HERMITAGE NEWARK, LLC; HERMITAGE PROPERTIES, LLC; HERMITAGE OPERATING, LLC, D/B/A ENDURANCE SANDS AND LOGISTICS; And DALE E. BEHAN v. ARKANSAS SAND COMPANY

2020 Ark. App. 214

• Court: Court of Appeals of Arkansas
• Decided: April 8, 2020
• Status: Published

Opinion

Reason: I attest to the accuracy and integrity of this document Cite as 2020 Ark. App. 214 Date: 2021-06-15 20: ARKANSAS COURT OF APPEALS 38:34 Foxit DIVISION III PhantomPDF Version: 9.7.5 No. CV-19-306

Opinion Delivered: April 8, 2020 HERMITAGE NEWARK, LLC; HERMITAGE PROPERTIES, LLC; HERMITAGE OPERATING, LLC, D/B/A APPEAL FROM THE INDEPENDENCE ENDURANCE SANDS AND LOGISTICS; COUNTY CIRCUIT COURT AND DALE E. BEHAN [NO. 31CV-16-281] APPELLANTS

V. HONORABLE MAUREEN HARROD, JUDGE ARKANSAS SAND COMPANY AND VOLVO FINANCIAL SERVICES, A AFFIRMED DIVISION OF VFC, LLC APPELLEES

RAYMOND R. ABRAMSON, Judge

Hermitage Newark, LLC; Hermitage Properties, LLC; Hermitage Operating, LLC,

d/b/a Endurance Sands and Logistics; and Dale E. Behan appeal the Independence County

Circuit Court judgment granting Arkansas Sand Company’s (Arkansas Sand’s) claim for

replevin. On appeal, they argue that the circuit court erred by denying their motion to

dismiss.1 We affirm.

1 In their brief, the Hermitage parties assert that the circuit court erred by denying their directed-verdict motion. However, the circuit court held a bench trial. The proper motion to challenge the sufficiency of an opponent’s evidence in a nonjury case is a motion to dismiss. Ark. R. Civ. P. 50(a); see Rymor Builders, Inc. v. Tanglewood Plumbing Co., 100 Ark. App. 141, 144–45, 265 S.W.3d 151, 153 (2007) (“The bench and bar often refer to a ‘directed verdict’ during a non-jury case. This is a misnomer. Because no jury is in the box, no verdict will be given.”). Sean Ross and Jean Hill Ross each owned 50 percent of Arkansas Sand, and Arkansas

Sand owned real property housing a sand plant in Newark, Arkansas (Newark Property),

subject to a mortgage held by First National Banking Company (FNBC). In 2012, FNBC

filed a foreclosure action against Arkansas Sand, and on August 30, 2013, the Independence

County Circuit Court entered a foreclosure decree ordering that the Newark Property be

sold at a judicial sale.

On September 26, the Newark Property was sold at a public auction pursuant to the

foreclosure decree. On October 3, the circuit court approved the issuance of a

commissioner’s deed of the Newark Property to Behan. The commissioner’s deed was

executed on January 22 and recorded on January 23, 2014. On June 20, Behan conveyed

the Newark Property to Hermitage Newark, LLC, an entity owned by Behan and his

family.

On December 8, 2016, Arkansas Sand filed the instant action against Hermitage

Properties, LLC, and Hermitage Operating, LLC, d/b/a Endurance Sands and Logistics. In

its complaint, Arkansas Sand sought replevin for several pieces of personal property that

remained on the Newark Property at the time of the judicial sale, including a Volvo 110F

front end loader (Volvo loader).

On December 20, 2016, Hermitage Properties, LLC, and Hermitage Operating,

LLC, d/b/a Endurance Sands and Logistics filed an objection to notice seeking order of

delivery. They asserted that Arkansas Sand’s replevin action was barred by the three-year

statute of limitations in Arkansas Code Annotated section 18-60-810 (Repl. 2015). They

alternatively argued that Arkansas Sand had abandoned the personal property that remained

2 on the Newark Property at the time of the sale. On May 12, 2017, Arkansas Sand amended

its complaint, joining Behan and Hermitage Newark, LLC, as parties and alleging

conversion and breach-of-contract claims.2

The court held a bench trial on April 19, 2018. At the beginning of the trial, the

Hermitage parties moved to dismiss Arkansas Sand’s replevin claim. They argued that

Arkansas Sand abandoned the Volvo loader as a matter of law pursuant to Arkansas Code

Annotated section 18-27-103. They acknowledged that the statute was not in effect until

July 2015 following the foreclosure sale, but they argued that it applied retroactively to the

case. The court denied the motion.

