Hartness v. Nuckles , 475 S.W.3d 558 ( 2015 )

Cite as 2015 Ark. 444
SUPREME COURT OF ARKANSAS
No. CV-14-869
Opinion Delivered December 3, 2015
ASHLEY HARTNESS
APPELLANT APPEAL FROM THE SEBASTIAN
COUNTY CIRCUIT COURT
V. [NO. CV-2012-111]
RICK NUCKLES HONORABLE STEPHEN TABOR,
d/b/a RESTORATION PLUS JUDGE
APPELLEE AFFIRMED.
RHONDA K. WOOD, Associate Justice
This appeal arises from a dispute involving the restoration of a 1968 Pontiac Firebird.
The car owner sued the body shop that did the repairs for, among other things, breach of
express warranty, breach of implied warranty, money had and received, and conversion.
The circuit court ruled that the breach of warranty claims failed for lack of notice and ruled
that the other claims failed for lack of proof. We affirm the circuit court’s judgment.
Facts and Procedural History
Ashley Hartness wanted to restore his 1968 Pontiac Firebird. He found a body shop
to do the work: Restoration Plus, which was owned by Rick Nuckles. Hartness and
Nuckles entered into an oral arrangement. Nuckles agreed to give the car a new paint job,
perform body work, and install a new electrical system. Hartness would purchase and
provide the new parts as needed, while Nuckles and his employees would provide the
services. Hartness claimed that Nuckles promised to do “Barrett-Jackson” or show-car
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quality work. At trial, Nuckles adamantly denied having made any such representation.
Even so, it is undisputed that the car entered the Restoration Plus body shop in May 2007.
Over the course of the next two and a half years, Nuckles submitted over nineteen
invoices to Hartness, which he paid in cash. Hartness also took the car for a number of test
drives and gave Nuckles feedback on the progress and quality of the work. Hartness picked
up his car in December 2009, believing the restoration was complete. He returned the car
on one more occasion to Nuckles for further repairs. After these final repairs, Hartness
picked up and kept the vehicle. Despite deep dissatisfaction with the restoration, he did not
notify Nuckles of any further concerns with the quality of the work until filing a lawsuit
against him in September 2012.
Hartness alleged a number of causes of action in his complaint: breach of express
warranty, breach of implied warranty, money had and received, conversion, fraud, deceit,
and false representation. A bench trial was held. Hartness introduced pictures of his car that
he claimed were taken shortly after the car left the body shop. A number of defects were
apparent from the pictures, including chipped paint, misaligned doors, and overall shoddy
workmanship. Nuckles testified, however, that there was no way the car looked as
represented in the pictures when it left the body shop.
The circuit court did not resolve the factual dispute regarding the existence of an
express or implied warranty. Instead, the court found that Hartness failed to comply with
the notice requirement of the Uniform Commercial Code (UCC), which requires a party
suing on a warranty to notify the breaching party before filing suit. Ark. Code Ann. § 4-2-
607(3)(a) (Repl. 2001). The court also rejected the remaining claims. Hartness appeals,
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arguing that the UCC-notice requirement applies only to warranties for goods; because his
warranty was for services, the notice requirement shouldn’t apply. Hartness also argues that
the court should have awarded him damages on his money-had-and-received and
conversion claims. We accepted certification from our court of appeals because the issue
regarding notice is one of first impression. Ark. Sup. Ct. R. 1-2(b)(1) (2015).
Express and Implied Warranties
We first address whether giving notice is a prerequisite to filing a breach-of-warranty
lawsuit in non-UCC cases. As an initial matter, this court has never explicitly ruled whether
express and implied warranties apply in a contract for services. It’s true that our commercial
code includes express and implied warranties for the sale of goods. 1 But outside the new-
home construction context, we have never extended implied warranties to contracts that
are exclusively for services.2 We have recognized an express warranty in a services case, but
in that particular case, such a warranty was specifically authorized by statute.3
The circuit court never ruled whether express and implied warranties applied to a
contract to restore an automobile. The court overlooked this preliminary issue and instead
addressed whether the notice requirement was satisfied. Since the court did not directly rule
1
Ark. Code Ann. § 4-2-313 (express warranties); Ark. Code Ann. § 4-2-314
(implied warranty of merchantability); Ark. Code Ann. § 4-2-315 (implied warranty of
fitness for a particular purpose).
