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Wills v. Lacefield

United States District Court, W.D. Arkansas, Harrison Division

September 10, 2014

MARTIN D. WILLS, Plaintiff,


P.K. HOLMES, III, Chief District Judge.

Currently before the Court are Plaintiff Martin D. Wills's motion for partial summary judgment (Doc. 46), Defendant Janet Faye Lacefield's motion for leave to file counterclaims (Doc. 56), and the parties' responses, replies, and supporting documents. Wills has moved for partial summary judgment on his claims that Lacefield fraudulently filed a deed, breached the parties' contract, and tortiously interfered with his contractual relationship. Lacefield has moved for leave to file counterclaims for reformation and, alternatively, judicial foreclosure. For the reasons discussed below, Wills's motion for partial summary judgment is DENIED and Lacefield's motion for leave to file counterclaims is GRANTED IN PART.

I. Background

The relevant facts are largely disputed. For the purpose of considering the instant motions, the Court assumes the following to be true: In 2004, Wills gave Lacefield $15, 000 for her to purchase a property in Mountain Home, Arkansas ("Property"). It is undisputed that Wills had no interest in the Property at that time or as a result of Lacefield's completed purchase of the Property. Less than three years later, the parties agreed that Wills would purchase the Property from Lacefield. On April 30, 2007, the parties closed the sale of the Property. As partial payment, Wills executed a promissory note to Lacefield for $15, 000 and secured the note with a mortgage on the Property. The note was to be paid off in monthly installments until June 2009, when a balloon payment was due. In addition to the promissory note, Wills paid another $15, 000 in cash and received $15, 000 credit for money he provided to Lacefield for her 2004 purchase of the Property. Contemporaneous with these transactions, Wills executed a quitclaim deed for the Property to Lacefield. The purpose of Wills executing the quitclaim deed at the closing of the sale is in dispute. Four days later, Lacefield executed a general warranty deed on the Property to Wills.

Lacefield accepted Wills's monthly payments on the promissory note until November 1, 2008. Lacefield claims that she did not receive another payment from Wills until 93 days later, at which point she claims that he was in default and, therefore, payment was not accepted. Lacefield acknowledges that Wills submitted more payments but claims that those were also late and rejected due to Wills being in default. Wills claims that all payments were submitted on time.

It is undisputed that the mortgage agreement provided only for foreclosure in the case of default. Instead of seeking foreclosure when Lacefield believed Wills was in default, Lacefield sent Wills a letter dated February 11, 2009 ("letter of default") informing him that he was in default and that she had recorded the quitclaim deed he executed on April 30, 2007. At the time Lacefield recorded the quitclaim deed, Wills was under contract with Full Circle Properties ("FCP"). FCP provided property management services and collected rent from tenants who were renting the Property from Wills. Lacefield was aware of the contract between Wills and FCP and, in the letter of default, informed Wills that the tenants had signed a new contract and that rental payments would no longer be received by FCP.

The issues in this case focus on the quitclaim deed, Wills's contested default on his promissory note, and Lacefield's later actions. Wills argues that he never had an interest in the Property when he executed the quitclaim deed-resulting in the deed having no legal effect, that he never defaulted on the note, and that, even if he was in default, the mortgage only provided for foreclosure as a remedy. Lacefield argues that the parties agreed to use the quitclaim deed as a deed in lieu of foreclosure and that Wills was in default. In addition, Lacefield seeks leave to file a counterclaim for reformation of the quitclaim deed if it is deemed void or improper and, alternatively, judicial foreclosure if the deed cannot be reformed.

II. Discussion

Prior to addressing the merits of Will's motion, the Court finds that res judicata does not bar Wills's claims in this case as argued by Lacefield. "[R]es judicata bars relitigation of a subsequent suit when: (1) the first suit resulted in a final judgment on the merits; (2) the first suit was based upon proper jurisdiction; (3) the first suit was fully contested in good faith; (4) both suits involve the same claim or cause of action; and (5) both suits involve the same parties or their privies." Jayel Corp. v. Cochran, 234 S.W.3d 278, 281 (Ark. 2006) (citations omitted). "Res judicata bars not only the relitigation of claims that were actually litigated in the first suit, but also those that could have been litigated." Id. "Where a case is based on the same events as the subject matter of a previous lawsuit, res judicata will apply even if the subsequent lawsuit raises new legal issues and seeks additional remedies." Id.

The litigation history between these parties is extensive. Wills first filed suit in a Baxter County, Arkansas state court ("Baxter One"), which consisted of largely the same claims as in this case, as well as a claim by Lacefield for judicial foreclosure. On August 15, 2012, Baxter One was involuntarily dismissed without prejudice following both parties' blatant disregard for a court order to refrain from filing additional pleadings without leave of court, and the judge's determination that the action had become "unwieldy." (Doc. 52-1, Ex. M). The parties were also involved in another Arkansas state court action, a case in the United States District Court for the Western District of Tennessee, and a separate case before this Court. Those cases involved determinations on orders of protection, conspiracies and civil rights violations alleged by Wills against state and private actors, state law claims for malicious prosecution related to violations of a protective order, and emotional distress stemming from the alleged malicious prosecution. Each of those cases other than Baxter One were resolved on the merits.

Although some of Wills's claims in Baxter One are similar to or the same as his claims in this case, Baxter One was not resolved on the merits and therefore cannot implicate res judicata. Furthermore, all of the other prior litigation between these parties dealt with their failed personal relationship and subsequent criminal actions, whereas the case now before the Court deals with the parties' real estate transaction-an event completely separate from the circumstances surrounding orders of protection, alleged civil rights violations, and malicious prosecution allegations. As a result, the Court finds that the claims in this case are not based on the "same events as the subject matter" of the prior lawsuits other than Baxter One, and therefore res judicata does not bar Wills's claims. Jayel Corp., 234 S.W.3d at 281.

The Court also finds that estoppel would be inappropriate under the circumstances of this case. Lacefield argues that Wills should be estopped from asserting that the quitclaim deed is void due to language in the parties' mortgage agreement. However, the mortgage agreement and the quitclaim deed are separate documents, and the Court will not combine them to find an alleged contradictory position on the part of either party. In addition, for the reasons discussed below, estopping the plaintiff from asserting that the quitclaim deed is void would have no effect.

A. Motion for Partial Summary Judgment

Wills has moved for summary judgment on his claims that Lacefield fraudulently filed a deed, breached the contract between her and Wills, and tortiously interfered with a contract between Wills and FCP. Under Federal Rule of Civil Procedure 56(a), "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The Court must review the facts in the light most favorable to the nonmovant and give that party the benefit of any inferences that logically can be drawn from those facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Nat'l. Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602, 606 (8th Cir. 1999). Once the moving party has met its burden, the nonmovant must "come forward with specific facts showing that there is a genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(c)). In order for there to be a genuine issue of material ...

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