Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ared-3_05-cv-00267/USCOURTS-ared-3_05-cv-00267-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1446 Petition for Removal- Personal Injury

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Where material facts are disputed, the Court will so indicate.

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IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF ARKANSAS

JONESBORO DIVISION

RALPH W. PUCKETT, ET AL. PLAINTIFFS

vs. CASE NO. 3:05CV267GH

KENESAW LEASING, INC.. DEFENDANT

ORDER

Plaintiffs filed this action in the Circuit Court of Crittenden County, Arkansas

alleging that the arrest and prosecution of Ralph Puckett was without probable causes.

Defendant Kenesaw Leasing, Inc. (“Kenesaw”) removed the action on the basis of

diversity jursidiction. Kenesaw has filed two motions for summary judgment. In the first

it requests judgment on plaitniffs’ claim for malicious prosecution. In the second, it

requests judgment on its counterclaim for breach of the lease agreement.

The facts, according to the record, are as follows:1

On January 28, 2002, NKP Trucking, Inc., Ralph W. Puckett and Emma K. Puckett

entered into a Lease Agreement whereby the Pucketts signed as principals and personal

guaranators of the lease of ten Kenworth dump trucks and two Dorsey dump trailers to

to the company. Paragraph 14 of the Lease Agreement requires that all leased

equipment be returned to Kenesaw’s Memphis facility upon the end of the lease. The

lease ran through July, 2005. 

On December 2, 2002, Ralph Puckett called Wade West of Kenesaw and advised

West that he could not continue payment under the lease. West declared Puckett in

default of the lease and so advised Puckett. On or about December 4, 2002, West

traveled to NKP’s facility to discuss return of the leased equipment to Kenesaw’s

Memphis facility. Based on his discussion with Puckett, West retained the services of

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Ark. Code Ann. § 5-36-115 provides as follows:

(a) Any person is guilty of theft and subject to the punishments prescribed by § 5-36-103

who shall intentionally, fraudulently, or by false pretense take, carry, lead, drive away,

destroy, sell, secrete, convert, or appropriate in any wrongful manner any personal property

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Mark Harkness to pick up all of the leased equipment from NKP’s yard in West Memphis

and return it to Kenesaw’s Memphis facility. 

On December 7 and 8, 2002, Harkness and his assistant John Tatum moved a

number of pieces of equipment to Memphis. Kenesaw states that three pieces of

equipment under the lease were not found at the NKP facility. Puckett later told West

where two pieces of equipment could be found. A missing tractor was found in Jonesboro

and a missing trailer was found in the possession of Fowler Concrete in West Memphis.

The last piece of equipment, the Dorsey trailer, was not found. Plaintiffs contend

that the Dorsey trailer was on the lot behind a locked gate at the time plaintiffs turned the

only key to the gate over to Harkness. Plaintiffs state that they left, and upon their return,

did not see the Dorsey trailer. Harkness claims that he saw the Dorsey trailer the first day

he was on the lot. The next time he was on the lot, the gate was locked and the Dorsey

trailer was no longer on the lot. 

West states that he had several discussions with Puckett in a continuing effort to

locate the missing trailer. Puckett states that he told Harkness that he didn’t have the

trailer and that he would help West and Harkness find the trailer. Puckett says he drove

around looking for the trailer. Puckett told West and/or Harkness of several locations

where the trailer might be. Wade and Harkness claim that they followed each of these

“leads” in an effort to find the missing trailer, but that the trailer was not at any of the

locations. Both West and Harkness asked Puckett to report the Dorsey trailer as stolen.

Puckett would not do so but stated he would help find the trailer. 

 On March 14, 2003, West sought the advise of Sgt. Will Smith, a detective with

the West Memphis Police Department, about what he viewed as plaintiffs’ failure to return

the leased Dorsey trailer. Sgt. Smith and his superior Lt. Ken Mitchell reviewed and

concluded that Ark. Code Ann. § 5-36-115 was applicable.2

 Smith informed West that the

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which is leased, rented, or entrusted to the person, or reports falsely of his wealth or

mercantile credit and thereby fraudulently obtains possession of that personal property.

(b) The amount involved in the theft shall be deemed to be the highest value by any

reasonable standard of the property or services which the person stole or attempted to steal.

(c) It shall be prima facie evidence of intent to commit theft when one who has leased or

rented the personal property of another fails to return or make arrangements acceptable with

the lessor to return the personal property to its owner within five (5) days, excluding

Saturday, Sunday, or state or federal holidays, after proper notice following the expiration of

the lease or rental agreement or presents identification to the lessor or renter thereof which is

false, fictitious, or not current with respect to name, address, place of employment, or other

appropriate items.