2
See, e.g., Wawak v. Stewart, 247 Ark. 1093, 1100, 449 S.W.2d 922, 926 (1970)
(holding that “an implied warranty may be recognized in the sale of a new house by a seller
who was also the builder”).
3
See Haase v. Starnes, 323 Ark. 263, 915 S.W.2d 675 (1996).
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on the existence of the warranties, nor was it addressed on appeal, the issue is not before us.
See Gwin v. Daniels, 357 Ark. 623, 184 S.W.3d 28 (2004) Furthermore, this is a court of
appellate jurisdiction, and we do not decide issues not directly or indirectly presented in or
decided by the trial court. Id. In any event, it would be premature for this court to decide
whether express and implied warranties attach as a matter of law in a contract for services.
The parties never briefed the issue, which has far-reaching implications. Commentators and
other jurisdictions are split on whether warranties should apply when the contract is for
services rather than goods.4 Thus, our discussion below is limited to whether there is a notice
requirement if such warranties exist.5
Hartness’s argument regarding notice has two components. First, he argues that UCC
notice was not required when the contract was for services. Second, he argues that even if
notice was required, his notice was sufficient. The first issue is one of law, which we review
de novo. Hobbs v. Jones, 2012 Ark. 293, 412 S.W.3d 844. The second issue is one of fact,
which we review for clear error. Ark. R. Civ. P. 52(a). Again, taking no position on
4
18 Richard A. Lord, Willison on Contracts § 52:45, 258–59 (4th ed. 2001) (“There
is a division of opinion whether the express warranty concepts in the Code are also
applicable or may be extended to service agreements.”). Compare Pepsi Cola Bottling Co. of
Anchorage v. Superior Burner Service Co., 427 P.2d 822 (Alaska 1967) (holding that a claim for
breach of an implied warranty did not lie in a contract for personal services) with Ellen
Taylor, Applicability of Strict Liability Warranty Theories to Service Transactions, 47 S.C. L. Rev.
231 (Winter 1996) (arguing that implied warranties should attach in a contract for services).
5
Contrary to the dissent’s point of view, this opinion is not advisory. Because the
circuit court’s only ruling on the breach of warranty claims was that the claims failed for
lack of notice, our jurisdiction is limited to this issue. Further, the answer to this question is
neither moot nor academic because our decision will have a practical effect on the parties’
legal rights: whether notice is required will control Hartness’s ability to sue Nuckles for
breach of warranty.
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whether breach of warranty claims should even exist for a contract that is exclusively for
services, we hold that if such warranties do exist, the UCC notice requirements apply.
Under Arkansas’s Uniform Commercial Code, a buyer of goods “must within a
reasonable time after he discovers or should have discovered any breach notify the seller of
the breach or be barred from any remedy.” Ark. Code Ann. § 4-2-607(3)(a). “[T]he giving
of reasonable notice is a condition precedent to recovery under the provisions of the
commercial code and . . . the giving of notice must be alleged in the complaint in order to
state a cause of action.” Williams v. Mozark Fire Extinguisher Co., 318 Ark. 792, 797, 888
S.W.2d 303, 305 (1994). One purpose of the notice requirement is to give the seller an
opportunity to reduce his damages by curing the defect. Id. Whether notice under this
subsection is sufficient and given in a reasonable amount of time is generally a question of
fact. 18 Richard A. Lord, Williston on Contracts § 52:44, 251 (4th ed. 2001); see also AMI—
Civil 2507 (2015) (including as an element of a breach of warranty cause of action whether
notice was given in a reasonable time).
