Court Opinion

ID: 3194227
Source: CourtListenerOpinion
Date Created: 2016-04-14 17:03:41.522339+00
Date Added: 2024-06-11T12:25:04.379888
License: Public Domain

Cite as 2016 Ark. 161

                SUPREME COURT OF ARKANSAS
                                        No.   CV-15-362

                                                   Opinion Delivered   April 14, 2016

RICHARD H. ASHLEY AND J.D.                         APPEAL FROM THE PULASKI
ASHLEY, JR., AS PERSONAL                           COUNTY CIRCUIT COURT,
REPRESENTATIVES OF THE ESTATE                      SIXTEENTH DIVISION
OF J.D. ASHLEY, SR.; CANDACE                       [NO. 60PR-10-383]
BAUGHMAN; AND THE ESTATE OF
CHAROLETTE ASHLEY, DECEASED                        HONORABLE MORGAN E. WELCH,
    APPELLANTS/CROSS-APPELLEES                     JUDGE

V.                                                 MOTION TO DISMISS DENIED;
                                                   MOTION FOR SANCTIONS
                                                   DENIED; AFFIRMED ON DIRECT
TODD H. ASHLEY                                     APPEAL; AFFIRMED ON CROSS-
    APPELLEE/CROSS-APPELLANT                       APPEAL.

                       JOSEPHINE LINKER HART, Associate Justice

       Richard H. Ashley and J.D. Ashley, Jr., as the personal representatives of the estate of

J.D. Ashley, Sr.; Candace Baughman; and the estate of Charolette Ashley, deceased (the

Ashleys) appeal from the circuit court’s nunc pro tunc order addressing deficiencies in an earlier

order it had issued granting an extension of time for lodging the record in Todd H. Ashley’s

appeal. On cross-appeal, Todd Ashley appeals from the circuit court’s probate order approving

a settlement agreement among the Ashleys. Also pending before us is the Ashleys’ motion to

dismiss Todd’s appeal, in which they argue that Todd failed to timely lodge the record for his

appeal. The Ashleys have also asked for sanctions against Todd Ashley for filing a frivolous

appeal. On direct appeal, we affirm the circuit court’s nunc pro tunc order. On cross-appeal,
                                    Cite as 2016 Ark. 161

we affirm the circuit court’s order approving the settlement agreement. Further, we deny the

Ashleys’ motion to dismiss and their motion for sanctions.

       On direct appeal, the Ashleys challenge the circuit court’s nunc pro tunc order in which

the court stated that it was clarifying an earlier order that had granted an extension of time for

lodging the record in the appeal brought by Todd Ashley. By way of background, on October

3, 2014, Todd Ashley filed a notice of appeal from the probate order approving the settlement

agreement. On December 8, 2014, the court reporter averred that an extension of time was

needed to prepare the record. On December 22, 2014, Todd Ashley filed a motion requesting

that the court grant the additional time needed to prepare the record. On January 2, 2015, the

circuit court granted the motion and extended the time to lodge the record to April 10, 2015.

       On February 2, 2015, Todd Ashley filed a motion in which he noted that the order

extending the time to lodge the record did not include the findings required by Rule 5(b) of

the Arkansas Rules of Appellate Procedure–Civil. He asked the court to enter a nunc pro tunc

order clarifying its findings of fact relating to the order granting the extension. The Ashleys

objected, stating that the requirements of Rule 5(b) were not present when the January 2, 2015

order was entered. Particularly, they asserted that they had not been given an opportunity to

be heard on the motion for an extension of time. The Ashleys noted that Rule 6 of the

Arkansas Rules of Civil Procedure sets out time in which to respond to a motion. They

asserted that according to the rule, they had until after January 2, 2015,1 in which to respond

       1
       In their argument to the circuit court and in their initial brief, the Ashleys stated that
they had until January 13, 2015, but in their reply brief, they state that they had until January
6, 2015.

