Court Opinion

ID: 1042135
Source: CourtListenerOpinion
Date Created: 2013-09-26 15:12:30.201783+00
Date Added: 2024-06-11T13:07:19.428118
License: Public Domain

Cite as 2013 Ark. 343

                SUPREME COURT OF ARKANSAS
                                      No.   CV-13-255

NEWTON W. DORSETT AND                            Opinion Delivered   September 26, 2013
DIAMOND TRANSPORT &
DRILLING, LLC                                    APPEAL FROM THE LAFAYETTE
                 APPELLANTS                      COUNTY CIRCUIT COURT,
                                                 [NO. CV-09-118-2]
V.
                                                 HONORABLE MICHIAL BRENT
                                                 HALTOM, JUDGE
DONALD BUFFINGTON AND
RICHARD WILLIAMSON                               AFFIRMED IN PART; REVERSED IN
                   APPELLEES                     PART.

                             JIM HANNAH, Chief Justice

       Appellant Newton W. Dorsett appeals an order of the Lafayette County Circuit Court

awarding damages, attorney’s fees, and prejudgment interest to appellee Donald Buffington.

On appeal, Dorsett argues that (1) Buffington’s action against Dorsett was barred by the

doctrine of res judicata, (2) the award of damages is contrary to the law, (3) the award of

prejudgment interest was in error, and (4) Buffington failed to prove conversion as a matter

of law. We affirm in part and reverse in part.

       This appeal concerns disputes among the owners of an oil-drilling rig. Buffington

owns 62.5% of the rig from his original interest and by assignment of the interest of another

owner, Richard Williamson.1 Dorsett, through his company, Diamond Transport & Drilling,

       1
        Williamson’s assignment of his interest to Buffington took place during the pendency
of the disputes; therefore, he was a party to some, but not all, of the litigation.
                                   Cite as 2013 Ark. 343

LLC (“Diamond”), owns the remaining 37.5% of the rig.

       This is the fourth lawsuit among the owners. The first case, filed in the United States

District Court for the Western District of Arkansas, Texarkana Division, was brought by

Buffington and Williamson against Dorsett. The second case, brought by Diamond against

Buffington and Williamson, was filed in the First Judicial District Court of Caddo Parish,

Louisiana. Those two lawsuits were resolved when the parties entered into a Compromise

Agreement in January 2008. The third case, filed on November 13, 2009, in the Lafayette

County Circuit Court, was brought by Buffington against Diamond and Dorsett. In his

complaint, Buffington alleged causes of action for breach of contract and conversion arising

out of the Compromise Agreement.2 The fourth case involved a “Rule To Enforce

Compromise” filed by Diamond against Buffington and Williamson on September 21, 2010,

in Caddo Parish, Louisiana. In that case, Diamond sought an order enforcing the

Compromise Agreement, including a finding that Diamond and Dorsett had fulfilled their

obligations under the agreement.

       Buffington and Williamson filed a motion to stay the Louisiana proceedings, citing the

pendency of the previously filed action in the Lafayette County Circuit Court. The Louisiana

court denied the motion to stay, and on April 28, 2011, entered a judgment (“Louisiana

Judgment”) finding, inter alia, that the Compromise Agreement remains in effect; that no

party has intentionally breached the provisions of the Compromise Agreement; and that

       2
       In an amended complaint, Buffington alleged claims of fraud against Diamond and
Dorsett. The circuit court directed a verdict against Buffington on the fraud claims, and he
does not appeal.

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Diamond complied with the provisions of the Compromise Agreement regarding the

production of an inventory sheet when it furnished an inventory during a March 28, 2011

hearing. In the Louisiana Judgment, the court also ordered Diamond to maintain the rig in

accordance with the provisions of the Compromise Agreement; ordered that all parties

continue to comply with the provisions of the Compromise Agreement; and stated that the

rights of all parties to make a claim, upon sufficient proof, pursuant to the Compromise

Agreement, shall be reserved.

