Cite as 2020 Ark. App. 500 Reason: I attest to the accuracy and integrity of this document Date: 2021-07-15 14:44:16 ARKANSAS COURT OF APPEALS Foxit PhantomPDF Version: DIVISION IV No. CV-18-1067 9.7.5
THOMASON INVESTMENTS, LLC; Opinion Delivered: October 28, 2020 AND TODD THOMASON APPELLANTS/CROSS-APPELLEES APPEAL FROM THE BOONE V. COUNTY CIRCUIT COURT [NO. 05CV-2015-15-4] JOHNNY HUDDLESTON; BRENDA HUDDLESTON; TAB CONSTRUCTION OF HARRISON, HONORABLE ELLEN BRANTLEY, LLC; JOHNNY HUDDLESTON D/B/A JUDGE TAB CONSTRUCTION AND TAB CONSTRUCTION, INC.; AND TAB AFFIRMED IN PART; REVERSED INVESTMENT, LLC AND REMANDED IN PART; APPELLEES/CROSS-APPELLANTS AFFIRMED ON CROSS-APPEAL
MIKE MURPHY, Judge
In 2015, the appellees Johnny Huddleston and Brenda Huddleston filed a complaint
to quiet title on real property that they owned in Boone County, alleging that the appellants,
Todd Thomason and Thomason Investments, refused to release a lien after they satisfied
their obligation on an $80,000 mortgage. Thomason countered with several claims for
damages and equitable relief against Johnny and Brenda as well as their businesses, Tab
Construction and Tab Investments, alleging breach of contract, negligence, breaches of the
fiduciary duty, unjust enrichment, conversion, and fraud and deceit.1
1 For clarity, we refer to appellants Todd Thomason and Thomason Investments simply as “Thomason.” We refer to the Huddlestons, Tab Construction, and Tab Investments collectively as “the Huddlestons.” When it is necessary to separately discuss Johnny Huddleston and Brenda Huddleston, we use their given names. A jury rejected most of Thomason’s claims for damages in a series of interrogatories,
and the circuit court, guided by the jury’s verdicts, also denied equitable relief. Thomason
now directly appeals those judgments, arguing that the circuit court erred by denying him
equitable relief, by submitting an erroneous instruction to the jury, and by denying his
motion for a judgment notwithstanding the verdict. The Huddlestons cross-appeal, asserting
that the circuit court erred when it denied their request for attorney’s fees pursuant to
Arkansas Code Annotated section 16-22-308.
For the reasons that follow, we reverse and remand the judgment denying equitable
relief. In the cross-appeal, we affirm the circuit court’s order denying the Huddlestons’
request for attorney’s fees.
I. Factual Background
Thomason owns Thomason Investments, LLC, whose business is to “buy notes and
mortgages at a discount.” Johnny and Brenda own Tab Construction, which is in the
business of building, remodeling, and repairing homes. Johnny and Brenda also provide
home financing through their other company, Tab Investments.
Thomason and Johnny met in 1990 when Johnny offered to sell a mortgage on a
property in Mississippi to Thomason Investments. The two men thereafter became close
friends and started doing a lot of business together. As indicated above, they entered into an
arrangement in which Thomason Investments would provide financing for homes that Tab
Construction built and sold. As Thomason described it at trial,
[T]he agreement . . . was [that] Johnny would borrow money from Thomason Investments. I wrote a check to Tab Construction. Johnny would sell the . . . houses to a third party. Then Johnny would sell me the mortgage. In the beginning the
2 buyer would sign a mortgage to Johnny then he would assign it to me. Later he would just assign the mortgage directly to me and [Johnny] was out of the loop.
The financing that Thomason Investments provided paid for the land, the building materials,
and the labor on the houses that Tab Construction built.
In addition to building the houses, the Huddlestons collected payments on the
mortgages that Thomason Investments held on these and other properties. Brenda issued
receipts and recorded the mortgage payments for each property in a spreadsheet program
that Thomason provided. Johnny thereafter delivered the payments—in both cash and
checks—directly to Thomason.
Thomason testified that his finance arrangement with Johnny turned into “revolving
credit” in 2003, when he claims he provided $150,000 for the construction of Johnny’s
home, and their business arrangement began to focus on building spec houses. At that time,
Thomason began recording all of the checks representing loans to Johnny, the balance of
Johnny’s debt, and the applied credits in a single spreadsheet file. That spreadsheet, which
was introduced as defendant’s exhibit 105 at trial, showed a beginning balance of $149,790
on October 23, 2003, and an ending balance of $795,739 on March 10, 2007. It also
demonstrated that Thomason Investments wrote checks through the years to fund multiple
construction projects (often several at a time in a single check) and to pay for personal items
that the Huddlestons acquired, including a truck, a boat, and a trailer.
According to Thomason, a novation occurred in March 2007 that divided the
Huddlestons’ $795,739 balance into three separate loans to Johnny and Brenda, Tab
Construction, and Tab Investments (collectively “the Huddleston loans”). He maintained
that the Huddlestons executed three promissory notes in which they personally agreed to
3 repay Thomason Investments $350,000; Tab Construction agreed to repay $200,000; and
Tab Investments agreed to repay $245,731. Thomason further testified that after the
novation, he began recording checks, payments, and other credits on separate spreadsheets
for each loan. Those spreadsheets were introduced at trial as defendant’s exhibits 107, 108,
and 109.