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to Todd Ashley’s motion to extend the time for lodging the record but that the court instead

granted the order on that day. Following a hearing, the circuit court entered the nunc pro tunc

order on March 17, 2015. In the order, the court stated that the requirements of Rule 5(b)

were in existence at the time the court’s January 2, 2015 order was entered. On appeal, the

Ashleys argue that the circuit court erred in entering the March 17, 2015 nunc pro tunc order

because Rule 5(b) had not been complied with at the time the original motion for extension

of time was granted.

       The record on appeal is due to be filed in the appellate court within ninety days from

the filing of the first notice of appeal. Ark. R. App. P.–Civ. (5)(a). If an extension of time is

needed, Rule 5(b) provides as follows:

       (1) If any party has designated stenographically reported material for inclusion in the
       record on appeal, the circuit court, by order entered before expiration of the period
       prescribed by subdivision (a) of this rule or a prior extension order, may extend the
       time for filing the record only if it makes the following findings:
               (A) The appellant has filed a motion explaining the reasons for the requested
               extension and served the motion on all counsel of record;
               (B) The time to file the record on appeal has not yet expired;
               (C) All parties have had the opportunity to be heard on the motion, either at a
               hearing or by responding by writing;
               (D) The appellant, in compliance with [Arkansas Rules of Appellate
               Procedure–Civil] Rule 6(b), has timely ordered the stenographically reported
               material in the record on appeal or for the clerk to compile the record; and
               (E) An extension of time is necessary for the court reporter to include the
               stenographically reported material in the record on appeal or for the circuit clerk
               to compile the record.

Historically, when an order fails to comply with Rule 5(b), we remand the matter to the

circuit court for compliance with the rule. See, e.g., Baxter v. Wing, 2016 Ark. 42, at 2 (per

curiam). On a remand for compliance with Rule 5(b)(1), the circuit court determines whether

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the rule was complied with at the time the original motion for extension of time was filed and

granted. Id. at 3. In those cases, we instruct the circuit court not to permit the parties the

opportunity to correct any deficiencies, but instead to make the findings required by the rule

as if they were being made at the time of the original motion. Id.

       First, the Ashleys assert that they were entitled to a hearing before the January 2, 2015

order was entered. The language of the rule, however, provides that the circuit court must find

that the parties “had the opportunity to be heard on the motion, either at a hearing or by

responding by writing.” Ark. R. App. P.–Civ. 5(b)(1)(C). Thus, a circuit court is not required

to hold a hearing before entering an extension order if there is an opportunity to respond in

writing.

       Second, the Ashleys assert that even if a hearing was not required, Rule 5(b) had not

been complied with at the time the original motion for extension of time was granted on

January 2, 2015, because they did not have opportunity to be heard in writing on the original

motion for extension of time. They note that the extension motion was filed on December 22,

2014, and that the extension order was entered on January 2, 2015. They assert that the order

was entered before the expiration of the time period allowed to respond to motions under

Rule 6(c) of the Arkansas Rules of Civil Procedure. In calculating their time to respond, the

Ashleys state that Rule 6(a) provides that when the period of time prescribed or allowed is less

than fourteen days, intermediate Saturdays, Sundays, or legal holidays are excluded from the

computation, and they note that Christmas Eve, Christmas Day and New Year’s Day are legal

holidays. They also assert that, pursuant to Rule 6(d), an additional three days should be added

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to the computation because Todd served the motion by electronic transmission. Thus, the

Ashleys argue that the deadline to respond to the extension motion was after January 2, 2015,

and accordingly, they did not have an opportunity to be heard in writing on the original

motion for extension of time to file the record as required by Rule 5(b)(1)(B).

       We note, however, that the rule does not provide an express time period in which a

party must have an opportunity to be heard. Rather, the rule provides that the motion and

order must be filed before the time has expired for lodging the record on appeal. Ark. R. App.

P.–Civ. 5(b)(1)(B). Thus, we do not read into Rule 5(b) the time limitations imposed by the

Arkansas Rules of Civil Procedure. Thus, the Ashleys had an opportunity to be heard, and they

did not demonstrate how they might have been better served if their opportunity in which to

be heard was longer.

