Jane Bevans v. Deutsche Bank National Trust Company
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SUPREME COURT OF ARKANSAS
No.
JANE BEVANS,
07-340
Opinion Delivered
APPELLANT,
VS.
DEUTSCHE BANK NATIONAL TRUST
COMPANY,
APPELLEE,
April 3, 2008
APPEAL FROM THE PULASKI
COUNTY CIRCUIT COURT,
NO. CV 05-0710,
HON. TIMOTHY DAVIS FOX, JUDGE,
DISMISSED.
ANNABELLE CLINTON IMBER, Associate Justice
The Arkansas Court of Appeals certified the instant case to this court on a
jurisdictional question: whether the circuit court’s order was final and appealable under our
rules of civil procedure, when the appellant/defendant Jane Bevans nonsuited all of her
compulsory counterclaims against the appellee/plaintiff Deutsche Bank, and the circuit court’s
subsequent order only addressed Deutsche Bank’s claims against Bevans. We conclude that
in such circumstances the circuit court’s order is not a final, appealable order, and we dismiss
Bevans’s appeal.
Pursuant to Arkansas Rule of Appellate Procedure–Civil 2(a)(1), a party may appeal
from a final judgment or final decree of the circuit court. Ark. R. App. P. 2(a)(1) (2007).
Absent a certificate from the circuit court directing that the judgment is final, “any judgment,
order, or other form of decision, however designated, which adjudicates fewer than all the
claims or rights and liabilities of fewer than all the parties shall not terminate the action as to
any of the claims or parties.” Ark. R. Civ. P. 54(b)(2) (2007). Finality of an order appealed
from is a jurisdictional issue, and, therefore, it is a matter this court will consider even when
the parties do not raise it. See Advanced Envtl. Recycling Tech., Inc. v. Advanced Control
Solutions, Inc., ___ Ark. ___, ___ S.W.3d ___ (Feb. 7, 2008).
Bevans executed a mortgage on her residence in favor of Argent Mortgage Company,
LLC, along with an adjustable rate promissory note. Believing that the mortgage company
had defrauded her by issuing a promissory note with a high-interest rate, Bevans sought advice
from D. Scott Heinman and Kurt F. Johnson of the Dorean Group. Based upon the advice
she received from them, Bevans stopped making payments on her note and executed a
quitclaim deed that transferred title ownership in her residence to Heineman and Johnson.
On January 19, 2005, Deutsche Bank filed a complaint in foreclosure against Bevans,
Heineman, and Johnson, alleging that Bevans was in default on the loan. The complaint
stated that Deutsche Bank served as trustee of Argent Securities, Inc., and was the current
holder of the note and mortgage on Bevans’s residence. Bevans filed several compulsory
counterclaims against Deutsche Bank, asserting breach of contract, wrongful foreclosure,
violations of the Federal Truth-In-Lending Act, violations of the Real Estate Settlement
Procedures Act, violations of the Unfair and Deceptive Trade Practices Act, common-law
fraud, and Yield-Spread-Premium fraud.
Bevans’s pleadings also included a claim of
common-law fraud against Heineman and Johnson. She eventually filed a motion for default
judgment against Heineman and Johnson. Deutsche Bank also filed a motion for summary
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judgment against the two men.
On October, 25, 2006, Bevans filed a motion for non-suit of her counterclaims, asking
that the circuit court dismiss the claims without prejudice. At a hearing the next day, the
circuit court judge orally granted Bevans’s motion for a nonsuit of her claims against Deutsche
Bank. The court then granted both Bevans’s motion for default judgment and Deutsche
Bank’s motion for summary judgment against Heineman and Johnson, and the court agreed
to restore title to the property back into Bevans’s name.
Following a trial on Deutsche Bank’s claims, the circuit court entered an order and
decree of foreclosure on December 12, 2006. The order includes the following reference to
the nonsuit in a section labeled “Background”: “On October 25, 2006, Bevans dismissed her
counterclaim.” Otherwise, the order fails to address the nonsuit motion.