This court has often looked to the UCC for guidance on contract principles by
analogy. See Graham Const. Co. v. Earl, 362 Ark. 220, 208 S.W.3d 106 (2005). There, we
held that an express warranty in a contract for services (namely, construction of a home)
takes precedence over implied warranties on the same subject. In reaching this conclusion,
we looked to the UCC, stating that “[a]lthough the statute is inapplicable to the present
case because [the statute] involves the sale of goods . . . the principle should nevertheless
apply.” Id. at 229, 208 S.W.3d at 111. We did the same thing in Haase v. Starnes, noting
that the UCC “provides guidance on contract principles by analogy.” 323 Ark. 263, 272,
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915 S.W.2d 675, 680 (1996). Our court of appeals also has relied on the UCC to impose a
notice requirement in breach-of-warranty cases involving the construction of a new home.
See Cinnamon Valley Resort v. EMAC Enters., Inc., 89 Ark. App. 236, 202 S.W.3d 1 (2005).
Therefore, we hold that if an express warranty or an implied warranty is created in a contract
for services, the UCC notice requirement from Ark. Code Ann. § 4-2-607 applies. That is,
before filing a lawsuit, a person alleging breach of warranty must give the breaching party
reasonable notice or be barred from any remedy. This holding vindicates the purpose of the
notice requirement, which is to allow the opposing party an opportunity to reduce his
damages by curing the defect. It is also in accord with our state’s well-established practice
of reasoning to the UCC by analogy in contracts for services.
Turning to the facts of this case, we hold that the circuit court’s ruling that Hartness
failed to give notice of the breach was not clearly erroneous. The testimony at trial indicated
that the first notice Nuckles received about his alleged breach of a warranty was in the
complaint, which was filed thirty-three months after Hartness picked up the vehicle from
the body shop and after he had driven the car for almost 1000 miles. This was an
unreasonable amount of time. See Mozark Fire, 318 Ark. at 797, 888 S.W.2d at 306 (holding
that a second amended complaint, in itself, was insufficient statutory notice for a breach-of-
implied warranty claim). Reasonable notice by Hartness would have informed Nuckles
exactly how the vehicle failed to live up to Hartness’s expectations. Notice also would have
given Nuckles an opportunity to cure any defects and would have allowed him to mitigate
any damages. It also would have given both parties an opportunity to document the
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condition of the car once the restoration was complete. We therefore affirm the circuit
court’s ruling that Hartness’s claims for breach of warranty failed for lack of notice. 6
Money Had and Received (Unjust Enrichment)
Hartness’s next argument is that the court should have granted him relief on his claim
for money had and received. An action for money had and received provided the foundation
for the doctrine of unjust enrichment, see Frigillana v. Frigillana, 266 Ark. 296, 307, 584
S.W.2d 30, 35 (1979), and the two actions are essentially the same. See First Nat’l Bank of
Dewitt v. Cruthis, 360 Ark. 528, 203 S.W.3d 88 (2005); Campbell v. Asbury Auto., Inc., 2011
Ark. 157, 21, 381 S.W.3d 21, 36 (defining an action based on unjust enrichment identically
to one for money had and received). Under the principle of unjust enrichment, a “person
should not be permitted unjustly to enrich himself at the expense of another, but should be
required to make restitution of or for property or benefits received, retained, or
appropriated.” Servewell Plumbing, LLC v. Summit Contractors, Inc., 362 Ark. 598, 612, 210
S.W.3d 101, 112 (2005).
Here, the circuit court denied Hartness’s claim for unjust enrichment because he
presented no evidence regarding his “damages,” ruling that any award would require
speculation. Hartness argues on appeal that this ruling was made in error, highlighting
multiple pieces of evidence from trial that support his claim for “damages.” For example,
Hartness argues that he submitted evidence regarding the amount it would cost to repair the
6
Hartness also argues that the issue of notice was tried by consent. However, the
record reflects that Nuckles raised lack of notice in his motion to dismiss, his motion for a
directed verdict, and in his posttrial brief.
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vehicle to its bargained-for condition. In short, Hartness argues that he was entitled to
recover based on unjust enrichment because he proved expectation damages.
