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Goodwin v. Magness Oil Co.

Court of Appeals of Arkansas, Divisions I, II

May 16, 2018

DANIEL R. GOODWIN AND THE GOODWIN LAW FIRM, PLLC APPELLANTS
v.
MAGNESS OIL COMPANY; BENNY W. MAGNESS; JANIE A. MAGNESS; AND JEFFREY MAGNESS APPELLEES

          APPEAL FROM THE BAXTER COUNTY CIRCUIT COURT [NO. 03CV-11-330] HONORABLE SHAWN A. WOMACK, JUDGE

          Ethredge & Copeland, P.A., by: Johnnie A. Copeland, for appellants/cross-appellees.

          Bailey & Oliver Law Firm, by: Frank H. Bailey and Sach D. Oliver; and Brian G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks, for appellees/cross-appellants.

          RITA W. GRUBER, CHIEF JUDGE

         Virginia attorney Daniel Goodwin and the Goodwin Law Firm, PLLC (Goodwin), appeal from the judgment of the Baxter County Circuit Court entered after a bench trial finding him liable for conversion and assessing damages of $500, 000 in favor of appellee Magness Oil Co. Goodwin argues that he lacks sufficient minimum contacts with the State of Arkansas to enable the circuit court to exercise jurisdiction over him. We agree. Accordingly, we reverse and dismiss.

         Magness Oil is an Arkansas-based, family-owned corporation that owns a series of convenience stores in Arkansas and other states. On April 10, 2009, Magness Oil and Piedmont Fields, LLC, a Georgia limited liability company, entered into a letter of intent for Magness Oil to sell twenty-three convenience stores in Arkansas to Piedmont.[1]

         On April 23, 2009, Piedmont and USA Global Holdings Business Trust (USAG), a Nevada registered business trust represented by Goodwin, entered into an "Escrow Presentation Hypothecation Agreement" whereby USAG would use $500, 000 provided by Piedmont to generate the funds to make a $45 million loan to Piedmont in order for it to purchase Magness Oil. The escrow/hypothecation agreement also provided that if the hypothecation process was unsuccessful, USAG would contact Piedmont and either attempt to hypothecate the deposit for a lesser amount or rescind the escrow/hypothecation agreement and return the money to Piedmont.

         Also, on April 23, 2009, Goodwin emailed a letter to Piedmont in Georgia directing it to wire transfer the $500, 000 to his trust account "in connection with [Piedmont's] acquisition of Magness Oil." The money was wired to Goodwin in Virginia as requested. Goodwin later wired $495, 000 to a third-party account owned by a USAG subsidiary in Nevada and transferred $5, 000 to his firm's operating account.

         On May 13, 2009, Magness Oil and Piedmont entered into the purchase agreement called for in the letter of intent. The purchase price was to be $42.5 million, plus the actual costs of constructing another store in Mountain View, Arkansas. The purchase agreement required Piedmont to tender $500, 000 earnest money and expressly stated that Piedmont had already delivered the money to USAG, who would hold the money as the escrow agent in accordance with the terms of the purchase agreement. The agreement also provided for a "Feasibility Period" of up to 120 days from the execution of the letter of intent for Piedmont to conduct its due diligence. After the expiration of the feasibility period, the earnest money became nonrefundable. Closing of the sale was to be on September 7, 2009. The agreement also provided that if Piedmont failed to meet its obligations, the earnest money was to be distributed to Magness Oil. The purchase agreement contained a forum-selection/choice-of-law provision that stated: "This Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas. Any action shall be adjudicated in the Circuit Court of Baxter County, Arkansas."

         The sale was not closed within the time specified by the purchase agreement because USAG could not secure the necessary funding. When USAG and Goodwin were not forthcoming with the earnest money after demands by Piedmont and Magness Oil, Magness Oil filed this suit in Baxter County Circuit Court against Goodwin, Piedmont, and USAG to recover the $500, 000 earnest money. The complaint alleged conversion and breach of fiduciary duty against Goodwin and his law firm.

         Goodwin filed a motion to dismiss, asserting that he lacked sufficient minimum contacts with the State of Arkansas as would enable the circuit court to exercise jurisdiction over him. Following a hearing on Goodwin's motion to dismiss, the circuit court ruled from the bench, denying Goodwin's motion. The court found that Goodwin had sufficient minimum contacts with the State of Arkansas. In making its ruling, the court relied on the role Goodwin played in facilitating the transactions to raise the money to fund the purchase agreement.

         Following entry of a default judgment against USAG and summary judgment against Piedmont, a bench trial was held on Magness Oil's claims against Goodwin. The circuit court ruled from the bench, finding that Goodwin and USAG acted in concert for the purposes of committing conversion of the earnest money and that Goodwin was liable for the full amount. Once a final order was entered, this appeal and cross-appeal followed.[2]

         Although Goodwin argues seven points on appeal, the dispositive point is whether the circuit court lacked personal jurisdiction over him. There, he argues that he lacked sufficient "minimum contacts" with Arkansas for the circuit court to exercise personal jurisdiction over him and his law firm. We agree.

         We begin our analysis with our long-arm statute, which provides in pertinent part, "The courts of this state shall have personal jurisdiction of all persons, and all causes of action or claims for relief, to the maximum extent permitted by the due process of law clause of the Fourteenth Amendment of the United States Constitution." Ark. Code Ann. § 16-4-101(b) (Repl. 2010). Accordingly, "the exercise of personal jurisdiction is limited only by federal constitutional law." Yanmar Co., Ltd. v. Slater, 2012 Ark. 36, at 5, 386 S.W.3d 439, 443. In ...


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