(d) Proper notice by the lessor shall consist of a written demand addressed and mailed by

certified or registered mail to the lessee at the address given at the time of making the lease

or rental agreement.

(e) The following factors shall constitute an affirmative defense to prosecution for theft:

(1) That the lessee accurately stated his name and address at the time of rental;

(2) That the lessee's failure to return the item at the expiration date of the rental contract was

lawful;

(3) That the lessee failed to receive the lessor's notice personally unless notice was waived;

and

(4) That the lessee returned the personal property to the owner or lessor within forty-eight

(48) hours of the commencement of prosecution, together with any charges for the overdue

period and the value of damages to the personal property, if any.

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The letter stated in relevant part:

We have exhibited enormous flexibility in our relationship with you and your company

(NKP Trucking) over the last two years, including the recent orderly liquidation of the

equipment under this defaulted lease. However, in recent weeks, your cooperation and

concern for the orderly surrender of the equipment under this lease has [sic] continually

declined to the point of a complete disregard for our efforts.

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statute required the lessor, i.e., Kenesaw, to give five days’ written notice to the lessee,

i.e., the Pucketts, and the opportunity to return the leased equipment or pay for it. 

On March 14, 2003, West sent five-day notice letters to the Pucketts, notifying

each of them that they had five business days to return the missing trailer to Kenesaw or

pay its value under the lease.3 Ralph Puckett received the letter. Emma Puckett did not

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We have recovered all of the equipment under the lease, at least that which is worth

recovering, with the exception of the following trailer:

One(1) 1992 Dorsey 28" Aluminum End Dump; VIN # 1DTD18A28NP03410

Today, our flexibility ends and we have not [sic] choice but to issue the following ultimatum.

You have five (5) business days to return the aforementioned trailer to a location of

Kenesaw’s choosing or make restitution of such equipment in the amount of $13,000 in

certified funds. Failure to either return the equipment or make restitution within 5 days of

your receipt of this letter constitutes evidence to commit theft, therefore, we will not hesitate

to swear out a warrant for your arrest.

West then quotes Ark. Code Ann. § 5-36-115(c) (see supra) and concludes the letter with the

following:

Obviously, it is in your best interest to produce this trailer. I sincerely hope you take this

letter and its demand seriously because I can assure you we certainly do.

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That form contained a narrative which stated the following:

The complainant stated suspect #1 [Ralph William Puckett] leased several dump

trucks and dump trailers the first part of December 2002. The suspect then was

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claim her letter but was aware of it and discussed it with Ralph. 

 On April 8, 2003, West returned to the West Memphis Police Department and

reported to Smith that he had not been contacted by either of the Pucketts. He gave

Smith a copy of the five-day notice letter and the Pucketts’ return receipts. Smith

prepared an Affidavit for Warrant of Arrest of Ralph Puckett, and West signed it. The

Affidavit for Warrant of Arrest stated the following:

Pursuant to Rule 7.1 of the Arkansas Rule of Criminal Procedures[sic], the

undersigned affiant(s) being duly sworn, deposes and says that he has

reason to believe that the above-named person [Ralph William Puckett]

committed the offense of: (5-36-115) THEFT OF LEASED, RENTED OR

ENTRUSTED PERSONAL PROPERTY (CLASS B FELONY) on or about

the 25th DAY OF MARCH, 2003. Any person is guilty of theft who shall

intentionally, fraudulently, or by false pretense take, carry, lead, drive away,

destroy, sell, secrete, covert, or appropriate in any wrongful manner any

personal property which is leased, rented, or entrusted to the person, or

reports falsely of his wealth or mercantile credit and thereby fraudulently

obtains possession of that personal property (PROPERTY BEING A 1992

DORSEY 28 FOOT ALUMINUM DUMP TRAILER VALUED AT

APPROXIMATELY $13,000.00) in the City of West Memphis in Crittenden

County, Arkansas, against the peace and dignity of the state of Arkansas.

Smith also prepared an NIBRS Incident Report Form.4

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shutting down his business so the complainant attempted to get the property back and

after some difficulty received all of the property back except the listed property. The

complainant then mailed the suspect a certified letter giving him ten days to make

arrangements to pay for the property or return the property but he did not do so. The

complainant stated he would prosecute.