       Dorsett and Diamond filed a motion for summary judgment in the Lafayette County

Circuit Court, contending that, in light of the Louisiana Judgment, the action in the circuit

court was barred by the doctrine of res judicata. The circuit court granted partial summary

judgment for Diamond, finding that res judicata applied to all issues except conversion. The

circuit court denied summary judgment as to Dorsett.

       The case proceeded to trial, and the jury found in favor of Buffington on his breach-

of-contract claim against Dorsett, awarding Buffington $335,000 in damages for lost profits.

The jury also found for Buffington on his conversion claims against Dorsett and Diamond,

but awarded no damages on those claims. The circuit court entered judgment against

Dorsett, awarding Buffington $335,000 in actual damages, attorney’s fees of $99,630, and

prejudgment interest of $100,591.77, for a total judgment of $535,221.77. Dorsett now

brings this appeal.

                                       I. Res Judicata

       Dorsett first contends that the circuit court erred in failing to dismiss the breach-of-

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contract claim against him under the doctrine of res judicata. He claims that Buffington’s

Arkansas action was precluded by the Louisiana Judgment. We conclude that res judicata did

not bar Buffington’s action against Dorsett. Res judicata, whether claim preclusion or issue

preclusion, does not bar a subsequent action where a party was actually prohibited from

asserting a claim in the earlier action or where a court in an earlier action has made an express

reservation of rights as to future litigation. Cater v. Cater, 311 Ark. 627, 632, 846 S.W.2d 173,

176 (1993).

       Here, Buffington was prohibited from asserting a claim for damages in the Louisiana

action because the Rule to Enforce Compromise was brought pursuant to Louisiana’s

summary-proceedings rule, which provides as follows:

       Summary proceedings may be used for trial or disposition of the following matters
       only:

       (1) An incidental question arising in the course of judicial proceedings, including the
       award of and the determination of reasonableness of attorney fees.

       (2) An application for a new trial.

       (3) An issue which may be raised properly by an exception, contradictory motion, or
       rule to show cause.

       (4) An action against the surety on a judicial bond after judgment has been obtained
       against the principal, or against both principal and surety when a summary proceeding
       against the principal is permitted.

       (5) The homologation of a judicial partition, of a tableau of distribution or account
       filed by a legal representative, or of a report submitted by an auditor, accountant, or
       other expert appointed by the court; and an opposition to any of the foregoing, to the
       appointment of a legal representative, or to a petition for authority filed by a legal
       representative.

       (6) A habeas corpus, mandamus, or quo warranto proceeding.

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       (7) The determination of the rank of mortgages, liens, and privileges on property sold
       judicially, and of the order of distribution of the proceeds thereof.

       (8) The original granting of, subsequent change in, or termination of custody,
       visitation, and support for a minor child; support for a spouse; injunctive relief;
       support between ascendants and descendants; use and occupancy of the family home
       or use of community movables or immovables; or use of personal property.

       (9) An action to annul a probated testament under Article 2931.

       (10) An action to enforce the right to a written accounting provided for in R.S.
       9:2776.

       (11) An action for dissolution or specific performance of a compromise entered
       pursuant to Article 1916(B) or by consent judgment.

       (12) All other matters in which the law permits summary proceedings to be used.

La. Code Civ. Proc. art. 2592.

       [W]hen a settlement of litigation is sought to be enforced, a motion to enforce that
       settlement is properly characterized as “an incidental question arising in the course of
       [that] litigation” which may properly be addressed by a summary proceeding (i.e. a
       motion) rather than by a completely new civil action. La. Code Civ. Proc. art.
       2592(1). “Generally, summary proceedings are allowed in instances where the issue
       to be resolved is narrow and/or the need for rapid adjudication is great.” Clay v. Clay,
       389 So. 2d 31, 35 (La. 1979). Motions for enforcement of litigation settlements,
       which settlements must be either in writing or recited on the record in open court,
       La. Civ. Code art. 3071, are apt to present narrow issues. As to the need for rapidity,
       settlements of litigation, which are to be encouraged, are made more likely when
       parties have confidence that they can be enforced, if necessary, by the most
       expeditious procedure the law allows.

