Opinion ID: 2333578
Heading Depth: 1
Heading Rank: 2

Heading: Liability Issues

Text: We turn then to the liability issues, which involve statutory interpretation. National Enterprises contends that summary judgment was error because the circuit court erroneously interpreted the Arkansas Time-Share Act to hold National Enterprises, a condominium owner, liable to other condominium owners for misrepresentation or constructive fraud. That liability, according to National Enterprises, should only be found against the original developer. This argument is not persuasive. The statute at issue reads: In the financing of a time-share program, the developer shall retain financial records of the schedule of payments required to be made and the payments made to any person or entity which is the lienholder of any underlying blanket mortgage, deed of trust, contract of sale or other lien or encumbrance. Any transfer of the developer's interest in the time-share program to any third person shall be subject to the obligations of the developer. Ark.Code Ann. § 18-14-601 (Repl.2003). National Enterprises claims that the second sentence of this two-sentence statute only imposes upon the transferee of the original developer's interest in the time-share program the obligation of record keeping that is described in the first sentence of the statute. The amicus curiae brief filed by the American Resort Development Association supports this construction urged by National Enterprises. There is no question but that National Enterprises was a successor-in-interest to HHH, the general partner of the Lakeshore Partnership, after buying the note and mortgage from HHH on the Lakeshore property. Indeed, the Joint Statement makes it clear that this is undisputed by the parties. But, more importantly, we view § 18-14-601 to be very clear on the point of National Enterprises's obligations. The second sentence of the statute reads that any transfer of the developer's interest to any third person shall be subject to the obligations of the developer. Giving the words of this statute their plain meaning, as we are required to do, the statute appears unambiguous and it conveys a clear and definite meaning. See Slusser v. Farm Serv., Inc., 359 Ark. 392, 198 S.W.3d 106 (2004). That meaning is that National Enterprises succeeds to the obligations of the initial developer, and we so hold. Our statutory interpretation in this regard is bolstered by the analysis undertaken by the Eighth Circuit Court of Appeals in Kessler III . In that opinion, the Eighth Circuit noted: the overriding purpose of the Time-Share Act is to protect consumers. Kessler III, 238 F.3d at 1013. We agree that § 18-14-601 adheres to that creed by assuring that the original developer's obligations to the Owners are not abandoned. National Enterprises also argues that the grant of summary judgment was in error because the Owners' constructive fraud claim is barred by the statute of limitations. The circuit court determined that the Arkansas Time-Share Act's statute of limitation governs this action, citing Shelton v. Fiser, 340 Ark. 89, 8 S.W.3d 557 (2000), for the principle that a general statute must yield to a specific statute. The Time-Share Act's limitations statute provides: A judicial proceeding in which the accuracy of the public offering statement or validity of any contract of purchase is in issue and a rescission of the contract or damages is sought must be commenced within four (4) years after the date of the contract of purchase, notwithstanding that the purchaser's terms of payments may extend beyond the period of limitation. However, with respect to the enforcement of provisions in the contract of purchase which require the continued furnishing of services and the reciprocal payments to be made by the purchaser, the period of bringing a judicial proceeding will continue for a period of four (4) years for each breach, but the parties may agree to reduce the period of limitation to not less than two (2) years. Ark.Code Ann. § 18-14-403 (Repl.2003). The circuit court's summary judgment applies the second sentence of the Arkansas Time Share Act's four-year statute of limitations to the instant case. That second sentence concerns actions to enforce purchase contract provisions requiring the continued furnishing of services and reciprocal payments by the purchaser. The circuit court concluded that the Owners' complaint was timely, because it was filed on November 27, 1996, within four years of the date when LHR terminated its agreement to provide amenities, parking, and utilities to Owners on December 10, 1993. National Enterprises urges that the circuit court found liability based on the developer's acts of misrepresentation and constructive fraud when it induced time-share purchases, in part, by promises of permanent access to the hotel's amenities, parking, and utilities. Therefore, it argues that the appropriate statute of limitations is the general three-year limitation pursuant to Ark.Code Ann. § 16-56-105 (1987), which governs fraud actions. As characterized by National Enterprises in its brief, the wrong done by the developer was the then-existing but otherwise unknown alleged flaw in the irrevocable license agreement, for which the limitation period, absent concealment, began in 1985 or 1986 at the time Owners purchased their time-share contracts. We affirm the circuit court and hold that the specific statute under the Time-Share Act (§ 18-14-403) controls as opposed to the general limitations statute (§ 16-56-105). Had we adopted National Enterprises's argument, this would have terminated the Owners' right to seek relief before any injury was known to them. This is certainly contrary to the General Assembly's intention to protect consumers under the Act.