Cite as 2026 Ark. App. 269 ARKANSAS COURT OF APPEALS DIVISION III No. CV-24-763
Opinion Delivered April 29, 2026
JEFFREY S. UNDERWOOD APPELLANT APPEAL FROM THE FAULKNER COUNTY CIRCUIT COURT V. [NO. 23CV-18-157]
JODY DORAN, INDIVIDUALLY AND AS A HONORABLE SUSAN WEAVER, SHAREHOLDER AND MEMBER OF JUDGE CONWAY PRECISIONS PRODUCTS, INC. APPELLEE AFFIRMED AS MODIFIED
MIKE MURPHY, Judge
Appellant Jeff Underwood appeals the order of the Faulkner County Circuit Court
awarding appellee Jody Doran (formerly Jody Underwood) attorney’s fees and costs following
a derivative action brought on behalf of Conway Precision Products, Inc. (CPPI). On appeal,
Jeff argues that the circuit court abused its discretion in awarding fees; alternatively, he argues
that a significant portion of the costs and fees that were awarded were improper. We agree
with his argument concerning costs and affirm as modified.
This is the second time these parties have appeared before this court. In Underwood v.
Underwood, 2024 Ark. App. 51, 684 S.W.3d 896, Jody sued Jeff individually and on behalf
of CPPI for breach of fiduciary duty, conversion, and collection of a shareholder loan. After
trial, the jury awarded CPPI $152,614 on the derivative claims for breach of fiduciary duty
and conversion and awarded Jody damages on her individual breach-of-fiduciary-duty claim, but it found in Jeff’s favor concerning the loan collection. Jody appealed, and Jeff cross-
appealed. On appeal, we agreed with Jody and reversed and remanded the loan-collection
claim, holding that there was no evidence that Jeff had performed the loan contract
requirements. We affirmed on cross-appeal.
After trial, Jody moved for attorney’s fees and costs, requesting $146,961.75 in fees
and approximately $22,000 in costs. Jeff responded, arguing that no fees were recoverable
because the underlying claims sounded in tort, and furthermore, Jody was not a prevailing
party.
Alternatively, he argued that any award should be reduced because the request
included fees and costs that are not recoverable under Arkansas law: clerical and
administrative work, fees attributable to unidentified billers, and costs for an expert witness.
The circuit court held a hearing on the motion and took the matter under
advisement. In the following order awarding Jody costs and half of the fees she requested,
the court wrote:
2. “The successful plaintiff in a derivative action may be awarded attorneys’ fees against the corporation if the corporation received ‘substantial benefits’[.]” See Millsap v. Lane, 288 Ark. 439, 442, 706 S.W.2d 378, 380 (1986).
3. A Plaintiff in a derivative action can recover interest on an attorneys’ fees award. See generally, Millsap, 288 Ark. at 444, 706 S.W.2d at 380.
4. The Court finds that Conway Precision Products, Inc. did benefit from Plaintiff’s claims; therefore, Plaintiff’s request falls under the substantial benefit exception stated in the Millsap case.
5. Taking into consideration the experience of the attorneys, the hourly rate and hours billed, the results obtained, and the individual and derivative nature of the claims asserted, the Court finds that an attorney fee award against the Corporation,
2 Conway Precision Products, Inc., equal to half of the amount requested is fair given that the Plaintiff was not successful on all of her claims.
6. Accordingly, Plaintiff is awarded against the Corporation, Conway Precision Products, Inc., attorneys’ fees in the amount of $73,480.87, which is half of the amount requested by Plaintiff. Plaintiff is also awarded $22,000.00 in costs against the Corporation, Conway Precision Products, Inc.
From this order Jeff appeals. On appeal, Jeff argues that the circuit court abused its
discretion in awarding attorney’s fees or, alternatively, by including nonrecoverable fees and
costs in the award.
In evaluating an attorney’s-fee award, this court recognizes the superior perspective of
the circuit court. DWB, LLC v. D&B Pure Tr., 2018 Ark. App. 283, at 13, 550 S.W.3d 420,
429. Accordingly, the decision to award fees and the amount to award are discretionary
determinations that the court will reverse only on a demonstration of an abuse of discretion.
Id., 550 S.W.3d at 429–30.
Jeff’s first point on appeal is that it was erroneous for the circuit court to award any
fees and costs in this case at all, because no statutory or equitable basis supports the award.