However, a party is not entitled to expectation damages for unjust enrichment;
instead, he is entitled to restitution. “[S]ometimes courts use the term damages when they
mean restitution . . . [b]ut . . . the damages remedy and the restitution remedies are always
conceptually distinct.” 1 Dan B. Dobbs, Law of Remedies: Damages-Equity-Restitution §
4.2(3), 581 (2d ed. 1993). “To measure damages, the courts look at the plaintiff’s loss or
injury; to measure restitution, the courts look at the defendant’s gain or benefit.” Id. A
claimant seeking restitution for unjust enrichment can generally recover the value of the
benefit conferred upon the party unjustly enriched. See Sanders v. Bradley Cnty. Human Servs.
Pub. Facilities Bd., 330 Ark. 675, 956 S.W.2d 187 (1997). The claimant’s burden is to
“produce evidence permitting at least a reasonable approximation of the amount of the
wrongful gain.” Restatement (Third) of Restitution and Unjust Enrichment § 51 (2011). “If the
claimant’s evidence will not yield even a reasonable approximation, the claim of unjust
enrichment is merely speculative, and disgorgement will not be allowed . . . [and] the
claimant’s burden of proof, so described, is ordinarily met as soon as the claimant presents a
coherent theory of recovery in unjust enrichment.” Id. at § 51 cmt. i; accord El Paso Prod.
Co. v. Blanchard, 371 Ark. 634, 647, 269 S.W.3d 362, 373–74 (2007) (reversing award of
restitution for unjust enrichment because award was speculative).
At trial, Hartness failed to present evidence of a reasonable approximation of
Nuckles’s wrongful gain. Instead, he focused on the how much it would cost to repair his
vehicle to its bargained-for condition. This is not a theory for recovery in unjust enrichment,
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and there was no competent evidence about what gains Nuckles received from the
transaction that were unjustified.7 Because there was no evidence regarding the amount of
Nuckles’s wrongful gain, we affirm the circuit court’s ruling that Hartness could not recover
for unjust enrichment.
Conversion
The final issue is conversion. Hartness argues that the circuit court should have
granted him relief on this claim because Nuckles kept the old parts from the car and never
returned them. The court denied this claim because, it found, the old parts had been
damaged and were generally worthless. The court ruled that Nuckles simply discarded the
old parts near the shop because he did not see any further use for them.
Conversion is a common-law tort action for the wrongful possession or disposition
of another’s property. McQuillan v. Mercedes-Benz Credit Corp., 331 Ark. 242, 961 S.W.2d
729 (1998). To establish liability for the tort of conversion, a plaintiff must prove that the
defendant wrongfully committed a distinct act of dominion over the property of another,
which is a denial of or is inconsistent with the owner’s rights. Id. Where the defendant
exercises control over the goods in exclusion or defiance of the owner’s rights, it is a
conversion, whether it is for defendant’s own use or another’s use. Id.
7
Hartness did present invoices from Restoration Plus that, according to him,
constituted evidence of overcharging. But the circuit court obviously did not believe that
any of these charges were wrongful or amounted to an unjustified gain for Nuckles. In any
event, Hartness argues that his damages for unjust enrichment should be the amount it
would take to repair his car; there is no argument that Nuckles should be stripped of his
wrongful gain, which is the proper measure of unjust enrichment.
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This was a bench trial, so the standard of review on appeal is whether the circuit
court’s findings were clearly erroneous or clearly against the preponderance of the evidence.
Cochran v. Bentley, 369 Ark. 159, 251 S.W.3d 253 (2007); Ark. R. Civ. P. 52(a). We view
the evidence in the light most favorable to the appellee, resolving all inferences in favor of
the appellee. McQuillan, supra. Disputed facts and determinations of the credibility of
witnesses are within the province of the fact-finder. Cochran, supra.