       Third, the Ashleys argue that the circuit court improperly corrected deficiencies in the

January 2, 2015 order by making the findings required by Rule 5(b), contending again that

they were not given an opportunity to be heard. In Harrison v. State, 370 Ark. 431, 260
S.W.3d 286 (2007) (per curiam), the record did not reflect compliance with the requirement

of Rule 5(b)(1)(B) of filing the extension motion before the time to file the record had

expired. We noted, however, that if he had complied with that requirement and the extension

order failed to state a finding to that effect, he could have sought a corrected order showing

that he had complied with the rule and asked the court to enter the amended order nunc pro

tunc. Here, Todd Ashley followed a similar procedure, and the circuit court found that the

requirements of the rule were met at the time the original motion for extension was granted.

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We hold that the circuit court’s order complied with Rule 5(b).

       In the Ashleys’ motion to dismiss, they argue that the record was not timely lodged

because the record was supplemented after the due date for the filing of the record. We note

that Todd Ashley lodged the record for his appeal on April 8, 2015. On August 31, 2015, the

day his brief as cross-appellant was due in the Arkansas Court of Appeals, he filed a petition

for writ of certiorari to complete the record because the record did not contain the hearings

held on June 16, 2014, and July 18, 2014, both of which were pertinent to his cross-appeal.

In response, the Ashleys contended that Todd Ashley’s appeal should be dismissed because he

did not lodge the entire record within the seven-month period allowed by Arkansas Rule of

Appellate Procedure–Civil 5(b)(2), which provides that in “no event shall the time be

extended more than seven (7) months from the date of the entry of the judgment or order.”

The court of appeals granted the motion to supplement the record, rendering the petition for

writ of certiorari moot, and passed the motion to dismiss until the case was submitted. That

motion is now before us.

       Rule 6(e) of the Arkansas Rules of Appellate Procedure–Civil specifically states that “[i]f

anything material to either party is omitted from the record by error or accident or is misstated

therein, the parties by stipulation, or the circuit court before the record is transmitted to the

appellate court, or the appellate court on motion made no later than 30 days after the appellee’s

brief is filed in the appellate court, or on its own initiative, may direct that the omission or

misstatement be corrected, and if necessary, that a supplemental record be certified and

transmitted.” Thus, under Rule 6(e), Todd Ashley could properly correct the omission from

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the record. Accordingly, we deny the motion to dismiss.

        On cross-appeal, Todd Ashley appeals from the circuit court’s probate order that

approved a settlement agreement, arguing that the circuit court erred in finding that the

agreement was in the best interest of the Estate of J.D. Ashley, Sr. At the time of his death, J.D.

Ashley, Sr., was survived by his wife, Charolette Ashley; his four children by a previous

marriage, Richard Ashley, J.D. Ashley, Jr., Melody Ashley, and Todd Ashley; and his

stepdaughter, Candace Baughman, whom he included in his estate planning. His estate plan

included a Last Will and Testament; the J.D. Ashley, Sr., Family Limited Partnership; and the

J.D. Ashley, Sr., Revocable Trust. The will contained a pourover provision, whereby the

residuary of his estate was to pass to the trust. At his death, amendments to the trust and the

partnership provided that Charolette Ashley was to receive $5 million of the assets of the

partnership, which the partnership was to purchase from her at that price, secured by a lien on

the transferred assets, and payable to her over fifteen years with interest at six percent. The

balance of the trust was to be divided and distributed in equal shares to the four children and

Candace Baughman. Both the will and the trust contained a no-contest clause by which a

beneficiary would forfeit his or her interests under the instruments by challenging their

validity.2

        2
         In addition to the aforementioned estate-planning devices, J.D. Ashley, Sr., provided
for his heirs in other ways. He owned a forty percent interest in an entity called the
Conservative Development Corporation, which owned five shopping centers. In 1993, he
transferred ten percent of his stock to Richard Ashley, and with the remainder he created four
irrevocable trusts for the benefit of Charolette Ashley, Candace Baughman, Melody Ashley,
and Todd Ashley. He also established a trust composed of life-insurance benefits and naming
Charolette Ashley as the beneficiary.

