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Morris v. Knopick

Court of Appeals of Arkansas, Divisions I, II

April 12, 2017



          Ethredge & Copeland, P.A., by: Johnnie A. Copeland, for appellant.

          Robert S. Tschiemer, for appellee.

          DAVID M. GLOVER, Judge

         This appeal primarily pertains to the conveyance of a Matco toolbox and tools.[1] The transfer of these items was included as a term of a real-estate contract entered into by buyer Margaret Conti and seller Michael Morris. Although the contract was signed by Conti and Morris, the negotiations were between Morris and Conti's son, Nickolas Knopick. The litigation commenced with Conti suing Morris, but Knopick was eventually substituted for Conti by agreement of the parties. Following a bench trial, the trial court ordered Morris to pay Knopick $92, 000 in damages. Both Morris and Knopick appeal.

         I. Background

         Michael Morris listed for sale a house and thirty acres of land in Baxter County, Arkansas. He initially listed the property with Century 21 Realty. While the property was listed with Century 21, Nickolas Knopick toured the house with a realtor from Lake River Land Realty; he had an exclusive-buyer agency agreement with Lake River Land Realty that ran from June 20, 2007, until December 31, 2007.

         After Morris's listing with Century 21 expired, he and Knopick entered into negotiations regarding the sale of the property. The parties dispute the relevant facts surrounding the negotiations. However, the negotiations culminated with Morris entering into a contract with Margaret Conti, Knopick's mother, for the sale of the house, surrounding acreage, and specific items of personal property-the most important items for the purposes of this appeal being a set of Matco tools and a tool box-on November 26, 2007. The purchase price was $863, 060. Conti never visited the property prior to the sale. A local realtor, Marie Hadzima, represented both Morris and Conti in the transaction.

         Knopick contends that the $863, 060 offer was made in reliance on Morris's statements that the tools and the tool box being sold with the property were worth $150, 000. The real-estate contract included a provision for the transfer of a Matco toolbox and tools with a $100, 000 value placed on the tools. After the transaction closed, Knopick determined that the tools transferred in the sale were worth significantly less than $100, 000.[2]

         Conti sued Morris to rescind the agreement or, alternatively, for damages, claiming that she was supposed to receive a Matco tool box, $150, 000 worth of tools, wicker furniture, a washer and dryer, and a nightstand in the transaction. She later amended her complaint, naming Hadzima as a party and suing her for negligence. Additionally, Nickolas Knopick was allowed to intervene as a necessary party.

         A bench trial was held on the issues pertaining to the transfer of the tools and the toolbox, At the beginning of the trial, counsel for Knopick announced that Knopick was the real party in interest and that the parties agreed that Knopick would be substituted for Conti. Following the trial, the court prepared and entered a judgment in favor of Knopick and awarded him $92, 000 in damages against Morris. The judgment also dismissed Knopick's negligence claim against Hadzima. Both Knopick and Morris timely appealed the trial court's judgment. Our court dismissed the first appeal without prejudice because the trial court's judgment failed to adjudicate issues regarding the transfer of the wicker furniture, the washer and dryer, and the nightstand. Morris, supra.

         Following our court's dismissal of the appeal, the parties returned to the trial court and a supplemental judgment was entered dismissing with prejudice Knopick's claims regarding the wicker furniture, the washer and dryer, and the nightstand. Morris and Knopick timely appealed from the judgment and supplemental judgment. Also following the entry of the supplemental judgment, Knopick filed a motion for new trial that was deemed denied. Knopick filed an amended notice of cross-appeal from the deemed denial. Additionally, Knopick filed a motion for attorney's fees and costs requesting attorney's fees for both the trial work and the work done in the first appeal. The trial court granted the request for attorney's fees and costs from the trial work, but it refused to rule on the request for work done in the first appeal. Instead, the court directed the attorneys to brief the issue of whether attorney's fees for appellate work was proper and announced that it would rule on this portion of the motion after the briefing was completed. From this order, Knopick filed a second amended notice of appeal to challenge the trial court's denial of his request for attorney's fees and costs for appellate work.

