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Wynne-Ark., Inc. v. Richard Baughn Construction

Court of Appeals of Arkansas, Division IV

December 13, 2017

WYNNE-ARK., INC., D/B/A KELLEY'S RESTAURANT APPELLANT
v.
RICHARD BAUGHN CONSTRUCTION APPELLEE

         APPEAL FROM THE CROSS COUNTY CIRCUIT COURT [NO. 19CV-14-46] HONORABLE RICHARD L. PROCTOR, JUDGE

          David A. Hodges, for appellant.

          Barber Law Firm, PLLC, by: Michael J. Emerson, for appellee.

          BART F. VIRDEN, JUDGE.

         This interlocutory appeal stems from the Cross County Circuit Court's decision to grant Richard Baughn Construction's (RBC) motion to compel discovery regarding a separate agreement between plaintiff Wynne-Ark. Inc., d/b/a Kelley's Restaurant (Kelley's) and a second defendant, Asphalt Producers, LLC (API). We reverse.

         On June 2, 2014, Kelley's filed a complaint in the circuit court seeking damages against RBC, a subcontractor of API. In the complaint, Kelley's alleged damages arising from the defendants' negligent performance of a state highway construction contract. Kelley's asserted that during construction the entrance to the restaurant was unnecessarily blocked for a significant amount of time, which caused a loss of business income. Kelley's also claimed that the defendants failed to control the dust and debris in the course of work and that defendants damaged the entrance. API and RBC filed separate motions for summary judgment, which the circuit court denied.

         On August 8, 2016, the circuit court ordered mediation. Both parties attended the mediation on September 20, 2016, and counsel for each party signed an agreement for mediation and a confidentiality agreement.

         On September 21, 2016, RBC filed an amended answer and cross-claim against API, seeking contribution and apportionment of fault among the parties found to be responsible for Kelley's damages, if any. On October 21, 2016, API responded that RBC had not stated facts or a legal basis for a claim, and the cross-claim should be dismissed. That motion was never ruled on by the circuit court. On November 23, 2016, Kelley's filed an objection to RBC's second set of interrogatories[1] and a request for production of documents.

         On December 2, 2016, RBC responded that Kelley's had recently reached a settlement agreement with API, and RBC was entitled to discovery of the document to ascertain "what factual allegations remain pending against RBC and what damages are attributable to same." RBC argued that it was entitled to information regarding fault and damages pursuant to apportionment of fault; thus, disclosure of the document was necessary for RBC to develop a defense.

         On January 9, 2017, RBC filed a motion to compel discovery. In the motion, RBC asserted that, pursuant to court-ordered mediation, Kelley's and API had reached a confidential settlement agreement. RBC explained that it had propounded discovery seeking the amount and terms of the settlement and release but that Kelley's had refused to disclose the document. RBC argued that the terms of the settlement were relevant and not privileged because RBC must have knowledge of the terms to prepare for trial and evaluate RBC's liability and damages. RBC also asserted that it is entitled to joint-tortfeasors settlement credit under the Uniform Contribution Among Tortfeasors Act (UCATA), codified in Ark. Code Ann. §§ 16-61-201 et seq., and that right is not abrogated in any way by the Civil Justice Reform Act (CJRA). RBC argued that it is entitled to apportionment of fault, with the greater amount of either fault or the settlement amount being apportioned to the settling defendant. RBC also contended that, pursuant to the CJRA, it is entitled to have API appear on the verdict forms to aid the jury in apportioning fault. RBC clarified that it was not requesting that the court rule on the admissibility of the document-only its discoverability.

         On January 20, 2017, Kelley's responded to the motion to compel arguing that Ark. Code Ann. § 16-7-206 guaranteed the confidentiality of any record or writing made during mediation. Kelley's argued that RBC's negligent acts and ensuing damages were separate from API's; thus, the definition of "joint tortfeasors" has not been met, and RBC would not be entitled to any credit of the amount paid by API. Kelley's asserted that "for the same reasons, Asphalt Producers should not appear on the jury form and there should be no allocation of fault." Kelley's also questioned the retroactive application of Act 1116, and the right to allocation of fault that was created by it.

         On January 23, 2017, Kelley's sought to dismiss without prejudice any claims against API. Kelley's explained that it had executed an agreement with API to resolve all claims, and on January 26, 2017, the circuit court granted Kelley's motion.

         On February 7, 2017, API filed a second motion to dismiss RBC's cross-claim. API argued that RBC could not state a claim for contribution against API because although RBC may have the right to introduce evidence of API's negligence, and RBC may have the right to seek apportionment of fault, these rights are not connected to a right of contribution against API. API asserted that the right of contribution does not arise until a jury finds that RBC is required to pay an amount of damages that exceeds its pro rata share of common liability, and because the case is pending and no finding of liability has been made, a cause of action for contribution does not exist. Furthermore, API argued that if RBC is found liable, it will be entitled to a setoff that ensures that RBC will pay only its pro rata share of fault. The court did not rule on the motion to dismiss the cross-claim.

         On February 27, 2017, the circuit court entered an order compelling discovery "with the proviso that there will be a Protective Order with regard to the resolution between Asphalt Producers, LLC and Plaintiff, which resolution took place during mediation, and the parties agree that there was a stipulation that the document resulting from the mediation was confidential." The circuit court declined to rule on the admissibility of the document. Citing Cooper Tire & Rubber Co. v. Phillips County Circuit Court, 2011 Ark. 183, 381 S.W.3d 67, the circuit court noted that whether a confidential settlement agreement is discoverable under these facts is an issue of first impression in Arkansas, and an interlocutory appeal is appropriate because this case ...


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