On appeal, Hartness argues that the “greater weight of the evidence demonstrates
Nuckles either lost or destroyed parts belonging to Hartness, which resulted in specific
damages.” This argument contradicts the testimony of one of Nuckles’s employees, who
testified that the old parts were labelled and damaged parts were discarded outside the body
shop. In essence, Hartness argues that we should reweigh the evidence in his favor. But this
is something we cannot do. We weigh the evidence in favor of the verdict and leave
questions regarding credibility with the fact-finder. Applying these standards, we hold the
circuit court’s findings were not clearly erroneous. We affirm on this point.
Affirmed.
BAKER and GOODSON, JJ., concur.
HART, J., dissents.
KAREN R. BAKER, Justice, concurring. I, like the majority, would affirm the
circuit court. However, I write separately because I would affirm the circuit court based
solely on Hartness’s failure to prove damages. The burden of proving damages rests on the
party claiming them. Minerva Enters., Inc. v. Howlett, 308 Ark. 291, 824 S.W.2d 377 (1992)
(citing Christmas v. Raley, 260 Ark. 150, 539 S.W.2d 405 (1976)). Although recovery will
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not be denied merely because the amount of damages is hard to determine, damages must
not be left to speculation and conjecture. Vowell v. Fairfield Bay Cmty. Club, Inc., 346 Ark.
270, 58 S.W.3d 324 (2001).
The circuit court held as follows:
Plaintiff argues in his brief that certain charges were “clearly excessive” and
much of the work was Aclearly defective[.]@ However, at trial certain things were
noticeable by their absence - such as expert testimony regarding the usual time and
expense of such a restoration as well as valuation of the vehicle both before and after
Defendants= involvement. In general, there was lack of competent testimony as to
damages.
....
The Court has no doubt that at least some of the issues complained of could
have, and should have, been performed better. For example, the presence of sand in
the vehicle seems inexcusable along with some cosmetic issues depicted in the
photographs taken shortly after Plaintiff took possession of the vehicle. However,
any damages awarded for those items would require speculation by the Court.
I cannot say that the circuit court clearly erred in finding that the proof of damages
in this case was insufficient to allow the court to enter a judgment without resorting to
speculation. Of particular concern is the lack of any specific proof about the value of the
car when it was retrieved by Hartness as opposed to the value the car would have had if it
had been restored to the condition agreed to by the parties.
Because Hartness failed to offer adequate proof of damages, the circuit court was left
to speculate as to the amount of damages. For this reason, I would affirm the circuit court
and I would not address whether the notice requirement of Arkansas Code Annotated
section 4-2-607(3)(a) is applicable to the present case.
GOODSON, J., joins.
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JOSEPHINE LINKER HART, Justice, dissenting. I dissent because the majority’s
opinion embodies mistakes of fact and law. The opinion reveals a fundamental
misunderstanding of an individual’s constitutional right to contract. Further, it is an advisory
opinion—something that this court routinely claims that it does not issue. The majority
also misunderstands the circuit court’s finding with regard to Mr. Hartness’s proof of value.
Mr. Nuckles’s defense to Mr. Hartness’s breach-of-warranty claims was that Mr.
Hartness failed to give him sufficient notice of the defect. While there was a disagreement
at trial as to whether Nuckles promised to restore Mr. Hartness’s 1968 Pontiac Firebird
convertible to “Barrettt-Jackson” quality, it was not disputed that Mr. Hartness was
promised at least a quality of restoration that was better than what Mr. Hartness expected to
receive when he took possession of his car. Accordingly, there is arguably a disagreement
about the terms of the express warranty in the oral contract. Nonetheless, there is no dispute
that an express warranty was made. Thus, the existence of a warranty was not an issue at
trial. The majority acknowledges that it was never raised, briefed, or ruled on by the circuit
court, yet concludes that the reason for the lack of a ruling is that the issue was
“overlooked.” In my view, for the majority to make such a conclusion is an obvious mistake
of fact.
