Opinion ID: 1756693
Heading Depth: 1
Heading Rank: 1

Heading: Common Issues on Appeal

Text: Appellants Sims, Bomar, the Ways, and Humnoke Farms argue that the circuit court violated their due-process rights by summarily denying their claims against JMFH without any type of notice or hearing. According to these appellants, due process requires at a minimum that they should have been given notice and a reasonable opportunity for a hearing before being deprived of their property interests. Appellees and Holleman argue that the creditors were given the opportunity to participate in the November 8 hearing and, because all but one of the creditors declined to do so, there was no violation of due process. Holleman additionally argues that the appellants never raised this newly alleged constitutional deprivation at the circuit court level and, therefore, are precluded from raising it now. We first address Holleman's argument that the due-process argument was not preserved for this court's review. After appellants' claims were summarily denied, they filed a joint motion on February 14, 2006, for reconsideration or new trial, or, alternatively, for a stay of the circuit court's order requiring payment of the other claims. In their motion, appellants did argue that the circuit court deprived them of their due-process rights. While the circuit court did not specifically rule on the motion, it was subsequently deemed denied. Therefore, this issue was presented to the circuit court and is preserved for our review. Turning to the merits of this issue, this court has previously discussed the fundamental principles of due process with regard to property interests in Tsann Kuen Enterprises Co. v. Campbell, 355 Ark. 110, 129 S.W.3d 822 (2003), and stated: Due process requires at a minimum that a person be given notice and a reasonable opportunity for a hearing before he is deprived of property by state action. Owings v. Economic & Med. Servs., 302 Ark. 475, 790 S.W.2d 438 (1990). In that regard, the concept of due process requires neither an inflexible procedure universally applicable to every situation nor a technical concept with a fixed content unrelated to time, place, and circumstance. See South Central Dist., Pentecostal Church v. Bruce-Rogers, 269 Ark. 130, 599 S.W.2d 702 (1980). Instead, what process must be afforded is determined by context, dependent upon the nature of the matter or interest involved. Id. The fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). The extent to which procedural due process must be afforded the recipient is influenced by the extent to which he may be condemned to suffer great loss. See Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). It depends upon whether the interest in avoiding that loss outweighs the governmental interest in summary adjudication. Id. Thus, determining what process is due involves the consideration of three factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail. Mathews v. Eldridge, supra, at pp. 334-335, 96 S.Ct. 893; McCrory v. Johnson, 296 Ark. 231, 755 S.W.2d 566 (1988). Id. at 119-20, 129 S.W.3d at 828-29 (quoting State of Washington v. Thompson, 339 Ark. 417, 425-26, 6 S.W.3d 82, 87 (1999)). The opportunity to submit evidence to rebut charges or adverse claims and testimony is an essential requirement of a full and fair hearing to satisfy the Due Process Clause of the Constitution. See Arkansas Pub. Serv. Comm'n v. Continental Tel. Co. of Ark., 262 Ark. 821, 561 S.W.2d 645 (1978). In examining the due-process factors, it is initially clear that appellants have a private interest in their personal property, here, their money. What is of specific interest here is the risk of an erroneous deprivation of the claimants' interests because they were not given the opportunity to be heard regarding their individual claims. Additionally, there are not additional or substitute procedural safeguards in this kind of a case because it involves the dissolution of JMFH. Once JMFH is completely dissolved and its assets are distributed, the creditors will no longer have a method to recoup JMFH's assets to pay their claims. Finally, there is no government interest present here that outweighed the importance of giving the individual claimants an opportunity to support their claims against JMFH before a final judgment was issued. While the appellees and Holleman argue that several hearings were held and that the creditors were given the opportunity to be heard, specifically in the November 8 hearing, the record reveals otherwise. The circuit court specifically observed near the conclusion of the November 8 hearing that the claimants had not had a chance to be heard with respect to their individual claims. The court ruled that it was passing on announcing any decisions as to the individual claimants because it had not taken any testimony or evidence with respect to their claims at that time. The record further reveals that a hearing was never conducted with respect to the individual claims. The individual claimants were allowed to amend their claims if needed; however, after those amendments were made and some additional motions were filed, the court issued an order that simply allowed certain claims sought by Jewell, Fletcher, Holleman, and creditor Betty Hoyt, but summarily denied the appellants' claims without further explanation or opportunity to be heard. Because the record reveals that the appellants were given no opportunity to support their claims before they were summarily denied, we find that the circuit court failed to provide the appellants a hearing and that such failure deprived them of their due-process rights. [1] Therefore, we reverse and remand on this point.