Banque De Depots v. Bozel Mineracao E Ferroligas, 728 So. 2d 533, 538 (La. Ct. App. 1999).

       The Supreme Court of Louisiana has held that the summary-proceedings rule “does

not provide for the recovery of damages in summary proceedings,” and “[d]amages, in the

absence of special provisions, may only be recovered via ordinaria.” Major v. Hall, 263 So.

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2d 22, 24 (La. 1972).3 See also Graci v. Gasper John Palazzo, Jr., L.L.C., ___So.3d ___ (La.

Ct. App. 2013) (holding that, because plaintiffs could not argue their claims for damages

during a summary proceeding for eviction, as those damages claims must be brought in an

ordinary proceeding, plaintiffs’ claims for damages and mitigation in subsequent action were

not barred by the doctrine of res judicata); In re Succession of Carroll, 72 So. 3d 384 (La. Ct.

App. 2011) (holding that an action to annul probated testament, which was required to be

brought by a summary proceeding, could not be brought with a suit for damages, which

must be brought by an ordinary proceeding); Horacek v. Watson, 934 So. 2d 908 (La. Ct. App.

2006) (holding that res judicata did not bar lessee’s action for damages arising out of an

eviction because the eviction action was filed in a summary proceeding and the lessee’s

subsequent suit for damages required suit by ordinary process). Here, Buffington could not

seek damages in the summary proceeding; therefore, his action in Arkansas court was not

barred by the Louisiana Judgment.

       Moreover, the Louisiana Judgment contained an express reservation of rights:

       This Court recognizes that legal matters are currently pending before the Court(s) in
       the State of Arkansas which may consist of the same or similar issues involving parties
       subject of these proceedings.

       Although [Diamond] has sold and/or utilized certain component parts of the subject
       drilling rig, [Diamond] has maintained the subject drilling rig in accordance with the
       provisions of the Compromise. Upon sufficient proof, [Buffington and Williamson]
       may have a future claim for reimbursement.

       FURTHER, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that

       3
       In Louisiana trial courts, three different modes of procedure are used in civil matters:
ordinary, summary, and executory. La. Code Civ. Proc. art. 851.

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       [Diamond] and [Buffington and Williamson] shall continue to comply with the
       provisions of the Compromise specifically regarding the sale of the subject drilling rig.

       FURTHER, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that
       the right(s) of all parties to make a claim, upon sufficient proof, pursuant to the
       Compromise shall be reserved.

       It is well settled that an express reservation of rights as to litigation on a certain item

preserves that subject for future adjudication. Miles v. Teague, 251 Ark. 1059, 1061, 476

S.W.2d 245, 247 (1972). In sum, because Buffington was prohibited from bringing a claim

for damages in the Louisiana summary proceeding and because the Louisiana Judgment

contained an express reservation of rights to future litigation, we hold that res judicata did

not bar Buffington’s action in Arkansas court.

                                          II. Damages

       Dorsett next challenges the jury’s award of damages on the contract claim. The jury

found Dorsett liable for breach of contract and awarded Buffington $335,000 in damages.

The instruction submitted to the jury on damages was “the value of any profits lost in

connection with the agreed sale of the drilling rig.” Dorsett moved for directed verdict and

for judgment notwithstanding the verdict to overturn the damages for insufficient proof. The

circuit court denied those motions.

       At trial, Buffington contended that he suffered lost-profit damages because Dorsett

refused to provide the inventory of rig specifications until long after the sales price had been

reduced so that only Diamond would receive proceeds from the sale. The Compromise

Agreement provided that the initial agreed sales price of the rig was $6.5 million, and the

price would be reduced by $325,000 every sixty days until the price reached $5.2 million.

