Omni Holding & Development Corp. v. C.A.G. Investments, Inc.

258 S.W.3d 374, 370 Ark. 220, 2007 Ark. LEXIS 353
CourtSupreme Court of Arkansas
DecidedJune 7, 2007
Docket06-1136
StatusPublished
Cited by23 cases

This text of 258 S.W.3d 374 (Omni Holding & Development Corp. v. C.A.G. Investments, Inc.) 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
Omni Holding & Development Corp. v. C.A.G. Investments, Inc., 258 S.W.3d 374, 370 Ark. 220, 2007 Ark. LEXIS 353 (Ark. 2007).

Opinion

Annabelle Clinton Imber, Justice.

This appeal arises out of land and loan transactions involving Appellant Omni Holding and Development Corp. (“Omni”) and Appellee/CrossAppellant C.A.G. Investments, Inc. (“C.A.G.”). In addition to Omni and C.A.G., other individuals or entities relevant to this appeal are Kim Crockett (“Crockett”), Omni’s current president and majority shareholder; Bob Herren (“Herren”), Omni’s former president and majority shareholder; Tom Papachristou (“Papachristou”), Omni’s general manager; Sherlee Despot (“Despot”), C.A.G.’s president and sole shareholder; and the Gregory Despot Children’s Trust (“Trust”), of which Despot is a beneficiary. For its appeal, Omni raises three points of error, while C.A.G. asserts one point on cross-appeal. We find no error and affirm the judgment of the circuit court.

In 1993, Herren and Papachristou met in Shreveport, Louisiana, through a lawyer who represented them both. The men developed a business plan whereby Herren would provide financing and facilities for a crop-dusting service and a farm-equipment export business to be run by Papachristou. Although the business, Omni, was incorporated by Herren in Louisiana, it was to be located in Crittenden County, Arkansas. Subsequently, Herren persuaded Despot, with whom he lived in Shreveport, to use money from her personal funds, bank loans, and Trust funds to purchase land in Crittenden County. She was promised a 10% rate of return on her investment. With Herren’s assistance, Despot organized C.A.G. as a Louisiana corporation and, in January 1994, C.A.G. purchased an 80-acre tract of land outside of Marion, Arkansas, to serve as Omni’s headquarters. In lieu of rent, Despot, Herren, and Papachristou agreed that Omni would pay the taxes and insurance on the land until the business could afford to make rental payments. Additionally, C.A.G. purchased a home for Papachristou and Crockett, his girlfriend, who was also employed by Omni. Over the next several years, C.A.G. intermittently advanced funds to Omni.

On December 3, 1997, Despot executed a warranty deed from C.A.G. to Crockett, conveying the 80-acre tract of land for the purchase price of $50,000, which sum was provided by Papachristou’s father. Prior to recording the deed, Papachristou requested that Herren secure additional financing from Despot and C.A.G. for Omni’s export business. C.A.G. refused the request for additional financing unless it owned the land. Thus, on February 18, 1998, C.A.G. wired $50,000 to Omni, and Crockett executed a warranty deed to C.A.G., conveying the land back to C.A.G. Both deeds were recorded on the same day, February 19, 1998.

In order to consolidate Omni’s outstanding indebtedness to C.A.G., Herren, in his capacity as president of Omni, prepared and signed a promissory note on September 15, 1998, in favor of C.A.G. in the sum of $175,000. The note was secured with an aircraft owned by Omni. One year later, Omni executed a bill of sale in favor of C.A.G., conveying airplane hangars, which had been built on the 80-acre tract, thereby securing title to the improvements in C.A.G.

On March 2, 2000, Omni borrowed $150,000 from Textron Financial Corporation (“Textron”), which loan was personally guaranteed by Despot. The $150,000 note was also secured by the identical aircraft that secured the earlier $175,000 note from Omni to C.A.G.

Omni’s financial difficulties continued over the next three years, resulting in the deterioration of the business relationship among the parties. In late summer 2003, Despot and Herren learned that Omni was contemplating bankruptcy and that Papachristou was out of the country, in Greece. Upon becoming aware of that information, Despot and Herren promptly traveled to Arkansas and discovered that the aircraft designated as security on both the Textron and C.A.G. notes had crashed in 2002. They also found out that the insurance proceeds payable to C.A.G., Omni, and Textron as loss payees, totaling $233,500, had been deposited into Omni’s bank account on May 15, 2002, without the endorsement of either C.A.G. or Textron. In November 2003, C.A.G. demanded that Omni immediately remove all personal property it owned or possessed from the real property owned by C.A.G. and to surrender possession of the real property.

As a result of Omni’s refusal to comply, C.A.G. filed a complaint against Omni on December 18, 2003, asserting that Omni was in possession of real property owned by C.A.G. and that the property was being unlawfully detained. Following a hearing, the circuit court entered an order on June 22, 2004, stating that Omni had committed an unlawful detainer of the property and that C.A.G. was entitled to a writ of possession of the property without the requirement of posting a bond. Omni requested permission to post bond and remain in possession; however, it did not post the required $50,000 cash bond and $550,000 corporate surety bond by July 30, 2004, nor did it vacate the premises. In addition to its failure to vacate, equipment remained on the property, most of which had been “stripped,” and Papachristou continued to reside on the premises.

C.A.G. amended its complaint, seeking a judgment for the amount due and owing on the September 15, 1998 promissory note and a finding of abandonment with regard to Omni’s personal property. That same day, C.A.G. filed a petition for contempt, asserting that Papachristou, with Omni’s permission, willfully remained on the premises and authorized other persons to remain on the premises, in violation of the court’s orders. The petition requested that the court find Papachristou and Omni in contempt. Omni filed a counterclaim for quiet title, asserting that Crockett signed and delivered to C.A.G. a deed purportedly conveying the real property to C.A.G., but that Omni did not intend to vest title in C.A.G.

At trial, testimony elicited early in the proceedings established that C.A.G.’s corporate charter had been revoked in Louisiana in 2000. Omni moved to dismiss C.A.G.’s complaint, claiming that C.A.G. did not have standing to sue or defend the counterclaim. On November 17, 2004, C.A.G. filed a response, asserting that its corporate charter had been reinstated in accordance with Louisiana law, effective November 4, 2004. Two days later, C.A.G. filed its second amendment to the complaint, alleging that, under Louisiana law, the certificate of reinstatement was retroactive and the charter and articles of incorporation continued in existence as though the revocation had never occurred. The circuit court denied Omni’s motion to dismiss, finding that although C.A.G. lacked standing at the time of the filing of its original complaint, C.A.G.’s corporate status had subsequently been cured.

Ultimately, the case was tried and, on May 30, 2006, the circuit court entered its order and judgment, finding in pertinent part as follows: (1) C.A.G. was the record fee simple title owner of the land and that all improvements and fixtures were quieted in C.A.G.; (2) Omni’s claim to rescind and reform C.A.G.’s title into a mortgage and quiet title in Omni was denied and dismissed; (3) C.A.G. ’s claim that Omni was indebted to it under the terms of a promissory note, or was otherwise liable in debt to it, was denied and dismissed; (4) Omni and Papachristou were in contempt for failing to vacate the premises after the court awarded possession to C.A.G.; and (5) Omni had abandoned all personal property it left on the premises following its failure to post the requisite bond to retain possession.

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Bluebook (online)
258 S.W.3d 374, 370 Ark. 220, 2007 Ark. LEXIS 353, Counsel Stack Legal Research, https://law.counselstack.com/opinion/omni-holding-development-corp-v-cag-investments-inc-ark-2007.