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## ARKANS AS COURT OF APPEALS

DIVISIONS I & II No. CV-13-522
C. B EAN TRANSPORT, INC. CREDITORS TRU ST APPELLANT V. CLAU D E B . KENNEDY , JR.; MICKEY JOE DU RDEN; TH E PH OENIX INSU RANCE COMPANY ; AND CH EROKEE INSU RANCE COMPANY APPELLEES Opinion Delivered January 15, 2014

APPEAL FROM TH E SEB ASTIAN COU NTY CIRCU IT COU RT, FORT SMITH DISTRICT [NO. CV-2012-1245 I] H ONORAB LE STEPH EN TAB OR, JU DGE

AFFIRMED

PHI LLI P T. WHI TEAKER, Judge C. B ean Transport , Inc. C redit ors Trust (“C. B ean Transport ”) appeals from a Sebast ian County Circuit Court order dism issing it s declarat ory-judgm ent act ion against Claude B

. Kennedy, Jr., M ickey J. Durden, and t h e Phoenix and C h e r o k e e Insurance Com panies. C. B ean Transport argues t hat t he t rial court erred b y failing t o st rike Kennedy’s

answer and by f

inding that it lacked t he subject -m at t er jurisdict ion t o hear the m at t er. B ecause we find t hat t he t rial court did not abuse it s d i s c r et ion in declining t o exercise subject -m at t er jurisdict ion, we affirm

. Claude Kennedy w as i njured in an aut om obile accident in Louisiana while w o r k ing for h is e mployer, C. Bean T ransport
. Kennedy sought workers’ com pensat ion benefit s from C. B ean Transport , who w a s s elf-insured, and C. B ean Transport paid Kennedy approxim at ely $ 63,000 in workers’ com pensat ion benefit s as a result of t his accident

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Kennedy then b rought suit in Louisiana against D u r d e n ( t h e driver of t he ot h er vehicle) for d am ages h e suffered i n t he accident and against Phoenix Insurance Com pany (his i n s ur e r ) and Cherokee Insurance Com pany (C. B ean Transport ’s insurer) under t h eir uninsured-m ot orist provisions. C. B ean Transport s o u g h t to int ervene in t he Louisiana
act ion. The Louisiana court denied C. B ean Transport ’ s request t o int ervene, finding t hat C. B ean Transport ’s policy wit h Cherokee e xcluded any coverage for workers’ com pensat i on benefit s paid t o C

. B e a n Transport ’s em ployees. When C. B ean Transport learned that Kennedy was at t em p ting t o set t le t he lit igat ion wit hout considerat i on of C. B ean Transport ’s right s of subrogat ion, C. B ean Transport filed a declarat or y - j udgm ent act ion i n Arkansas seeking t o det erm ine t hat any funds pay a b l e b y Durden, Phoenix, and/ or Cherokee were subject t o C. B ean Transport ’s st at ut ory right of subrogat ion. An appeal from t he denial of C. B ean Transport ’s mot ion t o int ervene was pending before t he Louisiana appellat e court s
at t he t im e of filing of t he Arkansas declarat ory-judgm ent act ion. Kennedy filed a pro se answer t o t he com plaint

. H e adm it tedly received assist ance in draft ing his answer from h i s Louisiana counsel who was not l icensed t o pract i ce law in Arkansas. C. B ean T r ansport m o ved t o st rike K e nnedy’s answer as a sanct ion for filing a pro

se answer t hat w as draft e d b y an at t orney not licensed t o p ract i c e l aw in A rkansas and request ed t hat a default judgm ent be ent ered. Ph o e n i x a n d Cherokee filed a m ot ion t o dism iss t h e Arkansas pet it ion based on Arkansas Rules of Civil Procedure 12(b)(1) (lack of subject -m at t er jurisdict ion) and 12(b)(6)

