Ahmad v. Horizon Pain, Inc. , 2014 Ark. App. LEXIS 746 ( 2014 )

Cite as 2014 Ark. App. 531
ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-14-165
Opinion Delivered October 8, 2014
DR. MAHMOOD AHMAD APPEAL FROM THE
APPELLANT INDEPENDENCE COUNTY
CIRCUIT COURT
[NO. CV-2008-333-2]
V.
HONORABLE ADAM HARKEY,
JUDGE
HORIZON PAIN, INC.
APPELLEE AFFIRMED
ROBERT J. GLADWIN, Chief Judge
Appellant, Dr. Mahmood Ahmad (Ahmad), appeals from a July 26, 2012 order
entered by the Independence County Circuit Court. Ahmad argues that the circuit court
erred in denying his requests to remove the special master and to set aside the special master’s
report for failure to comply with Arkansas Rule of Civil Procedure 53. He also argues that
appellee, Horizon Pain, Inc. (Horizon), and original plaintiff, Dr. Meraj Siddiqui (Siddiqui),
had no standing and failed to state a factual and legal basis for the derivative action.1
Horizon was formed in April 2006 for the purpose of providing medical services to
White River Medical Center (WRMC) and other hospitals or medical centers. Its 360 shares
were held in equal portions by Siddiqui and Ahmad. Siddiqui was employed by Horizon
1
We dismissed the original appeal in this case, CA 12-991, without prejudice, see
Ahmad v. Siddiqui, 2013 Ark. App. 562, after which the circuit court entered a final order
disposing of Siddiqui’s personal claim.
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and was paid a salary and income generated by him less expenses. In 2006, Ahmad borrowed
$178,519.19 from Horizon and Siddiqui.2 Siddiqui subsequently left the employ of Horizon,
established his own relationship with WRMC, asked that Horizon be dissolved, and sued
Ahmad for the monies he still owed to Siddiqui and Horizon.
On December 15, 2008, Ahmad filed a motion to dismiss identifying certain
deficiencies in the complaint, based upon Arkansas Rule of Civil Procedure 23.1. On
December 23, 2008, Siddiqui and Horizon filed an amended complaint rectifying those
deficiencies and giving Ahmad credit for $58,817.06 that he had previously repaid, leaving
a balance of $132,090.41. Also on December 23, 2008, Siddiqui and Horizon filed a
response and brief in support to Ahmad’s motion to dismiss.
On January 12, 2009, Ahmad filed an answer and counterclaim, in which he asserted
his right to set-off amounts and sought damages against Siddiqui for tortious interference
with his business expectancy and breach of fiduciary duty. On March 29, 2011, Siddiqui and
Horizon filed a motion for summary judgment regarding Ahmad’s counterclaims. On May
17, 2011, Siddiqui and Horizon filed a motion in limine to exclude certain evidence that
Ahmad had belatedly produced related to his claim for setoffs.3
2
Horizon’s claim was based entirely upon an email and spreadsheet sent by Ahmad to
Siddiqui on January 3, 2007, in which Ahmad acknowledged that he owed Horizon
$178,519.19, as of that date.
3
Ahmad claimed various setoffs, including monies owed by Horizon for hosting
services by United Pain Care, Inc., a corporation wholly owned by Ahmad, which
contracted to provide certain services to Horizon. Ahmad also claimed setoffs for payments
for accounting services and other expenses that he argued should mitigate any amounts owed
by him to Horizon or Siddiqui.
2
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At an in camera hearing prior to the jury trial set for May 24, 2011, the circuit court
granted Siddiqui’s and Horizon’s motion for summary judgment, thereby dismissing Ahmad’s
counterclaim, and granted their motion in limine to exclude Ahmad from presenting certain
evidence regarding alleged setoffs. An order was presented to the circuit judge but was never
entered because the parties reached a settlement and read the terms thereof into the record.
The judgment was in favor of Horizon but conditioned upon a subsequent hearing to
determine any applicable setoffs. Siddiqui dismissed his personal claims with prejudice,
leaving only the dispute regarding what Ahmad owed Horizon. The second proceeding was
to be held by a special master to consider all claims and setoffs. The judgment contained a
prohibition against any execution until after the second proceeding. Over objection by
Ahmad, the circuit court appointed Siddiqui’s nominee, John C. Gregg, as special master.
