MIRACLE KIDS SUCCESS ACADEMY, INC. APPELLANT
MARVIN HENRY MAURRAS APPELLEE
FROM THE PULASKI COUNTY CIRCUIT COURT, TWELFTH DIVISION [NO.
60CV-14-2778] HONORABLE ALICE S. GRAY, JUDGE
Hurst & Burnett PLC, by: Donald L. Parker II and Ronald
S. Burnett, Jr., for appellant.
Campbell, P.A., by: Phil Campbell and Chris Stevens, for
KENNETH S. HIXSON, Judge
Miracle Kids Success Academy, Inc. (Miracle Kids) appeals
from an order granting summary judgment to appellee Marvin
Maurras (M. Maurras) on M. Maurras's claim for repayment
of a loan. This is the second time this case has been before
this court. We dismissed the first appeal for lack of a final
judgment because two additional claims by M. Maurras had been
dismissed without prejudice, leaving him free to refile those
unresolved claims. See Miracle Kids Success Academy, Inc.
v. Maurras, 2016 Ark.App. 445, 503 S.W.3d 94. After our
dismissal, the trial court entered an order granting summary
judgment to M. Maurras on his claim for repayment of the
loan, dismissing M. Maurras's remaining two claims with
prejudice, and awarding M. Maurras $19, 200 in attorney's
fees. Miracle Kids timely appealed from that order, and in
this appeal, it contests both the summary judgment and the
attorney's fees. Because the order being appealed is now
a final order, we have jurisdiction to hear this appeal.
term of a contract is open to different reasonable
interpretations, there is a fact question to be resolved, and
the case is not ripe for summary judgment. See Prochazka
v. Bee-Three Dev., LLC, 2015 Ark.App. 384, 466 S.W.3d
448. Such is the case in the present litigation. We conclude
that the trial court erred in granting summary judgment for
M. Maurras in this case because the contract between the
parties was ambiguous as to an essential disputed term.
Therefore, we reverse the summary judgment, reverse the award
of attorney's fees, and remand for trial.
standard of review for summary-judgment cases is well
established. Anderson v. CitiMortgage, Inc., 2014
Ark.App. 683, 450 S.W.3d 251. Summary judgment should be
granted only when there are no genuine issues of material
fact to be litigated, and the moving party is entitled to
judgment as a matter of law. Thomas v. Clear
Investigative Advantage, LLC, 2017 Ark.App. 547, 531
S.W.3d 458. The purpose of summary judgment is not to try the
issues, but to determine whether there are any issues to be
tried. Graham v. Underwood, 2017 Ark.App. 498, 532
S.W.3d 88. In reviewing a grant of a summary judgment, the
appellate court determines if summary judgment was
appropriate based on whether the evidentiary items presented
by the moving party left a material question of fact
unanswered. Thomas, supra. We view the
evidence in the light most favorable to the party against
whom the motion for summary judgment was filed and resolve
all doubts and inferences against the moving party.
Katherine Hardin (Hardin) and Shelly Decker Keller (Keller)
created Miracle Kids, in 2008 and were seeking investors.
They successfully solicited Marvin Maurras and his nephew,
Chris Maurras (C. Maurras), to join them as the two remaining
shareholders and directors of Miracle Kids. The shareholders
ultimately agreed that each shareholder would contribute
$175, 000 as start-up capital for the company for a total of
$700, 000, and this agreement was reduced to writing in an
Operations Agreement dated and executed on September 23,
three months later on December 11, 2009, a shareholders'
meeting was held. Between September 23, 2009, the date the
Operations Agreement was executed, and December 11, 2009, the
date of the shareholders' meeting, some or all of the
shareholders apparently met with an accountant who suggested
a significant change in the manner in which the start-up
contributions would or should be made. Instead of each
shareholder's $175, 000 contribution being made in the
form of a capital contribution, the accountant suggested that
each shareholder contribute $25, 000 as start-up capital and
the remaining $150, 000 contribution be made in the form of
individual $150, 000 promissory notes. The minutes from that
December 11, 2009 meeting reflected this revision of the
initial funding provisions in the Operations Agreement,
Based on suggestion of accountant all agree that funding of
the company shall take place as loans to the company,
excluding the initial $25, 000 by each partner which will be
a capital contribution. The remaining $150, 000 of required
funding by each partner as stated in the Operating Agreement
will be held as a liability of the company which will be
repaid to each partner. The loans will accrue interest at an
annual interest of 5%. [Hardin] and [Keller] will be repaid
their principal only at a rate of $5000 monthly and [M.
Maurras] and [C. Maurras] agree to defer loan repayment for
now. This will replace the descriptions as detailed in
the Operating Agreement.