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(failure t o st at e fact s upon which relief can be grant ed). Phoenix and Cherokee argued that , because t here was lit igat ion pending in t he st at e of Louisiana involving t h e sam e part ies, t he

sam e issues, and arising out of the sam e m ot or-vehicle accident , t he court would be abusing it s discret ion i n ent ert aining subject -m at t er jurisdict ion over C. B e an Tr a n s p o r t ’s pet it ion. Kennedy joined in t he m ot ion. The trial court dism i ssed t he act ion on t he b asis that anot her act ion bet ween t he part ies

was pending in Louisiana. Th e c o urt also d eclined t o st rike Kennedy’s answer, st at ing that it would not punish a lit igant un d e r t h e s e c ircum st ances for t he act ions o n the part of an
at t o rney. The t rial court ’s order st at ed: Plaint iff has filed it s pet it ion seeking d eclarat ory judgm ent
. Defendant s seek to dism iss on t he grounds t he sam e part i es and i ssues are already subject of a L o uisiana lawsuit

. Declarat ory judgm ent is int ended t o supplem ent rat her t ha n s u p e r s ede ordinary causes of act ion. When anot her act ion b et ween t h e sam e part i e s, in which all issues c ould be det erm ined, is act ually pending at t he t im e o f t h e com m encem ent of an act ion for declarat ory judgm e n t , t h e court abuses it s d iscret i o n if it ent ert ains jurisdict i on. Mid-State Construction Co. v. Me a n s , 2 4 5 Ark. 691, 434 S.W.2d 292 (1968). The t ask f

or t his court t hen becom es t o ascert ain whet her the pending Louisiana mat t er involves t he sam e part i es and invokes t h e sam e issues a s t h e inst ant case. A cursory reading of t he Louisiana p le a d i n gs reveal [sic] t he part i e s t o be t he sam e in each case. In addit ion, t he Pet it ion f or Int ervent ion filed on behalf of Plaint iff in Caddo Parish plainly set s fort h t he grounds for i nt ervent ion as being reim bursem ent for Workers’ Com pensat ion benefit s fromany award Mr. Kennedy m ight receive in t h at pending lawsuit

. The pending pet it ion seeks t he s a m e relief. The Order of t he Louisiana court denying int ervent i on is current ly on appeal to t he Court of Appeal, Second Circuit , in t hat st at e. Plaint iff cit es Potter v. City of Tontitown , 371 Ark. 200, 264 S.W.3d 473 (2007) in support o f it s posit ion opposing dism issal. H owever, as point ed out b y Defendant s, t h at m at t er dealt solely wit h dism issal p u r s ua n t t o ARCP 12(b)(8), which is not t he
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case h ere. I n a d d i t i o n , t h e Potter court point s out t he filings at issue there involved different part ies and different

issues. Therefore, it appears t o t he Court t his c ase and the Louisiana case involve t he sam e part ies and issues. In addit ion, because Plaint iff’s i n t e rest s are st ill at issue in that st at e based on the appeal it filed, it rem ains pending in t he Court ’ s view. Therefore, t h is m at t e r m ust be dism issed. To do ot herwise would open t he door t o cont radict ory and confusing result s i n t wo st at es, t hereby m uddling and prolonging a final d isposit i on of t he issues. As a se p a r a t e m at t er, Plaint iff at h earing urged t he Court n ot t o address o r consider t he m ot i on of Separat e Defendant Kennedy because h is Answer t o t he pet it ion was “ghost writ t en” by a Louisiana at t orney. Counsel h a s raised concerns about t he et h i cal propriety of such act ion. E ven if such issues exist , which t he Court need not and does not address, t he Court will not punish a l it ig a n t u n d e r these circum st ances for such act ions on the part o f an at t orney. I f Plaint iff feels such act ions were inappropriat e, it should file a com plaint wit h t he appropriat e Louisiana aut hority. In decla r a t o r

y - j u dgm ent act ions, we review a t rial court ’ s decision on w het her to exercise i ts j urisdict ion under an abuse-of-discret ion s t andard. See UHS of Ark

