SMG 1054 Inc. v. Thompson ( 2014 )

Cite as 2014 Ark. App. 149ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-13-703
Opinion Delivered February 26, 2014
APPEAL FROM THE RANDOLPH
SMG 1054, INC. COUNTY CIRCUIT COURT
APPELLANT [No. CV-2013-6]
V. HONORABLE KEVIN KING, JUDGE
REMANDED TO SETTLE AND
JAMES E. THOMPSON SUPPLEMENT THE RECORD;
APPELLEE REBRIEFING ORDERED
LARRY D. VAUGHT, Judge
Appellant SMG 1054, Inc., appeals the order of foreclosure entered by the Randolph
County Circuit Court in favor of appellee James E. Thompson. On appeal, SMG contends that
the trial court abused its discretion in denying its motion for continuance and in refusing to
admit certain documentation into evidence. Because SMG’s abstract and addendum are
deficient, we order supplementation of the record and rebriefing.
Thompson filed a complaint for foreclosure against SMG on January 10, 2013. The
complaint alleged that on December 30, 2010, Thompson loaned $47,500 to Cedar Break LLC,
and in return received a promissory note, signed by T.V. Wallis (the manager of Cedar
Break—now deceased), promising to repay the loan on or before March 31, 2011. The
complaint also alleged that Wallis, on behalf of Cedar Break, signed a mortgage in favor of
Thompson, securing the indebtedness of Cedar Break by conveying to him a lien that was first
in priority on property located on Highway 62 in Randolph County, Arkansas (the property).
Cite as 2014 Ark. App. 149The mortgage was filed December 30, 2010. The foreclosure complaint also alleged that the note
provided that if any payments on the note became overdue or unpaid, the entire amount
remaining due, with interest to date, may be collected at Thompson’s option.
The Thompson complaint continued, averring that because Cedar Break failed and
refused to make payments due under the note, he was exercising his right to declare the entire
debt due and payable. Further, the complaint alleged that on May 3, 2011, Cedar Break conveyed
to SMG, by warranty deed,1 the property secured by the mortgage and that SMG failed to make
payments on the loan. Thompson prayed for judgment in rem against SMG in the amount of
$47,500, plus interest, attorney’s fees, and costs, and further prayed that should the judgment
not be paid within a reasonable time the property be sold.
On February 14, 2013, Shirley Matthews, pro se and on behalf of SMG,2 filed an “answer
to summons,” disputing and disagreeing with all claims and accusations made in the foreclosure
complaint. Matthews further responded by stating that she had never been involved with Cedar
Break and that it, along with its agent (Wallis), unlawfully obtained the SMG deed and made the
agreement with Thompson without her permission. She added that Thompson should be filing
suit against Cedar Break and Wallis’s estate.
A foreclosure hearing was held on April 22, 2013, where Matthews appeared on behalf
of SMG. At the onset of the hearing, she requested a continuance to retain an attorney. She
stated that she initially believed that she was capable of representing SMG but eventually
1
SMG’s warranty deed was filed May 4, 2011.
2
Matthews was the registered agent for SMG.
2
Cite as 2014 Ark. App. 149concluded that there were matters involved that she did not know how to handle, e.g., SMG’s
potential claims against Cedar Break and Wallis. She also told the court that she had talked to
three different attorneys, but they had conflicts. Counsel for Thompson objected to the motion
for continuance, contending that Matthews had had sufficient time to hire an attorney. The trial
court denied the motion for continuance, stating that this was the second time that the
foreclosure hearing had been set, that Matthews had had sufficient time to hire an attorney, and
that the only relevant issue before the court was Thompson’s foreclosure action—not SMG’s
potential claim against Cedar Break and Wallis.
The hearing proceeded with Thompson testifying first. He said that in December 2010,
he loaned Wallis, on behalf of Cedar Break, $47,500, for the purchase of the property in
question. Thompson said that Wallis was purchasing the property from Harold Eugene Tyler,
Jr., and that Thompson witnessed Wallis paying Tyler for the property and Wallis receiving the
deed.3 Thompson also stated that he received a promissory note and mortgage signed by Wallis,
but that Cedar Break did not make any payments. At this point during the hearing, the trial court
asked Matthews whether she signed the note and mortgage, to which she responded that she did
not. Then, Thompson’s attorney interjected, confirming that Matthews did not sign the note and
mortgage but that after the note and mortgage had been executed, Cedar Break deeded the
property in question to SMG, which was why the proceeding against SMG was in rem. Counsel
for Thompson stated that Matthews had no personal liability.
3
The property in question was conveyed by warranty deed to Cedar Break by Tyler. The
deed was filed December 30, 2010.
3
Cite as 2014 Ark. App. 149On cross-examination, Thompson denied knowing that Matthews, on behalf of SMG,
had purchased the property from Tyler. Thompson admitted knowing that Wallis was living on
the property but denied knowing that Matthews was also living there. Thompson also knew that
Matthews was remodeling the property.
Matthews also testified. She told the trial court that “I am SMG” and that she and Wallis
had been friends for sixteen years. She said that she “handled a lot of his contracts” and “worked
on his jobs.” She said that before Wallis bought the property in question from Tyler, she
purchased it from Tyler for $68,500.4 She added that she paid for the property in full as of
December 11, 2010, and that she had paperwork (a contract and receipts) to support her claim.
