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Thompson v. Broussard

Court of Appeals of Arkansas, Division III

September 6, 2017



          The Applegate Law Firm, PLLC, by: Ryan J. Applegate, for appellant.

          Baker Schulze Murphy & Patterson, by: Darryl E. Baker and J.G. Schulze, for appellee.


         Appellant Lara Thompson appeals the decision of the Garland County Circuit Court awarding appellee Rachel Broussard $7, 111 plus attorney's fees of $2, 000. Finding no error, we affirm.

         I. Background

         Thompson was the owner of Summit Gymnastics, a gymnastics studio. She agreed to sell the business to Broussard. The parties executed a document entitled "Agreement for the Sale and Purchase of Assets and Bill of Sale" in October 2014. Broussard agreed to pay Thompson $48, 000 for the business by making installments of $1, 500 per month for thirty-six months. Broussard made a down payment of $4, 500, and Thompson kept $1, 000 in receivables after the sale was made, for a total initial payment of $5, 500. In addition, Thompson applied $345 in salary she owed to Broussard (who had been employed by the studio), and Broussard made payments on two loans-one for $152 and the other for $1, 114-that the studio owed to Diamond Lakes Federal Credit Union.

         Broussard operated the gymnastics studio for two months-November and December 2014. The parties began to have disputes early on, however, and by December, Thompson was threatening to sue Broussard for breach of contract. Broussard returned ownership of the studio to Thompson on January 1, 2015. Thompson nonetheless filed a breach-of-contract suit against Broussard on January 2, 2015, alleging that Broussard had failed to make the required monthly payments. Thompson demanded that Broussard pay her the entire purchase price of $48, 000. Broussard answered and filed a counterclaim, alleging that Thompson had failed to disclose that she did not own 100 percent of the business's assets. Broussard sought cancellation of the contract and return of the money she had paid to Thompson.

         Broussard eventually filed a motion for summary judgment, contending that the contract between the parties had been rescinded and that she was therefore entitled to a refund of the amounts she had paid toward the purchase of the business, totaling $7, 111. The circuit court agreed with Broussard and granted summary judgment. The court found that the parties had rescinded the contract, that Thompson had retaken the business, and that Broussard had paid Thompson or made payments on her behalf totaling $7, 111. The court noted, however, that there was still a dispute as to whether Thompson was entitled to an offset for any net profits Broussard might have earned during the two months that she ran the business.

         The circuit court later held a hearing on Thompson's request for an offset. After hearing testimony and taking evidence, the circuit court concluded that Thompson had not met her burden of proof that Broussard made a profit for which Thompson would be entitled to a credit, and it therefore ordered that Thompson's complaint be dismissed. The court entered judgment for Broussard in the amount of $7, 111, plus costs and interest. Additionally, the court awarded Broussard $2, 000 in attorney's fees. Thompson subsequently filed a timely notice of appeal.

         II. Thompson's Entitlement to an Offset

         In her first argument on appeal, Thompson argues that the circuit court erred in finding that she failed to meet her burden of proof on the issue of an offset. Our standard of review on appeal in civil bench trials is whether the circuit court's findings were clearly erroneous or clearly against a preponderance of the evidence. Patel v. Patel, 2015 Ark.App. 726, at 2, 479 S.W.3d 580, 582; Tadlock v. Moncus, 2013 Ark.App. 363, at 3, 428 S.W.3d 526, 529. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court, on the entire evidence, is left with a firm conviction that a mistake has been committed. Patel, supra. We must give recognition to the circuit court's superior opportunity to determine the credibility of witnesses and the weight to be given to their testimony. S. Bldg. Servs., Inc. v. City of Ft. Smith, 2013 Ark.App. 306, at 6, 427 S.W.3d 763, 766.

         Before addressing the merits of Thompson's argument, we briefly set out the general law as it relates to rescission. Our supreme court has stated that rescission is cognizable both at law and in equity. Maumelle Co. v. Eskola, 315 Ark. 25, 29, 865 S.W.2d 272, 274 (1993). Equitable rescission is distinct from rescission at law in that equitable rescission requires the affirmative powers of an equity court to rescind or undo the contract, whereas in rescission at law, the court merely grants restitution after the party seeking it has achieved rescission by his or her own acts. Phelps v. U.S. Life Credit Life Ins. Co., 336 Ark. 257, 984 S.W.2d 425 (1999); Moreland v. Dodds, 2012 Ark.App. 10, 388 S.W.3d 73.

         Here, the parties agree that the agreement for Broussard to purchase the business from Thompson was legally rescinded when Broussard returned the venture to Thompson. Thompson does not appear to dispute that the $7, 111 judgment against her accurately represents the funds that Broussard expended during her time as owner of the business. She maintains, however, that she met her burden of proof ...

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