Cite as 2020 Ark. App. 66 Reason: I attest to the accuracy ARKANSAS COURT OF APPEALS and integrity of this document DIVISION I Date: 2021-06-29 16:35:36 Foxit PhantomPDF Version: No. CV-19-279 9.7.5
JERRY BRUCE LOFTIN Opinion Delivered: February 5, 2020 APPELLANT APPEAL FROM THE WASHINGTON V. COUNTY CIRCUIT COURT [NO. 72CV-18-501] FIRST STATE BANK APPELLEE HONORABLE BETH STOREY BRYAN, JUDGE
AFFIRMED
RITA W. GRUBER, Chief Judge
Appellant Jerry Bruce Loftin filed a complaint against First State Bank (FSB) in the
Washington County Circuit Court on February 22, 2018, seeking reinstatement of an
annuity or, alternatively, money damages for the value of the annuity, and a declaratory
judgment that he was entitled to full performance by FSB of a split-dollar life insurance
agreement between him and FSB. On April 18, 2018, FSB filed a motion to dismiss
pursuant to Rule 12(b)(6) of Arkansas Rules of Civil Procedure, and the circuit court
entered an order on September 5, 2018, granting Loftin ten days to file an amended
complaint to address the weaknesses alleged in the motion to dismiss. The amended
complaint was filed on September 10, 2018, and FSB again filed a Rule 12(b)(6) motion to
dismiss alleging that the annuity claims, which were based on an oral agreement between the parties, were barred because the complaint failed to allege facts sufficient to toll the
statute of limitations.1 The circuit court granted FSB’s motion to dismiss, finding that
Loftin’s claim for breach of an oral agreement was barred by the statute of limitations. On
appeal, Loftin argues that the circuit court erred in finding that the doctrine of equitable
tolling is inapplicable and that his claim is barred by the statute of limitations. We affirm.
We review a circuit court’s decision on a motion to dismiss a complaint by treating
the facts alleged in the complaint as true and by viewing them in the light most favorable to
the plaintiff. Hutcherson v. Rutledge, 2017 Ark. 359, at 2, 533 S.W.3d 77, 79. In order to
prevail on a motion to dismiss a complaint on the basis of a statute-of-limitations defense, it
must be barred on its face. Id.
Considering our standard of review, we begin with a summary of the facts as alleged
in Loftin’s complaint that are pertinent to the issues on appeal. Loftin had several decades of
experience as a bank executive when he was approached in 1999 by FSB seeking to recruit
him to open a loan-production office in Northwest Arkansas. When negotiating his
employment, Loftin indicated his desire to work ten more years before he retired and
requested a “capital, vesting interest in or from” FSB if he completed a ten-year term of
employment. FSB was unwilling to provide Loftin with an equity position in FSB stock but
instead offered an “Executive Supplemental Retirement Plan Executive Agreement”
1 The amended complaint again sought a declaratory judgment that Loftin was entitled to full performance by FSB of the split-dollar life insurance agreement. Loftin agreed with FSB that the claim should be dismissed, and the order appealed from dismissed the insurance claim.
2 (SERP), funded through a whole life insurance policy paid for by FSB that would “create
a substantial vested, capital amount for [Loftin] payable to him upon the completion of his
tenure.” This was an essential part of the consideration tendered for him to accept the
position, and the SERP was initiated by the bank in writing effective November 16, 1999.
Subsequently, the agreement was ratified, confirmed, and amended in writing on November
19, 2004.
In May 2009, new governmental regulations impacted the SERP. To fulfill its
obligation with Loftin, FSB proposed terminating the SERP and replacing it with an annuity
substantially equivalent to the SERP for which Loftin would be the owner, and FSB would
pay the premiums. The consideration exchanged to accomplish this new agreement was the
revocation of the SERP on May 14, 2009, and purchase of an annuity on May 19, 2009.
Loftin made the application with MLT Insurance Company as the owner and annuitant of
a deferred annuity, which was issued on May 26, 2009. FSB contracted with Loftin “in
exchange for his continued employment” to make a total of six annual payments to the
annuity, with the last payment to be made in May 2015, with a guaranteed value of
$420,730.89. If at any point during the six-year period Loftin was terminated, he would
own the annuity and the remaining balance. The first year’s premium of $67,712 was paid
by FSB.
Within the first year after the annuity was initiated, the Federal Deposit Insurance
Corporation (FDIC) and the Arkansas State Bank Department (ASBD) discovered
significant regulatory deficiencies with FSB. In order to avoid a regulatory takeover, FSB
3 entered into a “Memorandum of Understanding” (MOU) with the FDIC and the ASBD
subjecting it to temporary regulatory control by those agencies. The MOU mandated that
FSB implement, revise, and terminate various procedures and actions to avoid termination
of its charter or other sanctions. The complaint alleged that these procedures and actions
included the suspension of various executive-compensation packages and that thereafter,
FSB suspended annual payments to Loftin’s annuity without prior notice to, or discussions
with, him.