At some point in 2009, when Thomason was in the middle of a contentious divorce,
he delivered the Huddleston loan spreadsheets to Brenda, who, in addition to recording
payments on Thomason’s mortgages to third parties, began entering the Huddlestons’
payments and credits on each of the three Huddleston loans.
The procedure for collecting mortgage payments from third parties also changed in
2009. Johnny and Brenda started to deliver only the cash payments to Thomason and, at
Thomason’s direction, deposited the check payments that they collected into Tab
Construction’s bank account.
At around the same time, Thomason began to show signs that he was suffering from
a delusional disorder. He testified that he began to feel “sick” in 2009 and “thought people
were after [him].” He feared that he would be taken to jail because he was “having the
[police] called on [him] on a regular basis.” Accordingly, Thomason also executed a power
of attorney on August 2, 2010, that appointed Johnny as his attorney-in-fact.
Thomason’s mental condition continued to deteriorate in the years that followed,
leading to his arrest on March 23, 2012, and his incarceration in the Boone County Jail. At
that time, and at Thomason’s request, Johnny collected Thomason’s business records and
4 extensive gun collection from Thomason’s home and took them to his own house for
safekeeping.
Shortly after Thomason was arrested, he started to hear “conflicting stories about the
handling of [his] affairs” and “began losing confidence with [Johnny].” In particular,
Thomason discovered that while he was in jail, Johnny used his power of attorney to transfer
one of Thomason’s properties to John Seals—another of Thomason’s business associates.
Thomason also learned that Johnny released an unpaid mortgage that Thomason
Investments held on one of Mr. Seals’s other properties. Consequently, Thomason revoked
Johnny’s power of attorney in April 2012, and on August 3, 2012, shortly after his release
from jail, he requested that Johnny provide “a full, complete, and accurate accounting” of
the status of several loans on Thomason properties, including the Huddleston loans.
Brenda Huddleston compiled the accounting that Johnny produced several weeks
later. The three spreadsheets for the Huddleston loans were among the documents that the
Huddlestons produced. Exhibit 107, which tracked the debits and credits on the loan to
Tab Construction, indicated a starting balance of $200,000 and indicated that the
Huddlestons were entitled to a credit of $14,069. Exhibit 108, reflecting the loan to Tab
Investments, showed a starting balance of $257,839 and reflected that Thomason owed a
credit of $220,249. The spreadsheet for the Huddlestons’ personal loan, which was
introduced as exhibit 109 at trial, showed a starting balance of $348,941 and an ending
balance $263,599.
Thomason’s mental illness continued into June 2014 when his bond was revoked,
and he was returned to jail. His illness led to a judgment of acquittal by reason of mental
5 disease or defect, and he was committed to the Arkansas State Hospital in Little Rock until
he was conditionally released in April 2015.
II. Procedural History
On January 22, 2015, while Thomason was still in the Arkansas State Hospital, the
Huddlestons filed a complaint to quiet title on their home and property. They alleged that
on March 24, 2003, they mortgaged their property to Thomason Investments to secure a
loan for $80,000. The Huddlestons further alleged that they had paid the loan in full and
“notwithstanding full payment, Thomason fails and refuses and neglects to release the lien.”
Thomason denied those allegations in an answer filed on February 24, 2015, and
months later, filed several counterclaims. He sought an order of foreclosure on the
Huddlestons’ property, alleging that the home loan had not been paid in full as they claimed.
Thomason also alleged that Johnny breached his fiduciary duty in several respects, including
when he transferred property belonging to Thomason Investments to John Seals. He further
claimed that Johnny fraudulently concealed information in the accounting that Thomason
requested after his release from jail in 2012, and Johnny breached his fiduciary duty by
“failing to collect mortgage payments and deposit them in a Thomason or Thomason
Investments’ account.” Finally, Thomason alleged that Johnny was liable for negligence
because several guns from Thomason’s collection disappeared while they were in Johnny’s
care.
Thomason followed those allegations with a motion for accounting on March 20,
2017. He alleged that Johnny and Brenda improperly used their positions as “agents of
Thomason’s businesses” to “take over control of Thomason’s finances, money and
6 property”; therefore, they “should be ordered to account for any and all financial
transactions taken in Thomason’s name,” including “payments received and the disposition
of payments” and “transactions related to real property and [any] credits given to various
persons or entities indebted to Thomason” including the Huddlestons. Thomason further
asserted that “with regard to any irregularities that are discovered, the Huddlestons should
be ordered to pay back any and all monies that were misappropriated, missing, or misspent.”
The circuit court granted the motion in an order entered August 8, 2017, finding
that a fiduciary relationship existed among Thomason, Johnny, and Brenda, and “as
[fiduciaries], the burden is on Johnny and Brenda Huddleston to prove that accounts have
been properly handled.” In particular, the circuit court ordered the Huddlestons to
account for any and all actions taken in Thomason’s name or in the name of Thomason Investments, LLC, including but not limited to: checks written, purchases made, cash transfers or withdrawals, payments received and the disposition of such payments, gifts and loans, bills paid, account charges, expenditures, transactions related to real property, credits given to persons or entities indebted to Thomason (including, but not limited to, Johnny and Brenda Huddleston, Tab Construction, LLC, and Tab Investment, LLC).