At the beginning of the second hearing, an objection was again raised on the basis of
Gregg’s potential conflict of interest. Testimony indicated that Gregg (1) had been consulted
by Siddiqui on this very issue,4 and (2) was the person who drafted the bylaws and advised
Siddiqui at the incorporation of Horizon. Ahmad requested recusal by the special master,
but that request was denied. After the hearing, the special master denied all of Ahmad’s
claims of setoff. The circuit court adopted the special master’s ruling and ordered that, after
4
Horizon claims that there is no support for this statement in the record. According
to Siddiqui’s testimony, “Mr. Gregg was consulted by me. He did not incorporate but he
did the bylaws and gave me some advice about how partners work and how to buy shares,
how much you pay, what laws, what the role of the president, all kinds of corporate basic
information.” No evidence before us indicates that Gregg provided advice to Siddiqui
regarding the matter in controversy before him or related issues.
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collection of the consent judgment against Ahmad, Horizon be dissolved. It is from this
order that Ahmad appeals.
I. Denial of Ahmad’s Requests to Remove the Special Master
Although the review of this case is de novo regarding legal issues on appeal, the circuit
court’s findings of fact will not be disturbed unless they are clearly erroneous. See Horton v.
Ferrell, 335 Ark. 366, 981 S.W.2d 88 (1998); Arkansas Rule of Civil Procedure Rule 53(c)
& (e)(1) and (2) (2014). A finding is clearly erroneous when, although there is evidence to
support it, the court, on the entire evidence is left with the definite and firm conviction that
a mistake has been made by the master. HRR Ark., Inc. v. River City Contractors., Inc., 350
Ark. 420, 87 S.W.3d 232 (2002). When parties stipulate that a master’s findings of fact shall
be final, only questions of law arising from the report shall thereafter be considered. Ark. R.
Civ. P. 53(e)(3).
A special master is a judge subject to the Arkansas Code of Judicial Conduct (ACJC)
and the application of that conduct code is mandatory. Horton, supra. The ACJC states: “A
judge, within the meaning of this Code, is anyone who is authorized to perform judicial
functions, including an officer such as a, magistrate, special master, referee, or member of the
administrative law judiciary.” Ark. Code Jud. Conduct, Application, § I(B) (2014). The
canons and text of the ACJC establish mandatory standards, not mere guidelines. Farley v.
Jester, 257 Ark. 686, 520 S.W.2d 200 (1975).
Rule 2.11 of the Arkansas Code of Judicial Conduct provides that a judge shall
disqualify himself in any proceeding in which the judge’s impartiality might be reasonably
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questioned, including when the judge has a personal bias or prejudice concerning a party or
a party’s lawyer. A trial judge is presumed to be impartial, and a party seeking disqualification
bears a substantial burden to prove otherwise. Smith v. Hudgins, 2014 Ark. App. 150, 433
S.W.3d 265. A trial judge’s decision to recuse is within his or her discretion, and we will not
reverse absent a showing of an abuse of discretion. Id. An abuse of discretion can be proved
by a showing of bias or prejudice on the part of the trial judge. Id. Absent some objective
demonstration by the appellant of the trial judge’s prejudice, it is the communication of bias
by the trial judge that will cause us to reverse his refusal to recuse. Id. The mere existence
of adverse rulings is not enough to demonstrate bias. Id.
The circuit court approved the parties’ settlement contained in the “Consent
Judgment Conditioned Upon Stipulated Settlement” (consent judgment), which gave the
parties thirty days to agree on a suitable person to serve as special master in this case. The
consent judgment provided that if no agreement was reached, then the circuit court would
appoint someone to serve. Ahmad’s counsel had advised Siddiqui’s counsel that Ahmad
objected to Siddiqui’s counsel’s suggestion for Gregg’s appointment as special master. On
August 4, 2011, Siddiqui’s counsel filed a petition to appoint Gregg despite Ahmad’s
objections.
On August 12, 2011, Ahmad filed a responsive pleading formally objecting to
Siddiqui’s request for Gregg’s appointment as special master. There was also an August 22,
2011 letter from Ahmad’s attorney objecting to Siddiqui’s proposed order appointing
Siddiqui’s nomination for special master.
