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GM Enterprises, LLC v. HCH Toyota, LLC

Court of Appeals of Arkansas, Division IV

December 12, 2018

GM ENTERPRISES, LLC APPELLANT
v.
HCH TOYOTA, LLC, AND SACHS/HAYNES 503, LLC APPELLEES

          APPEAL FROM THE BENTON COUNTY CIRCUIT COURT [NO. 04CV-16-803] HONORABLE JOHN R. SCOTT, JUDGE.

          Doss Law Firm, P.A., by: D. Westbrook Doss, Jr., and Alex T. Shirley, for appellant.

          Friday, Eldredge & Clark, LLP, by: Clifford W. Plunkett, Kael K. Bowling, and Joshua C. Ashley, for appellees.

          BART F. VIRDEN, JUDGE.

         Appellant GM Enterprises, LLC (GM) appeals from the Benton County Circuit Court's order granting summary judgment to appellees HCH Toyota, LLC ("HCH") and Sachs/Haynes 503, LLC ("Sachs") on various claims raised by GM, including breach of contract, conversion, and unjust enrichment. On appeal, GM argues that summary judgment was inappropriate. We agree; therefore, we reverse and remand.

         I. Factual Background

         GM leased property owned by appellees for its car dealerships. HCH owned property that GM used for its new-car facility, and Sachs owned property that GM used for its used-car facility. Two substantially similar lease agreements required GM to pay "base rent":

3. Rent. (a) Base Rent.. . . The Annual Base Rent shall be payable in monthly installments . . . on or before the fifth (5th) day of each calendar month during the term of this Lease. Rental for the first and last months hereof shall be prorated on a daily basis.

         GM historically paid the base rent through two automatic transfers from its bank, Arvest, to the accounts of HCH and Sachs on the first day of each month. In the fall of 2015, the parties began negotiations to sell the real estate and car dealerships to a third party. GM agreed to sell the dealerships to LL Ark Northwest, LLC, and appellees agreed to sell the real estate to a related entity called LL Ark Properties, LLC. Two lease-termination agreements (LTAs) were executed and included the following pertinent language:

1. Termination of Lease. Effective upon the Closing of the Dealership Transaction and Real Estate Transaction and provided that the Lessee has satisfied its obligations to pay Base Rent through the Termination Date to Lessor and has paid, or provided adequate funds for the payment of, 2015 property taxes and prorated 2016 property taxes (through the Termination Date) assessed against the Leased Premises (the "Termination Date"), except as provided below, the Lease shall be deemed automatically terminated, null, void, and of no future effect, without any further action required on the part of Lessor or Lessee. From and after the Termination Date, neither Lessee, Lessor, any Guarantor nor any of their respective affiliates shall have any further liability, right, duty or obligation to the other party arising under the Lease. . . .
2. Release. As additional consideration for the termination of the Lease, each party hereby releases and waives any rights, duties, claims, or obligations of the other party arising out of or in connection with the Lease from and after the effective date of this Agreement.

         The following footnote is included in the LTAs:

"Closing" shall mean the date on which the parties to the Dealership Transaction and Real Estate Transaction make effective the conveyance of the respective assets and properties associated with each to LL Ark Properties, LLC and LL Ark Northwest, LLC and the purchase price for each is paid by LL Ark Properties, LLC and LL Ark Northwest, LLC, respectively.

         On January 28, 2016, GM contacted Arvest and attempted to cancel the automatic transfers to appellees for February's rent. On February 1, 2016, the parties executed the LTAs. GM later learned that Arvest had failed to cancel the automatic transfers, so rent of $101, 214.92 and $56, 745.93 was paid to HCH and Sachs, respectively, on February 1, 2016. Kenrick Morrand, an owner of GM, contacted Hunter ...


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