Loftin alleged that he continued his employment with FSB while the annuity was
suspended due to the MOU, fully and competently performing all his executive duties in
exchange for the compensation promised him by FSB. However, Loftin was terminated on
November 4, 2016. FSB operated under the MOU until approximately July 2017 at which
point FSB had no legal or regulatory prohibitions against performing its annuity agreement
with Loftin. Loftin further claimed that while FSB operated under the MOU, he had
fiduciary duties to FSB that would have been violated had he pursued a claim, risking loss
of employment and loss of compensation as an executive officer.
In ruling on the motion to dismiss, the court found in pertinent part,
4. With respect to the Annuity Claims, taking the facts alleged in the Amended Complaint as true, the Court finds that they are barred on the face of the Amended Complaint by the three (3) year statute of limitations set forth in Ark. Code Ann. § 16-56-105. Specifically, the Court finds that the breach of the oral agreement alleged by plaintiff occurred in May 2010, and the applicable statute of limitations therefore expired in 2013.
4 The court further found that the amended complaint failed to state facts sufficient to support
a claim that the statute of limitations was equitably tolled.2
In the present case, there is no dispute that the applicable statute of limitations for an
oral contract is three years pursuant to Ark. Code Ann. § 16-56-105 (Repl. 2005) and that
the breach in this case—the failure to make an annuity payment—occurred in 2010. Loftin
argues that the circuit court erred in finding that the doctrine of equitable tolling is
inapplicable and that his claim is barred by the statute of limitations for oral contracts.
There are very few cases in Arkansas involving equitable tolling, and in those cases,
the doctrine is not specifically defined. See, e.g., Skender v. Union Pac. R.R. Co., 2018 Ark.
App. 234, at 4, 547 S.W.3d 751, 753; Stracener v. Williams, 84 Ark. App. 208, 214, 137
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Cite as 2020 Ark. App. 66 Reason: I attest to the accuracy ARKANSAS COURT OF APPEALS and integrity of this document DIVISION I Date: 2021-06-29 16:35:36 Foxit PhantomPDF Version: No. CV-19-279 9.7.5
JERRY BRUCE LOFTIN Opinion Delivered: February 5, 2020 APPELLANT APPEAL FROM THE WASHINGTON V. COUNTY CIRCUIT COURT [NO. 72CV-18-501] FIRST STATE BANK APPELLEE HONORABLE BETH STOREY BRYAN, JUDGE
AFFIRMED
RITA W. GRUBER, Chief Judge
Appellant Jerry Bruce Loftin filed a complaint against First State Bank (FSB) in the
Washington County Circuit Court on February 22, 2018, seeking reinstatement of an
annuity or, alternatively, money damages for the value of the annuity, and a declaratory
judgment that he was entitled to full performance by FSB of a split-dollar life insurance
agreement between him and FSB. On April 18, 2018, FSB filed a motion to dismiss
pursuant to Rule 12(b)(6) of Arkansas Rules of Civil Procedure, and the circuit court
entered an order on September 5, 2018, granting Loftin ten days to file an amended
complaint to address the weaknesses alleged in the motion to dismiss. The amended
complaint was filed on September 10, 2018, and FSB again filed a Rule 12(b)(6) motion to
dismiss alleging that the annuity claims, which were based on an oral agreement between the parties, were barred because the complaint failed to allege facts sufficient to toll the
statute of limitations.1 The circuit court granted FSB’s motion to dismiss, finding that
Loftin’s claim for breach of an oral agreement was barred by the statute of limitations. On
appeal, Loftin argues that the circuit court erred in finding that the doctrine of equitable
tolling is inapplicable and that his claim is barred by the statute of limitations. We affirm.
We review a circuit court’s decision on a motion to dismiss a complaint by treating
the facts alleged in the complaint as true and by viewing them in the light most favorable to
the plaintiff. Hutcherson v. Rutledge, 2017 Ark. 359, at 2, 533 S.W.3d 77, 79. In order to
prevail on a motion to dismiss a complaint on the basis of a statute-of-limitations defense, it
must be barred on its face. Id.
Considering our standard of review, we begin with a summary of the facts as alleged
in Loftin’s complaint that are pertinent to the issues on appeal. Loftin had several decades of
experience as a bank executive when he was approached in 1999 by FSB seeking to recruit
him to open a loan-production office in Northwest Arkansas. When negotiating his
employment, Loftin indicated his desire to work ten more years before he retired and
requested a “capital, vesting interest in or from” FSB if he completed a ten-year term of
employment. FSB was unwilling to provide Loftin with an equity position in FSB stock but
instead offered an “Executive Supplemental Retirement Plan Executive Agreement”
1 The amended complaint again sought a declaratory judgment that Loftin was entitled to full performance by FSB of the split-dollar life insurance agreement. Loftin agreed with FSB that the claim should be dismissed, and the order appealed from dismissed the insurance claim.