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On August 29, 2011, the circuit court entered the proposed order appointing Gregg
as special master over Ahmad’s objections and despite the lack of mutual agreement by
counsel for both parties that he was suitable to serve as special master. Approximately eight
months later, the hearing before Gregg was scheduled for April 17, 2012. At the beginning
of the hearing, Gregg acknowledged that Ahmad’s counsel advised him that it had been
recently discovered that Siddiqui had sworn in his prior answers to interrogatories that Gregg
had served as his attorney in matters related to issues in this case, including preparation of
corporate documents for Horizon. Siddiqui had explained the private consultations he had
with Gregg about Horizon incorporation matters.
Gregg reviewed Siddiqui’s answer to the interrogatory listing him as the attorney who
provided legal services to Siddiqui but declined to withdraw as special master. He responded
that he had no knowledge of Ahmad’s prior objection to his appointment, and that he did
not remember any such prior representation of Siddiqui and/or Horizon. Gregg reviewed
the documents in question, and he stated that he did not recall preparing any of the corporate
documents presented for Siddiqui and/or Horizon. Ahmad then orally renewed his
objection to Gregg’s serving as special master because of his apparent conflict of interest, or
appearance of impropriety, and his past representation of Siddiqui and/or Horizon. Gregg
then commented on his concern about any conflict resulting in an appeal or complaint, and
whether he was suitable to serve because he was not an accountant, but he refused to recuse
and proceeded with the hearing.
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During the hearing, Siddiqui testified that Ahmad and he were each fifty-percent
shareholders in Horizon. During Siddiqui’s testimony about corporate-accounting records,
Siddiqui was asked by appellant’s counsel about an August 22, 2006 check that he wrote for
$1,850 for “legal fees” paid from Horizon Pain, Inc., which was entered in a Quick Books
report corporate sub-account assigned to Siddiqui. He answered that it was paid by him to
“the Master” (Gregg). He further testified that he had randomly selected Gregg as an
attorney from the telephone book and paid him to draft bylaws for Horizon, which had been
previously incorporated by Ahmad. Siddiqui also testified that he met privately with Gregg
in his law office for legal advice regarding Horizon and Siddiqui’s personal-employment
contract with Horizon, which Gregg possibly had drafted as his private attorney.
Gregg did not respond or comment after Siddiqui’s admission to the payment for legal
services to Gregg. Instead, he simply adjourned the hearing, leaving the record open for two
additional witnesses to be produced by deposition over the following sixty days.
The ACJC includes the following relevant provisions:
An independent and honorable judiciary is indispensable in our society. . . . Canon 1
ACJC;5
and
A judge shall avoid impropriety and the appearance of impropriety in all of the judge’s
activities. A judge shall respect and comply with the law and act at all times in a
manner that promotes public confidence in the integrity and impartiality of the
5
This is an older version of the ACJC—the current version that matches up most
closely to this language is found at Rule 1.2 (2014), which states that “A judge shall act at all
times in a manner that promotes public confidence in the independence, integrity, and
impartiality of the judiciary, and shall avoid impropriety and the appearance of impropriety.”
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judiciary. Canon 2 ACJC; Rule 2.9(A)(1)(a) concerning ex parte communications with the
judge; and Rule 2.11.6
and
Disqualification. (1) A judge shall disqualify himself in a proceeding in which the
judge’s impartiality might reasonably be questioned, including but not limited to
instances where: (a) the judge has personal bias or prejudice concerning a party or
party’s lawyer, or personal knowledge of disputed evidentiary facts concerning the
proceeding; (b) the judge served as a lawyer in the matter in controversy, or a lawyer
with whom the judge previously practiced law served during such association as a
lawyer concerning the matter, or the judge has been a material witness concerning it
. . . . “ Canon 3, E(1)(a) & (b); Rule 2.11(A)(1) ACJC, concerning a judge who has
personal knowledge of facts in dispute; and Rule 3.10 regarding the judge’s practice of law.7
and
A judge should disclose on the record information that a judge believes the parties or
their lawyers might consider relevant to the question of disqualification, even if the
judge believes there is no real basis for disqualification.” Canon 3 E(1) ACJC;
Commentary8
(Emphasis added.)
