United States District Court, W.D. Arkansas, Texarkana Division
OAK CREEK INVESTMENT PROPERTIES, INC. PLAINTIFF
AMERICAN ELECTRICAL POWER SERVICE CORPORATION; KMT GROUP, INC.; and CLEAResult CONSULTING, INC. DEFENDANTS AND KMT GROUP, INC. THIRD-PARTY PLAINTIFF
JIMMY HICKEY and RICHARD SMITH THIRD-PARTY DEFENDANTS
MEMORANDUM OPINION AND ORDER
TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE.
before the Court is Separate Defendant CLEAResult Consulting,
Inc.'s ("CLEAResult") Motion for Partial
Summary Judgment (Doc. 79), which is fully briefed and ripe
for decision. The Motion is GRANTED IN PART AND
DENIED IN PART. First, the Court dismisses
Plaintiffs breach of contract claim against CLEAResult.
Second, the Court finds, as a matter of law, that the
Plaintiffs mobile homes are not items of personal property,
but rather improvements to real property. Given this finding,
the Court further determines the proper measure of Plaintiffs
damages for any negligent injuries to its mobile homes.
Jimmy Hickey and Richard Smith formed a corporation, Oak
Creek Investment Properties, Inc.'s ("Oak
Creek"), through which they purchased 12.5 acres of
pastureland in Texarkana, Arkansas. (Doc. 88-1, pp. 1-2). The
pair then developed a platted mobile home neighborhood that
they named Oak Creek Manufactured Home Park. They installed
underground utilities, asphalt streets, and built driveways
to each of the park's 62 mobile home sites. Id.
Oak Creek then began purchasing used mobile homes-mostly from
the Dallas, Texas area-at an average price of approximately
$8, 000.00. (Doc. 81, ¶ 7). The mobile homes were
transported to Texarkana and physically affixed to each of
the 62 lots by removing the wheels, axles, and tongues. When
the development was complete, Oak Creek began leasing the
homes to its tenants. Oak Creek has owned and operated the
mobile home park ever since. (Doc. 88-1, p. 2).
in 2014, representatives of Separate Defendant KMT Group,
Inc. ("KMT") approached Oak Creek and pitched the
idea of "weatherizing" its mobile homes. The
objective was to make the mobile home units more energy
efficient, which in turn would lead to energy-cost savings.
KMT explained that it had partnered with Separate Defendants
CLEAResult-the designer of the weatherization program-and
American Electrical Power Service Corporation
("AEP-SWEPCO")-the provider of electric power to
Oak Creek's mobile home park-to perform the contracting
work necessary to weatherize the mobile homes. KMT would
perform the labor and AEP-SWEPCO would reimburse KMT for its
costs after the work was completed. The "weatherization
program" was thus a free service offered to Oak Creek.
(Doc. 36, p. 2).
Oak Creek was not interested in the program. But KMT
"persisted in offering its services," and sometime
in December of 2015, Oak Creek reconsidered and approved the
project. Id. However, in Oak Creek's view, once
the work was completed, "it became apparent KMT failed
to properly perform the weatherization program in the mobile
homes." Id. at 3. Oak Creek "began
noticing various issues with the interiors of mobile homes .
. . including, but not limited to[, ] warped and cracked
sub-flooring and flooring." Id. Oak Creek
believes that CLEAResult's weatherization program was
never intended to be used on mobile homes, and that
Defendants either knew or should have known this before any
of the work commenced. Id. at 3-4.
Creek claims to have been damaged by the weatherization
program and asserts the following causes of action: (1)
breach of contract arising from Oak Creek's third-party
beneficiary status for contracts between the Defendants; (2)
negligence; (3) deceit; (4) violations of the Texas Deceptive
Trade Practices Act; and (5) violations of the Arkansas
Deceptive Trade Practices Act. (Doc. 36).
the negligence claims, Oak Creek alleges that it
"suffered physical damage to its mobile homes."
Id. at 8, 10. Oak Creek claims that such negligence
has caused, among other things, a. "loss of income and
loss of profits," and "greatly reduced the fair
market value of [Oak Creek's] real property, [which]
prevents it from being able to sell it as an ongoing and
viable business," Id. at 8-9. Oak Creek
"expects that it will experience future loss of income,
loss of profit, ... and loss of value of the mobile home park
as a going business concern." Id. at 9.
Amended Complaint, Oak Creek asserts that the legal measure
of its damages depends on whether the mobile homes are
characterized as real property or personal property, and
whether the injury is determined to be permanent or
temporary. For example, according to Oak Creek:
• If the mobile homes are Real Property
and the injury is Permanent:
• Then Oak Creek seeks replacement costs for all 62
mobile homes, plus loss of use damages. According to Oak
Creek, the "replacement cost" for all mobile homes
is necessary to "restore the fair market value of its
mobile home park as an ongoing business concern." (Doc.
