Phillipy v. Thompson

2020 Ark. App. 146, 597 S.W.3d 108

• Court: Court of Appeals of Arkansas
• Decided: February 26, 2020
• Status: Published

Opinion

Cite as 2020 Ark. App. 146 Reason: I attest to the accuracy and integrity of this document ARKANSAS COURT OF APPEALS Date: 2021-06-21 14:42:15 Foxit PhantomPDF Version: 9.7.5 DIVISION I No. CV-19-75

LINDA ABRAMSON PHILLIPY AND Opinion Delivered February 26, 2020 WHITE RIVER NATURE CENTER, INC., A/K/A DELTA WILDLIFE APPEAL FROM THE MONROE MANAGEMENT, INC. COUNTY CIRCUIT COURT [NO. 48CV-15-108] APPELLANTS V. HONORABLE CHALK MITCHELL, JUDGE L.E. “ED” THOMPSON AND DAVID STEINMETZ AFFIRMED

APPELLEES

LARRY D. VAUGHT, Judge

Linda Abramson Phillipy and White River Nature Center, Inc., a/k/a Delta Wildlife

Management, Inc. (collectively appellants), appeal the order entered by the Monroe County

Circuit Court denying their motion for summary judgment and granting the summary-

judgment motion filed by L.E. “Ed” Thompson and David Steinmetz (collectively appellees).

Appellants argue that the circuit court erred in finding that appellees have standing in this

lawsuit and in applying the doctrine of collateral estoppel. We affirm.

On October 28, 2015, L.E. “Ed” Thompson and David Steinmetz filed a complaint

for declaratory judgment against Linda Abramson Phillipy and White River Nature Center,

Inc. (WRNC), a/k/a Delta Wildlife Management, Inc. (DWM), requesting the circuit court to

declare who is authorized to exercise control over WRNC a/k/a DWM and which entity is

the owner of 300 acres of real property located in Monroe County, Arkansas (the property). Appellees’ complaint alleges that in 1984, Thompson owned the property and desired to

establish a nature center in the community; therefore, he hired an attorney to prepare the

paperwork to form a nonprofit corporation known as WRNC. Thompson then deeded the

property to The Arkansas Nature Conservancy, which later deeded the property to WRNC.

According to appellees’ complaint, initial corporate documents listed Phillipy as an

officer and the registered agent of WRNC, and it was Thompson’s vision that Phillipy would

run WRNC. However, WRNC did not attract the interest or contributions needed to properly

fund and operate it. The complaint alleges that Phillipy moved out of Arkansas and ended her

involvement with WRNC and that since the early 1990s, Thompson has been operating the

nonprofit by holding corporate meetings, filing corporate reports, caring for the property, and

paying taxes on the property. Appellees’ complaint also alleges that in 2009, Thompson

changed WRNC’s name to DWM and that he executed a deed transferring the property from

WRNC to DWM. In September 2012, DWM entered into a lease agreement with Steinmetz

for limited hunting on and management of the property.

As per appellees’ complaint, Patrick Haynie and Gary Haynie filed a lawsuit in the

Monroe County Circuit Court in April 2013 (the Haynie lawsuit) against DWM, Steinmetz,

and Thompson requesting an easement over the property owned by DWM. The Haynie

lawsuit was resolved by a final order entered on August 27, 2014 (the 2014 order), that found:

“[DWM] is the owner of [the property]” and “[Thompson] is the president of [DWM].” The

2014 order also granted the Haynies an easement over the property.

Appellees’ complaint further alleges that in October 2014, a certificate of amendment

of a nonprofit, signed by Phillipy, was filed with the Arkansas Secretary of State on behalf of

2 DWM. Attached to the certificate are the minutes from a September 2014 DWM corporate

meeting that reflect a new board of directors was appointed (Phillipy was named president,

Gary Haynie was named vice president, and Gary’s wife, Christina Haynie, was named

secretary), the corporate name was changed back to WRNC, and the corporate address was

changed to 577 Phillips 604 Road, Marvell, AR 72366. On November 13, 2014, Phillipy signed

and filed a deed conveying the property back to WRNC. The deed lists Phillipy’s address as:

577 Phillips 604 Road, Marvell, AR 72366. Appellees allege in their complaint that Phillipy’s

actions are ineffective, invalid, and in direct violation and contradiction of the findings in the

2014 order. Appellees asked the circuit court to invalidate changes made to DWM’s corporate

structure during the September meeting; strike the November 2014 deed transferring the

property from DWM to WRNC; declare that the findings in the 2014 order—that Thompson

is president of DWM and DWM is the owner of the property—are binding on appellants;

declare that Phillipy has no role, position, or authority to act on behalf of DWM or WRNC;

and find that the lease between DWM and Steinmetz is valid, effective, and binding on the

parties.