Ahmad initially objected to Siddiqui’s suggestion that Gregg serve as special master
because he believed that this special master had a conflict of interest that disqualified him.
With his appointment, Gregg’s rulings on all fact and law issues became the sole basis for the
circuit court’s decision in this matter. Ahmad claims that this is an issue because there was
no transcript of the proceeding filed in the record for the circuit court to review before
6
This is not listed under current Canon 2, but seems to be covered by the above-
referenced language.
7
This is now covered in Canon 2, Rule 2.11.
8
This language is now contained in Comment [5] to Canon 2, Rule 2.11 (2014).
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entering its order, and the order was, in fact, entered without any review of the proceedings,
in large part because no transcript was submitted by Gregg.
Ahmad argues that the refusal by Gregg and the circuit court to implement a recusal
upon the confirmation of a conflict of interest during the hearing before Gregg violates the
judicial principles previously set forth. Despite those refusals, Ahmad continued to object
to Gregg and the circuit court about the influence and perception that these past ex parte,
privileged communications would cause regarding the findings of fact, as well as the
interpretation and application of the law.
Ahmad explained to the circuit court that the completion of this agreed dissolution
and liquidation process would not be delayed by an order removing the special master. But
the circuit judge simply denied both Ahmad’s request and motion for recusal, and adopted
Gregg’s findings of fact and conclusions of law without benefit of a transcript of the
proceedings. Ahmad maintains that the circuit court’s refusal to order Gregg’s removal, as
well as its adoption of Gregg’s findings of fact and law over objection, without reviewing the
mandatory transcript of the proceedings, was reversible error.
We disagree and hold that neither of the subsections of the ACJC relied on by Ahmad
requires disqualification of Gregg under these facts. The evidence before us indicates that
Siddiqui consulted Gregg in August 2006, at which time Gregg prepared bylaws for Horizon
and gave Siddiqui advice about general business-entity information. Gregg’s recollection of
the events was vague; recalling “taking a shot” at drafting an agreement but not believing that
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the employment agreement ultimately entered into between Siddiqui and Horizon was
drafted by him.
The question of a judge’s bias is usually confined to the conscience of the judge, see
Porter v. Ark. Dep’t of Health & Human Servs., 374 Ark. 177, 286 S.W.3d 686 (2008), and the
party seeking recusal must demonstrate bias. Smith, supra; see also Turner v. Nw. Ark.
Neurosurgery Clinic, P.A., 91 Ark. App. 290, 210 S.W.3d 126 (2005). Gregg properly
considered the matters addressed in Ahmad’s motion to compel recusal and concluded, based
upon his conscience, that he was not biased and could impartially decide the matters before
him. Ahmad has failed to demonstrate bias, as Gregg’s preparation of corporate documents
for Horizon, an entity owned equally by Ahmad and Siddiqui, did not cause him to favor
one party over the other. The relevant provision of the ACJC requires disqualification when
the judge “served as a lawyer in the matter in controversy or was associated with a lawyer who
participated substantially as a lawyer in the matter during such association.” (Emphasis added.)
Horizon cites Little Rock School District v. Armstrong, 359 F.3d 957 (8th Cir. 2004), in
which the Eighth Circuit Court of Appeals considered whether Judge Bill Wilson should
have granted a motion to compel recusal based upon his representation of Judge Henry
Woods in 1987, related to a mandamus proceeding arising out of the same desegregation
case. In its decision, the Eighth Circuit cited with favor language from a previous case, In
re Apex Oil Co., 981 F.2d 302 (8th Cir. 1992), in which it found that a judge’s previous
representation of parties to the case was not “sufficiently related” so as to constitute the same
matter in controversy. Armstrong, 359 F.3d at 961. In Armstrong, the court went on to find
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that “there is not a sufficient relationship between the recusal proceedings with respect to
Judge Woods and the issues now before us on the merits to make them the same ‘matter in
controversy.’” Id. (Emphasis added.)
