Bullock's Kentucky Fried Chicken Inc. v. City of Bryant Municipal Property Owners' Multipurpose Improvement District No. 84

2019 Ark. 249
CourtSupreme Court of Arkansas
DecidedSeptember 19, 2019
StatusPublished
Cited by3 cases

This text of 2019 Ark. 249 (Bullock's Kentucky Fried Chicken Inc. v. City of Bryant Municipal Property Owners' Multipurpose Improvement District No. 84) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bullock's Kentucky Fried Chicken Inc. v. City of Bryant Municipal Property Owners' Multipurpose Improvement District No. 84, 2019 Ark. 249 (Ark. 2019).

Opinion

Cite as 2019 Ark. 249 Digitally signed by Susan P. SUPREME COURT OF ARKANSAS Williams No. CV-17-761 Reason: I attest to the accuracy and integrity of this document Date: 2022.07.15 14:44:21 -05'00' Opinion Delivered: September 19, 2019

BULLOCK’S KENTUCKY FRIED CHICKEN, INC.; KAREN KING; AND APPEAL FROM THE SALINE ARKANSAS PULPWOOD COMPANY, COUNTY CIRCUIT COURT INC. [NO. 63CV-15-228] APPELLANTS

V. HONORABLE GARY ARNOLD, CITY OF BRYANT, ARKANSAS, JUDGE MUNICIPAL PROPERTY OWNERS’ MULTIPURPOSE IMPROVEMENT DISTRICT NO. 84; BANK OF THE OZARKS; AND TND DEVELOPERS, LLC APPELLEES AFFIRMED.

SHAWN A. WOMACK, Associate Justice

This case comes to this court from a decision of the Saline County Circuit Court entered

on April 28, 2017, and supplemented on May 23, 2017. The Appellants are Bullock’s Kentucky

Fried Chicken, Inc. (KFC); Karen Bullock (King); and Arkansas Pulpwood Company, Inc.

(APW). Appellees are the City of Bryant, Arkansas, Municipal Property Owners’ Multipurpose

Improvement District 84 (District 84); Bank of the Ozarks (Ozarks); and TND Developers,

LLC (TND). We affirm.

I. Facts

In 2007, TND began contracting to purchase lands comprising 195 acres in Saline

County and closed on most of these transactions in August 2007. Two of TND’s principals, Don Spears and Aaron Jones, were also attorneys with the law firm Spears & Jones, land

developers, and managed a title company that operated out of their law offices. Spears and Jones

were later appointed as initial commissioners of District 84. KFC and King both sold land to

TND and agreed to finance part of the purchase prices. TND purchased land from KFC and

Bullock Investment for $2,680,000––$1,300,000 paid at closing to Bullock Investment for a

tract of land south of Hilltop Road and a $1,380,000 promissory note was issued to KFC for a

tract north of Hilltop Road. The King sale was for $125,000 (paid by a $125,000 promissory

note delivered at closing) for her tract north of Hilltop Road. Under these two contracts, the

KFC and King promissory notes were secured by a first mortgage in the real property they sold

north of Hilltop Road. To obtain the necessary funds to finance these purchases, TND received

a loan for $3,748,452 from Centennial Bank and issued Centennial a promissory note secured

by a first mortgage on all 195 acres.

On August 27, 2007, the Centennial loan and the TND real estate purchases were closed

by Spears & Jones. The firm prepared the TND deeds, promissory notes, and mortgages. On

August 30, 2007, Spears & Jones recorded the Centennial mortgage first and then filed the KFC

and King mortgages shortly thereafter. Ultimately, APW paid off the Centennial mortgage and

was granted an assignment of all its interest. APW later foreclosed its mortgage against lands

owned by TND.

On October 30, 2007, TND filed a petition with the City of Bryant to form an

improvement district for the purpose of “constructing waterworks, sewers, recreational facilities,

and systems for gas pipelines, and . . . grading, draining, paving, curbing, and guttering streets

and laying sidewalks . . . .” The petition was subsequently approved, and District 84 was formed

on November 26, 2007.

2 Commissioners for the improvement district were appointed and they, in turn,

appointed Alan King as assessor for the district. Alan King appraised the benefits that would

result to tracts within the district and arrived at a total value of improvements of $7,366,668.

The assessment of benefits identified real property by lot and block number and an “Order of

Assessment” was issued on January 4, 2008, setting the improvement-district taxes at 6 percent

of the assessed benefits for each lot or parcel. The lots and parcels were eventually matched with

the county assessor records, and tract numbers were assigned to District 84 lands. At issue in

this appeal are tracts 840-11625-028 (tract 028), 840-11631-851 (tract 851), and 840-11811-

000 (tract 000).

To finance development and construction of the improvements, District 84 entered into

a bond indenture for the issuance of $6,110,000 in improvement-district bonds. In conjunction

with the bond issuance, District 84 and Ozarks, as trustee, entered into a “Pledge and Mortgage”

agreement in which District 84 pledged, mortgaged, assigned, transferred and set over to Ozarks

its interest in all special improvement-district taxes then existing or thereinafter levied, including

the proceeds from the special taxes levied by District 84.

In 2012, TND ceased payments of improvement-district taxes on the lots it still owned.

On March 30, 2015, District 84 filed its complaint to foreclose its improvement-district tax

liens for delinquent taxes, naming TND, KFC, King, and APW as party defendants. District 84

described the lands to be foreclosed as all of District 84, less and except certain lots previously

sold by TND. On February 29, 2016, APW filed a third-party complaint to bring in Ozarks,

seeking an order granting it the right to make a prepayment of the improvement-district taxes

under section 9.08 of the “Trust Indenture” agreement. On March 14, 2016, APW filed a

3 counterclaim against District 84 seeking an order compelling District 84 to allow prepayment

of the improvement-district taxes for tracts 028, 851, and parts of 000.

On April 28, 2017, the circuit court issued its decree and then a supplemental decree

was entered on May 23, 2017. The circuit court granted District 84’s request for foreclosure

and entered judgment against TND for the total of the unpaid improvement-district taxes, plus

penalties, interest, and attorney’s fees. It further ordered all TND lands within the district sold

with the proceeds applied against District 84’s judgment. The circuit court also ruled that there

was no right to prepay improvement taxes and have particular tracts released from the tax lien.

KFC and King were granted judgment against TND and Aaron Jones individually, for

$1,380,000 and $125,000, respectively, plus accrued interest and their mortgage liens were

ordered foreclosed. Because Jones recorded the KFC and King mortgages after the Centennial

mortgage, the circuit court found that Jones, individually and in his agency capacity for TND,

committed fraud against KFC and King. The circuit court, however, denied KFC’s and King’s

request to find that Jones committed fraud in his capacity as commissioner of District 84, to

impute his fraud to District 84, or to find that Jones’s fraud impacted the validity or priority of

District 84’s lien. The circuit court also denied KFC’s and King’s due-process and equal-

protection claims as well as their affirmative defenses of equitable subordination/estoppel or

subrogation.

II. Foreclosed Property

On appeal, Appellants APW, KFC, and King argue that District 84’s lien for

nonpayment of improvement taxes can only attach to individual tracts upon which taxes were

actually delinquent and unpaid. Specifically, Appellants argue the land north of Hilltop Road is

4 not “real property” under the definition of the governing statute, and therefore an in rem

judgment cannot be attached to those tracts.

This court reviews issues of statutory construction under a de novo standard. Ligon v.

Stewart, 369 Ark. 380, 386, 255 S.W.3d 435, 439 (2007). The basic rule of statutory

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