Case Title: Ozarks Unlimited Resources Cooperative, Inc. v. Edward C. Daniels, Jr. and Edward C. Daniels, III

Citation: 

Docket Number: 

State: arkansas

Court: Arkansas Supreme Court

Date: 1998-05-14T00:00:00Z

Document:
OZARKS UNLIMITED RESOURCES COOPERATIVE, INC.
v. Edward C. DANIELS, Jr., and 
Edward C. Daniels, III

97-924                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered May 14, 1998


1.   Judgment -- summary judgment -- denial of motion generally not reviewable or
     appealable. -- As a general rule, the denial of a motion for
     summary judgment is neither reviewable nor appealable.

2.   Appeal & error -- failure to address order's appealability -- appellate court must
     determine jurisdiction. -- When the parties fail to address the issue
     of an order's appealability, the appellate court must
     nevertheless determine whether it has jurisdiction.

3.   Judgment -- summary judgment -- when general rule regarding denial inapplicable. --
     Although denials of summary-judgment motions generally are
     nonappealable, the general rule does not apply where the
     refusal to grant a summary-judgment motion has the effect of
     determining that the appellants are not entitled to immunity
     from suit, as the right of immunity from suit is effectively
     lost if a case is permitted to go to trial.

4.   Appeal & error -- sovereign-immunity defense -- case warranted appellate review. --
     Where appellants claimed the defense of sovereign immunity,
     the case fell within the well-settled line of cases permitting
     review of summary-judgment denials based on qualified immunity
     and warranted appellate review.  

5.   Judgment -- summary judgment -- appeal of denial -- standard of review. -- The
     standard of review when an order denying a motion for summary
     judgment is appealed is whether the trial court abused its
     discretion in denying the motion.

6.   Constitutional law -- sovereign immunity -- doctrine discussed. -- Article 5,
     section 20, of the Arkansas Constitution provides that the
     State "shall never be made defendant in any of her courts";
     Article 5, section 20, grants sovereign immunity and a general
     prohibition against awards of money damages in lawsuits
     against the State and its institutions; the doctrine of
     sovereign immunity is rigid and, as such, the immunity may be
     waived only in limited circumstances; where the suit is one
     against the State and there has been no waiver of immunity,
     the trial court acquires no jurisdiction; therefore, sovereign
     immunity fully protects the State absent a waiver or consent
     by the State to be sued.

7.   Schools & school districts -- education service cooperatives -- comparable to school
     districts. -- Under the Education Service Cooperative Act of 1985,
     Ark. Code Ann.  6-13-1001 to -1025 (Repl. 1993 & Supp.
     1997), education service cooperatives are more closely
     analogous to school districts than to the State Department of
     Education; the legislation governing cooperatives is nested
     within the legislation governing school districts and not
     within the statutes governing the State Department of
     Education; the decisions to initiate, activate, or participate
     in a cooperative are made by school districts; the growth,
     utilization, and maintenance of the cooperative stems from the
     participating school districts and, as an entity, the
     cooperative is comparable to a school district.

8.   Constitutional law -- sovereign immunity -- trial court did not err in determining that
     appellant cooperative was not entitled to. -- Unlike school districts, the
     State Department of Education enjoys sovereign immunity;
     school districts are considered creatures of the State that
     may not avail themselves of all constitutional safeguards; as
     creatures of statute, school districts may only act through a
     board of directors and are bound by all lawful contracts into
     which they may enter; a school district is a corporate body
     with the power to sue and be sued; consistent with the
     legislation creating cooperatives and the practical manner in
     which they function, the supreme court concluded that the
     trial court's determination that appellant cooperative was not
     entitled to sovereign immunity was not erroneous.

9.   Schools & school districts -- education service cooperatives -- governing legislative
     act. -- Although an education service cooperative is more
     similar to a school district than the State Department of
     Education for purposes of determining immunity, the
     cooperative's formation and operation are independently
     governed by the Education Service Cooperative Act, which
     authorizes a cooperative's board of directors to employ a
     director, establish policies and procedures for operation and
     management, prepare an annual budget, and receive and expend
     funds and employ necessary personnel to provide programs and
     services, and also empowers cooperatives to rent or lease
     facilities and buildings to provide programs and services.

