Court Opinion

ID: 4096688
Source: CourtListenerOpinion
Date Created: 2016-11-09 16:06:05.629266+00
Date Added: 2024-06-11T07:45:31.675688
License: Public Domain

Cite as 2016 Ark. App. 542

                  ARKANSAS COURT OF APPEALS
                                       DIVISION II
                                       No. CV-16-122

MOUNTAIN PURE, LLC d/b/a                          Opinion Delivered   November 9, 2016
MOUNTAIN PURE WATER COMPANY;
MOUNTAIN PURE MS, LLC; MPAR, LLC;                 APPEAL FROM THE PULASKI
MPMS, LLC; MOUNTAIN PURE                          COUNTY CIRCUIT COURT,
HOLDINGS, LLC; and JOHN B. STACKS                 SEVENTEENTH DIVISION
                      APPELLANTS                  [NO. 60CV-14-1104]

V.                                                HONORABLE MACKIE M. PIERCE,
                                                  JUDGE
CLEAR WATER HOLDINGS, LLC, AS
SUCCESSOR IN INTEREST TO                          AFFIRMED
SIMMONS FIRST NATIONAL BANK
                       APPELLEE

                              LARRY D. VAUGHT, Judge

       Appellants, Mountain Pure, LLC d/b/a Mountain Pure Water Company; Mountain

Pure MS, LLC; MPAR, LLC; MPMS, LLC; Mountain Pure Holdings, LLC; and John B.

Stacks, 1 appeal the Pulaski County Circuit Court’s order denying their petition for contempt

filed against appellee Clear Water Holdings, LLC, as successor in interest to Simmons First

National Bank. We affirm.

       Appellants’ petition for contempt arose out of a foreclosure action. Simmons First

National Bank initiated the action on March 17, 2014, by filing a complaint to foreclose its

mortgages and security interests in certain real and personal property secured by loans

       1Stacks
            is the manager of Mountain Pure Holdings and the sole member of MPAR,
LLC, and MPMS, LLC.
                                  Cite as 2016 Ark. App. 542

Simmons made to appellants. On April 16, 2014, the circuit court entered a consent order

appointing Michael McAfee as receiver to preserve the property by managing the Mountain

Pure entities.

       On September 22, 2014, Simmons and appellants executed a settlement agreement and

mutual release of claims and security interests, which, pertinent to this appeal, included the

following provision:

       5. Information for Preparation of Mountain Pure Entities Tax Returns.

       Within 30 days of the date of this agreement, the Receiver shall in the ordinary course
       of its business provide a copy of all information from the Mountain Pure MAS-90
       computer system in Little Rock, Arkansas to enable the Mountain Pure Entities to
       prepare and file tax returns for the year 2013 and the partial year 2014 through
       September, 2014. After the Receivership is concluded, Simmons and the Receiver shall
       turn over the actual hard drive(s) and computer towers 2 that contain the hard drives to
       the Stacks Parties. Simmons and the Receiver have no responsibility in this regard other
       than providing copies of information on the computer system, and the Stacks Parties
       have no right or claim to any information of the Mountain Pure Entities on the
       computer system except as set forth in this paragraph.

A foreclosure decree was entered on September 24, 2014; the Little Rock Mountain Pure plant

was sold at a foreclosure sale on October 16, 2014, to Clear Water Holdings, LLC; an order

confirming the sale was entered on October 21, 2014; and Clear Water Holdings was

subsequently substituted as the proper party plaintiff.

       On January 9, 2015, McAfee delivered one computer tower, the main file server

containing the MAS-90 system, to appellant Stacks; however, Stacks claimed that there was no

data on the tower. McAfee claimed that his delivery of the computer tower with the MAS-90

system satisfied the terms of the settlement agreement.

       2Atissue were two computer towers: (1) the main file server, which included the MAS-
90 (accounting) system; and (2) the terminal server.
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       On February 26, 2015, appellants filed a motion for emergency relief to enforce

settlement, and later, on March 26, 2015, filed an amended motion. Although Stacks had

possession of the computer tower containing the MAS-90 system, he requested that McAfee

be ordered to immediately turn over the computer towers containing the hard drives and that

nothing be removed from the hard drives and computer systems, particularly the MAS-90

system. Appellants claimed that the data on the hard drives was extremely important to prepare

their taxes and to seek funding for continuing businesses.

       A hearing was held on appellants’ motion for emergency relief on April 1, 2015. On

April 13, 2015, the circuit court entered an order providing, “Immediately upon the conclusion

of the Receivership, the Receiver shall turn over and surrender the remaining computer towers

and hard drives from the Mountain Pure facility to John Stacks. The Receiver shall not delete

or remove any data, software or anything else from said hard drives.”

       On May 6, 2015, McAfee delivered a second computer tower to appellants—the

terminal server; however, Stacks claimed that data had been deleted from the hard drive. As a

result, on May 15, 2015, appellants filed a petition for contempt against McAfee.