(Emphasis added.) The December 11, 2009 minutes were signed
by all four shareholders.
record reflected that Hardin and Keller borrowed money from a
bank to fund their respective $175, 000 contributions and
that Hardin and Keller were allowed to pledge assets of the
company to the bank to secure the loans. M. Maurras made his
initial $25, 000 start-up capital contribution and then
funded his $150, 000 loan by making six installments of $25,
000 each with the last installment made in May
company apparently operated profitably through the summer of
2014. In June 2014, M. Maurras demanded repayment of his
loan, and Miracle Kids refused to pay. On July 17, 2014, M.
Maurras filed a complaint against Miracle Kids. In Count I,
M. Maurras demanded repayment of the loan in the principle
sum of $150, 000 plus 5% interest as reflected in the minutes
of the December 11, 2009 shareholder meeting. M. Maurras also
requested attorney's fees pursuant to Arkansas Code
Annotated section 16-22-308 (Repl. 1999). Miracle Kids
filed a timely answer to the complaint.
Maurras subsequently filed a motion for partial summary
judgment on his claim for repayment of the
loan. In his summary-judgment motion, M. Maurras
asserted that because there was no maturity date for the
loan, it was payable in full on demand. As support for the
proposition that the loan was "due on demand, " M.
Maurras cited Arkansas Code Annotated section 4-3-108(a)
(Repl. 2001), which provides in pertinent part: "(a) A
promise or order is 'payable on demand' if it . . .
(ii) does not state any time of payment."
Kids filed a response to M. Maurras's motion for partial
summary judgment. In its response, Miracle Kids asserted that
the December 11, 2009 minutes were not intended to constitute
a loan instrument or other type of instrument to be used for
the purpose of demanding payment from Miracle Kids. Miracle
Kids also asserted that it was financially unable to repay
the shareholder loan and that any repayment of the loan would
require shareholder approval as required by the parties'
Operations Agreement. Further, Miracle Kids specifically
contended that M. Maurras had incorrectly applied Arkansas
Code Annotated § 4-3-108(a) in that the minutes of the
shareholders' meeting did not constitute an "order,
" a "promise, " or a "negotiable
instrument" under Arkansas Code Annotated sections
4-3-103(a)(7) and (11) and section 4-3-104.
to Miracle Kids' response was the affidavit of
shareholder C. Maurras, the nephew of M. Maurras, wherein C.
6. As reflected in the December 11, 2009 minutes from the
shareholder meeting (the "Minutes"), based on
advice from Miracle Kids' accountant, $150, 000 of the
$175, 000 capital contribution that Marvin Maurras and I
each agreed to make to Miracle Kids would be treated as loans
to Miracle Kids and we agreed to defer repayment of the loans
to a future date. Our agreement was that the loans would be
paid at a later date to be determined by a majority of the
shareholders at such time (if ever) that Miracle Kids could
afford to repay the loan (i.e. refund the capital
contribution). At the time that the Minutes were signed, no
agreement was reached among the shareholders of Miracle Kids
as to when the shareholder loans would be repaid.
7. The Minutes are not and were never intended as a
promissory note or negotiable instrument, which could be used
for the purpose of making a demand for repayment of the
shareholder loans from Miracle Kids. I never viewed the
Minutes as a promissory note or other evidence of
indebtedness that could be presented to Miracle Kids for
payment of a debt. It was my understanding that the
shareholder loans (which were in reality capital
contributions) would be repaid when a majority of the
shareholders determined that Miracle Kids could afford to
repay the shareholder loans.
8. In the past 18 months, Miracle Kids has opened four (4)
new locations, and cash flow is extremely tight. At this
time, Miracle Kids does not have sufficient cash flow to
repay the shareholder loans to Marvin Maurras or to me.
9. If a shareholder meeting were duly called for the purpose
of deciding whether to immediately repay the shareholder loan
to Marvin Maurras, I would vote against repaying the loan due
to the current financial condition and cash needs for growth
of Miracle Kids.
(Emphasis added.) In addition, Miracle Kids attached the
affidavit of shareholder Shelly Keller, which was virtually
identical in content to C. Maurras's
affidavit. Simultaneous with the filing of its
response to the M. Maurras motion for partial summary
judgment, Miracle Kids also filed a motion requesting that
partial summary judgment be entered in its favor with respect
to M. Maurras's claim for loan repayment.
trial court entered an order granting M. Maurras's
summary-judgment motion and denying Miracle Kids'
summary-judgment motion. After we dismissed the appeal from
that order without prejudice due to lack of finality, the
trial court entered a final order disposing of all the claims
and again granting M. Maurras's motion and denying
Miracle Kids' motion. That final order, which was entered
by the trial court on December 16, 2016, provides in
The Plaintiff loaned the Defendant the principal sum of $150,
000 at Five-Percent (5%) annual interest, as set forth in the
shareholders' meeting minutes. The loan did not have a
maturity date and was, therefore, payable upon demand.
on these conclusions, the trial court entered a judgment to
M. Maurras in the amount of $206, 298.88 plus postjudgment
interest. The order also awarded M. Maurras $19, 200 in