Appellants answered appellees’ complaint stating that they own the property and that

they are entitled to declaratory judgment that they own the property “free and clear of all

claims of [appellees].” Appellants later filed a counterclaim requesting the circuit court to

declare that WRNC is the owner of the property and to enjoin appellees from leasing access

to the property.

Both parties moved for summary judgment. Appellees argued that they were entitled

to summary judgment based on the doctrine of collateral estoppel; more specifically, they

3 argued that appellants were bound by the findings in the 2014 order that Thompson is the

president of DWM and that DWM owns the property. In defending against appellees’ motion,

appellants argued that collateral estoppel does not apply and that the facts are undisputed that

Phillipy is the president of WRNC. In support of their motion for summary judgment,

appellants argued for the first time that appellees lack standing to bring this declaratory-

judgment action.

After a hearing, the circuit court entered an order granting appellees’ motion for

summary judgment and denying appellants’ motion. In the order, the court found that the

2014 order is binding and controlling on the issues in this case; the September 2014 corporate

meeting has no effect; the November 2014 deed has no effect and is stricken from the record

book; Phillipy “has no role, position or authority to act on behalf of [DWM] or [WRNC]”; the

lease between DWM and Steinmetz is valid, effective, and binding on the parties; and

Thompson is authorized to amend the records with the Arkansas Secretary of State to reflect

the findings in the order. Appellants have appealed from this order.

Summary judgment may be granted only when there are no genuine issues of material

fact to be litigated, and the moving party is entitled to judgment as a matter of law. Washington

Cty. v. Bd. of Tr. of the Univ. of Ark., 2016 Ark. 34, at 3, 480 S.W.3d 173, 175. Ordinarily, upon

reviewing a circuit court’s decision on a summary-judgment motion, we would examine the

record to determine if genuine issues of material fact exist. Id., 480 S.W.3d at 175. However,

when the parties agree on the facts, we simply determine whether the appellee was entitled to

judgment as a matter of law. Id., 480 S.W.3d at 175. When parties file cross-motions for

summary judgment, as was done in this case, they essentially agree that there are no material

4 facts remaining, and summary judgment is an appropriate means of resolving the case. Id., 480

S.W.3d at 175. As to issues of law presented, our review is de novo. Id., 480 S.W.3d at 175. De

novo review means that the entire case is open for review. Id., 480 S.W.3d at 175.

Appellants first argue that the circuit court erred in finding that appellees have standing

to bring a declaratory-judgment action. Appellants claim that it is undisputed that appellees

are not officers, directors, or members of WRNC or DWM; therefore, they have no interest

in or rights to the property. We cannot reach the merits of this argument because appellants

waived it.

The question of standing is a threshold issue and should be addressed first. Barrett v.

Thurston, 2020 Ark. 36, at 3–4, 593 S.W.3d 1, 4. The Arkansas Rules of Civil Procedure require

that any matter constituting an avoidance or affirmative defense must be outlined in a party’s

responsive pleading. Id. at 4, 593 S.W.3d at 5 (citing Ark. R. Civ. P. 8(c); Poff v. Brown, 374 Ark.

453, 454, 288 S.W.3d 620, 622 (2008)). The failure to plead an affirmative defense can result

in the waiver and exclusion of the defense from the case. Id., 593 S.W.3d at 5 (citing Seth v. St.

Edward Mercy Med. Ctr., 375 Ark. 413, 417, 291 S.W.3d 179, 183 (2009)). In Barrett, the appellee

argued in her cross-appeal that the appellant lacked standing to file her petition. Our supreme

court held that standing is an avoidance or affirmative defense, and because the appellee failed

to affirmatively plead standing in her answer to the appellant’s petition, the standing defense

was deemed waived. Id., 593 S.W.3d at 5.

In the instant case, appellants also failed to plead standing in their answer to appellees’

complaint. Accordingly, appellants’ standing-defense argument is deemed waived. Barrett, 2020

Ark. 36, at 5, 593 S.W.3d at 5.