Likewise, we hold that there is not a sufficient relationship between Gregg’s drafting
bylaws for Horizon and the issues that were before him as special master in these proceedings
so as to constitute the same matter in controversy. His specific duties, as stated in the consent
judgment, were to “consider all legitimate claims and set-offs of the parties or creditors, and
to transfer assets or cash to creditors, claimants, or shareholders of the corporation consistent
with his findings by application of Arkansas law, rules of civil procedure, rules of evidence,
and existing contracts between the parties.”
Horizon’s only asset, at the time of the hearing before Gregg, was its judgment against
Ahmad in the amount of $119,702.13. Gregg’s job as special master was simply to determine
how to distribute and allocate those funds among the shareholders of Horizon and any
legitimate creditors. Because this function had no relationship to Gregg’s role in preparing
the original bylaws for Horizon, it does not constitute the same matter in controversy, and
therefore, there is no conflict that would mandate his recusal. Additionally, there is no
suggestion that Gregg exhibited any bias in the hearing or in his findings, as Ahmad does not
challenge any of the substantive findings made by Gregg.
II. Refusal to Set Aside Report for Noncompliance with Rule 53
Arkansas Rule of Civil Procedure 53(e)(1) provides the following direction for cases
being conducted by an appointed master:
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Contents and Filing. The master shall prepare a report upon the matters submitted
to him by the order of reference, and, if required to make findings of fact and
conclusions of law, he shall set them forth in his report. He shall file the report with
the clerk of the court and unless directed by the order of reference shall file with it a
transcript of the proceedings and of the evidence and the original exhibits. The clerk shall
forthwith mail to all parties notice of the filing.
(Emphasis added.) Failure to comply with the terms of Rule 53 is reversible error. See
Horton, supra (reversing the refusal to remove a master and strike his report that contained
information outside the record through his ex parte communications). See also Ark. State
Game & Fish Comm’n v. Kizer, 222 Ark. 673, 262 S.W.2d 265 (1953) (holding that a master
must report his findings to the circuit court and must also submit a transcript of the evidence
taken so that the circuit court may determine whether the findings are supported by the
testimony, reasoning that the master cannot base his conclusions upon evidence not in the
record).
Ahmad notes that no transcript of the proceedings, exhibits, or evidence was filed
with the circuit clerk prior to the entry of a circuit court’s final order adopting all the special
master’s findings of facts, law, and plan for distribution of all corporate assets of Horizon to
Siddiqui. Accordingly, he requests that the decisions of the circuit court in this matter be
reversed, the special master removed, and the special master’s report struck from the record.
We hold that Ahmad waived this argument because he failed to raise it before the
circuit court. It is axiomatic that an appellate court will not address an argument that
previously has not been raised. Daugherty v. Jacksonville Police Dep’t, 2012 Ark. 264, 411
S.W.3d 196. This is so because the appellate court must determine the issues upon the
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record that was made in the circuit court, and issues not raised below cannot serve as the
basis for a decision in this court. Yanmar Co. v. Slater, 2012 Ark. 36, 386 S.W.3d 439.
III. Standing and Factual and Legal Basis for the Derivative Action
The only remaining party plaintiff in this case is Horizon because the other individual
plaintiff, Siddiqui, dismissed his personal action with prejudice before the remaining two
parties entered into a settlement formalized in the above-referenced consent judgment. The
sole remaining action at the time of the settlement was the derivative action. Ahmad claims
that he has consistently maintained that there was no standing for Siddiqui and Horizon to
bring that action.
His affirmative defenses in his answer and objections to Gregg’s finding of facts and
conclusions of law denied Siddiqui’s standing and venue. Ahmad submits that the question
of standing is always a threshold issue, see, e.g., Brewer v. Carter, 365 Ark. 531, 231 S.W.3d
707 (2006), and that without it, a party is not properly before the court to advance a cause
of action. Grand Valley Ridge, LLC v. Metro. Nat’l Bank, 2012 Ark. 121, 388 S.W.3d 24.
The Arkansas Rules of Civil Procedure provide that a shareholder may bring a
derivative action on behalf of a corporation to enforce a right of the corporation when the
corporation has failed to do so. Ark. R. Civ. P. 23.1. In the case of Farm Bureau Insurance
Company of Arkansas, Inc. v. Running M Farms, Inc., 366 Ark. 480, 237 S.W.3d 32 (2006), our
supreme court recognized the “near universal” rule that a corporation and its stockholders
are separate and distinct entities, even where a stockholder may own the majority of the
stock. Id.