He argues that the claims underlying the judgment sound in tort and that, under the
American Rule, attorney’s fees are not recoverable absent a statute or recognized exception.
The “American Rule” generally prohibits a successful litigant from collecting
attorney’s fees against the losing party absent a state statute to the contrary. Millsap, 288 Ark.
at 442, 706 S.W.2d at 379. Our supreme court has recognized two exceptions to the
American rule: (1) the “common fund” doctrine and (2) the “substantial benefit” rule. Gibson
v. Buonauito, 2022 Ark. 206, at 12, 655 S.W.3d 59, 67. The common-fund exception comes
3 into play when a plaintiff has created or augmented a common fund, or assets have been
salvaged for the benefit of others as well as himself. Id. at 13, 655 S.W.3d at 67. In such a
situation, to allow others to obtain the full benefit from the plaintiff's efforts without
requiring contribution or charging the common fund for attorney’s fees would be to enrich
the others unjustly at the expense of the plaintiff. Id. A common fund contemplates a new
pool of money. Id.
The supreme court first acknowledged the substantial-benefit rule in Millsap, supra, a
shareholder-derivative action. In Millsap, the court stated that a shareholder could recover
attorney’s fees against a corporation “if the corporation received ‘substantial benefits’ from
the litigation.” Id. at 442, 706 S.W.2d at 380. It may do so even if the benefits are not
pecuniary and no fund is created. Id. In Millsap, the supreme court affirmed an award of
attorney’s fees when the plaintiff’s derivative action preserved “$400,000 plus interest in
corporate assets,” which benefited the corporation. 288 Ark. at 443, 706 S.W.2d at 380.
Jeff argues that, here, no common fund was created, nor did CPPI actually benefit.
He explains that because the jury found he acted in good faith, he is entitled to
indemnification from CPPI for any amounts paid on the derivative claims (on the basis of
the company’s bylaws and Ark. Code Ann. § 4-26-814 (Repl. 2016)); therefore, there was no
real benefit to CPPI.
Jeff does not provide any authority, however, that we are required to conduct this sort
of “net benefit” analysis. Moreover, Millsap suggests otherwise. In Millsap, the cross-
appellants argued that attorney’s fees should be limited due to the corporation’s “economic
4 benefit,” taking into account offsetting obligations. The supreme court rejected that
approach, explaining that the attorneys “should not be forced to settle for less than the
amount they are due and that which the corporation can pay.” Millsap 288 Ark. at 443, 706
S.W.2d at 380. The relevant inquiry, then, ends with the result obtained in litigation. It was
not improper to award attorney’s fees in this shareholder-derivative suit.
Jeff next argues that significant portions of the fees awarded were improper.
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Cite as 2026 Ark. App. 269 ARKANSAS COURT OF APPEALS DIVISION III No. CV-24-763
Opinion Delivered April 29, 2026
JEFFREY S. UNDERWOOD APPELLANT APPEAL FROM THE FAULKNER COUNTY CIRCUIT COURT V. [NO. 23CV-18-157]
JODY DORAN, INDIVIDUALLY AND AS A HONORABLE SUSAN WEAVER, SHAREHOLDER AND MEMBER OF JUDGE CONWAY PRECISIONS PRODUCTS, INC. APPELLEE AFFIRMED AS MODIFIED
MIKE MURPHY, Judge
Appellant Jeff Underwood appeals the order of the Faulkner County Circuit Court
awarding appellee Jody Doran (formerly Jody Underwood) attorney’s fees and costs following
a derivative action brought on behalf of Conway Precision Products, Inc. (CPPI). On appeal,
Jeff argues that the circuit court abused its discretion in awarding fees; alternatively, he argues
that a significant portion of the costs and fees that were awarded were improper. We agree
with his argument concerning costs and affirm as modified.
This is the second time these parties have appeared before this court. In Underwood v.
Underwood, 2024 Ark. App. 51, 684 S.W.3d 896, Jody sued Jeff individually and on behalf
of CPPI for breach of fiduciary duty, conversion, and collection of a shareholder loan. After
trial, the jury awarded CPPI $152,614 on the derivative claims for breach of fiduciary duty
and conversion and awarded Jody damages on her individual breach-of-fiduciary-duty claim, but it found in Jeff’s favor concerning the loan collection. Jody appealed, and Jeff cross-
appealed. On appeal, we agreed with Jody and reversed and remanded the loan-collection
claim, holding that there was no evidence that Jeff had performed the loan contract
requirements. We affirmed on cross-appeal.