Sam Ross testified that he and Behan entered into an oral agreement wherein Behan

would create a new entity to operate the sand plant on the Newark Property and that Sam

would receive a 20 percent interest in the entity in exchange for several items of his personal

property that remained on the Newark property. He noted that the personal property

included the Volvo loader. He stated that they reached the agreement in September or

October 2013 but that Behan had breached that agreement when Behan created a new

entity, Hermitage Newark, LLC, without giving him an interest. Sam testified that he asked

Behan to provide him with proof of ownership in Hermitage Newark, LLC, on two

different occasions and that Behan told him that his son, who is a lawyer, was drafting an

agreement. He noted that he stopped assessing the personal property, including the Volvo

loader, in 2013 because he believed that Hermitage Newark, LLC, owned it. He further

2 On November 21, Arkansas Sand again amended its complaint to join Volvo Financial Services, a division of VFS US, LLC, due to its security interest in the Volvo loader.

3 testified that after the foreclosure sale, he made the initial arrangements for Scott Equipment

to repair the Volvo loader and advised Scott Equipment that Behan would make the final

arrangements. He acknowledged that Behan paid for the repairs.

Arkansas Sand also introduced into evidence emails from Sam to Behan dated April

26 and April 27, 2016, and an email from Behan to Sam dated April 28, 2016. In the April

26 email, Sam accused Behan of being dishonest about their agreement concerning the

personal property, and he listed his personal property, including the Volvo loader, that he

had given Behan permission to use. In the April 27 email, Sam again claimed that Behan

had been using his personal property, and he threatened to “file charges for [the] personal

property.” In the April 28 email, Behan denied any wrongdoing, stated that he had

purchased Sam’s real property to help Sam financially, and stated that he had offered Sam

the opportunity to retrieve the personal property.

Jean Hill Ross testified that she partially owns Arkansas Sand with her husband Sam

and that she is also an insurance agent. She stated that she and Sam believed that they had

contributed their personal property on the Newark Property to Hermitage Newark, LLC,

in exchange for an interest in the new entity. She further testified that in January 2014, she

completed an insurance application for Hermitage Newark, LLC, that included the Volvo

loader and that she sent the application to Behan for his approval. She explained that on the

application, she indicated that Hermitage Newark, LLC, was the owner of the Volvo loader

because she believed that she and Sam had an interest in the entity.

Dale Behan testified that prior to the foreclosure sale, he inspected the Newark

Property with Sam. He stated that Sam told him that “everything goes” with the sale. Behan

4 testified that he specifically asked Sam whether the Volvo loader was included with the sale

and that Sam responded that it was. He acknowledged that prior to the foreclosure sale, Sam

proposed acquiring a 20 percent interest in Hermitage Newark, LLC, but he denied entering

into an agreement with Sam to give him an interest in the entity in exchange for the personal

property. He explained that Hermitage Newark, LLC, was formed on October 15, 2013,

and that the entity was created to own the Newark Property. He testified that he did not

make Sam or his wife an owner of Hermitage Newark, LLC. He stated that he told Sam

that he could retrieve the personal property from the Newark Property following

foreclosure. He further stated that other than the Volvo loader, he is not using any of the

Rosses’ personal property on the Newark Property because the items are junk. He also

acknowledged that Sam had “complete liberty” to access the Newark Property and that he

had visited the property on numerous occasions. He testified that he had never asked Sam

to act on his behalf and that he, not Sam, contacted Scott Equipment to arrange for the

repair of the Volvo loader. He stated that he had spent thousands of dollars to repair the

Volvo loader and that he had financed the repair cost.

At the conclusion of Arkansas Sand’s testimony, the Hermitage parties moved to

dismiss Arkansas Sand’s replevin claim. Specifically, they renewed their basis for dismissal

from the commencement of the proceedings, and they also asserted that the replevin claim

is barred by the statute of limitations. The court took the matter under advisement.

Michael Spellmeyer then testified that he helped Behan make improvements to the

sand plant on the Newark Property after Behan had purchased the property at the

foreclosure sale. He stated that he saw Sam on the property on several occasions but that

5 Sam never informed him that Sam had an interest in Hermitage Newark, LLC. He also

testified that Sam was given multiple opportunities to retrieve his personal property on the

Newark Property following the foreclosure sale. After the Hermitage parties rested, they

renewed their motion to dismiss at the close of all the evidence. The court again took the

motion under advisement.

