Florida Oil Investment Group, LLC v. Goodwin & Goodwin, Inc.

2015 Ark. App. 209, 463 S.W.3d 323, 2015 Ark. App. LEXIS 271
CourtCourt of Appeals of Arkansas
DecidedApril 1, 2015
DocketCV-14-748
StatusPublished
Cited by5 cases

This text of 2015 Ark. App. 209 (Florida Oil Investment Group, LLC v. Goodwin & Goodwin, Inc.) 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
Florida Oil Investment Group, LLC v. Goodwin & Goodwin, Inc., 2015 Ark. App. 209, 463 S.W.3d 323, 2015 Ark. App. LEXIS 271 (Ark. Ct. App. 2015).

Opinions

RITA W. GRUBER, Judge

| florida Oil Investment Group, LLC, appeals from a judgment of the Sebastian County Circuit Court after a bench trial foreclosing the materialmen’s lien of Goodwin & Goodwin, Inc., on property owned by Florida Oil. Appellant contends that the circuit court erred in finding appellee’s lien valid and enforceable, arguing that appel-lee failed (1) to name the necessary parties; (2) to establish that it entered into a contract for labor and materials with an owner of the property at the time the labor and materials were provided; and (3) to strictly comply with the statutory requirements by properly identifying to whom the debt was owed and by adequately describing the labor and materials provided. Appellant also contends that the court erred in allowing appellee to include overhead and profits. Finally, appellant argues that the court erred in awarding attorney’s fees to appellee. Because we hold that Goodwin & Goodwin did not enter into a contract either with the owner of the property or with a [¿person or entity that had an interest in the property at the time it supplied materials and as required by Ark. Code Ann. § 18-44-101 (Repl. 2003), we reverse the circuit court’s judgment foreclosing the alleged lien. We also reverse the award of attorney’s fees, which were awarded pursuant to Ark.Code Ann. § 18-44-128 (Supp. 2013).

The facts in this case are complicated due to all of the entities involved. The facts that are relevant to the arguments before us are as follows. Bryan Goodwin, appellee’s owner and president, testified that David Northcutt approached him sometime in 2011 while Mr. Goodwin was working on another job and asked if he would be interested in working for him on some property in Sebastian County, which we refer to herein as the Fort Chaffee site. Mr. Northcutt told Mr. Goodwin that Fort Smith Petro Environmental, LLC (“FSP”) was building a refinery on the property. Mr. Goodwin testified that he thought Mr. Northcutt was a “partner” in FSP and that FSP was the owner or had an ownership interest in the Fort Chaffee site. Mr. Goodwin testified that he did not have a contract with any entity and was involved only with Mr. Northcutt, as FSP’s representative; that he was a general contractor; and that he initially agreed to install utilities at the Fort Chaffee site. He testified that he began working at the site in August 2011 and that Mr. Northcutt continued to expand the scope of his work to include roofing, putting up sheet rock, landscaping, plumbing, and laying concrete. He said that Mr. Northcutt never asked him for an estimate of expenses and that he never provided one. Mr. North-cutt, for FSP, periodically paid invoices submitted by appellee. Mr. Goodwin acknowledged that the invoices included overhead of seven percent and a profit margin of ten percent. Appellee continued to work on the property until |sNovember 18, 2011, when it submitted a final invoice.

Mr. Goodwin admitted that he never contacted the Secretary of State to determine whether Mr. Northcutt had the authority to represent FSP, never “pulled the permits” on the project, and generally just relied on “the good ole boy relationship” in his dealings. He did not learn until he had finished the project that FSP did not actually own the property, which he discovered was owned by the Fort Chaffee Redevelopment Authority (“FCRA”), an Arkansas public trust.

Appellee filed a materialmen’s lien on February 23, 2012, on the Fort Chaffee site, alleging that appellee had sold and delivered to FSP labor and materials and that the amount due and unpaid was $40,000. Appellee served the notice of intent to file lien on the executive director of FCRA and on David Northcutt, as agent for FSP. On March 1, 2013, when the $40,000 debt remained unpaid, appellee filed a complaint to foreclose its lien against appellant, who had purchased the property from FCRA on May 17, 2012.

Appellant filed a motion to dismiss, which the circuit court denied, and then answered, pleading various defenses including appellee’s failure to properly and timely serve the requisite notices of lien; failure to perfect a valid lien; and failure to join a necessary party. Appellant also contended at trial that the lien could not include overhead and lost profit, which ap-pellee had included in its invoices.

The evidence and testimony at trial established that the Fort Chaffee site was owned by FCRA during the time that ap-pellee constructed the improvements on the property. FCRA entered into a lease agreement with Petro Gold Environmental, LLC, for a term | beginning August 1, 2011, and ending July 31, 2016, for $1500 per month. The lease allowed Petro Gold to construct structures and improvements on the property if it obtained the written consent of FCRA’s design review committee. The lease forbade Petro Gold from assigning, subletting, or otherwise encumbering its interest in the premises or its rights under the lease without the prior written consent of FCRA. Finally, the lease gave Petro Gold the right of first refusal on any offer to purchase the property during the term of the lease. The address for Petro Gold was in Oklahoma City, and the lease was signed by Lyn Anglin as managing member of Petro Gold. The record contains no other documentation regarding Petro Gold’s organization, members, or owners. A defense exhibit lists Petro Gold as an applicant for a building permit on the property dated September 9, 2011, which was signed by David Northcutt for Petro Gold. But there was no testimony or documentation explaining if or how Petro Gold was related to either appellant or FSP.

Dr. Ashish Sanon testified that he was the managing member of appellant, which purchased the property from FCRA on May 17, 2012. Dr. Sanon explained that appellant was the managing member of Scientific Hydrocarbon Environmental Management, LLC (SHEM), and that SHEM was a managing member of FSP. He explained that David Northcutt was an employee of SHEM and had no ownership interest in FSP. The Articles of Organization of FSP, filed with the Arkansas Secretary of State on August 4, 2011, vested management of FSP in Mr. Northcutt, Mr. Anglin, and Dr. Sanon. Dr. Sanon said that Mr. Northcutt and Mr. Anglin were owners of a company that owned 30% of SHEM at the time appellee worked on the property and that, as employees of SHEM, they were responsible for building the plant |sat the Fort Chaffee site.

On May 13, 2014, the circuit court entered a judgment finding that appellee was entitled to foreclose its materialmen’s lien in the amount of $40,125 against the Fort Chaffee site.1 In support of its judgment, the circuit court found that “at the time of [appellee’s] providing the materials and labor for the construction of the commercial improvements, Fort Smith Petro Environmental, LLC was the beneficial owner of the property as provided in A.C.A. 18-44-106 pursuant to a Real Estate Contract (Commercial Property) dated November 28, 2011, between Fort Chaffee Redevelopment Authority and Fort Smith Petro Environmental, LLC.” The court also found that David Northcutt, as executive vice president of FSP, verbally contracted with appellee to provide labor and materials for construction of the improvements on the property and that the last day that appel-lee provided labor and materials was November 18, 2011. Appellant brought this appeal from the circuit court’s judgment.

We review lien-foreclosure cases de novo on appeal. Hickman v. Kralicek Realty & Constr. Co., 84 Ark. App.

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Florida Oil Investment Group, LLC v. Goodwin & Goodwin, Inc.
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Bluebook (online)
2015 Ark. App. 209, 463 S.W.3d 323, 2015 Ark. App. LEXIS 271, Counsel Stack Legal Research, https://law.counselstack.com/opinion/florida-oil-investment-group-llc-v-goodwin-goodwin-inc-arkctapp-2015.