the affidavits and other documents filed
by the parties. See id.
Whether the trial court erred in granting appellees’ motion for summary judgment,
dismissing appellant’s complaint, is the first issue before this court. Appellant contends that he
entered into a “straw person” transaction wherein he conveyed his interest in and to the
promissory note and mortgage at issue to his sister, Margaret Landis, and that she immediately
reconveyed her interest to Investors Finance Company. This assignment was recorded on
December 22, 1997.
Appellant claims that he used Investors Finance Company as an
unincorporated trade style, and that he is and always has been the equitable owner of the note
and mortgage. He argues that in dismissing his original complaint, the trial court failed to
conclude that he was at all times the equitable owner of the promissory note and mortgage.
In support of this proposition, appellant cites Wood v. Donohue, 736 N.E.2d 556 (Ohio
Ct. App. 1999), which discusses the doctrine of equitable conversion as related to land title,
and Cottrell v. Smith, 112 So. 465 (Miss. 1927), which acknowledges legal title may be held by
one and equitable title by another. Appellant herein claims that he is the equitable owner of
the promissory note and mortgage and as the real party in interest, he brought the suit in his
own name. He argues that an incomplete or faulty conveyance by Margaret Landis to
Investors Finance Company was not sufficient to deprive him of his equitable interest and the
right to bring the suit in his own name.
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The Mississippi and Ohio cases cited by appellant do not support his contention. The
Cottrell court held that Cottrell, who obtained legal title to the note sued upon by paying one
dollar to the Mary Mac Plantation Company, the real owner in interest, must account to the
plantation company for the money collected by him at the end of the suit and holds the note
subject to all appellee’s defenses thereto against the real owner. The Wood court dealt with the
doctrine of equitable conversion and held that any loss in the property’s value due to an
accidental occurrence fell on the buyer as owner of the equitable title.
Here, appellant’s argument ignores that the conveyance to Margaret Landis would
remain in place when her later conveyance to Investors Finance Company proved faulty. The
trial court determined that appellees were entitled to summary judgment on this issue,
dismissing appellant’s complaint for foreclosure. Reviewing the evidence in the light most
favorable to the nonmoving party, and finding no material fact unanswered, we affirm the trial
court’s award of summary judgment.
Abuse of Process
In order to prove the tort of abuse of process, appellant had to establish the following
elements: (1) a legal procedure set in motion in proper form, even with probable cause and
ultimate success; (2) the procedure is perverted to accomplish an ulterior purpose for which
it was not designed; and (3) a willful act is perpetrated in the use of process which is not proper
in the regular conduct of the proceeding. S. Ark. Petrol. Co. v. Schiesser, 343 Ark. 492, 36
S.W.3d 317 (2001). This court has stated that the test of abuse of process is whether a judicial
process is used to extort or coerce. Routh Wrecker Serv., Inc. v. Washington, 335 Ark. 232, 980
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S.W.2d 240 (1998). The key to the tort is the improper use of process after its issuance in
order to accomplish a purpose for which the process was not designed. Id.; see also Harmon v.
Carco Carriage Corp., 320 Ark. 322, 895 S.W.2d 938 (1995); Cordes v. Outdoor Living Ctr, Inc.,
301 Ark. 26, 781 S.W.2d 31 (1989). Thus, it is the purpose for which the process is used,
once issued, that is important in reaching a conclusion. Routh Wrecker, supra.
Pursuant to this appeal, we must determine whether the trial court erred in granting
appellees’ prayer for damages for abuse of process. Appellant argues that there is a dearth of
proof on the elements for abuse of process. Appellant admits to hiring an attorney to foreclose
on the note and mortgage in 2006, and the attorney mistakenly utilized the statutory
foreclosure procedure, which was unavailable to him. Appellant argues that even though the
statutory foreclosure was a mistake, he was the successful bidder at the public sale and
proceeded as the owner of the property as advised by his counsel. He claims that this was
defective procedure as a result of error, and not the use of a lawful procedure to accomplish
an ulterior motive.
Again, this argument ignores the evidence presented at trial regarding appellant’s failure
to accept payments tendered, his failure to notify appellees when he moved, and his failure to
notify appellees when he assigned his interest in the property to Margaret Landis. Appellant
tried at least two times to foreclose on the property, each time having his case dismissed for
failure to prosecute. The trial judge did not err in determining appellant used the judicial
process in a coercive manner.
Arkansas Rules of Civil Procedure 13 and 15
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Finally, appellant claims that the trial court erred in dismissing his counterclaim for
foreclosure of the note and mortgage. He argues that, assuming the trial court was correct in
ruling he did not have an interest in the note and mortgage at the commencement of the
lawsuit to recover under his complaint, he obtained an interest during the prosecution of the
action by the reconveyance of the property by Margaret Landis to appellant. Appellant
contends that under Arkansas Rule of Civil Procedure 13(d), a claim that was acquired after
filing shall be presented as a counterclaim. Further, he maintains that under Rule 15(a), the
trial court may strike the amended pleading, or grant a continuance. Appellant also argues that
under Rule 15(d), the trial court should have made a determination as to whether appellee
would have been prejudiced because of the filing of a supplemental pleading. He claims the
trial court failed to make such a finding, nor did the trial court determine that the cause would
be unduly delayed. See Ark. R. Civ. P. 15(d); Toney v. Haskins, 271 Ark. 190, 608 S.W.2d
28 (1980).
Appellant’s arguments regarding Rules 13 and 15 were not presented to the trial court
pursuant to appellant’s abstract filed in this appeal. These arguments may be summarily
disposed of, as they were not preserved below. This court has consistently refused to hear
arguments raised for the first time on appeal. See, e.g., Elser v. State, 353 Ark. 143, 114 S.W.3d
168 (2003); Mayes v. State, 351 Ark. 26, 89 S.W.3d 926 (2002); Rodgers v. State, 348 Ark. 106,
71 S.W.3d 579 (2002).
Affirmed.
P ITTMAN, C.J., and G RIFFEN, J., agree.
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