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On April 14, 2003, the Pucketts’ attorney, Gerald Coleman, sent a letter to West

advising him that the Pucketts did not know where the trailer was. The letter to West

stated the following:

I represent Mr. Puckett. I am in receipt of your letter of March 14, 2003.

As you well know, and as Mr. Puckett has informed you, your company came

on his property and repossessed the equipment. The trailer in question was

on the property when he allowed you to come on it. You, for reasons we do

not understand, did not pick up the trailer immediately. He noticed the trailer

was missing some days later, and assumed your company had picked it up.

Mr. Puckett has no idea where this trailer is, and if it has been stolen from his

property, he will be happy to assist you in filing a report. However, he does

not have it.

I read your recitation of Arkansas law. Please be advised that Arkansas law

also allows civil damages against companies who swear out warrants, and

have people falsely arrested.

My client will be happy to assist you in any way possible to try and figure out

what happened to the trailer. All he knows is that he thought you had it, and

he knows he does not have it.

After West signed the Affidavit, Sgt. Smith took it and the other documentation to

James C. Hale, Jr., the Deputy Prosecuting Attorney for Crittenden County, Arkansas. In

particular, Smith provided Hale with the Affidavit for Warrant of Arrest, the lease

documents, the five day notice letters, the notice form signed by West confirming that he

had been advised of the penalties for filing a false report with the police and the NIBRS

Incident Report Form. Hale stated that he believed that probable cause existed and that

he made the decision that an arrest warrant could and should be issued for the arrest of

Ralph Puckett. It is unclear whether that decision was made before Coleman’s letter to

West. There does not appear to be any evidence in the record that West provided a copy

of Coleman’s letter to either Smith or Hale. 

Hale submitted the Affidavit for Arrest and the documentation he had to District

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Judge Pal Rainey who reviewed it and executed the warrant on May 21, 2003. 

West states that after he received the April 13th letter he attempted to contact

Coleman’s office without success. He sent a letter dated May 28, 2003, to Coleman which

West contends sets forth a correct statement of the facts. According to West’s rendition

of the facts,

On 12-9-02, eight of the nine trucks were recovered from Mr. Puckett’s truck

yard. . . . On that date, we contacted Mr. Puckett to inquire about the

location of the two end dump trailers. It was then, that Mr. Puckett admitted

that Fowler Concrete had one. . . .

The trailer in question . . . was not on the yard and Mr. Puckett said he would

locate it. We were unable to successfully contact Mr. Puckett for roughly 30

days after that in order to locate the end dump trailer.

On February 7, 2003, we were able to contact Mr. Puckett. Mr. Puckett

stated that the trailer may be in Black Rock, AR as he owed money to a

contractor there, Aaron Trucking. Attempts to locate the trailer there were

unsuccessful. Again, we contacted Mr. Puckett and informed him that we

have not found the trailer. Again, he stated that he would locate it. 

Over the course of the following 30 days, we attempted to contact Mr.

Puckett and were unsuccessful as all addresses and phone numbers were

no longer valid. At no time, to[sic] Mr. Puckett make any real effort to assist

us and at no time did he report the trailer stolen. Mr. Puckett has known from

the date of our initial repossession, 12-9-02, that we did not have the 1992

Dorsey 28' Aluminum Trailer and further, that we were actively searching for

it. Still, his efforts to assist us were nonexistent.

As of 4-15-03, through the help of the West Memphis Police Dept., we

learned that the trailer was currently registered to an individual in Hamburg,

AR who has been deceased for 5 years. A local detective in Hamburg

followed up with the family of the deceased and he was unsuccessful in

locating the trailer.

Our only desire is to find our trailer and we very much would like to talk with

Mr. Puckett to ascertain any information that would help us in doing so. We

believe that he may have some knowledge of the individuals or parties in

Hamburg that may have the trailer or other information that may prove helpful

in the recovery of the trailer.

As Mr. Puckett can attest, we have been enormously flexible in our

relationship with him and his company (NKP Trucking) over the last two

years. You may note, we have not filed suit against him though we are

certainly within our right to do so. Civil litigation will not in any way cure our

loss; it will only add expense and time to an already unfortunate situation.

We earnestly would like to talk and/or meet with Mr. Puckett to discuss any

information that he may have as to the whereabouts of this trailer. Any

assistance that you could provide would be greatly appreciated. I look

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forward to hearing from you within five (5) business days with some

meaningful information, otherwise, we will have no other choice but to believe

something is afoul and proceed accordingly.