36, ¶ 5.2). o In the alternative, Oak Creek seeks
damages equal to the difference in the fair market value of
its Real Property (including the value of the mobile homes),
as measured immediately prior to and after the injury, plus
loss of use damages. Id.
• If the mobile homes are Real Property
and the injury is Temporary:
• Then Oak Creek seeks damages equal to the cost to
repair and restore the mobile homes to their pre-injury
condition. Id. at ¶ 5.3.
• If the mobile homes are Personal
Property and the injury is
• Then Oak Creek seeks damages equal to the fair market
value of the mobile homes immediately prior to the injury.
Id. at ¶ 5.4.
• In the alternative, Oak Creek seeks damages equal to
the replacement cost of the mobile homes. Id.
• If the mobile homes are Personal
Property and the injury is
• Then Oak Creek seeks damages equal to the difference
in the fair market value of the mobile homes immediately
prior to and after the injury. Id. at ¶ 5.5.
• In the alternative, Oak Creek seeks damages for the
cost to repair and restore the mobile homes to their
pre-injury condition. Id.
this background, "CLEAResult moves for partial summary
judgment on [Oak Creek's] measure of damages for its
negligence claim and substantively on [Oak Creek's]
breach of contract claim." (Doc. 79). In its response,
Oak Creek concedes that its breach of contract action against
CLEAResult should be dismissed, and therefore partial summary
judgment is GRANTED as to that claim. Below,
after summarizing the applicable legal standards, the Court
will take up the parties' respective arguments with
respect to the proper measure of Oak Creek's damages for
its negligence claims.
standard for summary judgment is well established. Under
Federal Rule of Civil Procedure 56(a), "[t]he court
shall grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law." The Court
must review the facts in the light most favorable to the
opposing party and give that party the benefit of any
inferences that can be drawn from those facts. Canada v.
Union Bee. Co., 135 F.3d 1211, 1212-13 (8th Cir. 1997).
The moving party bears the burden of proving the absence of a
genuine dispute of material fact and that it is entitled to
judgment as a matter of law. See Fed. R. Civ. P.
56(c); Matsushita Bee. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-87 (1986); Nat'l. Bank
of Commerce of El Dorado, Ark. v. DowChem. Co., 165 F.3d
602 (8th Cir. 1999).
the moving party has met its burden, the non-moving party
must "come forward with 'specific facts showing that
there is a genuine issue for trial.'"
Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P.
56(c)). However, "the mere existence of a scintilla of
evidence in support of the plaintiffs position will be
insufficient" to survive summary judgment. Anderson
v. Durham D&M, LLC, 606 F.3d 513, 518 (8th Cir.
2010) (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 252 (1986)). Rather, in order for there to be a
genuine issue of material fact that would preclude summary
judgment, the non-moving party must produce evidence
"such that a reasonable jury could return a verdict for
the nonmoving party." Allison v. Flexway Trucking,
Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting
Anderson, 477 U.S. at 248). To meet its burden,
"[t]he nonmoving party must do more than rely on
allegations or denials in the pleadings, and the court should
grant summary judgment if any essential element of the prima
facie case is not supported by specific facts sufficient to
raise a genuine issue for trial." Register v.
Honeywell Fed. Mfg. & Techs., LLC, 397 F.3d 1130,
1136 (8th Cir. 2005) (citing Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986)).
parties' briefing correctly explains that the proper
measure of "property damage" is initially dependent
on whether the injury harmed real property or
personal property. The remedy for injury to real
property, however, is further differentiated based on whether
the injury is to the land or an improvement
upon the land. Similarly, the remedies for injury to personal
property can differ based on the specific nature of the
recognizing these distinctions, Professor Howard Brill
concisely summarizes the case law in Arkansas as follows:
When land is negligently damaged, the initial question is
whether the injury is permanent or temporary. Early case law
stated that if the value of the property destroyed depends
upon its connection with the soil, the damage is treated as
permanent. For permanent damage to real property, the measure
of general damages is the difference in fair market value
immediately before and immediately after the occurrence. This
measure has been applied to situations ranging from the
overflow or diversion of a stream, to the destruction of
growing trees, and to the loss of topsoil through water
drainage. Particularly today, these types of damages should
arguably be treated as temporary damages, because they may be
reversible. Even the deposit of toxic wastes upon land may be
correctable with modern techniques.
On the other hand, if the damage to the property is
temporary, general damages are assessed as the reasonable
expense of necessary repairs. That measure has been applied
to the cost of restoring a bridge, cleaning a pond, reseeding
a meadow, repaving a parking lot, replacing topsoil and other
land cover, and remedying groundwater and soil contamination.
The objective is to provide the funds to restore the property
to its condition prior to the injury.
and Brill, 1 Arkansas Practice Series: Law of
Damages § 30:1 (6th ed.).
to other Arkansas cases, Professor Brill illustrates the
importance of distinguishing injuries to land fromh