On June 8, 2018, the court entered a letter opinion. The court found that Arkansas

Sand had failed to establish its breach-of-contract3 and conversion claims. As to the replevin

claim, the court found that Arkansas Code Annotated section 18-27-103 did not apply

retroactively such that the personal property could be considered abandoned. The court

instead found that Arkansas Sand had established that it was entitled to possession of the

Volvo loader based on the facts that the Rosses continued to express interest in the

equipment, did not relinquish title to it, and sought recovery of it. The court further found

that Behan had recognized Arkansas Sand’s ownership in the Volvo loader when he offered

the Rosses the opportunity to retrieve it.4

On December 28, the court entered a judgment and incorporated its June 9 letter

opinion. The court denied and dismissed Arkansas Sand’s breach-of-contract and conversion

claims. As to the replevin claim, the court denied and dismissed the claim as to all the

3 As to the breach-of-contract claim, the court found that Arkansas Sand did not present sufficient evidence that a contract existed. The court noted that the agreement “was simply too vague, the terms were not certain and there was not a meeting of the minds.” 4 As to the other personal property listed in Arkansas Sand’s complaint, the court found that Arkansas Sand had not established entitlement to the property because the Rosses had been aware that the other property was being replaced and that it made no effort to reclaim the property.

6 personal property except the Volvo loader. The court instead found that Arkansas Sand

presented sufficient evidence that it owned the Volvo loader, and it ordered the Hermitage

parties to return it within ten days. In granting the replevin claim as to the Volvo loader,

the court specifically rejected the Hermitage parties’ abandonment and statute-of-limitations

arguments. This appeal followed.

We will not reverse a finding of fact by the circuit court unless it is clearly

erroneous. Id. In reviewing a circuit court’s findings of fact, this court gives due deference

to that court’s superior position to determine the credibility of the witnesses and the weight

to be accorded their testimony. Strother v. Mitchell, 2011 Ark. App. 224, 382 S.W.3d 741.

We do not, however, defer to the circuit court on a question of law. Peavler v. Bryant, 2015

Ark. App. 230, 460 S.W.3d 298.

On appeal, the Hermitage parties argue that the circuit court erred by denying its

motion to dismiss Arkansas Sand’s replevin claim for the Volvo loader because (1) Arkansas

Sand abandoned the property as a matter of law pursuant to Arkansas Code Annotated

section 18-27-103, and (2) Arkansas Sand’s replevin claim is barred by the statute of

limitations in Arkansas Code Annotated section 16-56-105(5) (Repl. 2005). We first address

their abandonment argument.

The Hermitage parties argue that the circuit court erred by finding that Arkansas

Code Annotated section 18-27-103 did not apply retroactively to this case such that the

Volvo loader could not be deemed abandoned as a matter of law. They acknowledge that

section 18-27-103 became effective in July 2015, following the foreclosure sale in October

7 2013; they nonetheless contend that the court should have applied the statute retroactively

because it is similar to a statute of limitations.

Arkansas Code Annotated section 18-27-103(a) provides as follows:

Upon the purchase of land at a judicial sale . . . all personal property remaining on the land or in any structure on the land shall be considered to have been abandoned if:

(1) The owner of the personal property has received notice of the sale of the land and has neither removed the personal property nor notified the purchaser in writing of the owner’s claim to the personal property within thirty (30) days of recording the deed commemorating the sale.

Generally, retroactivity is a matter of legislative intent, and unless it expressly states

otherwise, we presume the legislature intends for its laws to apply prospectively.

JurisDictionUSA, Inc. v. Loislaw.com, Inc., 357 Ark. 403, 183 S.W.3d 560 (2004). Any

interpretation of an act must be aimed at determining whether retroactive effect is stated or

implied so clearly and unequivocally as to eliminate any doubt. Id. In determining legislative

intent, we have observed a strict rule of construction against retroactive operation and

indulge in the presumption that the legislature intended statutes, or amendments thereof,

enacted by it to operate prospectively only and not retroactively. Id. However, this rule

does not ordinarily apply to procedural or remedial legislation. Id.

The strict rule of construction does not apply to remedial statutes that do not disturb

vested rights or create new obligations but only supply a new or more appropriate remedy

to enforce an existing right or obligation. Bean v. Office of Child Support Enf’t, 340 Ark. 286,

9 S.W.3d 520 (2000). Procedural legislation is more often given retroactive application. Id.

Although the distinction between remedial procedures and impairment of vested rights is

often difficult to draw, it has become firmly established that there is no vested right in any

8 particular mode of procedure or remedy. See McMickle v. Griffin, 369 Ark. 318, 254 S.W.3d

729 (2007). Statutes that do not create, enlarge, diminish, or destroy contractual or vested

rights, but relate only to remedies or modes of procedure, are not within the general rule

against retrospective operation. Id. In other words, statutes effecting changes in civil

procedure or remedy may have valid retrospective application, and remedial legislation may,

without violating constitutional guarantees, be construed to apply to suits on causes of action

that arose prior to the effective date of the statute. Id.