She conceded, however, that she did not have a title-insurance policy for the property or a deed
for the property from Tyler. She also said that she was living on the property and that she let
Wallis move in with her after he became ill. She acknowledged that the deed held by SMG was
conveyed to it by Cedar Break in May 2011. But, she explained that Cedar Break had unlawfully
obtained the deed. In December 2010, she was tending to her ill son, and her final payment to
Tyler was due. She gave the payment to Wallis to give to Tyler. According to Matthews, Wallis
tendered the final payment and then had the deed to the property put in Cedar Break’s name
instead of SMG’s name. She said that she and Wallis “got into a lot of problems over that,” and
in May 2011, Cedar Break deeded the property to SMG. Matthews denied knowing that Wallis
had borrowed money from Thompson to purchase the property from Tyler and that he was
supposed to be making payments.
4
She added that she also spent $32,000 remodeling the house.
4
Cite as 2014 Ark. App. 149At the conclusion of the hearing, the trial court found that SMG had thirty days in which
to redeem the property; if the property was not redeemed within that time, the court ordered
foreclosure. The trial court’s order of foreclosure was entered on April 25, 2013. This appeal
followed.
SMG’s first point on appeal is that the trial court abused its discretion in denying its
motion for continuance. SMG argues that Matthews, on behalf of SMG, on multiple occasions
advised the trial court that she did not understand the legal issues involved, that she had tried
to hire several attorneys, and that she had potential claims against other parties. SMG also
contends on appeal that Thompson would not be prejudiced by a short continuance because the
foreclosure case was relatively new (only four months old) and that he had not received payment
from Wallis in two years.
A motion for continuance shall be granted only upon a showing of good cause. Hill v.
Ark. Dep’t of Human Servs., 2013 Ark. App. 760, at 3. We will not reverse the denial of a motion
for continuance absent an abuse of discretion amounting to a denial of justice. Id. A trial court
abuses its discretion when it acts improvidently and without due consideration. Id. The appellant
bears the burden of showing that the trial court’s denial of a continuance was an abuse of
discretion, and, in order to show an abuse of discretion, the appellant must show that she was
prejudiced by the denial. Id. at 3–4.
Our review of this case reveals that the primary reason why the trial court denied
Matthews’s motion for continuance was that the case had been continued once before—this was
5
Cite as 2014 Ark. App. 149the second time it had been set for a hearing.5 However, SMG did not abstract the prior hearing
or include in its addendum any order entered by the trial court that disposed of the matters
raised at that hearing. Because we do not know the facts and circumstances surrounding the first
hearing, we cannot determine whether the trial court, at the second hearing, abused its discretion
in denying SMG’s motion for continuance based on its conclusion that it had been continued
once before.
Arkansas Supreme Court Rule 4-2(a)(5) (2013) requires an abstract of the material parts
of all the transcripts in the record. Information in a transcript is material if the information is
essential for the appellate court to understand the case and to decide the issues on appeal. Id.Further, Rule 4-2(a)(8) provides that the appellant’s brief shall contain an addendum that
includes copies of non-transcript documents in the record on appeal that are essential for the
appellate court to understand the case and to decide the issues on appeal. Ark. Sup. Ct. R. 4-
2(a)(8). We hold that SMG’s abstract and addendum fail to provide the information that is
essential for our understanding of the case and to decide the issue on appeal; therefore, they are
deficient.
Our review of this case further reveals that the first hearing and order disposing of that
hearing are not included in the record. If anything material to either party is omitted from the
record by error or accident, we may direct that the omission or misstatement be corrected, and
if necessary, that a supplemental record be certified and transmitted. Ark. R. App. P.–Civ. 6(e).
5
The abstract reveals that the trial court stated on at least two occasions that it was not
going to give Matthews a continuance because the case had been continued one other time.
Matthews stated at one point, “I gathered all of my information, and I came to court last time,
and Judge Smith [had] a conflict.”
6
Cite as 2014 Ark. App. 149We therefore remand this case for the record to be settled and supplemented within thirty days.
SMG’s substituted brief is due within fifteen days after the supplemental record has been filed.
Ark. Sup. Ct. R. 4-2(b)(3) (2013). The examples we have noted are not to be taken as an
exhaustive list of deficiencies; counsel should carefully review the rules and ensure that no other
deficiencies exist.
Finally, we are obligated to mention our concern that Matthews, at the trial-court level,6
was a non-lawyer representing a corporation, which constitutes the unauthorized practice of law.
Ark. Bar Ass’n v. Union Nat’l Bank, 224 Ark. 48, 51, 273 S.W.2d 408, 410 (1954) (holding that
a corporation may represent itself in connection with its own business or affairs provided it does
so through a licensed attorney); Ark. Code Ann. § 16-22-206 (Repl. 1999); Ark. Code Ann. §
16-22-211(a) (Repl. 1999). Deepening our concern is the fact that both Thompson’s counsel and
the trial court were aware of Matthews’s unauthorized practice of law because she made multiple
pleas to the trial court throughout the hearing that she be given a continuance to retain counsel
for the corporate defendant. To the extent that this issue might have been relevant to the trial
court’s disposition of SMG’s motion for continuance, the parties should address it in their
substituted briefs on appeal.
Remanded to settle and supplement the record; rebriefing ordered.
GLADWIN, C.J., and HIXSON, J., agree.
Stanley & Woodard, PLC, by: Bill Stanley, for appellant.
Don R. Brown, for appellee.
6
SMG is represented by counsel in this appeal.
7