Dunn v. Womack
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Cite as 2011 Ark. App. 393
ARKANSAS COURT OF APPEALS
DIVISION II
No. CA 11-1
JACKY F. DUNN, D.O., and BIOMED
PERSONAL METABOLIC AND
NUTRITIONAL TESTING, INC.
APPELLANTS
Opinion Delivered
May 25, 2011
APPEAL FROM THE POPE COUNTY
CIRCUIT COURT
[NO. CIV-2008-144]
V.
HONORABLE WILLIAM M.
PEARSON, JUDGE
SID WOMACK
APPELLEE
AFFIRMED
WAYMOND M. BROWN, Judge
This is an appeal from an order making Jacky F. Dunn, D.O., personally responsible
for a debt belonging to Biomed Personal Metabolic and Nutritional Testing, Inc. (“Biomed”)
and owed to Sid Womack. Dunn raises four points on appeal. First, he argues that there was
not a document produced to satisfy the Statute of Frauds as to him personally. Second, he
contends that there was no evidence to show that Biomed failed to make payments according
to the terms of the agreement between it and Womack. Third, he asserts that there was no
statutory basis for awarding costs and attorney’s fees. Finally, he alleges that the trial court
abused its discretion in denying his request for a jury trial. There was clear and convincing
evidence sufficient to enforce the agreement against Dunn personally, regardless of whether
he signed the agreement in his personal capacity. Also, Dunn’s admission that Biomed filed
for bankruptcy before payments were due under the agreement eliminated the need for
Cite as 2011 Ark. App. 393
Womack to prove there was a default. Finally, the circuit court did not abuse its discretion
in not holding a jury trial or in awarding attorney’s fees. We affirm.
Background
Womack filed a breach-of-contract complaint against Biomed and Dunn in March
2008. According to the complaint, Womack provided consulting services for which he had
not been paid. In May 2009, the parties entered into an agreement in an effort to settle the
case:
1.
The Defendant, Biomed Personal Metabolic and Nutritional Testing, Inc.
(Biomed) shall pay to Sid Womack $46,200.00 for services performed by Sid
Womack as follows:
(A.) Interest only on said amount at 5% per annum due May 15, 2010.
(B.) Thereafter principle [sic] and interest paid monthly on principle [sic]
sum of $46,200.00 at 5% for 60 months.
(C.) Payments shall be paid to Gordon, Caruth & Virden, PLC.
2.
The debt shall be paid by Biomed as set out above. If Biomed shall default in
any payment as scheduled, the debt will become a joint and several and
personal debt of Defendant, Jacky Dunn as well, and that debt shall be a
liquidated debt and reduced to a judgment for the full amount of principle [sic]
and interest outstanding.
....
6.
Payments are to be made pursuant to this agreement and no judgment will be
entered. If default or nonpayment occurs the Plaintiff will be entitled to entry
of a judgment as per paragraph 2 in this case or a subsequent filing as may be
required by the Court.
It is agreed the 11th day of May, 2009.
_/s/ Sid Womack____________
Sid Womack, Plaintiff
_/s/ Jacky F. Dunn, President CEO_____
Jacky F. Dunn, Defendant
Biomed
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Cite as 2011 Ark. App. 393
_/s/ Bart Virden____________
Bart F. Virden, Attorney for Plaintiff
_/s/ Josh Sanford_________________
Josh Sanford, Attorney for Defendant
(Dunn signed his name on a separate copy of the agreement; the fact that he did so is of no
consequence for the purposes of this appeal.)
In June 2010, Womack filed a petition for judgment and enforcement, alleging failure
to pay under the agreement and requesting judgment against Dunn personally. Attached to
the petition was an affidavit from counsel, stating that his office had not received any
payments under the agreement. The motion also alleged that Biomed had filed for Chapter
7 bankruptcy.
Dunn filed a motion to dismiss Womack’s petition, arguing that Womack failed to
allege facts that would allow for relief. In response, Womack filed a motion to strike Dunn’s
motion and for sanctions. Attached to this motion was a transcript entitled “Oral Agreement.”