The Huddlestons produced two accountings. The first, called the “Later Years
Accounting,” accounted for the period from September 2009 to July 2012 and indicated
that Tab Investments and Tab Construction were due a credit of $284,461 for their payment
of taxes and other expenses related to Thomason’s properties. The second, called the “Early
Years Accounting,” claimed that Johnny and Brenda delivered $1,006,404 in cash, checks,
and money orders to Thomason from January 2002 to October 2009.
Thomason filed a response to the accountings, alleging that they were deficient in
several respects. Among other things, Thomason contended that both accountings failed to
7 “attach or identify all supporting documentation,” and “adequately account for the
$795,000 loan from Thomason to the Huddlestons.” Additionally, the Later Years
Accounting, he said, failed to show delivery of “hundreds of thousands of dollars of cash,
checks, and money orders collected by the Huddlestons,” and “includes charges to
Thomason for which the Huddlestons already received payment.”
In addition, Thomason filed a third-party complaint and second amended
counterclaim that asserted several more causes of action, including breach of contract, fraud,
unjust enrichment, conversion, and civil action by a crime victim under Arkansas Code
Annotated section 16-118-107.2 Thomason sought compensatory and punitive damages as
well as additional equitable relief in the form of a judgment for the balance due on the
Huddlestons’ court-ordered accounting. He also asserted that he was entitled to a
constructive trust or an equitable lien on several Tab properties that were acquired with
Thomason funds. The Huddlestons answered all the counterclaims, denying the material
allegations and pleading affirmative defenses.
The eight-day trial was held in February 2018. Thomason testified about the
novation that occurred in 2007, offering unsigned versions of the three promissory notes
and the balances, payments, and credits reflected in exhibits 105, 107, 108, and 109 as
evidence of his agreements with the Huddlestons and the Tab companies. He also offered
the testimony of Liles Henry, a certified public accountant, who gave his expert opinion
2 Tabitha Nolen, the Huddleston’s daughter, was the named third party. Thomason and Thomason Investments eventually nonsuited their claims against her as well as an additional claim of civil conspiracy that alleged that Tabitha, Johnny, and Brenda acted in concert to divert Thomason funds into accounts held by Tab Construction and Tab Investments.
8 that the checks, receipts, spreadsheets, and other documents in the case established that the
Huddlestons owed Thomason nearly $1.9 million in principal and interest. The
Huddlestons, on the other hand, denied that they owed any money, and they insisted that
they accounted for all of the cash and checks that they collected on the mortgages held by
Thomason Investments.
For his part, Johnny testified that he and his wife “owe Todd Thomason nothing.”
He acknowledged that “at first [he] borrowed money to build a house then sell it and pay
Thomason back,” but the arrangement changed to a kind of partnership “in 2000 or 2001,”
when they began building spec houses. According to Johnny, he owned several of the lots
where he built the spec houses, and Thomason financed the construction in exchange for
obtaining the promissory notes once the properties were sold. He testified that he and
Thomason sold every house that they built, and “the money [Johnny] took for the [spec]
houses from Mr. Thomason was not supposed to look like a loan.” Johnny claimed, rather,
that he “didn’t know that [Thomason] was doing it that way.” Johnny also testified that
several of the checks that Thomason charged against him as “loans” during that time were
actually applied to repairs for Thomason’s personal home or other Thomason-owned
properties or were “pass through” transactions in which the money from checks written to
Huddleston or one of the Tab entities was actually intended—and ultimately paid—as loans
to third parties.
Johnny also testified that while he and Brenda borrowed money from Thomason to
build their home in 2003, they only “signed a mortgage for $80,000” and never signed a
promissory note for $150,000 as Thomason claimed. Johnny and Brenda “paid off the
9 [$80,000 mortgage] with interest” and “never borrowed any more money” for the
construction of their house. Johnny claimed, rather, that the payments they made to
Thomason after the satisfaction of their mortgage was to purchase Thomason properties—
one of them the Sutton Building in Harrison—that were valued at $150,000. Johnny
testified that he was “just trying to pay $150,000 to get the properties,” but he “never got
anything” and “eventually quit paying.” Moreover, while Johnny acknowledged that he
had been aware of the $795,739 balance in exhibit 105 and that Thomason “[broke] up one
loan into three different loans to protect his assets,” Johnny denied having signed three
promissory notes to pay the debt as Thomason alleged.
Johnny further testified that he and Brenda also “started to collect money for
[Thomason] starting in 2002 or 2003,” and beginning in 2007, Brenda began to record
third-party mortgage payments in the spreadsheet program that Thomason provided. In
2009, Thomason told Johnny to deposit the collected checks in the Tab Construction
account “because he was trying to hide money from his ex-wife.” Johnny testified that he
used those funds to “pay all of the bills [and] take care of the houses” but continued to
deliver the cash payments directly to Thomason.
