FROM THE SCOTT COUNTY CIRCUIT COURT [NO. 64CV-12-128]
HONORABLE DAVID H. MCCORMICK, JUDGE.
Pinnacle Law Firm, PLLC, by: Matthew D. Campbell, for
Walters, Gaston, Allison & Parker, by: Troy Gaston, for
J. GLADWIN, JUDGE.
Government Lease Company ("FG") and Paul Graver,
sole owner and operator of FG, appeal the Scott County
Circuit Court's judgment against Graver in the amount of
$258, 195 in general damages and $1.5 million in punitive
damages and the order of May 11, 2017, denying
appellants' posttrial motions for judgment
notwithstanding the verdict, new trial, remittitur, and
findings of fact and conclusions of law. On appeal,
appellants argue that the circuit court erred in (1) its
analysis and ruling on their motion to dismiss; (2) refusing
to continue or delay the start of trial; (3) allowing
punitive damages; (4) denying appellants' motion for new
trial; and (5) striking appellants' counterclaims. We
Northwest Scott County Volunteer Fire Department
("VFD") borrowed $166, 500 from FG to buy fire
trucks, although the amount of money and number of trucks are
disputed. When VFD failed to make payments, FG filed a
replevin complaint in circuit court alleging that VFD had
violated their "Lease Purchase Agreement" and
seeking recovery of seven vehicles, which FG alleged were
used as collateral for the loan, interest, and attorney's
fees. VFD responded that FG had already repossessed the
vehicle financed through their agreement and filed a
counterclaim against FG based on fraud and the Arkansas
Deceptive Trade Practices Act ("DTPA").
dismissed its replevin complaint without prejudice on June 2,
2014. The circuit court filed a June 16 order noting that
VFD's counterclaim was still pending. Trial was set for
VFD's counterclaim on December 18‒19, with a
pretrial hearing set on December 11. The scheduling order
filed July 21 included an October 30 discovery deadline.
hearing held November 13, an order filed December 1 required
that FG provide all supplemental discovery responses and a
list of exhibits and witnesses by November 24, and all of
FG's witnesses were to be made available for deposition
between November 25 and December 5. In a separate order, the
circuit court denied FG's motion to reconsider its ruling
that Graver appear in Arkansas to be deposed and noted that
the rulings from the November 13 hearing were imposed on FG
as sanctions for failure to answer interrogatories and
requests for production of documents.
filed a petition for writ of prohibition with the Arkansas
Supreme Court on December 4, and Graver did not appear for
deposition on December 5. The petition for writ of
prohibition was denied, and the formal order was filed in the
circuit court on December 10. On that date, VFD filed a
motion to implead Graver because Graver had represented
himself as "d/b/a FG" on numerous occasions. At the
pretrial hearing on December 11, the trial was continued to
August 20‒21, 2015. The resulting order, filed February
5, 2015, granted the motion to implead Graver and found that
FG did not produce Graver for deposition in violation of the
circuit court's order. The circuit court reserved the
right to strike FG's answer, and Graver was ordered to
reappear for deposition on March 25, 2015. The circuit court
found that Graver could not testify as a witness in the case
unless called by VFD, and evidence not provided to VFD prior
to November 13, 2014, was excluded. A December 22, 2014
scheduling order required any pretrial motions to be filed at
least fifteen days prior to the pretrial hearing set for
August 13, 2015.
January 12, 2015, VFD filed an amended counterclaim, which
added a complaint against Graver as a third-party defendant.
VFD alleged that Graver was liable for FG's conduct and
claimed that appellants had committed fraud, conversion, and
usury and had violated the DTPA-which included a claim for
punitive damages. FG filed a motion to dismiss VFD's
counterclaim for failure to state a claim. See Ark.
R. Civ. P. 12(b)(6) (2017).
March 23, two days before Graver's scheduled deposition,
he filed a notice of removal in the United States District
Court and a separate notice in the circuit court.
Accordingly, Graver did not appear for deposition on March
25. On November 12, the federal court remanded for lack of
jurisdiction, finding that FG was not a registered business
entity and was in fact Paul Graver acting as a sole
proprietorship; therefore, Graver was the plaintiff in the
circuit court case, and he was not entitled to removal.
November 30, VFD filed a motion for emergency ex parte relief
alleging that appellants took two vehicles from VFD and sold
them. The vehicles were the objects of the parties'
litigation, and appellants received $179, 000 more than the
amount of the loan. VFD alleged that appellants were
"currently trying to repossess the remaining vehicles,
which would effectively render most of the northwestern
portion of Scott County without adequate fire
protection." VFD further alleged that since appellants
initially filed their complaint, appellants' agents had
broken into the local fire department and taken a vehicle.
