Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ared-4_09-cv-00462/USCOURTS-ared-4_09-cv-00462-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF ARKANSAS

WESTERN DIVISION

ELMER JOE SWAFFAR PLAINTIFF

VS. CASE NO.: 4:09-CV-0462 BSM

DAVID H. ARRINGTON OIL AND GAS, INC. DEFENDANT

ORDER

Defendant David H. Arrington Oil (“Arrington”) moves for summary judgment (Doc.

No. 27), and plaintiff Elmer Joe Swaffar objects (Doc. No. 30). For the reasons set forth

below, Arrington’s motion is granted in part and denied in part.

I. FACTS

The following facts are undisputed unless indicated otherwise. On April 5, 2006,

Mike Bennett, an independent landman under contract with Arrington, prepared and

delivered an Oil and Gas Lease (the “Lease”) to Swaffar. Plaintiff’s response to defendant’s

statement of undisputed material facts (“Pltf.’s stmt. of facts”) (Doc. No. 32), ¶ 4. The Lease

has been misplaced by both parties and is not in the record, but both parties agree that the

Lease was executed on April 5, 2006. Defendant’s statement of undisputed material facts

(“Deft.’s stmt. of facts”) (Doc. No. 29), ¶ 5; Pltf.’s stmt of facts, ¶ 5. 

A bank draft also dated April 5, 2006, (the “Draft”) in the amount of $1,227,644 was

paid to the order of Elmer Joe Swaffar. The draft provided, in part: 

On approval of lease or mineral deed described hereon, and on approval of title

to same by drawee not later than 45 banking days after arrival of this draft at

Collecting bank.

. . . 

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This draft is drawn to pay for Oil and Gas Lease, dated April 5th, 2006 and

covering 2232.08 acres, more or less, being a tract of land in Section Township

N Range E, Faulkner County, Arkansas.

The drawer, payee and endorsers hereof, and the grantors of the lease or

mineral deed described hereon, do hereby constitute and appoint the collecting

bank escrow agent to hold this draft for the first time above specified subject

alone to acceptance of payment hereof by drawee, within said time, and

without any right of the drawer, payee or endorsers hereof, or said grantors, to

recall or demand return of this draft prior to the expiration of the above

specified time, and there shall be no liability whatsoever on the collecting bank

for refusal to return the same prior to such expiration.

In the event this draft is not paid within said time, the collecting bank shall

return the same to forwarding bank and no liability for payment or otherwise

shall be attached to any of the parties hereto.

Draft attached at Exhibit 1 to Deft.’s stmt. of facts. The draft does not specifically identify

Swaffar’s land, and Arrington maintains it did not have sufficient information at the time to

provide a legal description of Swaffar’s land. Deft.’s stmt. of facts, ¶ 4. Swaffar disagrees,

and argues that the misplaced Lease contained an identification of the property by section,

township, and range. Pltf.’s stmt. of facts, ¶ 4. The “drawee” on the Draft is “David H.

Arrington Oil & Gas, Inc.” and the “collecting bank is “Western National Bank - Oil & Gas

Collection Department” in Midland, Texas. 

Swaffar presented the draft at The National Bank of Arkansas on April 6, 2006, the

day after it was executed. Collection check attached at Exhibit 2 to Deft.’s stmt. of facts, 2.

Western National Bank received the draft on April 10, 2006, and it was returned unpaid on

May 10, 2006. Collection Letter attached at Exhibit 2 to Deft.’s stmt. of facts, 2. “Title

failure” is handwritten on the receipt that indicates the draft was unpaid. Id.

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Swaffar filed his complaint on June 24, 2009, claiming Arrington breached the lease

when it did not honor the draft. He also brings claims for fraud, unjust enrichment,

promissory estoppel, and punitive damages. Arrington moves for summary judgment,

arguing that: (1) the statute of frauds dictates Swaffar’s claims should be dismissed; (2) no

contract was formed between the parties because several conditions precedent were not met;

(3) Arrington engaged in a good faith title examination that revealed Swaffar’s tax sale deeds

were void and unenforceable, so it disapproved title and dishonored the draft, as the Draft

allows; and (4) Swaffar’s fraud allegations have no basis. Swaffar objects to the motion for

summary judgment, and maintains that the parties entered into a valid contract, he holds the

mineral interests with clear title, and his fraud claims should be sent to a jury.

II. SUMMARY JUDGMENT STANDARD

“Summary judgment is proper if, after viewing the evidence and drawing all

reasonable inferences in the light most favorable to the nonmovant, no genuine issues of

material fact exist and the movant is entitled to judgment as a matter of law.” Christoffersen

v. Yellow Book U.S.A., 536 F.3d 947, 949 (8th Cir. 2008)(citing Fed. R. Civ.56; Pope v. ESA

Servs., Inc., 406 F.3d 1001, 1006 (8th Cir. 2005))

“A party seeking summary judgment always bears the initial responsibility of

informing the district court of the basis for its motion, and identifying those portions of [the

record] . . . which it believes demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party is not required to

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support its motion with affidavits or other similar materials negating the opponent’s claim.

Id. 