The transcript was a colloquy between the attorneys for Womack and Dunn, where the
parties outlined the terms of the agreement. Dunn’s attorney stated during the conversation,
“Dr. Dunn is going to be personally liable in the event of a default.” The attorneys also agreed
that default would mean nonpayment for more than thirty days, insolvency, or bankruptcy.
Dunn later filed an answer to Womack’s original petition, where he admitted that Biomed
had filed for Chapter 7 bankruptcy. He denied personal liability on Biomed’s debt to
Womack and raised the Statute of Frauds as a defense.
The court held a hearing on Womack’s petitions in September 2010. During that
hearing, the court denied Dunn’s request for a jury trial and found that Dunn was personally
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liable for Biomed’s debt to Womack. On October 13, 2010, the court entered a judgment
in favor of Womack against Dunn personally for $46,200 plus interest, along with $1500 in
attorney’s fees and $150 in costs. This appeal followed.
Standard of Review
In discussing the standard of review, Dunn states that he is unsure whether the order
being appealed from was on a motion for summary judgment or from a bench trial. He
discusses both standards. Ultimately, this circuit court enforced an agreement between the
parties made in an effort to enforce a settlement. Inasmuch as the court decided the matter
without a trial, we view its decision to be in the nature of a summary judgment. Womack was
entitled to summary judgment only if the pleadings, depositions, answers to interrogatories,
responses to requests for admission, and affidavits show that there was no genuine issue of
material fact to be litigated and that it was entitled to judgment as a matter of law.1 On
appellate review, this court must determine if summary judgment was proper based on
whether the evidence presented by the moving party left a material question of fact
unanswered, viewing the proof in a light most favorable to the party resisting the motion and
resolving any doubts and inferences against the moving party, to determine whether the
evidence presented left a material question of fact unanswered.2
1
See Windsong Enters., Inc. v. Upton, 366 Ark. 23, 233 S.W.3d 145 (2006).
2
Id.
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Cite as 2011 Ark. App. 393
Statute of Frauds
First, Dunn argues that the Statute of Frauds was not satisfied as to him personally. He
contends that he signed the agreement at issue here in his capacity as a representative of
Biomed. Thus, he argues, he could not be held personally liable for Biomed’s debt. We
disagree. Instead, we hold that there was clear and convincing evidence of Dunn’s agreement
to be responsible for the debt, thereby negating the need for him to sign the agreement in his
personal capacity.
The purpose of the Statute of Frauds is to prevent actions based on false claims, not to
prevent enforcement of otherwise legitimate transactions.3 Contracts that violate the Statute
of Frauds are unenforceable.4 A promise to answer for the debt, default, or miscarriage of
another ordinarily falls within the Statute of Frauds.5 Nonetheless, such an agreement can be
taken out of the Statute of Frauds if the making of the oral contract and its performance are
proven by clear and convincing evidence.6 A court may uphold an oral agreement that would
otherwise fall within the Statute of Frauds “to accomplish the purposes of the statute of frauds,
3
Hrezo v. City of Lawrenceberg, 934 N.E.2d 1221 (Ind. App. 2010); MEMC Elec.
Materials, Inc. v. BP Solar Int’l, Inc., 196 Md. App. 318, 9 A.3d 508 (2010); Brown Dev. Corp.
v. Hemond, 2008 ME 146, 956 A.2d 104.
4
Betnar v. Rose, 259 Ark. 820, 536 S.W.2d 719 (1976).
5
Arkansas Code Annotated § 4-59-101(a)(2) (Repl. 2001).
6
Dolphin v. Wilson, 328 Ark. 1, 942 S.W.2d 815 (1997), appeal after remand, 335 Ark.
113, 983 S.W.2d 113 (1998); Pfeifer v. Raper, 253 Ark. 438, 486 S.W.2d 524 (1972); Cobb v.