Brenda testified that in 2007, “Thomason came and put the [spreadsheet] program
on [her] computer,” whereupon she started making a record of the loan payments that she
collected on Thomason properties. She further testified that Thomason “added accounts for
Huddleston, Tab Construction, and Tab Investments” to the spreadsheet program in 2009,
but she maintained that she and her husband did not owe Thomason any money.
10 Brenda testified, rather, that she and Johnny “paid off the debt on the house on April
10, 2007,” and paid the remainder of the debt for other items, including pickup trucks for
their construction business, in April 2012. She further claimed, as Johnny did, that they
nonetheless continued to make additional payments in order to purchase the Sutton
Building and other property from Thomason. Brenda also said she gave Thomason a “full
accounting” when he requested it in 2012. She claimed credits for Tab Construction and
Tab Investments (in exhibit 107 and 108, respectively) because, she said, they “did [not]
owe on those properties (that Thomason claimed he had financed),” and “[Thomason] said
that he gave us credit . . . but was actually charging us again.”
Brenda further testified that she prepared the court-ordered accountings in 2017,
stating that she based them on her receipt book, the spreadsheets that she maintained on her
computer, and “thousands” of other papers. She also conceded, however, that her
accounting—apparently as a result of the volume of records that she had to review—was
not “perfect.”
Indeed, Brenda’s cross-examination cast doubt on the accuracy of the accountings
that she provided. The credits that she claimed in the 2012 accounting for Tab Construction
(exhibit 107) and for Tab Investments (exhibit 108) were made on a single day—August 22,
2012—and based on payments that third parties—not the Tab companies—made to
Thomason on their own respective mortgages. Brenda’s testimony and other evidence also
demonstrated that the spreadsheet that she produced for the house loan (exhibit 109), which
showed that the Huddlestons still owed a balance of $263,599 in 2012, was changed in
11 2016—after the litigation began—to show “extra house payments” and a claimed credit of
$178,400.3
Brenda also admitted that the court-ordered accounting was inaccurate in several
respects. The Later Years Accounting, which covered the period from September 2009 to
July 2012, erroneously claimed that the Huddlestons delivered cash to Thomason while he
was in the Boone County Jail. It also failed to account for thousands of dollars that the
Huddlestons admittedly collected on Thomason’s behalf from August 2012 to December
2012.
Brenda also admitted that she could not produce receipts for all of the $305,931 in
cash that the Later Years Accounting claimed had been delivered to Thomason between
September 2009 and July 2012. She further conceded that she and her husband did not
actually deliver all of that amount to Thomason. Mortgage-payment receipts and bank
records demonstrated that the Huddlestons actually deposited thousands of dollars of that
money into the Tab Construction account.
Brenda claimed that much of the cash that they deposited into the Tab Construction
account went to pay for expenses related to a Pizza Pro business that Thomason allegedly
owned. The accounting fails to give any credit to Thomason, however, on the Huddlestons’
claim they should be reimbursed $50,000 for “Pizza Pro expenses.”
Finally, Brenda also testified that “apparently the accounting is wrong” with regard
to the $41,798 in checks that the accounting indicates the Huddlestons delivered to
3 Apparently, these “extra payments” were those that the Huddlestons claim they continued to make in order to purchase the Sutton Building and other properties from Thomason.
12 Thomason between September 2009 and December 2009. Bank records demonstrated, in
fact, that several checks had been deposited into the Tab Construction account.
At the conclusion of the testimony, Thomason’s legal claims were submitted to the
jury in a series of interrogatories. The interrogatories that are pertinent to this appeal, as well
as the jury’s answers to them, were as follows:
1. Do you find for Thomason or Thomason Investments, LLC, against Johnny Huddleston, Brenda Huddleston, Tab Investments, LLC or Tab Construction of Harrison, LLC on any of their claims? Yes.
2. Do you find for Thomason Investments, LLC against Johnny Huddleston, Brenda Huddleston, Tab Investments, LLC, or Tab Construction of Harrison, LLC, in regard to the three open accounts/claimed promissory notes? (The causes of action associated with this Interrogatory were Breach of Contract and Unjust Enrichment) No.
3. Do you find that Brenda Huddleston and Johnny Huddleston are liable to Thomason Investments, LLC, for funds not accounted for? (The causes of action associated with this Interrogatory were Breach of Fiduciary Duty, Unjust Enrichment, Conversion, Negligence, Fraud and Deceit and Civil Action by a Crime Victim.) No.
4. Do you find Johnny Huddleston is liable to Todd Thomason for the failure to return all of Todd Thomason’s guns? Yes.
5. Do you find that Thomason Investments, LLC has proven that Johnny Huddleston breached his fiduciary duty by transferring property of Thomason Investments, LLC and releasing a Mortgage to John Seals? (The cause of action associated with this Interrogatory was Breach of Fiduciary Duty) Yes.
The jury awarded compensatory damages in the amount of $61,240 and declined to award
any punitive damages.
Thomason subsequently filed a motion for judgment notwithstanding the verdict and
alternative motion for a new trial. He challenged the jury’s verdict on interrogatory No. 2
concerning his claims for breach of contract and unjust enrichment as well as the verdict on
13 interrogatory No. 3 concerning the several legal claims related to the Huddleston’s failure
to provide an accurate accounting.