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In Running M Farms, supra, the majority stockholder attempted to maintain a
derivative action for the corporation against a third-party insurance company for crop-
damage insurance claims it failed to promptly pay to the corporation. But the court held that
in order for a shareholder to bring an individual cause of action against a third party, that
shareholder must be injured for a wrong, directly from or independently of, the corporation.
See also Golden Tee, Inc. v. Venture Golf Sch., Inc., 333 Ark. 253, 260–61, 969 S.W.2d 625,
629 (1998) (determining “that individual stockholders [have] no standing to sue in their
individual capacities for injuries allegedly suffered primarily by the corporation and its
shareholders”). See also First Commercial Bank, N.A. v. Walker, 333 Ark. 100, 110, 969
S.W.2d 146, 151 (1998), cert. denied 525 U.S. 965 (1998) (holding that “[a] corporate officer
has no individual right of action against a third party for alleged wrongs inflicted on the
corporation, even if the officer is the sole shareholder”). Additionally, this court has held that
“direct suits are appropriate only where a shareholder asserts ‘a direct injury to the
shareholder distinct and separate from harm caused to the corporation.’” Golden Tee, 333
Ark. at 261, 969 S.W.2d at 629.
The most current version of Arkansas Rule of Civil Procedure 23.1 regarding
derivative actions reads as follows:
(a) Prerequisites. This rule applies when one or more shareholders or members of a
corporation or an unincorporated association bring a derivative action to enforce a
right that the corporation or association may properly assert but has failed to enforce.
The derivative action may not be maintained if it appears that the plaintiff does not
fairly and adequately represent the interests of shareholders or members who are
similarly situated in enforcing the right of the corporation or association.
(b) Pleading Requirements. The complaint must be verified and must:
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(1) allege that the plaintiff was a shareholder or member at the time of the
transaction complained of, or that the plaintiff’s share or membership later
devolved on it by operation of law;
(2) allege that the action is not a collusive one to confer jurisdiction that the
court would otherwise lack; and
(3) state with particularity:
(A) any effort by the plaintiff to obtain the desired action from the
directors or comparable authority and, if necessary, from the
shareholders or members; and
(B) the reasons for not obtaining the action or not making the effort.
(c) Settlement, Dismissal, and Compromise. A derivative action may be settled,
voluntarily dismissed, or compromised only with the court’s approval. Notice of a
proposed settlement, voluntary dismissal, or compromise must be given to
shareholders or members in the manner that the court orders.
The complaint filed on November 24, 2008, by Siddiqui and Horizon, contained the
following information:
a. The style of the case, the complaint allegations, and the prayer for relief, all allege
that both Siddiqui, individually, as a 50% stockholder, and as an employee of Horizon;
and Horizon were the two plaintiffs;
b. That the plaintiffs’ unverified complaint is a shareholder’s derivative action
pursuant to Rule 23.1 of the Arkansas Rules of Civil Procedure;
c. In paragraphs 11, 12, 15, and 16, plaintiffs alleged that the amount of $3,688.27
allegedly misappropriated by Ahmad from Horizon; along with $119,702.13 Ahmad
borrowed from Horizon and owed to Horizon, should be delivered to Siddiqui, as
per his employment agreement [with Horizon];
d. That plaintiffs’ complaint referenced and attached as an exhibit a copy of Siddiqui’s
employment contract with Horizon, which contains the salary amount and method
of calculating other net compensation due Siddiqui as an employee from his employer
Horizon.
Ahmad submits that Horizon was admittedly Siddiqui’s employer and the entity with
which Siddiqui had privity of contract. He asserts that there is no privity of contract alleged
or existing between Ahmad, a third party, and Siddiqui. Siddiqui did not sue Horizon for
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his claim of compensation that Horizon allegedly owed him. As a result, Ahmad filed a
motion to dismiss Siddiqui’s and Horizon’s joint complaint and supporting brief under
Arkansas Rules of Civil Procedure Rules 9, 23.1, 12(b)(6) for failure to state a cause of
action, and 12(b)(3) venue stating that the complaint should be dismissed because of:
a. Improper use of Rule 23.1 including lack of verification, inadequate class
representation; attempt to use the action for the individual plaintiffs personal benefit
instead of the corporation’s benefit; lack of required corporate demand;
b. Rule 9 for failing to state with particularity required for the fraud allegation; and
c. Rule 12(b)(3) improper venue of Independence County, Arkansas, rather than the
corporation’s principal place of business and registration in Pulaski County.