Once the moving party demonstrates that the record does not disclose a genuine

dispute on a material fact, the non-moving party may not rest upon the mere allegations or

denials of his pleadings, but his response, by affidavits or as otherwise provided in Rule 56,

must set forth specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P.

56(e); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The

plain language of Rule 56(c) mandates the entry of summary judgment against a non-moving

party which, after adequate time for discovery, fails to make a showing sufficient to establish

the existence of an element essential to its case, and on which that party will bear the burden

of proof at trial. Celotex Corp., 477 U.S. at 322. Further, “[t]he nonmoving party’s

allegations must be supported by sufficient probative evidence that would permit a finding

in his favor on more than mere speculation, conjecture, or fantasy.” Mann v. Yarnell, 497

F.3d 822, 825 (8th Cir. 2007)(international citation and quotation marks omitted).

“[T]he mere existence of some alleged factual dispute between the parties will not

defeat an otherwise properly supported motion for summary judgment; the requirement is

that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 247-48 (1985). “[A] genuine issue of material fact exists if: (1) there is a dispute of

fact; (2) the disputed fact is material to the outcome of the case; and (3) the dispute is

genuine . . .” RSBI Aerospace, Inc., v. Affiliated FM Ins. Co., 49 F.3d 399, 401 (8th Cir.

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1995). A dispute is genuine if “the evidence is such that a reasonable jury could return a

verdict for the nonmoving party.” Anderson, 477 U.S. at 248.

III. DISCUSSION

A. Statute of Frauds

Swaffar’s claims are not barred by the statute of frauds. The Arkansas statute of

frauds is codified in Arkansas Code Annotated Section 4-59-101 (Repl. 2001) and provides

that no actions may be brought to enforce a contract for the sale of an interest in land if the

term of the contract is longer than a year, unless the contract is in writing and signed by the

parties. It is undisputed that the parties executed the Lease and Swaffar delivered a signed

copy to Arrington’s office. It is also undisputed that Arrington issued a draft to Swaffar for

the Lease for 2232.08 acres of mineral interests for $1,227,644. Although Arrington argues

that the statute of frauds is not satisfied because there is nothing in the record to sufficiently

identify the property at issue, Swaffar testified in his deposition that the lost Lease contained

a specific description of the land at issue. Deposition of Elmer J. Swaffar attached at Exhibit

A to Plaintiff’s response to defendant’s motion (“Pltf.’s resp.”) (Doc. No. 30), 31.

Finally, Arrington states that it denied the draft because there were problems with the

title to the property. To perform a good faith title search to determine whether to pay the

draft, Arrington had to have sufficient information about the property in which to perform

the title search. That information would have come from the information contained in the

Lease.

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Although Swaffar’s claims are not barred by the statute of frauds, this does not mean

that Swaffar can prove his case at trial. Simply having sufficient evidence to overcome

summary judgment will not carry the day at trial because Swaffar will have to prove the

contents of the Lease.

B. Contract Formation

Pursuant to the analysis set forth in Whistle v. David H. Arrington Oil, Case No. 2:08-

CV-00037-BSM (June 1, 2009) (Doc. No. 48), the draft placed only one condition precedent

to the formation of a binding contract, and that is title approval by Arrington. Although

Arrington maintains additional conditions precedent existed, that argument fails in light of

Whistle. If Arrington disapproved of Swaffar’s title in good faith, then no contract was

formed. While it was undisputed that the Whistle plaintiffs held clear title, it is disputed

whether Swaffar holds clear title. Therefore, whether Arrington acted in good faith when it

disapproved Swaffar’s title is an issue for trial.

C. Swaffar’s Title

Arrington maintains that, as a matter of law, Swaffar did not hold good title to the land

because his ownership claim is based on tax sale deeds relating to tax forfeitures of severed

mineral rights. The marketability of Swaffar’s title is, however, not the key issue. The issue

is whether Arrington acted in good faith when it disapproved of Swaffar’s title. See

Trenthem v. David H. Arrington Oil & Gas, Inc. (Case No. 1:09-CV-00017-JLH) (Doc. No.

36). There is a genuine issue of material fact in dispute as to whether Arrington acted in

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good faith when it disapproved of Swaffar’s title. Therefore, summary judgment is

inappropriate on this issue..

D. Fraud and Constructive Fraud allegations

Pursuant to the reasoning set forth in Whistle, a genuine issue of material fact remains

as to whether the actions and statements of Arrington were fraudulent. Summary judgment

is thus denied on these claims.

E. Unjust Enrichment and Promissory Estoppel

Swaffar fails to respond to Arrington’s motion for summary judgment on his unjust

enrichment and promissory estoppel claims. Therefore summary judgment is granted in

favor of Arrington and Swaffar’s unjust enrichment and promissory estoppel claims are

dismissed with prejudice.

IV. CONCLUSION

Accordingly, Arrington’s motion for summary judgment (Doc. No. 27) is granted in

part and denied in part. Swaffar’s claims for unjust enrichment and promissory estoppel are

dismissed. 

IT IS SO ORDERED THIS 6th day of August, 2010.

 

UNITED STATES DISTRICT JUDGE 

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