VFD asked for an order directing appellants to cease all
further collection and repossession efforts. The circuit
court granted ex parte relief on December 2, 2015.
filed a motion for contempt and temporary attorney's fees
on January 4, 2016, claiming that after filing this action,
appellants filed two cases in Illinois regarding the same
matter. One Illinois case was dismissed, but the second case
was still pending. VFD asked for attorney's fees for
having to defend these cases and argued that appellants were
trying to cause VFD financial hardship.
order filed April 6, 2016, the circuit court denied
appellants' motion to dismiss VFD's amended
counterclaim. The court found that the issues were waived
because appellants had not moved to dismiss the original
counterclaim, which was no different from the amended
pleading except that Graver was named. Because the issues
were not raised against the original counterclaim, Graver
waived those arguments. The circuit court also found that the
claim for fraud should survive the motion to dismiss under
Rule 12(b)(6). The circuit court further denied the dismissal
request related to the DTPA or conversion because the case
had been pending for over three years with most of the delay
caused by appellants' failure to answer discovery and
their erroneous attempt to remove the case to federal court.
Finally, the circuit court denied VFD's motion for
contempt and temporary attorney's fees. A new scheduling
order provided that the trial was reset for August
18‒19, 2016, and a pretrial hearing was scheduled for
August 11, 2016. The parties were reminded that all pretrial
motions should be filed at least fifteen days before the
3, 2016, appellants filed an amended answer with
counterclaims based on fraud and breach of contract.
Appellants claimed the affirmative defenses of laches,
unclean hands, detrimental reliance, and the Illinois Credit
Agreement Act, "which bars all tortious causes of action
that are 'in any way related' to a credit
filed a motion to dismiss appellants' counterclaims,
citing the circuit court's February 5, 2015 order that
excluded evidence not provided before November 13, 2014, and
excluding Graver as a witness unless called by VFD. VFD also
argued that it was clear from the circuit court's oral
instruction prior to the latest scheduling order that no
further pleadings would be tolerated and that this matter
would proceed to trial under the prior pleadings. VFD also
argued that appellants' fraud claim was barred by the
statute of limitations because the matter had been pending
since 2012, and the May 3, 2016 fraud allegation was
appellants' first attempt to sue VFD for any cause of
action based on fraud or deceit, and VFD claimed that all of
appellants' counterclaims were not timely filed.
filed a motion for partial judgment on the pleadings on
August 1, 2016, claiming entitlement to judgment for breach
of contract based on VFD's admission that it had failed
to make payments. VFD filed a motion to strike because
appellants' motion for partial judgment was filed after
the deadline set forth in the circuit court's scheduling
order. At the pretrial hearing, the circuit court ordered
that appellants were prohibited from testifying or presenting
any other witnesses because they had failed to produce
witnesses for deposition; the written order was filed on
September 8, 2016. In the same order, the circuit court
struck appellants' claims against VFD.
the pretrial hearing, appellants filed a notice of
interlocutory appeal on August 15, 2016, appealing the
circuit court's order striking their
counterclaims. After the Arkansas Supreme Court denied
appellants' petition for emergency stay pending appeal,
and the circuit court filed its order of September 8, 2016,
appellants filed an amended notice of interlocutory appeal on
October 10, 2016.
scheduling order filed August 24, 2016-setting the jury trial
for February 22‒ 23, 2017, and a pretrial hearing on
February 9, 2017-remained in effect, despite appellants'
attempts at an interlocutory appeal. However, on the first day of
the scheduled jury trial, neither Graver nor his counsel
appeared. The circuit court elected to proceed after
contacting counsel and determining that counsel had
mistakenly marked his calendar.
presented its case that it had borrowed $90, 000 from FG
after contacting Graver. VFD alleged that it already had
$170, 000 to pay toward a fire truck that cost $260, 000. VFD
was provided the "Lease Purchase Agreement" from
FG, and Donnie Adkins, the fire chief, testified that the
document was illegible. He said that he had trusted Graver,
that $90, 000 had been handwritten at the top of the
agreement, and that nothing else on the agreement had been
filled in. He was told that he had to sign the agreement to
get the check. He said that he signed the document and that
Graver "filled out the rest"; although, when the
document was faxed to him, it had not been filled out, and
they had never discussed the interest amount of $76, 500.
Adkins also described Graver's hatefulness and their
having to hide the smaller truck to prevent repossession
after Graver had sold the larger truck for $182, 032. Adkins
also said that the smaller truck was repossessed after the
circuit court had issued an ex parte order to cease and
desist any repossessions. He described how appellants'
agents had broken into the fire station by pulling out
ductwork from the outside air units.
close of the evidence, the circuit court instructed the jury,
and VFD's counsel gave its closing argument. The circuit
court then introduced appellants' counsel, who had just
arrived, and appellants made their closing argument. After
VFD's reply argument was given, the jury retired to
deliberate. Before the jury returned with its verdict,
appellants' counsel moved for directed verdict and
"JOV at this time based on the insufficiency of the
evidence." The circuit court denied the motion. Counsel
renewed the motion, and it was denied. The following colloquy
Appellants' Counsel: Okay. Also, ask the court for a
mistrial due to the unfairness of my client not being able to
put on any sort of case and not being here and having a
chance to cross examine the witnesses.
Court: And whose fault is that, sir?
Appellants' Counsel: It's my, that is mine, Your
Court: Okay. This case has been set for months. There was a
Notice sent. We've had several pretrial hearings. We had
a pretrial on February 9 in which everyone was here including
you at which time we discussed any motions pending. There
were none. I asked everybody if everybody was ready and said
see you on the 22nd. So, I don't see the fact that you
put it on your calendar wrong and didn't get here ...