Hart v. McChristian

36 S.W.3d 357, 71 Ark. App. 178, 2000 Ark. App. LEXIS 645
CourtCourt of Appeals of Arkansas
DecidedOctober 18, 2000
DocketCA 00-50
StatusPublished
Cited by1 cases

This text of 36 S.W.3d 357 (Hart v. McChristian) 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
Hart v. McChristian, 36 S.W.3d 357, 71 Ark. App. 178, 2000 Ark. App. LEXIS 645 (Ark. Ct. App. 2000).

Opinion

JOSEPHINE Linker Hart, Judge.

Appellants Joseph and Cheryl Hart appeal an order of the chancellor confirming an arbitration award and denying their petition to vacate that award. They also seek review of the court’s order holding them in civil contempt. We reverse and remand that part of the judgment concerning the arbitration award because we conclude there is a need for further development and clarification in this case. We also modify the contempt order concerning the punishment assessed by the chancellor. In all other respects, we affirm.

On January 27, 1990, appellants Joseph and Cheryl Hart, appellee Norman McChristian, and a corporation called DD&B, Inc., formed a limited partnership called Vinewood Communications for the purpose of owning and operating a radio station in northwest Arkansas. Appellants were the company’s general partners and owned ten percent of the partnership units. Appellee was a limited partner and owned eighteen percent of the partnership units. The remaining seventy-two percent of the units were owned by DD&B, the other limited partner, who is not a party to this appeal.

The agreement gave the general partners exclusive discretion in the management and control of partnership business. However, it also provided that the general partners could be removed upon a proposal for their removal being made by the limited partners holding fifty percent of the partnership units. Following such a proposal, removal would be accomplished by agreement of the limited partners holding seventy-five percent of the partnership units. If the general partners objected to their removal, the matter was to be “submitted within thirty (30) days of such notice of objection ... to binding arbitration. ...”

On June 16, 1998, DD&B, Inc., assigned all of its partnership units to appellee in consideration for $275,000. This transaction resulted in appellee holding ninety percent of the partnership units. On July 13, 1998, appellee notified appellants of the assignment and of a scheduled meeting wherein their removal as general partners would be voted upon. According to appellee, appellants were removed at the meeting that was held on August 17, 1998. Following these events, appellee filed a complaint in Washington County Chancery Court alleging that appellants had breached the limited partnership agreement by mismanaging the partnership, misappropriating partnership assets, and operating the company for their personal benefit. Appellee sought an accounting, the appointment of a receiver, and an order requiring arbitration should appellants object to their removal. In connection therewith, appellee filed a demand for arbitration on January 25, 1999.

On February 22, 1999, a hearing was held before the chancellor during which appellants objected to arbitration. They argued that, at the time the removal vote was taken, appellee was the holder of only eighteen percent of the partnership units and thus had no authority to remove them as general partners. The question of appellee’s authority to remove them, they contended, should be resolved prior to arbitrating the question of whether their conduct merited removal. The chancellor disagreed and ruled that their argument could be made to the arbitrators. A decree was entered ordering the parties to arbitration.

The arbitration hearing took place on May 10, 1999. At its conclusion, the arbitrators determined that the removal of the general partners was appropriate. The chancellor confirmed the arbitrators’ award on June 28, 1999, appointed a receiver as requested by appellee, and restrained appellants from interfering with the receiver or the company assets. The receiver was directed to take possession of all partnership assets and to file an application with the Federal Communications Commission to transfer control of Vine-wood Communications to a successor general partner.

On July 12, 1999, appellants filed motions to amend or vacate the arbitrators’ award and the court’s order confirming the award. Appellants again raised the issue of appellee’s authority, as an eighteen percent owner, to effect their removal. They also claimed that the arbitrators had violated several procedural rules concerning notice, exchanges of evidence, and requests for continuances. On July 14, 1999, appellee filed a motion asking that appellants be held in contempt for violating the chancellor’s June 28 order by fifing an objection with the FCC to the transfer of Vinewood Communications to the receiver. All these matters were addressed at a hearing on September 8, 1999. Following the hearing, the chancellor denied appellants’ motions to vacate or modify the arbitrators’ award and entered a judgment on the arbitration award commensurate with Ark. Code Ann. § 16-108-214 (1987). In addition, as requested by appellee, the chancellor held appellants in contempt on the ground that the opposition they filed with the FCC interfered with the receiver, in violation of the June 28 order. He directed appellants to withdraw their opposition, and, as punishment, to pay $7,118.90, which was the full cost of the arbitration proceedings, plus other costs incurred as the result of the contempt, and attorney fees “as subsequently determined.” This appeal is brought from that judgment and order.

On review of a chancery matter, “the whole case is open for review; therefore, all issues raised in the court below are before us for decision, and [a] trial de novo on appeal in chancery involves determination of both fact questions and legal issues.” Bradford v. Bradford, 34 Ark. App. 247, 248, 808 S.W.2d 794, 795 (1991). See also Ferguson v. Green, 266 Ark. 556, 587 S.W.2d 18 (1979); Lewis v. Lewis, 255 Ark. 583, 502 S.W.2d 505 (1974). In our de novo review, we will reverse only on grounds argued by appellant. See, e.g., Country Gentlemen, Inc. v. Harkey, 263 Ark. 580, 569 S.W.2d 649 (1978). Moreover, we will affirm the chancellor’s findings unless the findings are clearly erroneous. See Ark. R. Civ. P. 52(a); see also Adkinson v. Kilgore, 62 Ark. App. 247, 970 S.W.2d 327 (1998). “A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Smith v. Parker, 67 Ark. App. 221, 224, 998 S.W.2d 1, 3 (1999).

Appellants’ first argument has two components: 1) whether the chancellor erred in ordering the parties to arbitrate the issue of appellee’s authority to seek their removal; and 2) whether appellee actually had the authority to seek their removal, i.e., whether he in fact held seventy-five percent of the partnership units at the time the removal vote was taken. As to the first component, we agree with the chancellor’s decision to send the issue to arbitration. Article XI of the written partnership agreement sets out a method by which a general partner may be removed. It establishes the percentage of ownership required to propose removal, the percentage required to effect removal, and the grounds for removal.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Hart v. McChristian
42 S.W.3d 552 (Supreme Court of Arkansas, 2001)

Cite This Page — Counsel Stack

Bluebook (online)
36 S.W.3d 357, 71 Ark. App. 178, 2000 Ark. App. LEXIS 645, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hart-v-mcchristian-arkctapp-2000.