5 Appellants next argue that the circuit court erred in granting the summary-judgment

motion filed by appellees by finding that appellants are bound by the findings in the 2014

order based on collateral estoppel. The doctrine of collateral estoppel, or issue preclusion, bars

the relitigation of issues of law or fact actually litigated by parties in the first suit. Ark. Dep’t of

Human Servs. v. Dearman, 40 Ark. App. 63, 66, 842 S.W.2d 449, 451 (1992). It is based on the

policy of limiting litigation to one fair trial on an issue. Id., 842 S.W.2d at 451. Collateral

estoppel requires four elements before a determination is conclusive in a subsequent

proceeding: (1) the issue sought to be precluded must be the same as that involved in the prior

litigation; (2) that issue must have been actually litigated; (3) the issue must have been

determined by a valid and final judgment; and (4) the determination must have been essential

to the judgment. Powell v. Lane, 375 Ark. 178, 185, 289 S.W.3d 440, 444 (2008). The party

against whom collateral estoppel is asserted must have been a party to the earlier action and

must have had a full and fair opportunity to litigate the issue in that first proceeding. Id., 289

S.W.3d at 444. Unlike res judicata, which acts to bar issues that merely could have been litigated

in the first action, collateral estoppel requires actual litigation in the first instance. Id., 289

S.W.3d at 444. When determining whether an issue has been actually litigated, we must look

to see if the issue was properly raised and whether there was a full and fair opportunity to be

heard. Id. at 188, 289 S.W.3d at 446. There is no bright-line rule for the application of collateral

estoppel. Id. at 189, 289 S.W.3d at 447. Each judgment, taken by default or otherwise, must

be examined to determine what was finally decided and whether it meets the requirements of

collateral estoppel. Id., 289 S.W.3d at 447.

6 Appellants contend that collateral estoppel does not apply because they were not a

party to the Haynie lawsuit and because the Haynie lawsuit was not actually litigated. In Powell,

our supreme court was presented with similar arguments. There, the court affirmed the circuit

court’s order granting Davelynn and Wendell Lane’s 2006 petition to adopt DP and dismissing

Jason Powell’s 2006 divorce complaint as a result of a finding in a 2004 default judgment

entered in Davelynn’s 2004 paternity action against Jason. The supreme court held:

Davelynn asserted in the paternity action that she was not married at the time of [DP’s] conception and birth. Jason did not offer any evidence to the contrary, although he had the opportunity to do so. The circuit court declared that Davelynn was not married to Jason at the time of DP’s conception and birth. Thus, the issue of marital status was “actually litigated.” The decision of paternity was conclusive, and Jason is bound by that decision. Collateral estoppel applies in this case. To hold otherwise would undermine the finality of judgments.

Id. at 189, 289 S.W.3d at 447. Therefore, the supreme court held that the issue of the parties’

marital status had been “actually litigated.” Jason—who was served with the paternity action

but failed to answer it—had a full and fair opportunity to be heard, collateral estoppel applied,

and Jason was bound by the findings in the default-judgment paternity order in the subsequent

divorce and adoption proceedings. Id., 289 S.W.3d at 447.

We hold that appellants are likewise bound by the findings in the 2014 order in this

declaratory-judgment action. The record reflects that Phillipy was served—as the registered

agent for WRNC a/k/a DWM—with the complaint in the Haynie lawsuit on June 15, 2013,

yet she elected not to file an answer. Therefore, like Jason in Powell, appellants had a full and

fair opportunity to be heard in the Haynie lawsuit. They chose not to avail themselves of the

opportunity to be heard.

7 We further hold that the issues of who is the president of DWM and who owns the

property were actually litigated in the Haynie lawsuit. The 2014 order expressly answered these

two questions: DWM is the owner of the property, and Thompson is the president of DWM.

These determinations were essential to the judgment in that the Haynies were seeking an

easement over the property that was subject to the interest of appellees. Therefore, we hold

that collateral estoppel applies in this case and that appellants are bound by the findings in the

2014 order. Accordingly, we affirm the circuit court’s order granting appellees’ motion for

summary judgment and denying appellants’ motion for summary judgment.

Affirmed.

HARRISON and SWITZER, JJ., agree.

Sutter & Gillham, P.L.L.C., by: Luther Oneal Sutter and Lucien Gillham, for appellants.

Cullen & Co., PLLC, by: Tim Cullen, for appellees.