2 (SERP), funded through a whole life insurance policy paid for by FSB that would “create
a substantial vested, capital amount for [Loftin] payable to him upon the completion of his
tenure.” This was an essential part of the consideration tendered for him to accept the
position, and the SERP was initiated by the bank in writing effective November 16, 1999.
Subsequently, the agreement was ratified, confirmed, and amended in writing on November
19, 2004.
In May 2009, new governmental regulations impacted the SERP. To fulfill its
obligation with Loftin, FSB proposed terminating the SERP and replacing it with an annuity
substantially equivalent to the SERP for which Loftin would be the owner, and FSB would
pay the premiums. The consideration exchanged to accomplish this new agreement was the
revocation of the SERP on May 14, 2009, and purchase of an annuity on May 19, 2009.
Loftin made the application with MLT Insurance Company as the owner and annuitant of
a deferred annuity, which was issued on May 26, 2009. FSB contracted with Loftin “in
exchange for his continued employment” to make a total of six annual payments to the
annuity, with the last payment to be made in May 2015, with a guaranteed value of
$420,730.89. If at any point during the six-year period Loftin was terminated, he would
own the annuity and the remaining balance. The first year’s premium of $67,712 was paid
by FSB.
Within the first year after the annuity was initiated, the Federal Deposit Insurance
Corporation (FDIC) and the Arkansas State Bank Department (ASBD) discovered
significant regulatory deficiencies with FSB. In order to avoid a regulatory takeover, FSB
3 entered into a “Memorandum of Understanding” (MOU) with the FDIC and the ASBD
subjecting it to temporary regulatory control by those agencies. The MOU mandated that
FSB implement, revise, and terminate various procedures and actions to avoid termination
of its charter or other sanctions. The complaint alleged that these procedures and actions
included the suspension of various executive-compensation packages and that thereafter,
FSB suspended annual payments to Loftin’s annuity without prior notice to, or discussions
with, him.
Loftin alleged that he continued his employment with FSB while the annuity was
suspended due to the MOU, fully and competently performing all his executive duties in
exchange for the compensation promised him by FSB. However, Loftin was terminated on
November 4, 2016. FSB operated under the MOU until approximately July 2017 at which
point FSB had no legal or regulatory prohibitions against performing its annuity agreement
with Loftin. Loftin further claimed that while FSB operated under the MOU, he had
fiduciary duties to FSB that would have been violated had he pursued a claim, risking loss
of employment and loss of compensation as an executive officer.
In ruling on the motion to dismiss, the court found in pertinent part,
4. With respect to the Annuity Claims, taking the facts alleged in the Amended Complaint as true, the Court finds that they are barred on the face of the Amended Complaint by the three (3) year statute of limitations set forth in Ark. Code Ann. § 16-56-105. Specifically, the Court finds that the breach of the oral agreement alleged by plaintiff occurred in May 2010, and the applicable statute of limitations therefore expired in 2013.
4 The court further found that the amended complaint failed to state facts sufficient to support
a claim that the statute of limitations was equitably tolled.2
In the present case, there is no dispute that the applicable statute of limitations for an
oral contract is three years pursuant to Ark. Code Ann. § 16-56-105 (Repl. 2005) and that
the breach in this case—the failure to make an annuity payment—occurred in 2010. Loftin
argues that the circuit court erred in finding that the doctrine of equitable tolling is
inapplicable and that his claim is barred by the statute of limitations for oral contracts.
There are very few cases in Arkansas involving equitable tolling, and in those cases,
the doctrine is not specifically defined. See, e.g., Skender v. Union Pac. R.R. Co., 2018 Ark.
App. 234, at 4, 547 S.W.3d 751, 753; Stracener v. Williams, 84 Ark. App. 208, 214, 137
S.W.3d 428, 432 (2003). Loftin suggests that the doctrine of equitable tolling is best
described as follows: “[E]ven when the defendant is faultless, if the plaintiff because of
disability, irremediable lack of information, or other circumstances beyond his control just
cannot reasonably be expected to sue in time, the statute of limitations will be tolled until
he is able through the exercise of proper diligence to file his suit. This is equitable tolling.”
Miller v. Runyon, 77 F.3d 189, 191 (7th Cir. 1996).
Loftin contends that due to circumstances beyond his control and through no fault
of his own—specifically, FSB’s being bound by the MOU and his fiduciary duties as an
executive and board member of FSB—he was prevented from filing suit within the
2 The court’s oral ruling after arguments by counsel at the hearing on November 29, 2018, was incorporated into the written order.
