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Schlenker v. Tapp

United States District Court, W.D. Arkansas, Hot Springs Division

November 28, 2018

GARLAND SCHLENKER and MANDI SCHLENKER PLAINTIFFS
v.
SKY TAPP and GARLAND COUNTY SHERIFF'S OFFICE DEFENDANTS

          REPORT AND RECOMMENDATION OF A UNITED STATES MAGISTRATE JUDGE

          HON. BARRY A. BRYANT U.S. MAGISTRATE JUDGE

         Before the Court is Defendant Sky Tapp's Motion to Set Aside and Suspend Writ of Execution Sale and Other Related Relief, Amended Motion to Set Aside and Suspend Writ of Execution Sale, and Supplement to Amended Motion to Set Aside and Suspend Writ of Execution Sale and Other Related Relief.[1] ECF Nos. 103, 104, 108. Plaintiffs responded to these Motions. ECF No. 106. Also before the Court is Plaintiff's Motion to Lift Stay and Disburse Funds, Application for Costs, and Response to Motion to Set Aside and Suspend Writ of Execution Sale and Other Related Relief. ECF No. 110. Defendant Tapp has responded to this Motion. ECF No. 112.

         These Motions were referred to the undersigned[2] for consideration and are now ripe for consideration. The Court held a hearing to address these Motions in Hot Springs, Arkansas on October 31, 2018. All Parties were represented at this hearing.

         1. Background:

         This federal lawsuit was filed against Sky Tapp for negligence and breach of fiduciary duty. ECF No. 1.[3] This lawsuit was filed on May 19, 2014. The facts of the current lawsuit relate to an underlying state court action. In this underlying state court action, Plaintiffs hired Defendant Tapp, who was an attorney, to represent them against their homeowner's association because they allege they were being charged “an unreasonable and unconscionable rate.” Plaintiffs owned a condominium managed by this homeowner's association.

         During the pendency of this underlying action, a condominium adjoining Plaintiffs' condominium was sold at a foreclosure sale. Defendant Tapp, who was at that time Plaintiff's attorney, purchased that condominium at the foreclosure sale. According to Plaintiffs, Defendant Tapp then withdrew from representing them and left them without counsel. As a result of this withdrawal and Defendant Tapp's purchase, Plaintiffs filed the current lawsuit in federal court, claiming negligence and breach of fiduciary duty.

         On April 22, 2015, approximately one year after this lawsuit was filed, the Parties settled all claims. ECF No. 119. As a part of this settlement, Defendant Tapp supplied Plaintiffs with a warranty deed to the property he purchased during the foreclosure sale. Id. at 2. This property was encumbered by liens. Id. Because of the liens, Defendant Tapp also agreed to a consent judgment of $32, 000 in favor of Plaintiffs. Id. The parties agreed that if Defendant Tapp was able to supply “good and merchantable title . . . within 90 days, ” then that judgment would be void. Id. It is undisputed Defendant Tapp did not supply “good and merchantable title” within 90 days, and the consent judgment for $32, 000 was filed on August 19, 2015. ECF No. 72.

         This consent judgment includes the following provision: “Defendant [Defendant Tapp] will give a consent judgment for Thirty-Two Thousand Dollars ($32, 000.00); the judgment is to be held by Jeff Rosenzweig and will not be filed for 90 days. If good and merchantable title is delivered by the Plaintiffs within ninety (90) days, the Judgment will be null and void ab initio, and the Mortgage will be satisfied.” ECF No. 72.

         Over two years later, on March 8, 2018, Plaintiffs made efforts to collect this $32, 000 consent judgment by applying for a writ of execution as to Defendant Tapp's property. ECF Nos. 92-93. In response to these efforts, Defendant Tapp filed the current set of Motions (ECF Nos. 103, 104, and 108), seeking to stop this execution. Thereafter and upon consideration of these Motions, the Honorable P. K. Holmes, III entered an order staying this execution until a hearing could be held on in this matter. ECF No. 109. As a part of this order, Judge Holmes directed Defendant Tapp to place $27, 000 into the Court's registry. Defendant Tapp has complied with order and has deposited $27, 000 into the Court's registry.[4]

         2. Discussion:

         a. Defendant's Motions: There is no dispute Defendant Tapp did not supply “good and merchantable” title to the condominium at issue in this case within the requisite 90-day time-period. Thus, the consent judgment was properly entered, providing a liquidated amount of $32, 000 to Plaintiffs. Consistent with the terms of the consent judgment, Defendant Tapp is directed to satisfy that $32, 000 consent judgment.

         Pursuant with this directive, the $27, 000 Defendant Tapp paid into the Court's registry should be paid to satisfy this consent judgment. Based upon the docket in this case, the Court notes this consent judgment was previously assigned to Leads, LLC. for the sum of $2, 000. ECF No. 91-1. Accordingly, the $27, 000 contained in the Court's registry should be released to Leads, LLC.

         As for the remaining $5, 000 ($32, 000 minus $27, 000), the Court recommends Defendant Tapp be given thirty (30) days to supply this amount to Leads, LLC. If that money is not supplied within thirty (30) days, the Court recommends a writ of execution be issued as to any and all of Defendant Tapp's properties to satisfy this amount.

         b. Plaintiff's Motion: Based on the foregoing analysis, Plaintiff's Motion to Lift Stay and Disburse Funds, ...


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