Thomason’s motion also argued that he was entitled to a judgment on the court-
ordered accounting, which “[t]he evidence at trial showed . . . was false and omitted material
information.” He pointed to Brenda’s admission, described above, that the Huddlestons did
not deliver all of the cash and checks to Thomason between 2009 and 2012 as they claimed
in the accounting. Thomason also asserted that the Huddlestons deposited several thousand
dollars into the Tab Construction account, and they could not explain what happened to
the cash that they collected while Thomason was in jail. The Huddlestons also failed, he
said, to account for the funds that they admittedly collected for Thomason after July 2012
and several of the accounting’s charges to Thomason were for the Huddlestons’ own living
expenses or the result of “double dipping.” Thomason argued, therefore, that he should be
awarded a judgment of $625,180 “of collected and unaccounted for funds[.]”
The circuit court expressed its own concerns about the jury’s verdict in a hearing on
posttrial motions on June 5, 2018. Regarding Thomason’s motion for judgment
notwithstanding the verdict, the circuit court noted that the “whole verdict is . . . a little
bit difficult to understand,” and it was “troubled” by Brenda’s testimony that she “zeroed
out a lot of the accounts that showed . . . the Huddlestons owing Mr. Thomason a bunch
of money.” The court did not find Brenda’s explanations for those adjustments “real
convincing,” and regarding the accounting, the court explained that it was troubled by
evidence showing that “the Huddlestons receiv[ed] check and cash payments [intended] for
Mr. Thomason” that were “traced to their bank account.” Indeed, the court observed that
14 the verdicts were inconsistent with Brenda’s testimony, and there were “some severe issues
with the accounting for certain sums of money after the time Mr. Thomason went to jail.”
Nonetheless, the court denied Thomason’s motion for judgment notwithstanding the
verdict, ruling that “even though it’s not the verdict [it] would have rendered,” the court
was “just [going to] go with it.” In addition, based on the jury’s verdict, the circuit court
denied Thomason’s request for restitution on the court-ordered accounting.
The circuit court also heard the Huddlestons’ request for attorney’s fees, which they
claimed under Arkansas Code Annotated section 16-22-308 (Repl. 1999). They asserted
that they were entitled to fees under the statute because they were the prevailing party, and
the case, which had both contract and tort claims, sounded primarily in contract. The circuit
court denied the Huddlestons’ request, ruling that the Huddlestons were not entitled to fees
under section 16-22-308 because the case “was clearly an action predominantly sounding
in tort.”
The circuit court entered a judgment on the jury’s verdict as well as an order denying
relief on Thomason’s equitable claims and the posttrial motions on July 2, 2018. Thomason
now appeals the judgment and order and the Huddlestons cross-appeal, arguing that the
circuit court erred by denying their motion for attorney’s fees under Arkansas Code
Annotated section 16-22-308.
III. Direct Appeal
A. Equitable Claims
Thomason first argues that the circuit court abused its discretion when it denied his
claims for equitable relief. The abuse occurred, he says, when the circuit court failed to
15 make its own independent findings and allowed the jury’s verdict to direct its ruling on the
equitable claims. He asserts that the circuit court’s abuse of discretion is just like the complete
failures to exercise discretion that we have reversed in other contexts, including when a
circuit court mechanically followed a “rule of thumb” to impose a sanction for a discovery
violation in Young v. Kajkenova, 2010 Ark. App. 783, at 4–5, and when a circuit court
followed the perceived wishes of the jury when it chose to impose consecutive sentences in
Wing v. State, 14 Ark. App. 190, 191–93, 686 S.W.2d 452, 454 (1985). Thomason further
contends that he would have prevailed on his claim for relief on the accounting, as well as
his claim for a constructive trust or an equitable lien, if the circuit court had not merely
adopted the jury’s verdicts on the legal claims. He says that Brenda’s own testimony
establishes that the accountings were inaccurate, and therefore, he was entitled to restitution
of the funds unaccounted for. He also argues that “the same evidence that debunked the
accountings” proves that he was entitled to a constructive trust or an equitable lien.
1. The standard of review
As an initial matter, we decline Thomason’s invitation to review the circuit court’s
denial of equitable relief for an abuse of discretion. “Arkansas appellate courts have
traditionally reviewed matters that sounded in equity de novo on the record[.]” Cason v.
Lambert, 2015 Ark. App. 41, at 4, 454 S.W.3d 250, 253. A finding of fact by a circuit court
in an equity case will not be reversed, moreover, unless it was clearly erroneous. Griffith v.
Griffith, 2018 Ark. App. 122, at 7, 545 S.W.3d 212, 216.
Beyond his assertion that the circuit court was generally “vested with discretion,”
Thomason does not make any effort to explain why we should abandon these standards in
16 favor of an abuse-of-discretion standard that he urges on appeal. Indeed, while Thomason
cites analogous authority to show how the circuit court allegedly abused its discretion, he
does not make any convincing argument in support of its predicate—that the abuse-of-
discretion standard of review even applies in these circumstances. Because we will not
consider points that are not supported by convincing argument, Farm Credit Midsouth, PCA
v. Bollinger, 2018 Ark. App. 224, at 11–12, 548 S.W.3d 164, 173, we decline to review the
circuit court’s denial of equitable relief according to the abuse-of-discretion standard.