Leyendecker, 89 Ark. App. 167, 200 S.W.2d 924 (2005).
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e.g. to evade deceit and to uphold what justice and good conscience demand.” 7
The requisite evidence to enforce the agreement between the parties is present here.
When the attorneys for the parties were negotiating the terms of the agreement, Dunn’s
attorney explicitly stated that Dunn would be personally liable in the event Biomed defaulted
on the agreement. A client is bound by the actions of his attorney upon matters concerning
which the attorney is employed or held out to be the spokesman of the client. 8 Therefore,
Dunn’s attorney’s actions bound Dunn to the agreement, which included personal liability
in the event the corporation defaulted on the debt.
This agreement would otherwise fall within the Statute of Frauds. But the transcript
of the agreement negotiation leaves no question as to Dunn’s liability. The agreement can be
enforced against Dunn personally. Therefore, we affirm on this point.
Proof of Default
Second, Dunn argues that the circuit court erred in holding him personally liable
because there was insufficient evidence that Biomed failed to make payments according to the
terms of the agreement. He argues that the affidavit from Womack’s attorney, stating that his
firm had not received any payments from Dunn, was insufficient to establish nonpayment.
In his motion to strike Dunn’s motion to dismiss, Womack alleged that Biomed had
filed for Chapter 7 bankruptcy. Dunn admitted this fact in his response. Therefore, there was
7
Brockman v. Sweetwater County Sch. Dist. No. 1, 826 F. Supp. 1328, 1333 (D. Wyo.
1993) aff’d, 25 F.3d 1055 (10th Cir. 1994);
8
Barnes v. Barnes, 311 Ark. 287, 843 S.W.2d 835 (1992).
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no question that Biomed had filed for bankruptcy. While the term “default” is not defined
in the agreement, the parties stated during their negotiation that default would include
Biomed being declared insolvent or going bankrupt. Therefore, the issue of whether default
had occurred was settled in the parties’ pleadings before the court.
Further, Dunn asserts that Womack’s attorney’s affidavit is not competent evidence
because there is no affirmative showing that Womack’s counsel had personal knowledge of
payments received by Womack.9 But the agreement required all payments to be made to
counsel’s firm, not directly to Womack himself. Therefore, there would be no need for
counsel to account for payments made to Womack.
The admissions in the pleadings and Womack’s uncontroverted affidavit constituted
proof of default sufficient to justify making Dunn personally responsible for the debt under
the terms of the agreement. We affirm on this point.
Attorney’s Fees
Next, Dunn argues that there was no basis for any award of attorney’s fees. In addition
to asserting that there was no basis for a personal award against him (an argument that we have
already addressed), he contends that there was no basis for the award, that Womack failed to
comply with the procedural requirements for the award, and that the award was inequitable.
Again, we disagree.
9
See Organized Sec. Life Ins. Co. v. Munyon, 247 Ark. 449, 456, 446 S.W.2d 233, 237
(1969) (“It must be affirmatively shown, or appear from statements contained in any affidavit
supporting or opposing a summary judgment, that it is based upon personal knowledge of the
affiant, that the facts stated therein would be admissible in evidence and that the affiant is a
witness competent to state these facts in evidence.”).
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Attorney-fee awards are reviewed under the abuse-of-discretion standard.10 In
Arkansas, a court cannot award attorney fees unless they are expressly provided for by statute
or rule.11 But Arkansas Code Annotated section 16-22-308 (Repl. 1999), which allows for
attorney’s fees in breach-of-contract cases, clearly applies here. Both the underlying action and
the agreement were attempts to settle a debt owed to Womack. Dunn fought the lawsuit both
in his capacity as president and CEO of Biomed and in his individual capacity. Therefore, the
circuit court had statutory authority for the award.