Pursuant to Rule 41(a)(1) of the Arkansas Rules of Civil Procedure, a claim may be
dismissed without prejudice to a future action by the plaintiff before final submission of the
case to the jury; however, “it is effective only upon entry of a court order dismissing the
action.” Ark. R. Civ. P. 41(a)(1) (2007). The provisions of Rule 41 also apply to the
dismissal of any counterclaim, cross-claim, or third-party claim. Ark. R. Civ. P. 41(c) (2007).
Here, the circuit court made an oral ruling from the bench, and the “Background” section
of the order recites that “Bevans dismissed her counterclaim.” The written order does not
reflect the court’s disposition of the counterclaims. Rule 41(a) clearly states that the dismissal
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of any claim is not effective until entry of an order dismissing the claim.1 Thus, in the absence
of a written order dismissing Bevans’s counterclaims, the circuit court’s foreclosure order is
not final and appealable.
In any event, even if a written order dismissing Bevans’s counterclaims had been
issued, the circuit court’s foreclosure order in this case would not have been final. As stated
above, an order or judgment is not considered final and appealable unless it disposes of all the
parties and all the claims. See Ark. R. Civ. P. 54 (2007). Our court has never decided a case
with the exact issue presented here. We have, however, decided cases that are particularly
instructive when examining the issue of finality, as well as the related issue of res judicata. In
Haile v. Arkansas Power & Light Co., 322 Ark. 29, 907 S.W.2d 122 (1995), this court held that
a plaintiff may not take a voluntary nonsuit as to some of its claims and then appeal from the
circuit court’s order disposing of the plaintiff’s other claims because a voluntary nonsuit
without prejudice leaves the plaintiff free to refile the claim; therefore, the order is not
considered final. Id. See also Ratzliff v. Franz Foods of Ark., 255 Ark. 373, 500 S.W.2d 279
(1973) (decided prior to the adoption of our rules of civil procedure). We have also held that
when all claims against one defendant are nonsuited so that the defendant is effectively
dismissed from the suit, the circuit court’s order against a second defendant is a final,
appealable order because a plaintiff is not required to sue prospective defendants
simultaneously. Advanced Envtl. Recycling Tech., Inc. v. Advanced Control Solutions, Inc., supra;
Pursuant to Admin. Order No. 2 (b)(2), a judgment, decree, or order is “entered” when
stamped or otherwise marked by the clerk with the date, time, and the word “filed.”
1
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Driggers v. Locke, 323 Ark. 63, 913 S.W.2d 269 (1996).
In Lemon v. Laws, 305 Ark. 143, 806 S.W.2d 1 (1991), the court was asked to decide
whether a plaintiff was barred by the doctrine of res judicata from refiling the plaintiff’s
previously nonsuited claims. Id. We held that a plaintiff has an absolute right to take a
voluntary nonsuit under Rule 41(a) before the final submission of the case for trial. Id. We
pointed out that the first nonsuit and dismissal is without prejudice, thereby leaving the
plaintiff free to refile his or her claim. Id. In Lemon, the plaintiff nonsuited his claim and the
court proceeded to enter an order in favor of the defendant on his counterclaim, but when
the plaintiff attempted to refile his claim, the defendant asserted that the claim was barred by
res judicata. Id. We determined that to apply the doctrine of res judicata to the plaintiff’s
nonsuited claim would be changing the absolute right under Rule 41(a) to a qualified right.
Id. Accordingly, the court held that res judicata did not apply. Id.
