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Canady v. Petit Jean State Bank

Court of Appeals of Arkansas, Division II

May 13, 2015


Editorial Note:

This opinion is uncorrected and subject to revision before publication in the printed official reporter.


GLOVER and HIXSON, JJ., agree.


Page 329


Carlean Canady appeals from an order denying her claim against the appellee, Petit Jean State Bank, for the value of improvements that she made to certain real property. She contends that the trial court erred in holding that the Betterment Act, Arkansas Code Annotated section 18-60-213 (Repl. 2003), did not apply to her situation. Alternatively, she argues that the trial court erred in not ruling on and applying her alternative theory of common-law unjust enrichment to compensate her for the increase in value that she brought to the subject property. We affirm.

In April 2011, appellee bank obtained a judgment and foreclosure decree against Juan and Martha Gomez as a result of their default on a loan secured by certain real property in Conway County, Arkansas. It is undisputed that the judgment was recorded by the circuit clerk. The property was sold at auction, leaving a substantial deficiency after the sale proceeds were applied to the judgment debt. In December 2011, the Gomezes contracted to sell a separate tract of real property owned by them in Conway County to appellant, Carlean Canady. A contract and warranty deed were executed at that time but were not recorded. Appellant did not perform a title search on the property, which would have disclosed the judgment lien. In October 2012, appellant began making improvements to an existing house on the property. She then recorded her warranty deed in December 2012.

In an effort to collect the deficiency owed on the judgment, appellee filed in April 2013 its petition seeking, inter alia, to have the priority of its judgment lien established, to force a sale of the property that appellant had purchased from the Gomezes, and to have the proceeds distributed. Appellee claimed that the lien of its judgment against the Gomezes attached to all of their real property in the county from the date that the judgment was recorded, Arkansas Code Annotated section 16-65-117(a) (Supp. 2013), and that appellant, who purchased the property in question from the Gomezes subsequent to the filing of the judgment, took title subject to the judgment lien. Appellant answered and filed a counterclaim against appellee for relief under the Betterment Act and a cross-claim against the Gomezes for damages for fraud or breach of their warranty of good title. After a bench trial, the circuit court ruled that, although appellant had made substantial improvements to the property, appellant took title subject to the lien of appellee's judgment and that the Betterment Act did not apply under the circumstances presented. The court did grant appellant permission to remove any improvements that had not become affixed to the realty. Noting the expense and inconvenience of removing improvements

Page 330

only to have to restore them in the event that appellant were to win an appeal on the applicability of the Betterment Act, the trial court found no just reason for delay of an immediate appeal of that issue and issued a certificate pursuant to Arkansas Rule of Civil Procedure 54(b) directing that the judgment be final as to that issue.

Arkansas Code Annotated section 18-60-213, commonly known as the Betterment Act, provides in part as follows:

(a) If any person believing himself or herself to be the owner, either in law or equity, under color of title has peaceably improved, or shall peaceably improve, any land which upon judicial investigation shall be decided to belong to another, the value of the improvement made as stated and the amount of all taxes which may have been paid on the land by the person, and those under whom he or she claims, shall be paid by the successful party to the occupant, or the person under whom, or from whom, he or she entered and holds, before the court rendering judgment in the proceedings shall cause possession to be delivered to the successful party.

(Emphasis added.) Here, the trial court held that the Act was inapplicable to appellant's claim against appellee for the value of her improvements to the property because the property did not belong to appellee but was, in fact, owned by appellant herself in fee simple. Appellant contends that the trial court erred in so reading the Act. Appellant argues that the holder of a judgment lien should be ...

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