. v. Ch arter Hosp. of Little Rock , Inc. , 297 Ark. 8, 759 S.W.2d 204 (1988). C. B e an Transport argues that
t h e t rial court erroneously det erm ined that i t lacked subject -m at t e r jurisdict ion. We disagree. We hold t hat t he t rial court was not expressing a det erm inat ion t hat it com plet ely lacked subject -m at t er jurisdict ion t o hear t he m at t e r as C. B ean Transport cont e nds; inst ead, t he
court ’s analysis clearly cont em plat es t hat it could exercise it s jurisdict ion if it so chose. H owever, because the sam e part ies and issues were involved in b ot h t he A r k ansas and t he Louisiana act ions, it sim ply declined t o exercise t hat jurisdict ion because t o do so would be problem at ic. This was not error. It is well set t led t hat subject -m at t er jurisdict ion i s considered t o be a court ’s aut hority
t o hear and decide a part icular t ype of case. E dwards v. E dwards , 2009 Ark. 580, 357 S.W.3d

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445 (cit ing David Newbern & John J. Wat kins, Ark ansas Civil Practice and Procedure § 2:1, at 19–20 (4t h ed. 2006)). An Arkansas court lacks subject -m at t er jurisdict ion if it cannot hear

a mat t er “under any circum st ances” and is “wholly incompet ent t o grant t he relief sought .” Id

. ( q u o t i n g J. W

. Reynolds Lumber Co. v. Smack over State B ank , 3 10 Ark. 342, 352–53, 836 S.W.2d 853, 858 (1992)). An Arkansas circuit court obt ains subject -m at t er jurisdict ion when i t i s conferred under t he Arkansas Const it ut ion or by m eans of const it ut ionally aut ho r i z e d
st at ut es or court rules. Id

. The declarat ory-judgm ent st at ut es give court s of record t he power
t o declare right s, st at us, and o t her legal relat ions wit hin t heir respect ive jurisdict ions. Travelers Indem. Co. v. O live’ s Sporting Goods, Inc ., 297 Ark. 516, 764 S.W.2d 596 (1989). H ere, t he
t rial court had t he aut h ority t o act on t he pending declarat ory request
. The st at ut es, however, do not c onfer subject -m at ter jurisdict i o n. B ryant v. Picado , 3 38 A rk. 227, 996 S.W.2d 17 (1999); UHS of Ark

. , s u

p ra . Thus, declarat ory judgm ent is procedural, not jurisdict ional. Martin v. Equitable Life Assur. Soc. of th e U. S. , 344 Ark. 177, 181, 4 0 S.W.3d 7 33, 7 3 6

– 3 7 (2001). In ot her words, the declarat ory-judgm ent st at ut es em power t he court to grant relief, but do notm andat e such. Declarat ory-judgm ent st at ut es are int e n de d t o supplem ent rat h er than supersede ordinary causes of act ion. As a result , t here exist s a requirem ent t hat the t rial c ourt consider
t h e “propriety” o f exercising jurisdict ion, not m e r ely whet her it has t he legal aut hority t o do

so. Id

. The p r o p r iety of exercising jurisdict ion depends in large part o n whet her t he issue

m ay be resolved in anot her court
. Id

. Consequent ly, w hen anot her act ion bet ween t he sam e

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part ies, in which all issues could be det erm ined, is act ually p en d i n g a t t he t im e of t he

com mencem ent of an act ion for a declarat ory j udgm ent , t he court abuses it s discret ion when it ent ert ains jurisdict ion. UHS of Ark

. , supra . The t rial court c learly considered t he n at ure and subst ance o f t h e t wo st at e-court
act ions, as well as t he possibilit y t hat t he exercise of j u risdict ion could give rise t o pot ent ially
cont radict ory and confusing result s, before declining t o exercise it s jurisdict i on. U nder these circum st ances, we find no abuse of discret ion. B e cause we have det erm ined that t he t rial court did n ot abuse it s discret ion in declining t o exercise subject -m at t er jurisdict ion in t his m at t e r, we need n ot address C. Bean Transport ’s argum ent on t h e t rial court ’s failure t o st rike Kennedy’s answer. Affirm ed. G L A D W I N , C.J., and H I X S O N and W O O D , JJ., agree. V A U G H T and B R O W N , JJ., dissent