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Subsequent sales-price reductions would take place at ninety-day intervals. Diamond would

receive the first $4.5 million from the sale, regardless of when it was sold, with the remainder

being split evenly between Buffington and Williamson, whose share of the sales proceeds

diminished over time and eventually zeroed out. Buffington provided the following table in

his brief to illustrate the formula for calculating sales proceeds:

 Date of Sale                    Agreed Sales Price               Buffington and
                                                                  Williamson’s share of sales
                                                                  proceeds
 January 10–March 9, 2008        $6.5 million                     $1 million
 March 10–May 8, 2008            $6.175 million                   $837,500
 May 9–July 7, 2008              $5.805 million                   $675,000
 July 8–September 5, 2008        $5.25 million                    $512,000
 September 6–December 4,         $5.2 million                     $350,000
 2008
 December 5, 2008–March          $4.875 million                   $187,500
 5, 2009
 March 6–June 3, 2009            $4.5 million                     $50,000
 June 4, 2009 forward            continued reductions             -0-

       Williamson, who had assigned his interest to Buffington in 2009, was not a plaintiff

in this action, but he testified at trial. Williamson stated that he had more than twenty years

of experience in buying and selling oil equipment and that, based on his experience, the first

thing a prospective buyer requests is the rig inventory. He testified that, without the

inventory, a seller could not expect to get a firm offer from a buyer because “people [are not]

generally interested in spending millions of dollars on a rig without seeing the inventory.”

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According to Williamson, attempting to sell a rig without a rig inventory was “like going

fishing without bait.” Williamson stated that the sale of a rig usually closes within thirty to

forty-five days after the rig inventory and specifications have been provided. Williamson

testified that, in February 2008, A.T. Green, an oil-rig broker, contacted him about the rig

for sale, so Williamson then called Dorsett and asked him where the inventory was and

Dorsett told him that he would try to get it. According to Williamson, Dorsett did not

provide him with the inventory.

         Dorsett testified that Williamson called him in February 2008, but he could not recall

whether Williamson told him he had a buyer interested in purchasing the oil rig for $6.5

million. He also stated that he could not remember whether Williamson asked him for the

inventory.

         Buffington testified at trial that “[y]ou can’t get [a buyer] until you get them an

inventory.” He testified that he could not say “for certain” that, even if they had an

inventory, they would have sold the rig, but “[w]e probably would have had a chance to sell

it, if we had had the inventory like we was supposed to.” Buffington stated that they never

had a firm offer on the oil rig because they did not have the inventory from Dorsett and, as

such “[o]ur hands [were] tied.”

         Dorsett contends that the jury’s award of damages for lost profits must be reversed

because it was based on speculation and conjecture. He maintains that damages for lost profits

are based on the loss of actual or imminent sales and cannot be based on the loss of potential

sales.

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       The parties stipulated that Louisiana law governed their claims for breach of contract

and damages. In Louisiana, lost profits are recoverable in an action for breach of contract if

the amount can be proved with reasonable certainty. Scenicland Constr. Co., LLC v. St. Francis

Med Ctr., Inc., 936 So. 2d 247, 252 (La. Ct. App. 2006). Loss-of-profit awards may not rest

on speculation or conjecture unless direct evidence is not available to establish this element

of damage. Id. Customary or foreseeable profit may be resorted to as a measure of damage

where there is no direct evidence of the exact extent of loss. Id. Broad latitude is given in

proving lost profits because this element of damages is often difficult to prove and

mathematical certainty or precision is not required. Breechen v. News Group, L.P., 105 So. 3d

1011, 1029–30 (La. Ct. App. 2012).

       We agree with Buffington’s assertion that the very nature of Dorsett’s breach—failure

to provide the required inventory sheet—made it impossible for Buffington to secure a firm

offer on the rig while time was of the essence and that if Dorsett’s argument were accepted,

it would be impossible to prove damages caused by his breach under the circumstances. In

addition, we are not persuaded by Dorsett’s contention that Buffington’s claim for damages

fails because lost profits cannot be based on opinion testimony from the plaintiff or other

injured parties. In this case, Buffington’s proof on damages came in large part from

Williamson, who was not a party to the case. Moreover, the absence of independent

corroborative evidence of loss of profits is not always fatal to such a claim; rather, the absence

goes to the weight of evidence. Ed Bulliard Co. v. Foretich-Zimmer Constr. Co., 451 So. 2d 29,

31 (La. Ct. App. 1984). We hold that, in this case, there is substantial evidence to support the

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award of damages.