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       The circuit court admitted the will to probate, and as nominated in the will, the court

appointed Richard Ashley and J.D. Ashley, Jr., as the personal representatives of the estate.

Charolette Ashley filed an election to take against the will and objected to the inventory of the

estate, asserting that her husband’s interest in the partnership was erroneously omitted from the

inventory because he had not transferred his partnership interest to the trust. Charolette Ashley

also made claims against the estate as trustee on behalf of a trust for her benefit and a trust for

Candace Baughman. A claim was also made by a company regarding a personal guaranty made

by J.D. Ashley, Sr., on a loan to Candace Baughman and her husband. After litigation, the

Arkansas Court of Appeals affirmed the circuit court’s finding that her husband’s interest in the

partnership had been transferred to the trust prior to his death and was properly omitted from

the inventory of the estate. Ashley v. Ashley, 2012 Ark. App. 236, 405 S.W.3d 419.

       Charolette Ashley died on April 26, 2013, and Candace Baughman was appointed as

the personal representative of her estate, and the estate was substituted as the proper party on

Charolotte Ashley’s behalf. The Ashleys filed a joint petition with the circuit court to approve

a settlement agreement. To summarize, the settlement called for the purchase of Charolette

Ashley’s interest in the partnership for $5 million in cash; settled a claim by a trust for

Charolette Ashley by having a limited liability company pay her $319,332,49; settled a claim

by having the estate pay $140,983.21 to Charolette Ashley’s trust; settled a claim by a trust for

Candace Baughman by having the partnership pay her $137,336.99; settled a claim by the trust

for Candace Baughman by having the estate pay her $59,460.75, which had been reduced by

an offset for the payment of the personal guaranty; settled claims by a life-insurance trust of

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J.D. Ashley, Sr., against the estate of Charolette Ashley by having her estate pay $120,000;

settled issues relating to the issuance of fiduciary deeds in the estate, deeds from Charolette

Ashley’s estate to the partnership, and assignment of stock from the estate to the partnership;

settled a claim by the estate of Charolette Ashley relating to the ownership of vehicles. In

addition, the agreement provided for a general mutual release.

       Prior to a hearing on the approval of the settlement agreement, Todd Ashley raised

objections to the agreement. At a hearing on the agreement, the circuit court heard the

testimony of Richard Ashley. Following the hearing, the circuit court approved the agreement,

finding that the agreement was in the best interest of the estate. Todd Ashley appealed.

       This court reviews probate proceedings de novo on the record, but we will not reverse

the decision of the circuit court unless it is clearly erroneous. Stautzenberger v. Stautzenberger,

2013 Ark. 148, at 6, 427 S.W.3d 17, 21 This court will not overturn the circuit court’s factual

determinations unless they are clearly erroneous. Id., 427 S.W.3d at 21. However, no

deference is given to the circuit court on matters of law. Id., 427 S.W.3d at 21.

       Arkansas Code Annotated section 28-50-112 (Repl. 2012) provides that “[w]hen a

claim against the estate has been filed or suit thereon is pending, if it appears to be in the best

interest of the estate and subject to the court’s authorization or approval, the creditor and

personal representative may compromise the claim whether due or not due, absolute or

contingent, liquidated or unliquidated.” On appeal, Todd Ashley first argues that the circuit

court’s authority under the statute is limited to the approval of a settlement of claims made by

a creditor against the estate. He contends that the settlement agreement embraces claims and

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parties unrelated to the estate.

       To the extent that the agreement settles matters unrelated to the probate of the estate

of J.D. Ashley, Sr., those claims would not have required the circuit court’s approval. Thus,

settlement of claims beyond the scope of probate would have no bearing on whether the

settlement of probate-related claims was in the best interest of the estate. On many occasions,

this court has stated that an appellant must demonstrate prejudice or this court will not reverse.