10.  Schools & school districts -- trial court did not err in finding appellant's five-year
     lease was not violative of Ark. Code Ann.  6-20-402. -- Although Arkansas
     Code Annotated section 6-20-402 (Repl. 1993 & Supp. 1997)
     provides that the amount of obligations incurred by a school
     district for any school year shall not be in excess of the
     district's revenue receipts for that year, the statutes
     governing education service cooperatives indicate the
     legislature's determination that cooperatives may enter into
     contracts that will commit their funds and extend their
     indebtedness beyond one fiscal year; the only limitation
     placed on a cooperative's board of directors is that the
     board's agreements must be consistent with available funds;
     the supreme court concluded that the trial court's finding
     that appellant cooperative's five-year lease was not in
     violation of section 6-20-402 was not erroneous.

11.  Interest -- prejudgment interest -- when allowable. -- Prejudgment interest
     is compensation for recoverable damages wrongfully withheld
     from the time of the loss until judgment; it is allowable
     where the amount of damages is definitely ascertainable by
     mathematical computation or the evidence furnishes data that
     makes it possible to compute the amount without reliance on
     opinion or discretion; where prejudgment interest may be
     collected at all, the injured party is always entitled to it
     as a matter of law.

12.  Interest -- prejudgment interest -- trial court did not err in awarding to appellees.
     -- Where a lease agreement detailed a specific sum to be paid
     as rent each month, adjusted annually to reflect changes in
     the consumer price index, the formula permitted the
     calculation, with reasonable certainty, of the overall amount
     due during the remaining term of the lease and yielded a
     liquidated amount that is not subject to conjecture; the
     amount of damages was ascertainable by means of a defined
     formula from the date appellant vacated the premises; the
     supreme court concluded that the trial court did not err in
     awarding appellees prejudgment interest. 

13.  Damages -- diminution in property value -- recoverable element. -- Diminution in
     property value is a recoverable element of damages.

14.  Appeal & error -- arguments not presented to trial court are not reviewable. -- No
     instruction concerning diminution in property value was given
     to the jury, which received, instead, an instruction relating
     to lost profits, to which appellees failed to object;
     arguments not presented to the trial court are not reviewable
     on appeal.

15.  Landlord & tenant -- termination of lease by landlord's reentry. --  When a
     landlord reenters and resumes the use and enjoyment of the
     premises for his own account, he terminates the lease, as a
     matter of law, insofar as his right to recover subsequently
     accruing rent is concerned.

16.  Damages -- appellees' effective termination of lease rendered jury instruction
     permitting award for damages after sale date erroneous. -- Where appellees
     accepted the surrender of the leasehold and resumed their use
     and enjoyment of the property by selling it to another party,
     they, in effect, terminated the lease and the accrual of
     damages under the lease for lost rent; the supreme court
     concluded that a jury instruction permitting an award for
     damages after the sale date was erroneous.

17.  Damages -- trial court did not err in setting aside portion of award for damages after
     sale date. -- Where the jury's verdict was in the form of two
     interrogatories, the second relating to damages sustained
     after the sale date; where each interrogatory answered by the
     jury is a special verdict on that particular fact, and the
     court has the power and authority to rectify inconsistent
     answers, particularly where the inconsistency is due in part
     to incorrect instructions; and where the incorrect instruction
     was a special verdict on a particular fact, the supreme court
     concluded that the trial court did not err in setting aside
     that portion of the award representing damages sustained after
     the sale date.


     Appeal from Boone Circuit Court; Robert McCorkindale, Judge;
affirmed.
     Laser, Wilson, Bufford & Watts, P.A., by: Dan F. Bufford and
Brian A. Brown, for appellant/cross-appellee..
     Vowell & Atchley, by: Russell C. Atchley, P.A., for
appellees/cross-appellants.