Dunn complains that Womack did not submit an affidavit to support his motion for
attorney’s fees, but this was unnecessary. In the motion for attorney’s fees, Womack’s attorney
stated that he did not keep time records because he took this case on a contingency-fee
arrangement, but he opined that he spent at least thirty hours working on the case and that
his customary hourly rate was $200 per hour. Under Arkansas Rule of Civil Procedure
54(e)(2), a motion for attorney’s fees must specify the judgment and statute or rule entitling
the moving party to the award and must state the amount or provide a fair estimate of the
amount sought. The rule does not require an affidavit.
Finally, we have no objection to the amount ultimately awarded. There is no fixed
formula in determining the computation of attorney’s fees, but the courts should be guided
by recognized factors in making their decision, including the experience and ability of the
10
See, e.g., Southern Bank of Commerce v. Union Planters Nat’l Bank, 375 Ark. 141, 289
S.W.3d 414 (2008).
11
Friends of Children, Inc. v. Marcus, 46 Ark. App. 57, 876 S.W.2d 603 (1994).
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attorney, the time and labor required to perform the legal service properly, the amount
involved in the case and the results obtained, the novelty and difficulty of the issues involved,
the fee customarily charged in the locality for similar legal services, whether the fee is fixed
or contingent, the time limitations imposed upon the client or by the circumstances, and the
likelihood, if apparent to the client, that the acceptance of the particular employment will
preclude other employment by the lawyer. 12 And due to the circuit judge’s intimate
acquaintance with the record and the quality of service rendered, we usually recognize the
superior perspective of the circuit judge in assessing the applicable factors.13 In fact, it is not
even necessary that the circuit court hold a hearing on the amount of attorney’s fees, because,
having presided over the proceeding, it is familiar with the services rendered by the attorney.14
Here, Womack’s attorney asked for $6000 in fees; he was awarded $1500. Counsel’s
duties, at a minimum, included filing motions and briefs in support, preparing for hearings
before the court, and negotiating the agreement between Womack and Dunn. Under these
facts, we cannot say that the circuit court abused its discretion in its award of attorney’s fees.
We affirm on this point.
Right to a Jury Trial
Finally, Dunn argues that the circuit court abused its discretion in denying his request
for a jury trial. He asserts that he complied with the procedural requirements for making a
12
Chrisco v. Sun Indus., Inc., 304 Ark. 227, 800 S.W.2d 717 (1990).
13
Id.
14
Curry v. Thornsberry, 81 Ark. App. 112, 98 S.W.3d 477 (2003).
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jury-trial demand and that he presented questions of fact regarding the capacity in which he
signed the agreement and whether Biomed or he breached the agreement.
Although Dunn argues that there was an abuse of discretion,15 we see the issue as
whether there were any genuine issues of material fact that a jury could have decided. While
many of the issues raised by Dunn are ordinarily questions of fact, there was no jury question
raised here. Dunn contends that there was a question about whether he signed the agreement
in his personal or corporate capacity, but because Dunn’s attorney’s actions bound Dunn to
the agreement, how he signed the agreement was a non-issue. And he asserts that there was
a genuine issue regarding whether there was a breach of the agreement, but by conceding that
Biomed filed for Chapter 7 bankruptcy, he eliminated any issue as to whether Biomed
defaulted on the agreement, thereby making Dunn personally liable on the debt and entitling
Womack to a judgment in the amount of the debt. Because there was no question of fact to
be presented to the jury, we affirm on this point as well.
Conclusion
Most of Dunn’s argument is premised on his arguments that he did not sign the
agreement in question in his personal capacity and that Womack presented no evidence of
default. But Dunn’s attorney’s actions bound Dunn to the agreement, and his admission that
his company filed bankruptcy was sufficient to establish default. This justified the judgment
15
See Duncan v. McGaugh, 19 Ark. App. 276, 719 S.W.2d 710 (1986) (reviewing the
denial of a request for a jury trial under the abuse-of-discretion standard).
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against him personally, the attorney-fee award to Womack, and the denial of his request for
a jury trial.
Affirmed.
R OBBINS and M ARTIN, JJ., agree.
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