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Smith v. Mountain Pine Timber, Inc.

Court of Appeals of Arkansas, Division IV

April 6, 2016

BRUCE SMITH AND JAN SMITH, HUSBAND AND WIFE, APPELLANTS/CROSS-APPELLEES
v.
MOUNTAIN PINE TIMBER, INC.; JOE T. BENTON III; RUSSELL A. BENTON; AND SHEILA SNOWDEN, IN HER CAPACITY AS PERSONAL REPRESENTATIVE OF THE ESTATE OF DANNY H. SNOWDEN, DECEASED, APPELLEES/CROSS-APPELLANTS

          APPEAL FROM THE CLEBURNE COUNTY CIRCUIT COURT. NO. CV-2010-210-4. HONORABLE TIM WEAVER, JUDGE.

         MARTIN WAYNE BOWEN, GREG D TAYLOR, for appellants.

         CHARLES TURNER COLEMAN, MELVIN E MORGAN, RODNEY PAUL MOORE, SETH RYAN JEWELL, for appellees.

         RITA W. GRUBER, Judge. ABRAMSON and VAUGHT, JJ., agree.

          OPINION

         

Page 410

          Rita W. Gruber, Judge

         This appeal arises out of a mineral-rights dispute. Mountain Pine Timber, Inc. (MPT), sold land located in Cleburne County, Arkansas, to Bruce Smith and Jan Smith (the Smiths) and claimed to convey

Page 411

all rights to the land to them. However, MPT had previously conveyed the mineral rights to the land to another entity. The Smiths learned of the previous conveyance when they attempted to sell the mineral rights. Following this discovery, the Smiths sued MPT and its former shareholders for breach of warranty of title. The result was a $250.22 jury verdict in the Smiths' favor. This appeal followed.

         I. Facts

         In 1987, the Smiths purchased two tracts of land from MPT. MPT was an Arkansas corporation owned by Joe Benton, Russell Benton (the Bentons), and Danny Snowden. On February 12, 1987, the Smiths agreed to purchase 130.22 acres of land from MPT. They paid for the land over time and eventually obtained a warranty deed to the land on April 22, 1993. On March 27, 1987, the Smiths purchased an additional 120 acres from MPT; they paid for the land immediately and were given a warranty deed to the land on that date. Neither deed contained a reservation or exception of minerals.

         Prior to the execution of these warranty deeds, MPT conveyed the minerals underlying both tracts of land to CenArk Oil and Gas Company (CenArk). CenArk was also owned by the Bentons and Danny Snowden. In 2008, the Smiths contracted to sell the mineral rights to both tracts of land for $1,500 per acre. It was at this time that the Smiths discovered the prior mineral deed from MPT to CenArk. Because of the prior deed, the Smiths were unable to effectuate their sale of the mineral rights.

         In October 2010, the Smiths initiated this litigation against MPT suing it for breach of warranty of title. MPT responded by filing a motion to dismiss pursuant to Ark. R. Civ. P. 12(b)(6) arguing that the statute of limitations had expired on the Smiths' claim. The circuit court denied MPT's motion to dismiss finding that the breach occurred at the time of constructive eviction and concluding that the statute of limitations did not bar this action. During the pendency of the litigation, the Smiths learned that MPT was a dissolved corporation. Upon this discovery, they amended their complaint to add the Bentons and the Estate of Danny Snowden, the former shareholders of MPT, as parties.[1]

         As the litigation progressed, the Smiths filed a motion to determine the measure of damages applicable to their claim for breach of warranty of title. The Smiths argued that their damages should be based on the value of the minerals at the time of constructive eviction, while the Bentons and the Estate of Danny Snowden argued that damages should be based on the value of the minerals at the time of conveyance but limited to the ...


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