         II. Issues on Appeal

         On direct appeal, Morris argues that (1) the trial court erred by finding that the parties had a contract and then failing to apply the terms of the contract; (2) there was no justifiable reliance by Knopick or Conti; (3) Morris did not make misrepresentations actionable as fraud; (4) neither Knopick nor Conti suffered damages caused by any alleged misrepresentation, and (5) Knopick is barred from recovery because of unclean hands.

         Knopick cross-appeals, arguing that the trial court erred by (1) failing to grant rescission and restitution; (2) failing to find fraud and award compensatory and punitive damages; (3) failing to find Hadzima negligent; (4) denying his motion for new trial; and (5) denying his motion for attorneys' fees and costs for work done in the first appeal.

         III. Jurisdiction

         As a preliminary matter, we must address a jurisdictional issue raised by Knopick. He contends that this appeal must again be dismissed for lack of finality-this time because the trial court has not adjudicated all of the claims as they pertain to Conti. Specifically, Knopick argues that Conti's rescission claim has not been adjudicated. This argument is without merit. The trial court's judgment disposes of the rescission claim.

         Knopick also argues that the trial court improperly substituted him for Conti. This argument is similarly unpersuasive. Knopick first raised this argument in a motion for new trial. An objection first made in a motion for new trial is not timely. Cochran v. Bentley, 369 Ark. 159, 251 S.W.3d 253 (2007). A party cannot wait until the outcome of the case to bring an error to the trial court's attention. Id. at 175, 251 S.W.3d at 267. Here, not only did Knopick fail to challenge the substitution, he agreed to it and his counsel announced the agreed substitution to the court. It is logical that he waived any potential defect regarding his substitution by his consent to proceed with the litigation.

         IV. Morris's Direct Appeal

         With jurisdiction established, we turn to Morris's arguments on direct appeal. Morris challenges several of the trial court's findings, and we evaluate the trial court's findings using a clearly erroneous standard of review. Poff v. Peedin, 2010 Ark. 136, 366 S.W.3d 347.

         A. A Contract

         Morris argues that the trial court erred by determining that he and Knopick had a contract and then by not applying the terms of the contract. First, Morris contends that the trial court erred in finding a contract between Knopick and him. However, the parties agreed to Knopick's substitution for Conti, and with that substitution, Conti's claims became Knopick's to pursue. Additionally, Morris did not develop this argument before the trial court; thus, he is precluded from doing so here. Kulbeth v. Purdom, 305 Ark. 19, 805 S.W.2d 622 (1991). Accordingly, we affirm the trial court's finding of a contract.

         Determining whether the trial court failed to apply the terms of the contract requires a review of the contract itself. Morris bases his argument on the premise that the contract provision that the buyer will not rely on any warranties, representations, or statements of the seller controls. However, the contract also includes a specific, handwritten provision stating that the sale included the transfer of a Matco toolbox and tools with a $100, 000 value placed on the tools.

         It is the duty of the courts to enforce contracts as they are written and in accordance with the ordinary meaning of the language used and the overall intent and purpose of the parties. Hancock v. Tri-State Ins. Co., 43 Ark.App. 47, 858 S.W.2d 152 (1993). "In seeking to harmonize different clauses of a contract, we should not give effect to one to the exclusion of another even though they seem conflicting or contradictory, nor adopt an interpretation which neutralizes a provision if the various clauses can be reconciled." RAD-Razorback Ltd. P'ship. v. B.G. Coney Co., 289 Ark. 550, 554, 713 S.W.2d 462, 465 (1986). When a contract contains general and specific provisions relating to the same subject, the specific provision controls over more general terms. Taylor v. Hinkle, 360 Ark. 121, 200 S.W.3d 387 (2004). We conclude that the provisions of the real-estate contract can be read harmoniously. The alleged value of the tools was reduced to writing and included as a term of the contract. This specific provision controlled over the more ...

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