       At the contempt hearing on August 3, 2015, Stacks testified that on May 6, 2015,

McAfee delivered a computer tower; however, data on it had been deleted. Stacks testified that

he hired Tracy Bush, a former employee, and Gordon Bond, a computer expert, who both

confirmed that the data had been deleted. Stacks stated that two weeks prior to the contempt

hearing, on July 21, 2015, McAfee delivered a USB drive containing 300GB of data. Stacks

further testified that he had been trying to obtain the computers and the data thereon since

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September 2014 and that he desperately needed it to file his taxes and to secure loans for his

other businesses. He claimed that the ordeal had caused him considerable trouble and expense.

       Tracy Bush testified that the computers delivered by McAfee in January (the main file

server) and May 2015 (the terminal server) had no data. Gordon Bond, service manager of

The Computer Works, testified that he had been retained by Stacks to examine the terminal

server Stacks received from McAfee on May 6, 2015. Bond’s examination revealed that data

had been deleted from the terminal server on May 5, 2015, the day before it was delivered.

Bond further stated that the 300GB of data on the USB drive that was provided by McAfee

in July 2015 was not data from the terminal server.

       Marvin Bonney worked for a computer-networking company that was hired by Clear

Water Holdings. He testified that in January 2015 he was asked to “decommission” the main

file server and replace it with another server. He said that he was told by McAfee not to

compromise the MAS-90 system or its data but to remove all remaining data—300GB—from

the main file server. Bonney copied the 300GB of data to a USB drive and then deleted that

data from the main file server before it was delivered to Stacks. Bonney testified that he was

later asked by McAfee to remove the terminal server from the network so that it could be

delivered to Stacks. Bonney was told not to delete anything from the terminal server; however,

he did delete user names, files, and data of hackers that he claimed compromised the server.

       McAfee testified that it was his understanding based on the settlement agreement that

he was to deliver a copy of the MAS-90 system and its data from the main file server to

appellants so they could prepare their tax returns. He said that he did that in January 2015.

McAfee stated that he did not believe that he was obligated, pursuant to the settlement

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agreement, to provide appellants any other data from the main file server or the server itself

until the end of the receivership. Nevertheless, he testified that the data deleted from the main

file server was delivered to Stacks in July 2015. McAfee conceded that at the April 2015 hearing

he did not report to the circuit court that he had caused data from the main file server to be

deleted in January 2015. However, he testified that he complied with the April 2015 order

when he delivered the remaining server—the terminal server—to Stacks in May 2015. He

testified that to his knowledge there was no usable data on the terminal server that had been

deleted prior to its delivery.

       Johnny Pabian testified that he is the owner of Pabian Partners, a SAGE 3 software

reseller. He stated that on January 19, 2015, he met with Tracy Bush, who had possession of

a working copy of the MAS-90 system. Pabian testified that he and Bush accessed all the data

available on the MAS-90 system, including income statements, revenue and expense

statements, balance sheets, a general-ledger module, accounts receivable, and spreadsheets.

       From the bench, the circuit court, on multiple occasions, voiced its dissatisfaction with

McAfee’s conduct. The court noted that McAfee failed to disclose at the April hearing that he

had caused data to be deleted from the main file server before it was delivered to Stacks. It

noted that McAfee delivered the terminal server that had data deleted from it as well. The

court stated that McAfee “poured jet fuel on a fire that had been burning for a year with Mr.

Stacks.” While the court stated that it was not concerned that McAfee deleted anything of

“great importance,” the court stated that McAfee added “further suspicion,” “distrust,” “ill-

       3SAGE    was formerly known as MAS-90.

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will,” and “animosity to a bad situation.” Before taking the matter under advisement, the

circuit court stated, “Mr. McAfee, you may not have violated any rules, but you played in a

manner that I’d call chicken manure.” The court said that McAfee’s conduct left a “very bad

taste in my mouth today after having heard all of this. It makes me very unhappy.”

       On January 6, 2016, the circuit court issued a letter ruling:

              I have had an opportunity to fully review and consider your respective letters
       and briefs regarding Mr. Stacks’s contempt motion against Mr. McAfee. While I do not
       necessarily agree with every action taken by Mr. McAfee in his capacity as receiver, I
       do not find that his actions rise to the level of contemptible conduct. Therefore, Mr.
       Stacks’s contempt motion is denied and no damages are awarded. Each party shall bear
       their own fees and costs in connection with this particular motion.

On January 12, 2016, the circuit court entered an order denying the petition for contempt.

This appeal followed.

       We review a circuit court’s refusal to punish an alleged contemnor for an abuse of

discretion. Harral v. McGaha, 2013 Ark. App. 320, at 10, 427 S.W.3d 769, 775 (citing Jones v.

Jones, 320 Ark. 449, 451, 898 S.W.2d 23, 24 (1995)). A circuit court abuses its discretion when

it acts thoughtlessly and without due consideration. Harral, 2013 Ark. App. 320, at 10, 427
S.W.3d at 775–76.