In Lucas v. Handcock, 266 Ark. 142, 583 S.W.2d 491 (1979), our supreme court held

that Act 1015 of 1979, which concerned an out-of-wedlock child’s right to inherit property

from natural parents, did not apply retroactively. The court reasoned that the act was a

matter of substantive rather than procedural law. Id. Similarly, in this case, we hold that the

circuit court did not err by refusing to retroactively apply section 18-27-103. Section 18-

27-103 is not similar to a statute of limitations—it addresses property rights. Thus, it is a

matter affecting substantive rights, and we hold that the circuit court did not err by refusing

to apply it to the instant case.

The Hermitage parties next argue that the circuit court erred by denying its motion

to dismiss Arkansas Sand’s replevin claim because it is barred by the three-year statute of

limitations in Arkansas Code Annotated section 16-56-105(5). Specifically, they assert that

there was ample evidence presented at trial showing that the Rosses contributed the Volvo

loader to Hermitage Newark, LLC, immediately following the foreclosure sale in October

2013, which was more than three years before the filing of Arkansas Sand’s complaint for

9 replevin in December 2016. In other words, they argue that the statute of limitations

commenced the moment Arkansas Sand transferred possession of the Volvo loader to Behan.

A replevin action is a possessory action for the recovery of specific property. Spear v.

Ark. Nat’l Bank of Hot Springs, 111 Ark. 29, 163 S.W. 508 (1914). Arkansas Code Annotated

section 16-56-105(5) provides a three-year statute of limitations for the taking of or injury

to any goods or chattels. Our supreme court has stated that the statute of limitations for

replevin begins to run at the date of possession and exercise of control over property and

not when a demand is made for its return. Johnson v. Gilliland, 320 Ark. 1, 896 S.W.2d 856

(1995) (citing Pickens v. Sparks, 44 Ark. 29 (1884)). Our supreme court has further stated

that

[i]n suits to recover personal property, the statute of limitations and the principle of adverse possession are inseparably connected, on the theory that the statute does not begin to run until the possession becomes adverse, and a limitations statute relating to suits to recover personalty is affected by the doctrine of adverse possession by the defendant.

Johnson, 320 Ark. at 5, 896 S.W.2d at 858 (quoting Henderson v. First Nat’l Bank, 254 Ark.

427, 433, 494 S.W.2d 452, 456 (1973)).

In the context of adverse possession, if the original use and possession was permissive,

it cannot become adverse until notice of the hostility of the possessor’s holding has been

brought home to the owner by actual notice or by a holding so open and notorious as to

raise a presumption of notice equivalent to actual notice; the evidence of the adverse holding

when the original entry is by permission must be very clear. Tolson v. Dunn, 48 Ark. App.

219, 893 S.W.2d 354 (1995); Mikel v. Dev. Co., Inc., 269 Ark. 365, 602 S.W.2d 630 (1980).

10 Whether possession is adverse to the true owner is a question of fact. Tolson, 48 Ark. App.

219, 893 S.W.2d 354.

In this case, we hold that the circuit court did not err by finding that Arkansas Sand’s

replevin claim is not barred by the statute of limitations. Even though the evidence shows

that Behan assumed possession of the Volvo loader following the foreclosure sale, the

evidence also supports a finding that the possession was not adverse. Both Spellmeyer and

Behan testified they had told Sam that he could retrieve the personal property on the

Newark Property after the sale. The April 2016 emails between Sam and Behan further

show that Behan recognized Sam’s ownership interest in the property when he admitted

that he had told Sam that he could retrieve the personal property. The circuit court further

found that after the sale, the Rosses continued to express interest in the Volvo loader. Given

the evidence that Behan’s possession was not adverse, we cannot say that the circuit court

erred by finding that Arkansas Sand’s claim was not barred by the three-year statute of

limitations in Arkansas Code Annotated section 16-56-105(5).

Affirmed.

VIRDEN and HIXSON, JJ., agree.

Murphy, Thompson, Arnold, Skinner & Castleberry, by: Kenneth P. “Casey” Castleberry,

for appellants.

Fuller Bumpers, for separate appellee Arkansas Sand Company.