For their second point on appeal, appellants collectively argue that the circuit court erred in denying their claims after the receiver had initially accepted them. Appellees and Holleman aver that the circuit court never appointed the receiver for the purpose of making the final decision about claims, nor could it do so because, pursuant to Ark.Code Ann. § 4-27-1432(a), the court had exclusive jurisdiction over JMFH. Holleman again argues that the appellants never raised this argument below. First, this issue was preserved for our review because, on February 14, 2006, after the circuit court denied their claims, the appellants filed a joint motion for reconsideration or new trial, or, alternatively, for a stay of the circuit court's order requiring payment of the other claims. In their motion, appellants did argue that the circuit court erred because the receiver, not the court, had the authority to determine whether claims against JMFH should have been allowed. Therefore, the appellants' argument is preserved. The circuit court appointed the receiver in this case in its September 27, 2004 order, pursuant to Ark.Code Ann. § 4-27-1432. Section 4-27-1432 provides the following regarding the appointment of a receiver: (a) A court in a judicial proceeding brought to dissolve a corporation may appoint one (1) or more receivers to wind up and liquidate, or one (1) or more custodians to manage, the business and affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property wherever located. (b) The court may appoint an individual or a domestic or foreign corporation (authorized to transact business in this state) as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs. (c) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers: (1) the receiver (i) may dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court; and (ii) may sue and defend in his own name as receiver of the corporation in all courts of this state; (2) the custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its shareholders and creditors. (d) The court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation, its shareholders, and creditors. (e) The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and his counsel from the assets of the corporation or proceeds from the sale of the assets. Ark.Code Ann. § 4-27-1432 (Repl.2001). We must turn to the statute in order to determine what authority is awarded to an appointed receiver in a dissolution case. The basic rule of statutory interpretation is to give effect to the intent of the General Assembly. See Martin v. Pierce, 370 Ark. 53, 257 S.W.3d 82 (2007). The first rule in determining the meaning of a statute is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. See id. This court will construe a statute so that no word is left void, superfluous or insignificant, with meaning and effect given to every word in the statute if possible. See id. When the language of the statute is plain and unambiguous, conveying a clear and definite meaning, we need not resort to the rules of statutory construction. See id. A statute is ambiguous only where it is open to two or more constructions, or where it is of such obscure or doubtful meaning that reasonable minds might disagree or be uncertain as to its meaning. See id. The statute clearly does not give jurisdiction of the claims to the receiver. Rather, the receiver acts only with the authorization of the court. Here, the circuit court, in accordance with the statute, did describe the powers and duties of the receiver in its appointing order and stated that the receiver's duties would: include, but not be limited to (i) notifying the claimants of JMFH of this dissolution pursuant to Ark.Code. Ann. 4-27-1406; (ii) publishing notice to unknown claimants of JMFH of this dissolution pursuant to Ark.Code. Ann. 4-27-1406; (iii) reviewing the receivables of JMFH and taking such actions as he deems prudent to collect those receivables; and (iv) making provision for payment of the creditors of JMFH from its assets. While appellants argue that their claims had been accepted by the receiver, it is clear from the receiver's November 8, 2005 letter to the circuit court, the receiver simply informed the court of what claims had been filed in the case, which appellant had an actual judgment, and his recommendation. Section 4-27-1432 clearly gives the circuit court the option to appoint a receiver to aid in the process of winding up the affairs of a corporation; however, the circuit court retains exclusive jurisdiction. See Ark.Code Ann. § 4-27-1432(a). Therefore, the circuit court did not err by making the final judgment on the claims over the receiver; it erred only by failing to give claimants the proper opportunity to support their claims before such a judgment was issued.