Ahmad’s answer to the complaint set forth the same and additional affirmative defenses as
well, but the circuit court denied the motion to dismiss. Ahmad argues that the complaint
filed by Horizon and Siddiqui was inadequate on its face and that the circuit court erred in
not finding that there was a lack of standing or appropriate pleading to maintain this action,
and it also erred in denying Ahmad’s motion to dismiss filed in response to the complaint.
We decline to address the underlying merits of Ahmad’s argument because he waived
the right to appeal this issue by virtue of the settlement contained in the consent judgment.
Based upon the pretrial rulings by the circuit court, Ahmad agreed to the settlement
contained in the consent judgment. In reading the agreement into the record, Ahmad
acknowledged that he understood the terms of the settlement and that he understood that
he could not appeal the previous rulings made in these proceedings.
Ahmad’s counsel responded as follows to questions by Gregg at the April 17, 2012
hearing when asked what the purpose was for entering into the settlement:
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MR . GREGG: Based upon what? Things that were already agreed to at the time of
the judgment? How final is this judgment?
MR . SATTERFIELD: Not at all.
MR . GREGG: Then what was the purpose of entering it?
MR . SATTERFIELD: Getting out of a tight spot with a jury, with no case, with no
evidence and not allowed to go forward in any way, other than to try to resolve it in
a way that we could have time later to prove our set offs. And it’s contractual. Both
parties were sworn in and asked if they understood it and they did. I believe.
Ahmad now asserts that the circuit court erred in denying his motion to dismiss in its
November 5, 2009 order, approximately one-and-a-half years before Ahmad agreed to enter
into a settlement and stated on the record his understanding that, by entering into the
settlement, he waived his right to appeal the previous rulings of the court.
Horizon correctly notes that a litigant who has, voluntarily and with knowledge of
all the material facts, accepted the benefits of an order, decree, or judgment of a court,
cannot afterwards take or prosecute an appeal or error proceeding to reverse it. Ark. State
Highway Comm’n v. Marlar, 236 Ark. 385, 366 S.W.2d 191 (1963). A consent judgment is
a judgment sanctioned by the court, but one that is comprised of terms and provisions agreed
to by the parties. Selig v. Barnett, 233 Ark. 900, 350 S.W.2d 176 (1961). Consent excuses
error and ends all contention between the parties. Vaughan v. Brown, 184 Ark. 185, 40
S.W.2d 996 (1931). It leaves nothing for the court to do, but to enter what the parties have
agreed upon, and when so entered, the parties themselves are concluded. Id.
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Ahmad knowingly entered into a consent judgment, with the advice of counsel, and
accepted the benefits afforded by that judgment. He cannot now challenge the circuit
court’s rulings, which predated the consent judgment, on appeal.
Affirmed.
BROWN , J., agree.
VAUGHT, J., concurs.
LARRY D. VAUGHT, Judge, concurring. I agree that this case should be affirmed.
I write separately to address the issue of the requested recusal of the special master. While I
cannot vote to reverse based on our standard of review and the great discretion afforded to
judges in the matter of recusal, I must express my discomfort in the way this case was handled.
In this day and age when lawyers and the legal system as a whole are treated with
suspicion by many of our fellow citizens, I think lawyers should never accept an appointment
as a special master when they have had an attorney-client relationship with one of the parties.
Likewise, a circuit judge should never appoint a master who the judge knows has had such
a relationship. The “appearance of impropriety” is a part of our Code of Judicial Conduct,
and while appearances are in the eyes of the beholder, we should all maintain the highest
standards.
Satterfield Law Firm, PLC, by: Guy “Randy” Satterfield, for appellant.
Murphy, Thompson, Arnold, Skinner & Castleberry, by: Tom Thompson and Casey
Castleberry, for appellees.
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