Coleman, by letter dated June 11, 2003, acknowledged that he had received West’s

May 28th letter and had forwarded it to the Pucketts. Coleman stated that he was awaiting

a response from the Pucketts. West stated that he never heard anything further from the

Pucketts or their attorney. 

In October, 2004, Ralph Puckett was arrested on the outstanding warrant. The

charges were later nolle prossed by another deputy prosecutor. Plaintiffs filed this

complaint for malicious prosecution on October 19, 2005. 

In order to establish a claim for malicious prosecution, plaintiffs must prove the

following five elements: (1) a proceeding instituted or continued by the Kenesaw against

plaintiff; (2) termination of the proceeding in favor of plaintiff; (3) absence of probable cause

for the proceeding; (4) malice on the part of the Kenesaw; and (5) damages. Sundeen v.

Kroger, 355 Ark. 138, 142 (2003). “[T]he existence of probable cause is to be determined

by the facts and circumstances surrounding the commencement and continuation of the

legal proceedings. Probable cause for prosecution must be based upon the existence of

facts or credible information that would induce a person of ordinary caution to believe the

accused person to be guilty of the crime for which he is charged.” Id. (citations omitted).

 

Kenesaw asserts that acting on advise of counsel is a defense to a claim of

malicious prosecution. According to Arkansas law, “where one lays all the facts in his

possession before the public prosecutor, or before counsel learned in the law, and acts

upon the advice of such counsel in instituting a prosecution, this is conclusive of the

existence of probable cause, and is a complete defense in an action for malicious

prosecution.” Machen Ford-Lincoln-Mercury, Inc. v. Michaelis, 284 Ark. 255, 257 (Ark.

1984)(citation omitted)

Here, West presented all the facts in his possession at the time to Smith, who

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subsequently presented them to Hale. Although plaintiffs, through their counsel, had sent

a letter after the five days, plaintiffs took no further action to assist West in locating the

trailer or clarifying the issue of the registered trailer, even in light of information that the

trailer had been registered to a deceased person. The facts as they existed and as

presented to the prosecutor were: Puckett leased the equipment, he failed to return the

equipment upon default, he received the statutory five-day notice and he did not return the

equipment or make alternate arrangements as required by the statute after receipt of the

notice. These were sufficient to establish probable cause for issuance of the warrant.

Indeed, under Arkansas law, the failure to return the property or make arrangements for

such within five days receipt of the notice is prima facie evidence of intent to commit theft.

Ark. Code Ann. § 5-36-115(c). 

Furthermore, plaintiffs have presented no evidence of malice on the part of

Kenesaw. Malice is “any improper or sinister motive for instituting the suit.” Milton

Hambrice, Inc. v. State Farm Fire & Cas. Co., 114 F.3d 722, 725 (8th Cir. 1997) (citations

and internal quotation omitted). The evidence reveals that representatives of Kenesaw

attempted to work with plaintiffs to locate the trailer. Only after a number of unsuccessful

attempts to locate the trailer and plaintiffs’ lack of cooperation in either finding the trailer or

reporting it as stolen or missing did West seek assistance from the police department. 

West carefully followed the advise of Smith and relied on the decision of Hale.

In sum, the Court finds that Kenesaw is entitled to summary judgment on plaintiffs’

malicious prosecution claim. Kenesaw’s reliance on the advise of counsel is a complete

defense. Furthermore, there was sufficient probable cause for the issuance of an arrest

warrant and; plaintiffs have failed to provide evidence of malice.

Kenesaw has also filed a motion for summary judgment on its counterclaim for

plaintiffs’ breach of the lease agreement. There is no dispute that plaintiffs each personally

guaranteed the lease agreement payment obligations. There is also no dispute that

plaintiffs failed to keep the equipment insured against casualty and theft, as required by the

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lease. There is also no dispute that Kenesaw suffered substantial monetary loss as a result

of the damaged tractor found at the NKP lot which was sold for salvage, the damaged T300 tractor whose engine was replaced, and the damaged trailer found at Fowler Concrete

and sold for salvage. While plaintiffs assumed that Kenesaw had the Dorsey trailer picked

up, they do not dispute Kenesaw’s assertions that the trailer was never found and that

Kenesaw suffered a loss as a result. 

