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Lipsey v. Giles

Supreme Court of Arkansas

June 26, 2014

MAURICE R. LIPSEY, WILLIAM LARRY COX, AND CONNIE L. COX, APPELLANTS
v.
KAREN GILES, APPELLEE

Page 14

APPEAL FROM THE CLEBURNE COUNTY CIRCUIT COURT. NO. CV-2011-223-4. HONORABLE TIM WEAVER, JUDGE.

Deal, Cooper & Holton PLLC, by: John R. Holton, for appellants.

Eric Bray; and PPGMR Law, PLLC, by: Kimberly D. Logue, for appellee.

OPINION

Page 15

COURTNEY HUDSON GOODSON, Associate Justice.

Appellants Maurice R. Lipsey, William Larry Cox, and Connie L. Cox, appeal the order entered by the Cleburne County Circuit Court dismissing their class-action complaint for injunctive and other relief filed against appellee Karen Giles, in her official capacity as Cleburne County Circuit Court Clerk. For reversal, appellants contend that the circuit court erred in dismissing their complaint, sua sponte, based on a lack of damages. Appellants also contend that the circuit court erred in dismissing the complaint because Arkansas law recognizes the ability of a court to enjoin the actions of a state agency or official if their actions are ultra vires. The order dismissing appellants' complaint is a final judgment or decree pursuant to Arkansas Rule of Appellate Procedure--Civil 2(a)(1). This court's jurisdiction is proper as this case involves an issue of substantial public interest relating to the recording of oil-and-gas leases in Cleburne County. Ark. S.Ct. R. 1-2(b)(4). Because we conclude that the circuit court improperly dismissed appellants' complaint sua sponte, we reverse and remand.

Appellants filed a class-action complaint requesting an injunction and other relief on October 31, 2011. The complaint alleges that Giles, along with Cleburne County Circuit Court Deputy Clerks Heather Smith and Wanda Jensen, falsely and fraudulently notarized oil-and-gas leases outside the presence of the landowners. According to the complaint, landmen, who were procuring leases for oil-and-gas companies, would obtain the signatures of landowners on the leases and then deliver the leases en masse to the clerk's office. There, the clerks would notarize the signatures and then record the leases, although the clerks had not witnessed the landowners' signing the leases.[1] The complaint requested that the court grant an injunction to require Giles to " inspect and verify each and every oil and gas lease received for recording and determine if the notarial acknowledgment is accurate, true, and correct." Appellants further requested that the court enjoin Giles " to purge any and all oil and gas leases which contain a false notarial acknowledgment." Finally, the complaint requested costs and attorney's fees.

On November 30, 2011, Giles filed an answer to the complaint and a motion to

Page 16

dismiss. In her motion to dismiss, Giles asserted that the complaint failed to state facts upon which relief can be granted pursuant to Arkansas Rule of Civil Procedure 12(b)(6), failed to join necessary parties including the lessee oil companies, the operators of the drilling units, and the Arkansas Oil and Gas Commission, and that the complaint failed to meet the requirements for class-action certification. Finally, Giles asserted the defense of sovereign immunity.

Appellants filed an amended complaint on December 12, 2011, contending that they had been " damaged and harmed by the practice of falsifying notarial acknowledgments," and that they " rely on the Cleburne County Circuit clerk to accept for filing only validly executed documents which are not falsified and fraudulent." Appellants also filed a response to Giles's motion to dismiss on that same date. Subsequently, on December 21, 2011, Giles filed an amended motion to dismiss. In her amended motion, Giles contended that appellants had no standing to bring the action because they have incurred no harm as a result of the allegations in the complaint. She further asserted that the complaint stated no facts upon which she could be found liable to appellants and again requested that the complaint be dismissed pursuant to Arkansas Rule of Civil Procedure 12(b)(6). Appellants filed an answer to the motion to dismiss on January 24, 2012. Giles then filed an answer to the amended complaint on May 4, 2012.

After discovery had begun, appellants filed a motion for an injunction on May 23, 2012. Giles filed an answer to the motion for an injunction two days later. After briefing from the parties regarding the circuit court's authority to grant the relief requested, the court held a hearing on appellants' motion for injunction on August 12, 2013. During the hearing, the circuit court questioned appellants concerning their damages in the following colloquy:

The Court: Then what damage [have] your clients suffered that would require anymore time of this ...

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