2. The accounting
With that said, we hold that the circuit court’s order denying equitable relief on the
accounting warrants reversal under our existing standards of review. “An accounting is an
equitable remedy designed to provide a means for compelling one, who because of a
confidential or trust relationship has been entrusted with property of another, to render an
account of his actions and for the recovery of any balance found to be due.” A&P’s Hole-
In-One, Inc. v. Moskop, 38 Ark. App. 234, 239, 832 S.W.2d 860, 863 (1992) (internal
quotations omitted). The burden of proving that the accounts have been properly handled
is placed on the fiduciary. Id. at 240, 832 S.W.2d at 863. That is because when the duty of
an agent requires it, he or she “must keep true, regular, and accurate accounts of all of his
[or her] transactions, both receipts and disbursements, and should render a full and complete
statement, supported by proper vouchers.” Red Bud Realty Co. v. South, 96 Ark. 281, 299,
131 S.W. 340, 348 (1910) (internal quotations omitted).
The function of a court in an accounting, moreover, “is rather that of an auditor
clothed with judicial power, or that of a master stating an account.” Estates of McKnight v.
17 Bank of Am., N.A., 372 Ark. 376, 380, 277 S.W.3d 173, 177 (2008) (internal quotations
omitted). This is not usually “such work as juries can perform”; therefore, “judges must take
the responsibility of determining the facts as well as the law.” Crow v. Reed, 38 Ark. 482,
485 (1882). If the fiduciary “does not keep clear, distinct, and accurate accounts, with proper
vouchers,” the court settling the accounts must take “all presumptions” against him and
resolve all doubts adversely to him. Moskop, 38 Ark. App. at 240, 832 S.W.2d at 864 (internal
quotations omitted).
Despite all the discrepancies that Brenda acknowledged during her testimony—not
to mention the concern that the circuit court expressed about them during the June 5
posttrial hearing—there is no indication that the court considered the presumption set forth
in Moskop before denying relief. Indeed, the circuit court expressly based its ruling on the
verdicts from the jury, which as we discuss, infra, was not instructed to apply the
presumption. Accordingly, we reverse the judgment denying equitable relief on the
accounting and remand the case to the circuit court for proceedings consistent with this
opinion.
3. Constructive trust or equitable lien
Thomason next argues that the circuit court erred when it denied his request for a
constructive trust or an equitable lien on a list of nine properties that are titled to the Tab
Companies or third-party buyers. He contends that he is entitled to those remedies because
those properties were “developed with Thomason funds” and because the Huddlestons
pocketed the mortgage payments that the third-party purchasers of some of those properties
owed to Thomason. We disagree.
18 An equitable lien is “a right to have a demand satisfied from a particular fund or
specific property.” C.A.R. Transp. Brokerage Co., Inc. v. Seay, 369 Ark. 354, 361, 255
S.W.3d 445, 451 (2007). It “awards a nonpossessory interest in property to a party who has
been prevented by fraud, accident, or mistake from securing that to which he was equitably
entitled.” Id. In addition, an equitable lien may arise “by implication from the conduct and
dealings of the parties.” Id. (internal quotations omitted). It will not be implied, however,
where the facts and circumstances present no grounds for equitable relief, and there is an
adequate remedy at law. Id. at 362, 255 S.W.3d at 451.
A constructive trust, on the other hand, “is an implied trust that arises by operation
of law when equity demands.” Tripp v. Miller, 82 Ark. App. 236, 244, 105 S.W.3d 804, 810
(2003). “It is imposed where a person holding title to property is subject to an equitable
duty to convey it to another on the ground that he would be unjustly enriched if he were
permitted to retain it.” Id.
“To impose a constructive trust, there must be full, clear, and convincing evidence
leaving no doubt with respect to the necessary facts, and the burden is especially great when
a title to real estate is sought to be overturned by parol evidence.” Betts v. Betts, 326 Ark.
544, 548, 932 S.W.2d 336, 338 (1996) (internal quotations omitted). “The test on review
is not whether the court is convinced that there is clear and convincing evidence to support
the [circuit court’s] finding, but whether it can say the [circuit court’s] finding that the
disputed fact was proved by clear and convincing evidence is clearly erroneous, and [this
court] defer[s] to the superior position of the [circuit court] to evaluate the evidence.” Id.
19 We cannot say that the circuit court clearly erred by denying Thomason’s request.
While there was ample testimony that Thomason financed Tab Construction’s purchases of
property and construction of homes, the trial evidence does not coherently draw the line
from Thomason’s money to the particular properties for which he now claims a constructive
trust or an equitable lien. Indeed, Thomason often paid for several properties with a single
check, and the witnesses interchangeably referred to the same properties by their street
addresses, their lot numbers, or the last names of the purchasers (or in some cases, even the
purchaser’s successor in interest). The testimony also demonstrated that several of the checks
that Thomason identified as loans to the Huddlestons were actually “pass-through”
transactions intended for third parties. Thomason’s brief on appeal, moreover, makes no
effort to discuss the evidence connecting his money with the properties on the list.
