This opinion is uncorrected and subject to revision before publication in the printed official reporter.
APPEAL FROM THE BENTON COUNTY CIRCUIT COURT. NO. CV2012-1854-5. HONORABLE XOLLIE DUNCAN, JUDGE.
Law Offices of Steven H. Kay, P.A., by: Joseph Paul Smith, for appellant.
Davis, Clark, Butt, Carithers & Taylor, PLC, by: Constance G. Clark and Sidney P. Davis, Jr., for appellee.
JOSEPHINE LINKER HART, Associate Justice. Special Justice WARREN E. DUPWE joins in this opinion. HANNAH, C.J., and DANIELSON and WOOD, JJ., concur in part and dissent in part. WYNNE, J., not participating.
JOSEPHINE LINKER HART,
Appellant, Ken David Swindle, sued appellee, Southern Farm Bureau Casualty Insurance Company (SFB), for breach of contract. SFB moved for summary judgment, and the circuit court granted the motion and awarded attorney's fees to SFB pursuant to Rule 11 of the Arkansas Rules of Civil Procedure. On appeal, Swindle argues that, after filing suit, SFB paid to him the sum he sued for, and thus, he was the prevailing party in the lawsuit and entitled to an award of attorney's fees under Arkansas Code Annotated section 16-22-308 (Repl. 1999). He further argues that the circuit court erred in sanctioning him under Rule 11, because SFB did not provide him with notice of their request for sanctions. We affirm the circuit court's decision to deny him fees as the prevailing party but reverse the circuit court's decision to sanction Swindle under Rule 11.
In his complaint, Swindle alleged that he represented David Dornan and Araceli Perez for damages that they sustained in a motor-vehicle collision. The driver of the other vehicle was insured by SFB. Swindle informed SFB of his attorney's liens on Dornan's and Perez's claims. According to the complaint, SFB offered to settle both Dornan's and Perez's claims, and both accepted. Swindle further alleged that he had disbursed $24,500 in reliance on the settlement but that checks written by SFB were never honored by SFB's bank. Swindle sought recovery of the $24,500.
In its answer to Swindle's complaint, SFB alleged that Swindle's claims were spurious and not presented in good faith and that the claims were made for an improper purpose such as to harass or to cause unnecessary delay and needlessly increase the cost of litigation. SFB asked that the circuit court dismiss the lawsuit, sanction Swindle under Rule 11, and order Swindle to pay the costs of litigation, including an attorney's fee.
Swindle moved for a " judgment on the pleadings." In his motion, he stated that he had filed the action in order to receive payment on a contract, that SFB had issued payment, and that he had received the funds. He asserted that because he had obtained the relief he sought, there was no material issue of fact remaining on the underlying issue. He concluded that the only remaining issue to be considered was his request for attorney's fees. He requested that a judgment be entered by the court finding in his favor and reserving the assessment of costs and attorney's fees.
In response, SFB asserted that Swindle's receipt of the funds was not the result of his filing of a cause of action and denied that Swindle was entitled to an award of attorney's fees. SFB further asserted that the complaint should be dismissed and that the court should award SFB costs and attorney's fees, either as the prevailing party in a contract suit or as sanctions pursuant to Rule 11.
No hearing was held. In its order granting summary judgment to SFB, the circuit court concluded that Swindle had filed a frivolous claim against SFB without proper and reasonable investigation. The court granted SFB summary judgment and imposed sanctions in the form of awarding attorney's fees to SFB. In a separate order, the court awarded attorney's fees and expenses in the sum of $6785.65.
Swindle raises two issues on appeal. In his first issue, he observes that the underlying question--his entitlement to the payment of the $24,500 by SFB--was resolved in his favor by SFB's payment of the funds to him. He argues that because SFB paid him after he had filed his complaint for breach of contract, he was the prevailing party in the lawsuit, and thus, he was entitled to an award of attorney's fees. This issue is one of statutory interpretation, and our review is de novo because it is for this court to decide what a statute means. See, e.g., Berryhill v. Synatzske, 2014 Ark. 169, at 4, 432 S.W.3d 637, 640.
Arkansas Code Annotated section 16-22-308 (Repl. 1999) 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.
The statute provides that in an action for breach of contract, the " prevailing party" may be allowed a ...