. L A R R Y D. V A U G H T , Judge, di s s enti ng. The majorit y present s a well-reasoned and well-writ t en o pinion, and I t ake no issue w it h t he fact s or law as pre s en t e d. M y object ion, however, st em s from t he wording of t he t rial court ’s o rder of dism issal. In it s order t he court direct ly st at e d t hat
t h is m at t er must be dism issed. To do ot herwise w ould open the d oor t o cont radict ory and confusing result s in t h e two st at es, thereby m uddling and prolonging a final disposit ion of t he issue. (Em phasis added.) T hat is sim ply not a correct st at em ent of t he law. The court most cert ainly possesses subject -m at t er jurisdict ion t o hear a plea for d eclarat o r y r el i e f. And, unlike cases

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where t h ere are com pet ing suit s wit hin Arkansas court s, t he t rial court had t he discret ion to grant declarat ory relief i f it so desired. Specifically, it i s t he trial court ’s use o f t he word “m ust ”
t h at I find object ionable. The rules and cases c it e d by t he t rial court (and t h e m a j o r i t y) relat e t o declarat oryjudgm ent a ct ions d ealing wit h com pet ing cases f iled in Arkansas st at e court s, not cases init iat ed in two se p a rat e jurisdict ions. The UHS of Ark ansas, Inc. v. Ch arter Hospital of Little Rock , Inc. , 297 Ark. 8, 759 S.W

. 2 d 2 0 4 ( 1 9 8 8), case involved t wo act ions i n two Arkansas
st at e c ourt s, unlike t he ca s e a t h a n d

. F urt her, in Potter v. City of Tontitown , 371 Ark. 200, 215–16, 264 S.W.3 d 473, 484–85 (2007), o ur suprem e c ourt specifically not ed t hat when
t h ere are two cases—one i n A rkansas st at e court and a secon d i n a n o t h e r st at e or pursued

u n d e r federal law—t he circuit court has subject -m at t e r jurisdict ion to h ear a declarat o r y
act ion. Also, Arkansas Code Ann o t a ted sect i o n 16-111-108 (Repl. 2 001) deals wit h t he quest i on of whet her a circuit court “m ay” r efuse to render or ent e r a d eclarat ory judgm e n t
. H ere, t he t rial court expressed it s inabilit y t o c onsider t he m at t e r, n ot it s discret ion as to whet her itshould hear t he m at t er. Potter and UHS im plicit ly held t hat A r kansas court s are vest e d wit h subject -m at t er jurisdict ion t o h ear and det erm ine declarat o ry a c t i o n s and should hear t he act ion if it will “fully resolve t he uncert aint y or cont roversy at issue.” Potter , 371 Ark. at 2 15–16, 264 S.W.3d
at 484–85. In t his case, C. Bean is an Arkansas com pany t hat p aid workers’ com pensat i on benefit s t o Kennedy pursuant t o Arkansas law. C. B ean t hen sought a declarat ory ruling that
any proceeds received by Kennedy in his Louisiana tort act ion are subject t o C. B ean’s

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st at ut ory subrogat ion right s under Arkansas law. This quest ion is squarely wit hin t he subjec t

- m a t t er jurisdict ion of t he Sebast ian County Circuit Court

. To say t hat t he m at t er must be dism issed is an incorrect st at em ent of law, and
t h erefore I dissent

. B R O W N , J., joins. Smith , Coh en & Horan, PLLC , by: Don A. Smith ; and McDonald, McCann, Metcalf & Carwile, LLP , by: Gary M. McDonald and Ch ad J. K

utmas , for appellant s. Jones, Jack son & Moll, PLC , by: M ich ael T. Newman ; B assett L aw Firm LLP , by: Dale W

. B r own ; and W

rig h t, Lindsey &

Jenning s LLP , by: K

yle R. W ilson , for appellees.

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