After trial, Jody moved for attorney’s fees and costs, requesting $146,961.75 in fees
and approximately $22,000 in costs. Jeff responded, arguing that no fees were recoverable
because the underlying claims sounded in tort, and furthermore, Jody was not a prevailing
party.
Alternatively, he argued that any award should be reduced because the request
included fees and costs that are not recoverable under Arkansas law: clerical and
administrative work, fees attributable to unidentified billers, and costs for an expert witness.
The circuit court held a hearing on the motion and took the matter under
advisement. In the following order awarding Jody costs and half of the fees she requested,
the court wrote:
2. “The successful plaintiff in a derivative action may be awarded attorneys’ fees against the corporation if the corporation received ‘substantial benefits’[.]” See Millsap v. Lane, 288 Ark. 439, 442, 706 S.W.2d 378, 380 (1986).
3. A Plaintiff in a derivative action can recover interest on an attorneys’ fees award. See generally, Millsap, 288 Ark. at 444, 706 S.W.2d at 380.
4. The Court finds that Conway Precision Products, Inc. did benefit from Plaintiff’s claims; therefore, Plaintiff’s request falls under the substantial benefit exception stated in the Millsap case.
5. Taking into consideration the experience of the attorneys, the hourly rate and hours billed, the results obtained, and the individual and derivative nature of the claims asserted, the Court finds that an attorney fee award against the Corporation,
2 Conway Precision Products, Inc., equal to half of the amount requested is fair given that the Plaintiff was not successful on all of her claims.
6. Accordingly, Plaintiff is awarded against the Corporation, Conway Precision Products, Inc., attorneys’ fees in the amount of $73,480.87, which is half of the amount requested by Plaintiff. Plaintiff is also awarded $22,000.00 in costs against the Corporation, Conway Precision Products, Inc.
From this order Jeff appeals. On appeal, Jeff argues that the circuit court abused its
discretion in awarding attorney’s fees or, alternatively, by including nonrecoverable fees and
costs in the award.
In evaluating an attorney’s-fee award, this court recognizes the superior perspective of
the circuit court. DWB, LLC v. D&B Pure Tr., 2018 Ark. App. 283, at 13, 550 S.W.3d 420,
429. Accordingly, the decision to award fees and the amount to award are discretionary
determinations that the court will reverse only on a demonstration of an abuse of discretion.
Id., 550 S.W.3d at 429–30.
Jeff’s first point on appeal is that it was erroneous for the circuit court to award any
fees and costs in this case at all, because no statutory or equitable basis supports the award.
He argues that the claims underlying the judgment sound in tort and that, under the
American Rule, attorney’s fees are not recoverable absent a statute or recognized exception.
The “American Rule” generally prohibits a successful litigant from collecting
attorney’s fees against the losing party absent a state statute to the contrary. Millsap, 288 Ark.
at 442, 706 S.W.2d at 379. Our supreme court has recognized two exceptions to the
American rule: (1) the “common fund” doctrine and (2) the “substantial benefit” rule. Gibson
v. Buonauito, 2022 Ark. 206, at 12, 655 S.W.3d 59, 67. The common-fund exception comes
3 into play when a plaintiff has created or augmented a common fund, or assets have been
salvaged for the benefit of others as well as himself. Id. at 13, 655 S.W.3d at 67. In such a
situation, to allow others to obtain the full benefit from the plaintiff's efforts without
requiring contribution or charging the common fund for attorney’s fees would be to enrich
the others unjustly at the expense of the plaintiff. Id. A common fund contemplates a new
pool of money. Id.
The supreme court first acknowledged the substantial-benefit rule in Millsap, supra, a
shareholder-derivative action. In Millsap, the court stated that a shareholder could recover
attorney’s fees against a corporation “if the corporation received ‘substantial benefits’ from
the litigation.” Id. at 442, 706 S.W.2d at 380. It may do so even if the benefits are not
pecuniary and no fund is created. Id. In Millsap, the supreme court affirmed an award of
attorney’s fees when the plaintiff’s derivative action preserved “$400,000 plus interest in
corporate assets,” which benefited the corporation. 288 Ark. at 443, 706 S.W.2d at 380.
Jeff argues that, here, no common fund was created, nor did CPPI actually benefit.