This error was compounded by this court deciding, on its own motion, to make the
existence of a warranty a threshold issue, finding that this issue was not ruled on by the
circuit court, and using the failure to obtain a ruling as its rationale for barring Mr. Hartness’s
argument on appeal. The majority’s justification for its holding is that the Arkansas Supreme
Court has never decided whether “breach of warranty claims should even exist for a contract
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that is exclusively for services.”1 The majority clearly misunderstands the role of the Arkansas
Supreme Court. We are not lawgivers. Our job is to interpret the law. The right to contract
is inalienable and guaranteed by our state constitution, and this court should not create
wholesale conditions that will affect all service contracts. Leep v. St. Louis, I.M. & S. Ry.
Co., 58 Ark. 407, 25 S.W. 75 (1894). Accordingly, the court has exceeded its power; it has
only the power to opine on the constitutionality of a limitation imposed on the right to
contract. Id.
Inexplicably, having barred Mr. Hartness’s argument, the majority nonetheless goes
on to consider whether the notice requirement stated in Arkansas Code Annotated section
4-2-607(3)(a), a statute dealing with warranties in the sale of goods, should apply “if such
warranties do exist.” There is no clearer example of an advisory opinion. Black’s Law
Dictionary, 35–36 (6th ed. 1990) defines advisory opinions as follows:
Such may be rendered by a court at the request of the government or an interested
party indicating how the court would rule on a matter should adversary litigation
develop. An advisory opinion is thus an interpretation of the law without binding
effect. While the International Court of Justice and some state courts will render
advisory opinions, the federal courts will not; their jurisdiction being restricted to
cases or controversies.
1
Perhaps the majority believes that causes of action that sound in contract are the
same as causes of action that sound in tort. It is the practice of this court to selectively
recognize common law torts. See, e.g., M.B.M. Co. v. Counce, 268 Ark. 269, 596 S.W.2d
681 (1980) (recognizing the tort of outrage or intentional infliction of emotional distress);
see also Goff v. Harold Ives Trucking Co., 342 Ark. 143, 27 S.W.3d 387 (2000) (refusing to
recognize the tort of spoliation of evidence).
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Heretofore, this court did not render advisory opinions. See, e.g., Arkansas State Hwy. &
Transp. Dep’t v. O.J.’s Serv. Two, Inc., 2015 Ark. 388; Arms v. State, 2015 Ark. 364, ___ S.W.3d
____; Chandler v. Martin, 2014 Ark. 219, 433 S.W.3d 884.
Lastly, in my view, the majority also makes a mistake of fact when it purports to
affirm the circuit court’s finding that Mr. Hartness “presented no evidence regarding his
‘damages.’” In its findings of fact, the circuit court acknowledged that there was at least
some substandard work:
The Court has no doubt that at least some of the issues complained of could have,
and should have, been performed better. For example, the presence of sand in the
vehicle seems inexcusable along with some cosmetic issues depicted in the
photographs taken shortly after Plaintiff took possession of the vehicle. However,
any damages awarded for those items would require speculation by the Court.
Mr. Harness testified that he was not only over-charged for work performed, but
also charged for work that was never performed. I am also mindful that Mr. Harness also
testified that he believed he was entitled to full refund. Regarding Mr. Harness’s desire for
a complete refund, there is significance in the circuit court’s finding that there was a lack of
evidence of the value of the vehicle before and after Nuckles’s involvement, as well as the
lack of expert testimony to establish the usual and customary time and expense for such
restoration. However, while Mr. Harness may not have presented proof that he was entitled
to a complete refund, Mr. Nuckles conceded that, based on the pictures and live view of
the car that was conducted during the trial, a portion of the work was not up to standard
and required a definite amount of shop time to remedy. Suffice it to say that there is a
difference between no evidence and incomplete evidence. Certainly Mr. Hartness
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presented evidence whereby a trier of fact could find some damages. I would therefore
reverse and remand this case for the circuit court to assign a value to sub-standard work.
Byars, Hickey & Hall, PLLC, by: Joe D. Byars, Jr., for appellant.
Smith, Cohen & Horan, PLC, by: Stephen C. Smith and Jacob K. Wooley, for appellee.
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