     W.H. "Dub" Arnold, Chief Justice.
     Appellant, Ozarks Unlimited Resources ("O.U.R."), brings this
appeal challenging the Boone County Circuit Court's findings that
(1) O.U.R. was not immune from suit pursuant to Article 5, Section
20, of the Arkansas Constitution, and (2) that a lease entered into
by O.U.R. was not violative of Ark. Code Ann.  6-20-402 (Repl.
1993 & Supp. 1997).  Additionally, O.U.R. appeals the circuit
court's judgment awarding the appellees, Edward C. Daniels, Jr.,
and Edward C. Daniels, III (collectively "Daniels"), prejudgment
interest.  Via a cross-appeal, Daniels contests the circuit court's
judgment setting aside a portion of a jury verdict awarding Daniels
$25,000 for damages sustained after July 26, 1993.  Our
jurisdiction is invoked pursuant to Ark. Sup. Ct. Rules 1-2(a)(1),
(a)(17)(i), (a)(17)(vi) (1997) because the issues involve the
interpretation of the Arkansas Constitution and Ark. Code Ann.  6-
20-402.  Finding no error in the points raised on direct appeal or
cross-appeal, we affirm.
     O.U.R. is an education service cooperative, providing
educational services to twenty-one school districts in a multi-
county region of northwestern Arkansas, that was created pursuant
to Ark. Code Ann.  6-13-1000 to -1025 (Repl. 1993 & Supp. 1997). 
Since the late 1980's O.U.R. has leased a building from Daniels. 
The initial leases provided for one-year lease terms.  However, in
November of 1990 O.U.R. and Daniels executed an "Agreement to Enter
into a Lease" that contemplated a new lease, conditioned upon
Daniels completing specified improvements to the premises, with a
five-year term at a higher monthly rental rate than the prior
leases.  In May of 1991, the parties executed a new lease with the
five-year lease term.
     Subsequently, in January 1992, O.U.R. informed Daniels that it
was exploring other housing alternatives, because of a projected
decrease in funding and an inability to make the additional space
functional, and that it was terminating the lease effective June
30, 1992.  Although Daniels sold the property to another party on
July 26, 1993, they filed a complaint in the Boone County Circuit
Court against O.U.R. for breach of the lease agreement.  Daniels's
complaint sought recovery of the unpaid monthly rental payments due
from July 1992 through July 26, 1993, and $25,000 for diminution in
property value.
     O.U.R. asserted two legal defenses: (1) that the action was
barred by Article 5, Section 20, of the Arkansas Constitution
because it was, in effect, a suit against the State, and (2) that
the five-year lease agreement was void because it violated the
limitation on a school district's current indebtedness mandated by
Ark. Code Ann.  6-20-402.  Additionally, O.U.R. claimed two
factual defenses: (1) that the lease agreement permitted
termination if O.U.R.'s funding was not sufficiently available and,
in fact, funding was not available, and (2) that Daniels breached
the lease.
     O.U.R. moved for summary judgment based on the two legal
defenses and, after hearing oral arguments on March 10, 1995, the
trial court denied the motion.  On December 2, 1996, the parties
tried the case before a jury.  O.U.R. renewed the legal defenses
raised in its summary-judgment motion at the close of Daniels's
case and at the close of all evidence.  However, the trial court
overruled these motions and permitted the jury to consider whether
O.U.R. was justified in terminating the lease because of a funding
loss and whether O.U.R. breached the lease.  Ultimately, the jury
returned a verdict in favor of Daniels, awarding them $13,575.60
for lost rental payments from July 1, 1992 through July 26, 1993,
and $25,000 for damages sustained after July 26, 1993.  The trial
judge set aside the post-July 26, 1993 damages and entered a
judgment for Daniels in the amount of $13,575.60, plus prejudgment
interest, attorney's fees, and costs.

      I.  Appeal from Denial of Motion for Summary Judgment
     The appellant's first point on appeal contests the trial
court's finding that O.U.R. was not entitled to sovereign immunity
pursuant to Article 5, Section 20, of the Arkansas Constitution. 
O.U.R. first raised the immunity defense via a motion for summary
judgment, which the trial court denied.  As a general rule, the
denial of a motion for summary judgment is neither reviewable nor
appealable.  Nucor Holding Corp. v. Rinkines, 326 Ark. 217, 931 S.W.2d 427 (1996).  Accordingly, we first consider whether this
point reaches us through an appealable order.  See Newton v. Etoch,
332 Ark. 325, ___ S.W.2d ___ (1998).  When the parties fail to
address the issue of an order's appealability we, nevertheless,
must determine whether we have jurisdiction.  See Associates Fin.
Servs. Co. v. Crawford County Mem. Hosp., 297 Ark. 14,