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Patton Hospitality Management, LLC v. Bella Vista Village Coopershares Owners Association, Inc.

Court of Appeals of Arkansas, Division I

May 25, 2016

PATTON HOSPITALITY MANAGEMENT, LLC APPELLANT
v.
BELLA VISTA VILLAGE COOPERSHARES OWNERS ASSOCIATION, INC. APPELLEE

         APPEAL FROM THE BENTON COUNTY CIRCUIT COURT [NO. CV-14-1620-4] HONORABLE JOHN R. SCOTT, JUDGE

          Gill Ragon Owen, P.A., by: Matthew B. Finch and Heartsill H. Ragon III; and Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, LLC, by: Miles C.Thomas, pro hac vice, for appellant.

          Wright, Lindsey & Jennings LLP, by: Paul D. Morris; and Byars & Hall, by: Joe D. Byars, Jr., for appellees.

          BART F. VIRDEN, Judge

         Appellant Patton Hospitality Management, LLC (Patton) brings this appeal to challenge the Benton County Circuit Court's orders granting summary judgment in favor of Bella Vista Village Coopershares Owners Association, Inc. (the Association), awarding attorney's fees to the Association, and finding Patton in contempt of court. After considering the merits of this appeal, we find no error and affirm.

         I. Background

         We begin by identifying the entities that are integral to the understanding of this appeal. Appellee the Association owns a resort in Benton County known as Greens I, and appellant Patton is a management company that entered into a contract to manage Greens I. Although not a party to the litigation, Escapes Travel Choices, LLC (ETC), a company that contracted to provide reservation services for Greens I, also factors heavily into the outcome of this case. The underlying litigation arose when the Association terminated Patton's management agreement. This appeal boils down to a dispute regarding whether the Association was contractually bound to notify ETC of its intent to terminate that agreement with Patton.

         In August 2001, the Association and a company known as Escapes II, Inc. (Escapes II) entered into a management agreement (Management Agreement) wherein Escapes II agreed to provide management services for Greens I. The Management Agreement included a provision that allowed Escapes II to assign its rights under the contract to another management firm if the Association consented.

         Escapes II eventually changed its name to Escapes!, Inc., and in October 2004, Escapes!, Inc., the Association, ETC, and Escapes Property Management, LLC (EPM) entered into an affiliation agreement (Affiliation Agreement). The Affiliation Agreement provided for certain aspects of the management of Greens I; it made Greens I an ETC resort and provided for the implementation of a reservation system for which ETC would be responsible. It included a provision that "the Developer, the Association, and the Management Company agree to immediately notify ETC, LLC of any change in any fact or circumstance affecting the operation of the Resort . . . including but not limited to the termination of any existing management company."

         Pursuant to the terms of the August 2001 Management Agreement, Escapes II assigned its rights under the Management Agreement to EPM. A first amendment to the Management Agreement memorialized this assignment in October 2012. In January 2013, EPM assigned its rights and responsibilities under the Management Agreement to Patton, and a second amendment to the Management Agreement was executed.

         The Association, Patton, and ETC executed an agreement referred to as the tri-party agreement (Tri-Party Agreement) in January 2013.[1] According to the agreement, it was entered into "to address and/or clarify certain items related directly or indirectly to the Project and Management Agreement." Paragraph 12(f) of the Tri-Party Agreement contained a clause central to this case specifically providing that

[t]his Agreement (including the Exhibits to this Agreement) supercedes any other agreement, whether written or oral, that may have been made or entered into by any party or any of their respective Affiliates . . . relating to the matters contemplated hereby. This Agreement (together with the Exhibits) constitutes the entire agreement by and among the Parties and there are no agreements or commitments by or among such Parties except as expressly set forth herein.[2]

         Of particular significance is the procedure for terminating the management company. The Tri-Party Agreement provides that the term of the management agreement will automatically extend at the end of each contract year for one additional contract year unless either Patton or the Association notifies the other party of its intent not to extend at least ninety days prior to the commencement of the subsequent contract year.

         In a letter dated July 31, 2013, the Association notified Patton that it intended to terminate the Management Agreement at the conclusion of its term in January 2015.[3] The Association sent an additional notice of termination to Patton by letter dated August 15, 2014. However, the Association did not notify ETC of Patton's termination.

         This litigation commenced shortly thereafter with Patton suing the Association in December 2014. Patton claimed that the Association improperly terminated the Management Agreement, and it sued the Association for breach of contract, specific performance, promissory estoppel, and declaratory and injunctive relief. The dispute concerned whether the Association was required to notify ETC of Patton's termination. The Association filed an answer and counterclaim wherein it sought declaratory relief that the 2004 Affiliation Agreement had been superseded by the 2013 Tri-Party Agreement and that the contract with Patton has been properly terminated. The Association also sought an injunction requiring that Patton immediately cooperate and provide the Association with access to and control over its funds. ETC was not a party to the litigation.

         In January 2015, the Association filed a motion for summary judgment arguing that it was entitled to declaratory and injunctive relief. The circuit court granted summary judgment in the Association's favor and found that, by granting the relief requested, all of Patton's claims against the Association were also effectively resolved in the Association's favor. An additional and pertinent portion of the order granting summary judgment is the circuit court's directive that "Patton shall immediately transfer and convey all of the Association's property unto the Association."

         Following the entry of the order granting summary judgment, the Association petitioned the circuit court for an award of attorney's fees based on the ability to recover attorney's fees in breach-of-contract cases. Ark. Code Ann. § 16-22-308. Patton resisted this request, contending that this case was not primarily based in contract and that, accordingly, attorney's fees were not authorized. The Association filed an additional motion with the circuit court asking that Patton be held in contempt for "failure to transfer and convey all of the Association's property unto the Association."

         At the conclusion of a two-day hearing on these motions, the circuit court granted all of the relief requested by the Association. It awarded the Association $22, 941.50 in attorney's fees and also found Patton in willful and malicious contempt of the court's February 2015 order. This timely appeal followed.

         On appeal, we are tasked with determining whether (1) the circuit court erred by granting summary judgment in favor of the Association, (2) the circuit court abused its discretion by awarding attorney's fees to the Association, and ...


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