Therefore, we cannot say that the circuit court’s denial of Thomason’s request for a
constructive trust or an equitable lien was clearly erroneous.
B. Jury Instruction
At the conclusion of all the evidence, the jury was told that it would settle issues of
fact in a series of interrogatories that included interrogatory No. 3, which, as noted above,
asked the jury whether it found that the Huddlestons were liable to Thomason for “funds
not accounted for.” The interrogatory pertained to Thomason’s claims of breach of fiduciary
duty, unjust enrichment, conversion, negligence, fraud, and civil action by a crime victim.
Thomason proffered the following instruction, based on Moskop, for the jury to consider as
it answered interrogatory No. 3:
The burden of proving that the accounts had been properly handled is placed on the fiduciary. The degree of difficulty in preparing a fiduciary account does not
20 foreclose the need of it. If a fiduciary does not have the proper records, then every presumption must be taken adversely to the fiduciary.
The circuit court submitted the instruction to the jury without the sentence directing the
jury to take “every presumption” adversely to the Huddlestons. Thomason now argues that
was error. We disagree.
“Under Arkansas law, a party is entitled to a jury instruction when it is a correct
statement of the law and there is some basis to support giving the instruction.” Sealing
Devices, Inc. v. McKinney, 2009 Ark. App. 412, at 8, 321 S.W.3d 270, 279. This court will
not reverse a circuit court’s refusal to give a proffered instruction, moreover, unless there
was an abuse of discretion. Id. Because Thomason cannot demonstrate reversible error, we
affirm.
This court will reverse a ruling of a circuit court only if it committed prejudicial
error, Smith v. Smith, 2015 Ark. App. 539, at 3, and Thomason cannot be heard to complain
about the missing presumption because he received more than he was entitled when the
circuit court instructed the jury according to any part of the law of accountings. We reiterate
that “[a]n accounting is an equitable remedy”; therefore, “the question of an accounting
may not be submitted to a jury as if it were a suit for the recovery of money.” McKnight,
372 Ark. at 380, 277 S.W.3d at 177. Additionally, the given instruction, which placed the
burden of proof on the Huddlestons, was at odds with other instructions that correctly told
the jury that Thomason had the burden of proving his legal claims. Therefore, we conclude
that Thomason cannot demonstrate prejudice from the circuit court’s refusal to instruct the
jury according to the presumption.
21 C. Motion for Judgment Notwithstanding the Verdict
In his final point on appeal, Thomason asserts that the circuit court erred by denying
his motion for a judgment notwithstanding the verdict. Specifically, he contends that the
jury’s verdicts cannot stand under the weight of Brenda’s admissions at trial, which, he says,
demonstrate that the Huddlestons still owe him money and that they pocketed mortgage
payments payable to him. Thomason does not specify which of his many claims were
established by Brenda’s testimony as a matter of law, but assuming that he is now
challenging—as he did below—the jury’s verdicts on all the claims decided in interrogatory
No. 2 and interrogatory No. 3, we affirm.
On review of a circuit court’s denial of a motion for a judgment notwithstanding the
verdict, we “will reverse only if there is no substantial evidence to support the jury’s verdict,
and the moving party is entitled to a judgment as a matter of law.” Carr v. Nance, 2010 Ark.
497, at 15, 370 S.W.3d 826, 836 (internal quotations omitted). “Substantial evidence is that
which goes beyond suspicion or conjecture and is sufficient to compel a conclusion on way
or the other.” Id. at 15–16, 370 S.W.3d at 836. This court does not try issues of fact; rather
we “simply review the record for substantial evidence to support the jury’s verdict.” Id. at
16, 370 S.W.3d at 836. In determining whether there is substantial evidence, this court
“view[s] the evidence and all reasonable inferences arising therefrom in the light most
favorable to the party on whose behalf judgment was entered.” Id. A motion for judgment
notwithstanding the verdict should be denied, moreover, “when there is a conflict in the
evidence, or when the evidence is such that fair-minded people might reach different
conclusions.” Id. Indeed, “the weight and value to be given to the testimony of witnesses
22 is a matter within the exclusive province of the jury.” Cadillac Cowboy, Inc. v. Jackson, 347
Ark. 963, 971, 69 S.W.3d 383, 389 (2002).
The circuit court did not err by denying the motion for judgment notwithstanding
the verdict on the breach-of-contract and unjust-enrichment claims decided in interrogatory
No. 2. “In order to prove a breach-of-contract claim, one must prove the existence of an
agreement, breach of the agreement, and resulting damages.” Jones v. John B. Dozier Land
Tr., 2017 Ark. App. 23, at 6, 511 S.W.3d 869, 873. To prove the alternative theory of
unjust enrichment, “a party must have received something of value, to which he or she is
not entitled and which he or she must restore.” Campbell v. Asbury Auto., Inc., 2011 Ark.
