DWB, LLC v. D & T Pure Trust

550 S.W.3d 420
CourtCourt of Appeals of Arkansas
DecidedMay 2, 2018
DocketNo. CV–16–1131
StatusPublished
Cited by9 cases

This text of 550 S.W.3d 420 (DWB, LLC v. D & T Pure Trust) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DWB, LLC v. D & T Pure Trust, 550 S.W.3d 420 (Ark. Ct. App. 2018).

Opinion

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LARRY D. VAUGHT, Judge *424This appeal involves a business dispute arising out of the sale of Mayflower RV. Appellants DWB, LLC (DWB), and Danny Brown appeal from a judgment in favor of appellees D & T Pure Trust (D & T) and Toni Boydston, individually and as personal representative of her deceased husband Doug Boydston's estate. We affirm in part and reverse in part.

A critical component of this case is the insurance coverage required by the parties' lease, which required Brown and DWB to maintain insurance coverage in the amount of the replacement value of any improvements erected on the property. Replacement-value insurance covers the cost of replacing a structure, whereas actual-cash-value insurance takes depreciation into consideration and essentially covers only market value of the structure.

In April 2014, a tornado struck the Mayflower property, causing substantial damage. This triggered a dispute between the parties, and Brown and DWB sued Doug Boydston and D & T to seek a declaratory judgment on the parties' rights and responsibilities on several issues. D & T and Doug Boydston responded to DWB and Brown's complaint and counterclaimed. For appellate purposes, the claims presented to the court that are most pertinent are D & T and Doug Boydston's breach-of-contract claim for underinsurance of the Mayflower property and their two claims for conversion of certain insurance proceeds.

Shortly after the declaratory-judgment action was filed, the insurance company tendered a $450,000 check representing full policy limits to DWB for tornado damage incurred on the Mayflower property. Brown endorsed the check and tendered it to D & T and Doug Boydston with an accord-and-satisfaction letter providing that he considered the check to be payment in full for any damage that occurred from the tornado. D & T and Doug Boydston refused to accept the $450,000 as accord and satisfaction of their claims against DWB and Brown. Thereafter, they filed a motion to disburse the $450,000 free and clear of any accord-and-satisfaction claim or, alternatively, for this money to be *425placed into the circuit court's registry pending further orders of the court.

The insurance company also tendered a $10,000 check to DWB for cleanup of debris stemming from the tornado. DWB and Brown were not specifically required to maintain insurance for debris cleanup, but the lease did require them to maintain "fire, hazard and extended coverage insurance" on the improvements to the property. The evidence demonstrates that Brown and DWB never offered the $10,000 insurance proceeds to Doug Boydston and D & T. Brown and DWB argued that because the debris-removal policy was not required under the lease, Doug Boydston and D & T were not entitled to the money.

In September 2014, the circuit court held a hearing on the motion to disburse the $450,000 or, alternatively, for the money to be placed into the registry. At the conclusion of the hearing, the circuit court gave D & T and Doug Boydston three options, they could (1) return the check to Brown and DWB, (2) accept the check as an accord and satisfaction, or (3) ask that the funds be deposited into the court's registry. They chose to have the money deposited into the registry of the court, and an order was entered authorizing the deposit. Even though no evidence was received at the hearing, the order included a finding that Brown and DWB had tendered the check to D & T and Doug Boydston in good faith-a requirement for accord and satisfaction.

Later in September 2014, Doug Boydston died while cleaning debris at the Mayflower property. Toni Boydston, his widow and personal representative, was substituted for him as a party in this case; she also intervened in her individual capacity.

In November 2014, First Service Bank (FSB), the mortgagee on the Mayflower property, filed a motion to intervene, which the circuit court granted. FSB sought to withdraw from the registry of the court the amount it was owed under the mortgage. FSB ultimately prevailed and was allowed to withdraw approximately $185,000 from the registry of the court to satisfy its mortgage.

A four-day trial on the merits was held in February 2016. In July 2016, the circuit court entered detailed findings of fact and conclusions of law and a judgment. The findings most pertinent to this appeal are that appellants Brown and DWB underinsured the Mayflower property; converted the $450,000 and $10,000 insurance checks and were liable for $230,000 in punitive damages for conversion; and were required to pay prejudgment interest for the claims arising out of the converted checks and the underinsured property. The order also allowed appellees D & T and Toni Boydston, individually and as personal representative of Doug Boydston's estate, to submit a request for attorney's fees, and in November 2016, the circuit court entered an order awarding appellees $200,000 in attorney's fees.1 This timely appeal followed.

Appellants make six arguments in support of reversal. They contend that (1) appellees waived their right to enforce against any alleged underinsurance of the Mayflower property; (2) they did not commit conversion of the $450,000 and $10,000 insurance checks; (3) assuming they committed conversion, punitive damages were not appropriate; (4) the attorney's-fee award should be reversed or reduced; (5) the award of prejudgment interest for conversion of the $450,000 and for the underinsurance *426of the property is reversible error; and (6) it was error to hold Danny Brown personally liable for the acts of DWB.

I. Waiver

The parties' lease required appellants to maintain insurance coverage in the amount of the replacement value of any improvements erected on the property. The evidence demonstrated that appellants had the property insured with actual-cash-value insurance rather than replacement-value insurance and had $450,000 worth of coverage, which appellees contend was significantly less than was necessary to cover the replacement of any improvements on the property.

Appellants clearly breached the lease, but they argued that appellees waived the right to enforce against any breach because appellees knew and accepted that there was $450,000 of actual-cash-value insurance on the property. "A party to a contract, who, with knowledge of a breach by the other party, continues to accept benefits under the contract and suffers the other party to continue in performance thereof, waives the right to insist on the breach." Stephens v. W. Pontiac-GMC, Inc. , 7 Ark. App. 275, 278, 647 S.W.2d 492, 493 (1983).

In determining that appellants breached the lease, the circuit court found that appellees had not waived their right to enforce the lease. Specifically, the circuit court stated that "there was no admissible or credible testimony that Doug Boydston requested or agreed to" the $450,000 value and that he "would have never knowingly and willingly agreed to the lower insurance amounts."

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Bluebook (online)
550 S.W.3d 420, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dwb-llc-v-d-t-pure-trust-arkctapp-2018.