                                  III. Prejudgment Interest

       The circuit court awarded Buffington $100,591.77 in prejudgment interest. Dorsett

states that, although the circuit court did not provide a calculation for the prejudgment

interest in the judgment, the award equals ten percent per annum on the $335,000 judgment

for a period of three years from November 10, 2008, through November 11, 2011. Dorsett

claims that this award is contrary to law and that Buffington is not entitled to prejudgment

interest because his damages were not definitely ascertainable as to date or amount of loss.

       Prejudgment interest is compensation for recoverable damages wrongfully withheld

from the time of the loss until judgment. Ozarks Unlimited Resources Co-op., Inc. v. Daniels,

333 Ark. 214, 224, 969 S.W.2d 169, 174 (1998). Prejudgment interest is allowable if the

amount of damages is definitely ascertainable by mathematical computation, or if the

evidence furnishes data that make it possible to compute the amount without reliance on

opinion or discretion. Woodline Motor Freight, Inc. v. Troutman Oil Co., 327 Ark. 448, 453,

938 S.W.2d 565, 568 (1997). If the damages are not by their nature capable of exact

determination, both in time and amount, prejudgment interest is not an item of recovery.

Mitcham v. First State Bank of Crossett, 333 Ark. 598, 601–02, 970 S.W.2d 267, 269 (1998);

Kutait v. O’Roark, 305 Ark. 538, 540–41, 809 S.W.2d 371, 373 (1991) (noting that our cases

have stressed the requirement of certainty as to time and amount and that vague assertions

fail to comply with that requirement).

       Based on the record before us, we conclude that the circuit court erred in awarding

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prejudgment interest. The jury awarded damages based on Buffington’s lost profits from the

failure to sell the rig under the Compromise Agreement, which expressly provided a formula

for Buffington’s compensation upon a sale. The formula depended on a “step down” scale

based on the actual sales price of the rig and the date of sale. If the rig was sold between

September 6 and December 4, 2008, Buffington was entitled to $350,000. If the rig was sold

between December 5, 2008, and March 5, 2009, Buffington was entitled to $187,500. From

the evidence, the jury determined that Dorsett had breached the contract, and a method for

determination of Buffington’s damages existed, per the parties’ “step down” formula. Under

this formula, there is no calculation that produces $335,000—the amount of damages

awarded by the jury—and the exact time of Buffington’s loss was not determined by the jury,

nor was the jury asked to make this determination. Because the damages were not by their

nature capable of exact determination, both in time and amount, the circuit court erred in

awarding prejudgment interest.

                                      IV. Conversion

       Finally, Dorsett contends that this court must reverse the conversion judgment and

dismiss the conversion claim against him because Buffington failed to prove an essential

element of conversion—damages. Although the jury returned a verdict in favor of Buffington

on his conversion claim, it awarded no damages for the claim.

       Per the parties’ agreement, the circuit court instructed the jury on Buffington’s

conversion claim, pursuant to Louisiana law:

       An action for conversion is grounded on the unlawful interference with the
       ownership or possession of a movable. A conversion is committed when any of the

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       following occurs: (1) possession is acquired in an unauthorized manner, (2) the
       movable is removed from one place to another with the intent to exercise control
       over it, (3) possession of the movable is transferred without authority, (4) possession
       is withheld from the owner or possessor, (5)the movable is altered or destroyed, (6)
       the movable is used improperly, or (7) ownership is asserted over the movable.4

       A review of the jury instruction reveals that the establishment of damages was not an

essential element to a conversion claim. That Buffington failed to actually receive damages

is immaterial. We affirm the judgment for conversion.

       Affirmed in part; reversed in part.

       Ned A Stewart, Jr. and Williams & Anderson PLC, by: Jess Askew III, Andrew King, and

Jamie K. Fugitt, for appellant.

       Mercy Carter Tidwell, L.L.P., by: W. David Carter, for appellee.

       4
       As authority for the elements of conversion, the jury instruction cited the Louisiana
Supreme Court’s decision in Dual Drilling Co. v. Mills Equip. Inv., Inc., 721 So. 2d 853 (La.
1998).

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