He explains that because the jury found he acted in good faith, he is entitled to
indemnification from CPPI for any amounts paid on the derivative claims (on the basis of
the company’s bylaws and Ark. Code Ann. § 4-26-814 (Repl. 2016)); therefore, there was no
real benefit to CPPI.
Jeff does not provide any authority, however, that we are required to conduct this sort
of “net benefit” analysis. Moreover, Millsap suggests otherwise. In Millsap, the cross-
appellants argued that attorney’s fees should be limited due to the corporation’s “economic
4 benefit,” taking into account offsetting obligations. The supreme court rejected that
approach, explaining that the attorneys “should not be forced to settle for less than the
amount they are due and that which the corporation can pay.” Millsap 288 Ark. at 443, 706
S.W.2d at 380. The relevant inquiry, then, ends with the result obtained in litigation. It was
not improper to award attorney’s fees in this shareholder-derivative suit.
Jeff next argues that significant portions of the fees awarded were improper.
The allowance of fees by the circuit court must be affirmed unless the appellant
demonstrates, or the record shows, that the allowance is excessive, inadequate, or
unreasonable. Ark. Fed. Credit Union v. Pigg, 2015 Ark. App. 560, at 6. There is no fixed
formula or policy to be considered in arriving at such fees other than the rule that the circuit
court’s appropriately broad discretion in such matters must not be abused. Id.
Jeff first explains that of the $146,961.75 in requested fees, $20,585.35 should have
been deducted before the court reduced the award by half because those hours related to a
motion for contempt on which the court had already awarded $10,000 in attorney’s fees. He
additionally argues that another $40,000 of the requested fees was improper because it
reflected time billed for nonattorney work, such as work performed by secretaries and
paralegals. These were arguments he made to the circuit court, and in its order, the circuit
court expressly stated that it considered “the hourly rate and hours billed” in determining a
reasonable fee before reducing the requested amount by half. Considering that the circuit
court reduced the fee award by an amount greater than the total that Jeff challenges, we
cannot say that the court failed to consider these arguments such that it abused its discretion.
5 Finally, Jeff argues that the award of costs associated with Jody’s expert witness was
improper. In her fee request, Jody requested $22,142.28 in costs, of which $21,697.78 was
for fees charged by her expert witness at trial.
In the absence of statutory authority, the fees of expert witnesses cannot be treated as
costs and charged against a losing party. City of Benton v. Alcoa Rd. Storage, Inc., 2017 Ark. 78,
at 4–5, 513 S.W.3d 259, 262. There is no Arkansas statute that allows recovery of costs
associated with an expert witness. Jody argues that the same reasoning that supports recovery
of attorney’s fees in this case also supports the recovery of expert-witness costs. Jody explains
that, if the point of the substantial-benefit rule is to ensure others are not unjustly enriched
at the expense of the plaintiff, Millsap, supra, the reasoning should likewise be extended to
fees for an expert witness. However, Arkansas law has not yet extended the substantial-benefit
doctrine to permit recovery of expert-witness fees, and we decline to do so today. Moreover,
even when attorney’s fees are recoverable, that recovery does not automatically require
extension to all litigation expenses. See Sunbelt Expl. Co. v. Stephens Prod. Co., 320 Ark. 298,
309, 896 S.W.2d 867, 873 (1995) (disallowing deposition costs, expert-witness fees, and
travel expenses despite awarding attorney’s fees); Miller v. Miller, 70 Ark. App. 64, 69, 14
S.W.3d 903, 907 (2000) (affirming attorney’s-fees award in divorce case but holding that
expert-witness fees are not recoverable as costs). Miller is especially persuasive because it
demonstrates that even when attorney’s fees sound in equity, expert-witness fees remain
unrecoverable.
After review, we hold that the circuit court did not abuse its discretion in awarding
6 Jody her attorney’s fees but that it did abuse its discretion in directing costs paid associated
with an expert witness. Accordingly, we modify the circuit court’s order by deducting the
$21,697.78 awarded as payment of Jody’s expert-witness fee. See Miller, supra. In all other
respects, the order is affirmed.
Affirmed as modified.
TUCKER and BARRETT, JJ., agree.
The Jiles Firm, LLP, by: Gary D. Jiles and Matthew K. Brown, for appellant.
Newland & Associates, PLLC, by: Joel F. Hoover and W. Evan Lawrence, for appellee.