See, e.g., Viravonga v. Samakitham, 372 Ark. 562, 571, 279 S.W.3d 44, 51 (2008). Todd Ashley

did not present any evidence at the hearing, and he has not shown how he was prejudiced by

any settlement of claims outside the scope of the probate of the estate of J.D. Ashley, Sr. While

he further asserts that the settlement agreement may preclude him from pursuing his own

claims against Richard Ashley and J.D. Ashley, Jr., for breach of fiduciary duty, we note that

the agreement does not contain any language concerning any potential claims by Todd Ashley

against Richard Ashley and J.D. Ashley, Jr., nor do we address them here.

       Second, Todd Ashley asserts that certain findings made by the circuit court in its order

approving the agreement are clearly erroneous. Particularly, he challenges the circuit court’s

statement that Todd Ashley was made aware of the settlement agreement at an advisory board

meeting of the partnership and stated that he did not anticipate objecting to the settlement

agreement. He further challenges the circuit court’s statement that he did not take any

affirmative action relating to the settlement agreement. The findings he challenges, however,

were not relevant to the question of whether the settlement agreement was in the best interest

of the estate. Rather, the court’s findings focused on Todd Ashley’s knowledge of the

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agreement. Todd Ashley did not present evidence at the hearing, and the burden was on him

to demonstrate prejudice. Id., 279 S.W.3d at 51. He does not identify in his brief how he

suffered prejudice from these findings. Because the findings he complains of were not material

to the circuit court’s decision on whether the agreement was in the best interest of the estate,

he cannot demonstrate prejudice. Consequently, we affirm on this point.

       Third, Todd argues that the circuit court erred in approving the payment of $5 million

to Charolette Ashley’s estate. He contends that Charolette Ashley may have forfeited her right

to recover this amount based on the no-contest clauses contained in the will and the trust. He

also asserts that, because the estate contained no assets and was insolvent, her election to assert

her dower interest in the estate entitled her to nothing. He reasons that she would not have

prevailed on any of her arguments and that it was improper for her to recover the $5 million.

       The question in this case is whether, as required by section 28-50-112, the compromise

was in the best interest of the estate. We note that had litigation ensued, the question of

whether a spouse’s election to take against the will triggers a no-contest clause would have

been a question of first impression in this state. Also, the record indicates that the parties

questioned whether, for purposes of calculating an elective share, the estate could be

augmented with the assets of the trust; this, too, would have been a matter of first impression

in this state had litigation been pursued. On this record, Todd Ashley’s argument embarks on

speculation regarding how this court would rule and claims that the settlement agreement was

therefore not in the best interest of the estate. This court has not ruled on these issues, and we

need not address these issues here. We are mindful that in its order, the circuit court addressed

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the merits of the issue relating to the no-contest clause. Even so, because the only issue before

us is whether the circuit court properly concluded that the settlement agreement was in the

best interest of the estate, we need only observe that those issues have not been decided by this

court, and such uncertainty supports the circuit court’s finding that the settlement agreement

was in the best interest of the estate. As for his claim that the estate was insolvent, we note that

the trust documents provided for the trust to pay the costs of administration and claims against

the estate. We further note that Richard Ashley testified that he was carrying out the wishes

of his father and that paying the amount in a lump sum was more advantageous, rather than

paying it out over fifteen years at six percent interest, because he was able to obtain a lower

interest rate. Based on this record, we conclude that the circuit court did not clearly err in

concluding that the settlement of this claim was in the best interest of the estate.

       The Ashleys have also filed with this court a motion for sanctions against Todd Ashley

for filing a frivolous appeal for improper purposes. Todd Ashley, however, could properly

appeal whether the settlement agreement was in the best interest of the estate. We deny their

motion.

       Motion to dismiss denied; motion for sanctions denied; affirmed on direct appeal;

affirmed on cross-appeal.

       Special Justice ROBERT HUDGINS joins in this opinion.

       GOODSON, J., not participating.

       Chisenhall, Nestrud & Julian, P.A., by: Jim L. Julian; and The Law Office of Bruce H.

Phillips, PLLC, by: Bruce H. Phillips, for appellants.

       Todd H. Ashley, pro se appellee.

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