Godwin v. Churchman

810 S.W.2d 34, 305 Ark. 520, 1991 Ark. LEXIS 284
CourtSupreme Court of Arkansas
DecidedMay 20, 1991
Docket91-107
StatusPublished
Cited by21 cases

This text of 810 S.W.2d 34 (Godwin v. Churchman) 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
Godwin v. Churchman, 810 S.W.2d 34, 305 Ark. 520, 1991 Ark. LEXIS 284 (Ark. 1991).

Opinion

Robert L. Brown, Justice.

The appellants (“Godwin”) appeal from two orders dismissing their complaint against the appellees (“Churchman/Turner/Bonds”). The trial court’s dismissals were premised on violation of the statute of limitations and failure to state appropriate facts under Ark. R. Civ. P. 8(a) and 12(b)(6).

We affirm in part and reverse in part and remand.

In June 1981 Godwin, who had an established accounting practice, began discussions with Churchman/Turner/Bonds, who were also accountants, about working together under a mutually agreeable business arrangement. Over the next three years, the accountants worked together as part of a corporation formed for that purpose — Godwin, Churchman, Turner & Bonds, Ltd. Though at least two meetings were held with counsel to fashion a business agreement, none was executed by the parties.

By the latter part of 1984 the business relationship between Godwin and Churchman/Turner/Bonds had deteriorated to the point that on November 9,1984, Turner advised Godwin and his attorney that Churchman/Turner/Bonds wished to terminate the business relationship and buy out Godwin. Godwin refused. On November 11, 1984, Churchman/Turner/Bonds individually tendered their resignations to Godwin. On November 16, 1984, Godwin’s attorney wrote Churchman/Turner/Bonds on Godwin’s behalf to request certain information from them prior to a meeting to “wind up” corporate matters.

Over the next few working days, from November 12 through November 23, 1984 (November 22 was Thanksgiving Day), Churchman/Turner/Bonds continued working at the corporation office. Churchman/Turner/Bonds testified that this was solely for the purpose of winding up affairs. Over the following weekend (November 24-25), Churchman/Turner/Bonds took furniture, client files in progress, computer diskettes with client information, and financial data including accounts receivable from the office, without giving prior notice to Godwin.

Godwin filed his complaint against Churchman/Turner/ Bonds on November 20,1987, and alleged six counts, all of which are connected to the schism in the business enterprise: 1) breach of oral contract; 2) breach of implied contract; 3) tort of outrage; 4) tortious interference with Godwin’s clients; 5) conversion of property; and 6) breach of fiduciary duty owed the corporation. Churchman/Turner/Bonds moved to dismiss the complaint under Ark. R. Civ. P. 12(b) for lack of jurisdiction and failure to state claims upon which relief could be granted with accompanying brief on December 3, 1987, and attached to their motion an affidavit by Turner. Godwin responded to the motion with a brief and affidavit on December 14,1987. The response of Godwin, the briefs of both parties, and both affidavits assert facts not included either in the original complaint or in the motion to dismiss.

On March 31,198 8, a hearing was held by the trial court on the limitations question raised as part of the jurisdiction allegation in the 12(b) motion of Churchman/Turner/Bonds. In the course of that hearing testimony was taken from all parties, as well as from Godwin’s wife, and exhibits were introduced. The trial counsel admitted at the conclusion of the hearing that the evidence taken went beyond the limitations issue. The trial court dismissed Count I (breach of oral contract) and Count II (breach of implied contract) on July 21, 1988, on limitations grounds. Prior to that order a second 12(b)(6) motion to dismiss was filed by Churchman/Turner/Bonds on July 6, 1988, with a brief in which counsel argued that Godwin’s complaint should be dismissed because it constituted notice pleading rather than the required fact pleading under Ark. R. Civ. P. 8(a). The trial court granted the second motion and dismissed the remaining four counts of Godwin’s complaint on January 18, 1990.

We begin with an analysis of what exactly was the nature of the first motion considered by the trial court. The motion filed by Churchman/Turner/Bonds ostensibly was a 12(b) motion, but once matters outside of the pleadings were presented to the trial court the rules require that the motion be considered one for summary judgment and be treated as such and disposed of as provided in Rule 56. See Ark. R. Civ. P. 12(b). We have held that it is improper for the trial court to look beyond the complaint to decide a 12(b) motion unless it is treating the motion as one for summary judgment. See Battle v. Harris, 298 Ark. 241, 766 S.W.2d 431 (1989); Guthrie v. Tyson Foods, 285 Ark. 95, 685 S.W.2d 164 (1985). We have further said that even if the trial court treats the motion as one for summary judgment, it is incorrect for it then to base its decision on factual allegations made in the briefs and exhibits. Id. Our civil procedure rules clearly provide that the trial court may only consider “pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any” for summary judgment purposes. Ark. R. Civ. P. 56(c).

By going beyond the complaint in considering the first 12(b) motion, the trial court converted that motion to one for summary judgment under Rule 56, according to the peremptory language of Rule 12(b). Moreover, by going beyond the pleadings, discovery, and affidavits, the trial court erred for purposes of summary judgment, and the procedure followed did not fall within the specific parameters of Rule 56.

What transpired before the trial court on March 31, 1988, was, in reality, a trial on the limitations issue. Live testimony was presented from six witnesses and several exhibits were introduced by both parties, after which time the trial court made a factual determination regarding the statute-of-limitations defense. The proceedings were not orchestrated solely by the trial court. The attorneys for both parties agreed to a hearing with testimony and exhibits to decide the limitations issue. The trial court initially questioned the propriety of doing this, but at the end it agreed to proceed:

Court: Well, that’s fine, I mean, I’ll do it that way if both of y’all agree. . . .
McLarty: Well, what I had suggested in my motion is that if the cause of action is clearly barred by limitations, that my clients particularly ought not to have to be put through the expense, time and trouble of a full-scale preparation and a full-scale trial.
Court: I’ll tell you what let’s do. I can’t answer this question until I hear the proof.
McLarty: I don’t think you can.
Court: And, I think you’re right. And let’s go ahead and put on what we’ve got today and I’ll listen to it and if I think that’s part of a fact question for a jury, then I’m going to, I’m going to. . .
McLarty: You’re going to overrule the motion.
Lyons: I understand that and I have no objection to the Court hearing it if the Court. . .
Court: Well, I got to hear it in order to know —
Lyons: Right.

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Bluebook (online)
810 S.W.2d 34, 305 Ark. 520, 1991 Ark. LEXIS 284, Counsel Stack Legal Research, https://law.counselstack.com/opinion/godwin-v-churchman-ark-1991.