5 limitations period, and equitable tolling should apply. He suggests that his case is analogous
to Young v. United States, 535 U.S. 43 (2002). We disagree. While Young was an equitable-
tolling case, it was also a bankruptcy case. The Supreme Court, in affirming the Fifth
Circuit’s decision, stated that “the IRS was disabled from protecting its claim during the
pendency of the Chapter 13 petition, and this period of disability tolled the three-year
lookback period when the Youngs filed their Chapter 7 petition.” Young, 535 U.S. at 50–
51. The Court concluded that “the lookback period of 11 U.S.C. § 507(a)(8)(A)(i) is tolled
during the pendency of a prior bankruptcy petition.” Id. at 54.
In Young, the bankruptcy law (the automatic stay of 11 U.S.C. § 362) prevented the
IRS from taking steps to collect the unpaid taxes due. Id. at 50–51. There is no allegation
in the amended complaint that the MOU prevented Loftin from filing a complaint. Rather,
the complaint alleges that because of his position as an executive employee and stockholder
of FSB, he had “substantial fiduciary duties to the Bank which would be violated were he
to pursue a claim against the Bank for his rights regarding the Annuity contrary to the
mandates of the MOU, risking loss of his employment and loss of compensation as an
executive officer.” He also alleged he would have been “risking loss of his stock values if
he sued the Bank to compel it to act contrary to the MOU.”
Loftin also argues that his fiduciary duty to FSB is a basis to apply equitable tolling
and cites Golden Pacific Bancorp v. F.D.I.C., 273 F.3d 509, 518 (2d Cir. 2001), in support of
his argument. Loftin’s reliance on Golden Pacific Bancorp is misplaced. That case involved a
claim for breach of fiduciary duty that had a six-year statute of limitations under New York
6 law. Golden Pacific Bancorp sued the FDIC for breach of fiduciary duty arising from the
FDIC’s receivership of Golden Pacific Bancorp’s subsidiary bank. The district court found
in part that the claims were barred because the case was not filed within the statutory period
after the alleged wrongful conduct, which occurred in June 1985. In vacating and remanding
the district court’s decision, the Second Circuit explained,
Under New York law, the limitations period for claims arising out of a fiduciary relationship does not commence “until the fiduciary has openly repudiated his or her obligation or the relationship has been otherwise terminated.” Westchester Religious Inst. v. Kamerman, 262 A.D.2d 131 (1999); accord 196 Owners Corp. v. Hampton Mgmt. Co., 227 A.D.2d 296 (1996); Bd. of Educ. v. Thompson Const. Corp., 111 A.D.2d 497 (1985). In such cases, the “statutory period [is] tolled between the alleged fiduciary misconduct” and the date on which the fiduciary relationship is openly repudiated or otherwise ended, so that any misconduct alleged before that end date “falls within the permissible temporal scope.” Kamerman, 262 A.D.2d 131. A receivership is, of course, a type of fiduciary relationship and is therefore subject to this tolling period. See, e.g., Kupferman v. Consol. Research & Mfg. Corp., 459 F.2d 1072, 1080 (2d Cir.1972) (Friendly, J.) (applying New York law).
Golden Pac. Bancorp, 273 F.3d at 518–19 (citations omitted). The FDIC did not dispute that
it owed Golden Pacific Bancorp fiduciary duties as receiver of the bank and that the FDIC
did not terminate its fiduciary duty (its receivership of the bank) until November 1, 1995.
Id. at 519.The court held that Bancorp had timely filed its claim on October 31, 1995. Id.
We agree with the circuit court that equitable tolling is not applicable to the facts of
this case. Loftin has not alleged anything that prevented him from bringing an action against
FSB based on the MOU or any fiduciary duties he may have owed to the bank. While it
may not have been beneficial for Loftin as an executive officer to file a complaint to enforce
the annuity agreement, there was no allegation that he was prevented from doing so.
7 Likewise, there was no allegation of fraudulent concealment that would have tolled the
statute of limitations. Loftin was aware in 2010 that FSB failed to make payments on the
annuity pursuant to the oral agreement. The statute of limitations ran in 2013. Having
reviewed the facts alleged in the complaint, we agree with the circuit court that the action
is barred by the statute of limitations.
Affirmed.
ABRAMSON and MURPHY, JJ., agree.
Davis, Clark, Butt, Carithers & Taylor, PLC, by: Constance G. Clark and William
Jackson Butt II, for appellant.
Shemin Law Firm, PLLC, by: Kenneth R. Shemin; and Lax, Vaughan, Fortson, Rowe &
Threet, P.A., by: Grant E. Fortson, for appellee.