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Miracle Kids Success Academy, Inc. v. Maurras

Supreme Court of Arkansas

May 9, 2019

MIRACLE KIDS SUCCESS ACADEMY, INC. APPELLANT
v.
MARVIN MAURRAS APPELLEE

          APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT [NO. 60CV-14-2778] HONORABLE ALICE GRAY, JUDGE

          Donald L. Parker II; and Ronald S. Burnett, Jr., for appellant.

          Fuqua Campbell, P.A., by: Haley Heath Burks, Phil Campbell, and Chris Stevens, for appellee.

          RHONDA K. WOOD, ASSOCIATE JUSTICE

         Miracle Kids Success Academy, Inc., appeals the circuit court's order granting summary judgment in favor of Marvin Maurras and awarding Marvin attorney's fees. In this contract dispute, the circuit court concluded that Marvin's loan to Miracle Kids was payable on demand because the loan agreement did not have a maturity date. We affirm.

         I. Background

         Mary Katherine Hardin and Shelly Decker Keller formed Miracle Kids in August 2008. After its formation, Marvin and his nephew, Chris Maurras, joined Miracle Kids as shareholders and directors with each owning 25 percent of the company's outstanding stock. On September 23, 2009, the directors unanimously approved an "Operations Agreement." The Operations Agreement provided that each shareholder agreed to contribute $175, 000 as start-up capital, and Marvin and Chris agreed to loan an additional $300, 000 to Miracle Kids during the first six months of the company's operation.

         On December 11, 2009, the shareholders and directors held another meeting to discuss the start-up funding. They revised the initial funding provision of the original Operations Agreement. Per the December 2009 meeting minutes, they unanimously agreed to treat $25, 000 of the start-up capital for Miracle Kids as a "capital contribution," and to treat the remaining $150, 000 of their contributions as a loan with 5 percent interest per annum. They further agreed to repay Hardin's loan and Keller's loan at a rate of $5, 000 per month, and they agreed to defer repayment of Marvin's and Chris's loans "for now."

         Marvin made his initial $25, 000 start-up capital contribution and later funded his $150, 000 loan to Miracle Kids. In June 2014, Marvin demanded repayment of his loan, and Miracle Kids refused to pay. In July 2014, Marvin sued Miracle Kids for repayment of the loan and attorney's fees pursuant to Arkansas Code Annotated section 16-22-308 (Repl. 1999).

         Marvin filed a motion for summary judgment on his claim for repayment of the loan. He asserted that because the Operating Agreement as amended by the December 2009 meeting minutes did not include a maturity date for the loan, it was payable in full on demand. Miracle Kids responded to Marvin's motion for summary judgment and filed a counter-summary-judgment motion. Miracle Kids argued that the agreement did not constitute any type of loan instrument to be used for the purpose of demanding payment from Miracle Kids. It asserted that the December 2009 minutes did not constitute a negotiable instrument. Rather, it claimed that majority-shareholder approval was a condition precedent for repayment. Miracle Kids also asserted that it was financially unable to repay Marvin and that any repayment of the loan would require shareholder approval as required by the Operating Agreement. The circuit court granted Marvin's summary-judgment motion and denied Miracle Kids' motion. The court's final order[1] concluded that because the loan did not have a maturity date, it was payable on demand. The circuit court also awarded Marvin $19, 200 in attorney's fees. The court of appeals reviewed the circuit court's decision and reversed and remanded because genuine issues of material fact existed as to whether the loan agreement was an on-demand contract. Miracle Kids Success Acad., Inc. v. Maurras, 2018 Ark.App. 40, 539 S.W.3d 603. Marvin filed a petition for review of the court of appeals' decision, which we granted.

         II. Analysis

         A. Contract Dispute

         The circuit court should grant summary judgment when there is no issue of fact to be litigated, and the moving party is entitled to judgment as a matter of law. Cannady v. St.Vincent Infirmary Med'l Ctr., 2018 Ark. 35, 537 S.W.3d 259. Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, responses to requests for admission, and affidavits show that there is no genuine issue of matter fact and that the moving party is entitled to judgment as a matter of law. Id. The moving party bears the burden of proving that ...


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