The Lease Agreement provided that plaintiffs shall assume all risk or loss or damage

to the property whether or not such loss or damage is covered by insurance on the

equipment. The Lease Agreement further provided that in the event of default, the Lessor

(Kenesaw) had the option to 

(a) declare the remaining unpaid installments of rent at once due and

payable, or (b) terminate this Lease and, with or without legal process, enter

in or upon Lessee’s premises and remove said property with or without notice

to Lessee, and subsequently sue for damages suffered from the breach by

Lessee . . . or (c) terminate this Lease and, with or without legal process,

enter in or upon Lessee’s premises and remove said property with or without

notice to Lessee and sell or lease the property at such price as Lessor

determines is reasonable and apply the proceeds of the sale or lease first to

the expenses of the sale or lease, including reasonable attorney’s fees, and

second to the total unpaid rental due for the term of this Lease and Lessee

shall pay Lessor any deficiency . . .

The total amount, for the entire term of the lease, due by plaintiffs, as guarantors of

the lease, at the time the lease was executed was $756,000.00. The total amount due and

payable by plaintiffs at the time they were placed in default in December of 2002 was

$711,381.00 as plaitniffs had paid only $44,619.00 toward their lease obligation.

Kenesaw elected to sell and/or re-lease the individual pieces of equipment to third

parties after plaintiffs’ default, and credited the amount recovered to plaintiffs’ account. The

total amount recovered by Kenesaw was $608,470.10, and therefore the net balance due

after giving all credits is $111,310.90. 

In support of its assertion that the amount of the credits given to plaintiffs is fair and

reasonable, Kenesaw has provided the affidavit of John Bond, an expert in the valuation

of used Kenworth equipment. He states that the amounts credited to the plaintiffs’ account

Case 3:05-cv-00267-GH Document 41 Filed 08/03/06 Page 9 of 11
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Paragraph 17 of the Lease provides that “[i]n the event of any action at law or suit in

equity in relation to this Lease, Lessee, in addition to all other sums which Lessee

may be called upon to pay, will pay to Lessor a reasonable sum for its attorney’s

fees.”

Ark. Code Ann. § 16-22-308 provides:

In any civil action to recover on an open account, statement of account, account

stated, promissory note, bill, negotiable instrument, or contract relating to the

purchase or sale of goods, wares, or merchandise, or for labor or services, or breach

of contract, unless otherwise provided by law or the contract which is the subject

matter of the action, the prevailing party may be allowed a reasonable attorney's fee to

be assessed by the court and collected as costs.

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for each unit was far in excess of the NADA book value, and the value that he placed on

the equipment as of January, 2003. The amount Kenesaw credited was about 87% of the

original purchase price which included the federal excise tax. One truck, which was so

damaged that it could not be put back in service, was sold for scap and plaintiffs were

credited the amount received for the scrap.

Plaintiffs have not provided any evidence to dispute that submitted by Kenesaw. At

the most they claim that the value of $13,000.00 for the Dorsey trailer that was not found

is too high. That is really a non-issue as Kenesaw did not give any credit for the Dorsey

trailer. The credits were only for the vehicles recovered. Indeed, had plaintiffs maintained

insurance on the Dorsey trailer or had the Dorsey trailer been recovered, plaintiffs would

undoubtedly be arguing that they should receive the entire $13,000.00 credit even though

the trailer was over ten years old at the time of the default. They do not dispute that the

credits they did receive were fair and reasonable. 

Based on the undisputed evidence, the Court finds that the credits are fair and

reasonable and that Kenesaw is entitled to judgment on its counterclaim.

Kenesaw also asserts that it is entitled to attorney’s fees under the Lease Agreement

and under Ark. Code Ann. § 16-22-308 both of which provide for a reasonable attorney’s fee

in an action such as this.5

 Kenesaw requests that a reasonable attorney’s fee be the greater

of either $37,103.63, i.e. one-third the amount of the damages, or its actual attorney’s fee

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incurred in not only pursuing this claim but in defending the claim brought by plaintiffs.

The Court finds that Kenesaw is entitled to a reasonable attorney’s fee which is

limited to the amount actually incurred in pursuing its counterclaim. Kenesaw should submit

an itemization of the hours expended and counsel’s hourly rate as well as expenses incurred

within ten days of the entry of this order. 

Accordingly, Kenesaw’s first motion for summary judgment is granted; Kenesaw’s

;Kenesaw’s second motion for summary judgment is granted as set forth above and

judgment will be entered in favor of Kenesaw on its counterclaim in the amount of

$111,310.90 along with reasonable attorney’s fees. Kenesaw’s motion to compel is denied

as moot.

IT IS SO ORDERED this 3rd day of August, 2006.

 ___________________________________ UNITED STATES DISTRICT JUDGE

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