Appellants Sims and Bomar additionally argue that the circuit court erred by not issuing findings of fact and conclusions of law after they requested it do so pursuant to Ark. R. Civ. P. 52(a). Holleman argues that the rules of civil procedure are inapplicable to this dissolution case because dissolution is a statutory procedure. Appellees collectively argue that, even if the rules of civil procedure apply, the appellants' request was untimely because they did not make the request prior to the entry of the judgment, and appellants were not parties to the proceeding. While Holleman argues that the rules of civil procedure are inapplicable to this dissolution case because dissolution is a statutory procedure, that argument is an overly broad application of a civil procedure concept. Where a statute creates a right, remedy or proceeding [that] specifically provides a different procedure ... the procedure so specified shall apply. Ark. R. Civ. P. 81(a) (2007) (emphasis added). While the process of dissolution is governed by statute, nothing prohibits the application of civil procedure rules that do not govern the actual process by which dissolution takes place. Rule 52(a) of the Arkansas Rules of Civil Procedure states: (a) Effect. If requested by a party at any time prior to entry of judgment, in all contested actions tried upon the facts without a jury, the court shall find the facts specially and state separately its conclusions of law thereon, and judgment shall be entered pursuant to Rule 58; and in granting or refusing interlocutory injunctions, the court shall similarly set forth the findings of fact and conclusions of law which constitute the grounds of its action. Requests for findings are not necessary for purposes of review. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous (clearly against the preponderance of the evidence), and due regard shall be given to the opportunity of the circuit court to judge the credibility of the witnesses. The findings of a master, to the extent that the court adopts them, shall be considered as the findings of the court. If an opinion or memorandum of decision is filed, it will be sufficient if the findings of fact and conclusions of law appear therein. Findings of fact and conclusions of law are unnecessary on decisions of motions under these rules. Ark. R. Civ. P. 52(a) (2007). Appellees argue that a request pursuant to Rule 52(a) should have been presented to the circuit court prior to the entry of judgment. The appellants made their request pursuant to Rule 52(a) on February 14, 2006, after the circuit court's order was issued on February 3, 2006. The circuit court did not respond. However, because we are remanding the case to give claimants the proper opportunity to support their claims, there is no need to reach this issue.
Appellants Bomar, the Ways, and Humnoke Farms argue that the claimants met all the conditions set forth in Rule 24(a) of the Arkansas Rules of Civil Procedure and, therefore, were entitled to intervention as a matter of right. Appellees argue that the appellants were simply claimants in a judicial dissolution proceeding and did not have the right to intervene. To intervene as a matter of right under Ark. R. Civ. P. 24(a)(2) (2007), an applicant must show three things: (1) that he has a recognized interest in the subject matter of the primary litigation, (2) that his interest might be impaired by the disposition of the suit, and (3) that his interest is not adequately represented by existing parties. See DeJulius v. Sumner, 373 Ark. 156, 282 S.W.3d 753 (2008); Medical Park Hosp. v. Bancorp South Bank of Hope, 357 Ark. 316, 166 S.W.3d 19 (2004); Billabong Prods., Inc. v. Orange City Bank, 278 Ark. 206, 644 S.W.2d 594 (1983). We have not set forth a standard of review for the denial of a motion to intervene by right filed pursuant to Ark. R. Civ. P. 24(a)(2), when that denial is based on a failure by the appellant to meet the requirements of Rule 24(a)(2) rather than on untimeliness of the motion. See id. As we indicated in both DeJulius and Medical Park , we are hesitant to articulate a standard of review when the parties have not addressed the issue. See id. Here, the claimants' interests should have been protected by a proper claims process and the appointment of the receiver to handle that process. See Ark.Code Ann. § 4-27-1432 and § 4-27-1406 (Repl. 2001). Had the instant claims process provided the claimants with the proper opportunity to be heard, there would have been no need for the claimants to intervene. Because we are remanding this case back to the circuit court to give the claimants an opportunity to be heard on their individual claims in accordance with the dissolution statutes, it is unnecessary to address the circuit court's denial of the motions to intervene.