157, at 21, 381 S.W.3d 21, 36. “There must be some operative act, intent, or situation to
make the enrichment unjust and compensable.” Id. “One who is free from fault cannot be
held to be unjustly enriched merely because he or she has chosen to exercise a legal or
contractual right.” Id. “In short, an action based on unjust enrichment is maintainable where
a person has received money or its equivalent under such circumstances that, in equity and
good conscience, he or she ought not to retain.” Id.
While Thomason introduced compelling testimony that the Huddlestons owed him
well over $795,000, he failed to produce signed promissory notes or recorded mortgages as
evidence of those debts. The Huddlestons claimed that they did not sign any promissory
notes for the novation in 2007, and they denied that they still owed Thomason any money.
Spreadsheets produced at trial also showed that the Huddlestons were entitled to credits in
each of the three Huddleston loan accounts. While reasonable minds may weigh these
exhibits and the Huddlestons’ testimony differently, on review of an order denying a
23 judgment notwithstanding the verdict, this court leaves the weight and value of the evidence
to the exclusive province of the jury. Jackson, 347 Ark. at 971, 69 S.W.3d at 389. Therefore,
Thomason’s challenges to the jury’s verdict on his claims of breach of contract or unjust
enrichment lack merit.
The circuit court likewise did not err by denying a judgment notwithstanding the
verdict on the many claims that the jury decided with its answer to interrogatory No. 3.
Thomason appears to assert that all those claims, including conversion, civil action by a
crime victim, breach of fiduciary duty, negligence, unjust enrichment, and fraud and deceit,
were established as a matter of law when Brenda admitted—contrary to the accounting—
that she and Johnny failed to deliver all the mortgage payments that they collected to
Thomason. We disagree.
Brenda’s admissions conflict with other evidence showing that the Huddlestons
delivered all the payments that they collected. Johnny and Brenda testified that they
delivered all cash and check payments to Thomason until 2009 when they agreed to deposit
the checks into the Tab Construction account. They also testified that they continued to
deliver the cash payments to Thomason, and the court-ordered accounting that they
prepared, which was also admitted at trial, supports that claim. While Brenda’s admissions
that they did not actually deliver all the cash they collected certainly impeaches the
accounting and their earlier testimony, the resolution of that conflict is—again—exclusively
in the province of the jury. Accordingly, we find no error in the circuit court’s denial of
Thomason’s motion for judgment notwithstanding the verdict.
24 IV. Cross-Appeal
In their cross-appeal, the Huddlestons argue that the circuit court erred by denying
their request for attorney’s fees under Arkansas Code Annotated section 16-22-308. They
assert that they were entitled to fees as the prevailing parties on Thomason’s breach-of-
contract claim. Thomason responds that fees were not available under the statute because
the case primarily sounded in tort. For the reasons that follow, we affirm.
Attorney’s fees are not allowed except when expressly provided for by statute. Nissan
N. Am., Inc. v. Harlan, 2017 Ark. App. 203, at 12, 518 S.W.3d 89, 97. As stated, the
Huddlestons claimed that they were entitled to fees pursuant to section 16-22-308, which
provides as follows:
In any civil action to recover on an open account, statement of account, account stated, promissory note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services, or breach of contract, unless otherwise provided by law or the contract which is the subject matter of the action, the prevailing party may be allowed a reasonable attorney’s fee to be assessed by the court and collected as costs.
“This section has been held to authorize an award of attorney’s fees to a party who
successfully defends against a contract claim.” C & W Transp., LLC v. Whittington, 90 Ark.
App. 213, 216, 205 S.W.3d 157, 158 (2005). In cases in which both contract and tort claims
are pursued, we have held that fees are proper under section 16-22-308 only when the
action is based primarily in contract. DWB, LLC v. D & T Pure Tr., 2018 Ark. App. 283,
at 13, 550 S.W.3d 420, 430.
As indicated above, the circuit court denied attorney’s fees because the case
“predominantly sounded in tort.” The litigation started with the Huddlestons’ complaint
to quiet title and Thomason’s counterclaim for foreclosure based on the mortgage on the
25 Huddlestons’ home. Thereafter, Thomason sought damages on a single claim of breach of
contract or unjust enrichment based on the Huddleston loans. The remainder of his claims
sounded in tort, including several alleged instances of breach of fiduciary duty, conversion,
negligence, and fraud and deceit. On these facts, we agree with the circuit court’s assessment
that the litigation primarily sounded in tort, and we affirm the order denying the
Huddleston’s request for attorney’s fees under section 16-22-308.
V. Conclusion
We reverse and remand the judgment denying equitable relief on the Huddlestons’
inadequate accounting. The settling of accounts is a function that is reserved exclusively to
the circuit court, and the circuit court clearly erred by relying on the jury’s verdict to deny
relief. We affirm the judgment on Thomason’s legal claims and the order denying the
Huddlestons’ request for attorney’s fees.
Affirmed in part; reversed and remanded in part; affirmed on cross-appeal.
VAUGHT, J., agrees.
GRUBER, C.J., concurs.
Cullen & Co., PLLC, by: Tim Cullen, for appellants/cross-appellees.
Smith, Cohen & Horan, PLC, by: Matthew T. Horan; and Everett Law Firm, by: John
C. Everett, for appellees/cross-appellants.