       Appellants argue that the circuit court abused its discretion in denying their petition

for contempt based on the undisputed facts that McAfee

       1. Directed that all of the data from the main file server, except the MAS-90 system
          and its data, be deleted before the main file server was delivered to Stacks in January
          2015.
       2. Did not report to the parties or the court at the April 1, 2015 hearing on appellants’
          motion for emergency relief to enforce the settlement agreement that in January
          2015 he had ordered that all data, other than the MAS-90 system and its data, be
          deleted from the main file server.
       3. Delivered the terminal server to appellants on May 6, 2015, yet some data from that
          server had been deleted the day before.
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Appellants further rely on many of the circuit court’s comments following the contempt

hearing, wherein it voiced its strong dissatisfaction with McAfee’s conduct.

          A contempt proceeding is a cause of action to enforce valid orders of a court. Davenport

v. Uselton, 2013 Ark. App. 344, at 3. Contempt is a matter between the judge and the litigant

and not between the two opposing litigants. Id. In order to establish contempt, there must be

willful disobedience of a valid order of a court. Lone v. Koch, 2015 Ark. App. 373, at 14, 467
S.W.3d 152, 160. For a person to be held in contempt for violating a court order, that order

must be clear and definite as to the duties imposed upon the party, and the directions must be

expressed rather than implied. Jones, 320 Ark. at 451, 898 S.W.2d at 24. A person cannot be

held in contempt for failing to do something which the circuit court did not order. Id., 898

S.W.2d at 24 (citing McCullough v. Lessenberry, 300 Ark. 426, 780 S.W.2d 9 (1989); Waldon v.

Waldon, 34 Ark. App. 118, 806 S.W.2d 387 (1991)).

          The order that appellants contend McAfee violated is the April 13, 2015 order, which

stated:

          Immediately upon the conclusion of the Receivership, the Receiver shall turn over and
          surrender the remaining computer towers and hard drives from the Mountain Pure
          facility to John Stacks. The Receiver shall not delete or remove any data, software or
          anything else from said hard drives.

The language of this order—drafted by appellants’ counsel—is clear and unambiguous.

McAfee was required to turn over the remaining computer, the terminal server, to Stacks after

the receivership had been concluded. The receivership was terminated on September 10, 2015.

Nevertheless, it is undisputed that prior to the conclusion of the receivership McAfee delivered

the terminal server, and he delivered the 300GB of data that had been removed from the main

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file server. Therefore, McAfee not only complied with the specific requirements of the order,

he provided more information than was required and he did so prior to the time period stated

in the order. Accordingly, we hold that the circuit court did not abuse its discretion in finding

that McAfee did not willfully violate the order.

       We acknowledge that McAfee directed that all of the data from the main file server,

except the MAS-90 system and its data, be deleted before the main file server was delivered to

Stacks in January 2015. It is also true that McAfee did not report either to the parties or to the

court at the April 1, 2015 hearing that he had deleted that information from the main file

server. However, those are matters that took place prior to the entry of the April 13, 2015

order; thus, they cannot constitute evidence of a willful violation of that order.

       We further acknowledge that after the April 13, 2015 order had been entered, McAfee

delivered the terminal server to Stacks and that some data from that server had been deleted

from the server the day before delivery. However, the evidence presented supports the circuit

court’s finding that McAfee’s actions in this regard did not rise to the level of contemptible

conduct. Bonney testified that McAfee said not to delete anything from the terminal server

before it was delivered to Stacks. Bonney testified as follows:

       To the best of my memory, when I was asked to make the terminal server ready, I was
       not told to delete anything or just—it was just get it off the network so that we can
       give it to Mr. Stacks. 4 When I got to the server, I determined it had been compromised
       by outside people—hackers, essentially—within the last several days. I dumped all of
       those user profiles from the hackers into the recycle bin and spent a lot of time
       changing passwords and locking the system back down to where that it could be usable
       . . . [I] deleted the data [the hackers] had placed on the server. . . . I . . . didn’t delete
       any—any data, any spreadsheets, things like that.

       4In
         contrast, Bonney testified that McAfee directed him to delete all data, except for
the MAS-90 system and its data, from the main file server.
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The circuit court could conclude from Bonney’s testimony that McAfee did not order Bonney

to delete data from the terminal server. To the contrary, McAfee ordered Bonney to remove

the terminal server from the network so it could be delivered to Stacks. McAfee testified that

to his knowledge there was no usable data on the terminal server that had been deleted prior

to its delivery to Stacks. Under these facts McAfee’s conduct could, at most, rise to the level

of negligence for unknowingly delivering the terminal server that had some data deleted. We

cannot say that such conduct rises to the level of willful contempt.

          A circuit court abuses its discretion when it acts thoughtlessly and without due

consideration. Here, it is clear that at the conclusion of the contempt hearing the circuit court

was displeased with McAfee’s conduct. However, the court took the matter under advisement

and, after careful consideration of the entire record, concluded that McAfee’s actions did not

rise to the level of contemptible conduct. Based on the language of the April 13, 2015 order,

along with the evidence in this case, we cannot say that the court abused its discretion. We

affirm.

          Affirmed.

          KINARD and GRUBER, JJ., agree.

          Gibson Law Office, by: Chuck Gibson, for appellants.

          Quattlebaum, Grooms & Tull PLLC, by: Geoffrey B. Treece, for appellee Michael McAfee.

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