In Linn v. Nationsbank, 341 Ark. 57, 14 S.W.3d 500 (2000), this court decided the issue
of res judicata as to compulsory counterclaims that have been nonsuited. Id. In that case,
Nationsbank filed a complaint for foreclosure against the Linns’ bed-and-breakfast because the
Linns had defaulted on their construction loans. Id. The Linns then filed counterclaims for
breach of contract, fraudulent misrepresentation, and negligence arising from Nationsbank’s
refusal to honor an alleged oral agreement to provide permanent financing after construction
of the bed-and-breakfast was completed. Id. The Linns nonsuited their counterclaims, which
were dismissed without prejudice, and the court proceeded to enter a foreclosure decree in
favor of Nationsbank. Id. The Linns then attempted to file their original counterclaims and
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some additional claims in circuit court. Id. Nationsbank argued that the Linns’ claims were
compulsory counterclaims, pursuant to Ark. R. Civ. P. 13, and were barred by the doctrine
of res judicata and collateral estoppel. Id. The circuit court agreed and entered summary
judgment in favor of Nationsbank. Id. On appeal, the Linns argued that the circuit court
erred in dismissing their claims. Id.
In deciding the issue on appeal, our court analyzed the doctrine of res judicata, a
common law principle, in the context of compulsory counterclaims under Rule 13 and
voluntary nonsuits under Rule 41. Id. We explained that the purpose behind Rule 13 is to
require parties to present all existing claims simultaneously or be forever barred, thereby
preventing a multiplicity of suits arising from the same set of circumstances. Id. Yet, while
Rule 13 requires compulsory counterclaims to be brought, or else waived, it does not state
whether a compulsory claim must be litigated in order to prevent a bar. Id. This court then
reiterated a party’s absolute right to voluntarily dismiss his or her claims without prejudice and
to refile those claims within a year, pursuant to Rule 41. Id. (citing Lemon v. Laws, supra).
In light of the fact that the Linns filed their counterclaims in compliance with Rule 13 and
were also allowed to voluntarily dismiss those claims without prejudice, under Rule 41, we
concluded that the doctrine of res judicata did not bar the Linns from refiling their previous
counterclaims. Id.
Based upon our holding in Linn v. Nationsbank, supra—that a defendant who nonsuits
all of his or her compulsory counterclaims is not barred from bringing those claims against the
plaintiff again—it follows that an order or judgment providing for the nonsuit of those
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counterclaims while entering a judgment on the plaintiff’s claims is not a final, appealable
order under Rule 54(b) of the Arkansas Rules of Civil Procedure. Or, stated another way,
if a party is free to refile his or her compulsory counterclaims that arise out of the same
transaction or occurrence as claims that are decided by the circuit court, the possibility for
piecemeal appeals exists. The reason we were asked by the parties in Linn to address the res
judicata issue, and not the finality issue, was that the defendants did not attempt to appeal the
original foreclosure decree; instead, they refiled their previous counterclaims in circuit court.
The facts in Linn are strikingly similar to the facts in the instant appeal. Deutsche Bank
filed a foreclosure action against the defendant Bevans. Bevans then filed compulsory
counterclaims that all arose out of the financing arrangement, and after she voluntarily
nonsuited all of her counterclaims against Deutsche Bank, the bank’s claims were decided at
trial. Instead of refiling her counterclaims in circuit court, Bevans has appealed from the
judgment against her. Because her nonsuited claims were compulsory counterclaims, Bevans
would have been able to refile her claims. See Linn v. Nationsbank, supra; Lemon v. Laws, supra.
Therefore, the order she now appeals from is not a final, appealable order.
The instant case is distinguishable from our opinions in Advanced Envtl. Recycling Tech.,
Inc. v. Advanced Control Solutions, Inc., supra; and Driggers v. Locke, supra, in which we held that
an order was final when the plaintiff dismissed all of his or her claims against one defendant.
In those cases, the plaintiff dismissed claims against one of many defendants, and the defendant
was effectively dismissed from the case. In the instant case, the defendant nonsuited her
compulsory counterclaims against the plaintiff, but both parties remained in the case until the
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plaintiff’s claims were decided. For these reasons, we dismiss Bevans’s appeal without
prejudice.
Dismissed.
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