Halon V, LLC v. Terminella ( 2023 )

Cite as 2023 Ark. App. 193ARKANSAS COURT OF APPEALS
DIVISION IV
No. CV-21-237
HALON V, LLC Opinion Delivered April 5, 2023
APPELLANT
APPEAL FROM THE BENTON
COUNTY CIRCUIT COURT
V. [NO. 04CV-20-2198]
THOMAS TERMINELLA A/K/A TOM
TERMINELLA; MONICA
TERMINELLA; THE TERMINELLA
HONORABLE XOLLIE DUNCAN,
COMPANY, INC.; MONICA’S
JUDGE
MEADOW, LLC; WEDINGTON MINE,
LLC; AND JOHNSON MINE, LLC
APPELLEES
REVERSED AND REMANDED
CINDY GRACE THYER, Judge
Halon V, LLC (“Halon”), has filed this appeal from a Benton County Circuit Court
order dismissing its first amended complaint against the appellees. Because the circuit court
converted a motion to dismiss to a motion for summary judgment without giving the
appellant a reasonable opportunity to meet proof with proof and attempt to show an issue
of material fact, we reverse and remand.
In 2019, the appellant, Halon, was assigned a judgment against Thomas Terminella
(“Tom”) that had been entered in 2009. On October 13, 2020, Halon filed a complaint
against Tom; his wife, Monica Terminella (“Monica”); the Terminella Company, Inc.;
Monica’s Meadow, LLC; Wedington Mine, LLC; and Johnson Mine, LLC. The Terminella
Company, Inc., and Monica’s Meadow, LLC, are collectively referenced herein as the
“Monica Business Appellees.” Wedington Mine, LLC, and Johnson Mine, LLC, are
collectively referenced herein as the “Mine Appellees.”
Halon alleged claims under Arkansas Code Annotated section 16-66-418 (Repl. 2005)
and unjust enrichment against all appellees and asked to pierce the corporate veil of the
Monica Business Appellees. All the appellees moved to dismiss the complaint. Additionally,
the Mine Appellees filed a verified answer on November 13, 2020.
On December 15, 2020, Halon purchased “every chose in action possessed by
Thomas A. Terminella.” On December 17, Halon filed its first amended complaint stating
several new facts, including that Halon had purchased Tom’s choses in action. The first
amended complaint again alleged claims under § 16-66-418 and unjust enrichment on
Halon’s behalf and as Halon standing in Tom’s shoes against all appellees. The first amended
complaint also asserted a claim to pierce the corporate veil of the Monica Business Appellees.
All the appellees moved to dismiss pursuant to Arkansas Rule of Civil Procedure 12(b)(6).
The Mine Appellees did not file a verified answer to the first amended complaint. The circuit
court granted the appellees’ motions to dismiss on February 25, 2021. The dismissal order
stated, in its entirety:
Now on this 25th day of February, 2021, the above-styled cause came before
the Court on the motions of all Defendants to dismiss the Plaintiff’s Amended
Complaint. From the pleadings, the Court finds that said motions should be
and hereby are granted. The court does not find the underlying judgment to
be void, but does find that the Plaintiff’s Amended Complaint fails to state
facts upon which relief can be granted based on Plaintiff’s causes of action as
asserted in said Amended Complaint.
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The appellant then brought this appeal, arguing that the circuit court abused its
discretion when it dismissed all of Halon’s claims.
I. Standard of Review
When reviewing a summary-judgment action, this court will determine whether
genuine issues of material fact exist. United Servs. Auto. Ass’n v. Norton, 2020 Ark. App. 100,
at 4, 596 S.W.3d 522, 525. If issues of law or statutory interpretation are presented, then
this court’s standard of review is de novo. Id.II. Analysis
The order in this appeal was purportedly an order granting the appellees’ motions to
dismiss for failure to state a claim pursuant to Arkansas Rule of Civil Procedure 12(b)(6).
However, the circuit court converted the motions to dismiss to motions for summary
judgment by considering matters outside the first amended complaint.
When considering a Rule 12(b)(6) motion, the circuit court does not consider matters
outside the four corners of the complaint, and all the allegations in the complaint are to be
taken as true. York v. GALR, LLC, 2022 Ark. App. 287, at 3, 647 S.W.3d 1, 4. Arkansas Rule
of Civil Procedure 12(b)(6) also requires that if matters outside the complaint “are presented
to and not excluded by the court, the motion shall be treated as one for summary judgment
and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity
to present all material made pertinent to such a motion by Rule 56.” Ark. R. Civ. P. 12(b)(6).
Further, when a party presents material outside the complaint and the circuit court does not
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specifically exclude it, then this Court considers the material to have influenced the circuit
court’s decision. Morgan v. Turner, 2010 Ark. 245, at 8, 368 S.W.3d 888, 894.
Here, the Mine Appellees filed a verified answer to the complaint on November 13,
2020. This verified answer was not a simple list of which facts as stated in the complaint were
denied and which were admitted along with a recitation of affirmative defenses. The verified
answer also included facts that were not pled in the complaint—or later, in the first amended
complaint. The verified answer stated that 100 percent of the Mine Appellees’ interests were
sold to Mitchell Massey on or about October 1, 2020, “in a good-faith, arm’s length
transaction for value, which cuts off any rights Plaintiff may have to recover from [Mine
Appellees] any money to satisfy Plaintiff’s judgment against Tom.”
Counsel for the Mine Appellees referenced this new factual allegation at least six
times in the Mine Appellees’ combined motion to dismiss plaintiff’s first amended complaint
and brief in support. Indeed, counsel for the Mine Appellees referenced the allegation from
the verified answer as grounds for this court to affirm the circuit court’s order.
The circuit court stated in its order that it decided its ruling “[f]rom the pleadings[.]”
An answer is a pleading. Ark. R. Civ. P. 7(a). The Mine Appellees clearly asked both the
circuit court and this court to consider matters outside the first amended complaint. Because
the Mine Appellees presented facts outside the first amended complaint and encouraged the
circuit court to consider those facts, and because the circuit court specified that it had relied
on the pleadings—which would include the verified answer—the motion to dismiss was
converted to a motion for summary judgment. See Ark. R. Civ. P. 12(b)(6).
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Rule 12(b)(6) states that when a motion to dismiss is treated as a motion for summary
judgment, “all parties shall be given reasonable opportunity to present all material made
pertinent to such a motion by Rule 56.” Ark. R. Civ. P. 12(b)(6). If the party moving for
summary judgment makes a prima facie showing that it is entitled to judgment as a matter
of law, then the nonmoving party has the opportunity to “meet proof with proof by showing
a material issue of fact.” Robinson v. Quail Rivers Props., LLC, 2022 Ark. App. 409, at 3, 654
S.W.3d 690, 693.
Here, there was no hearing on the motion, nor was there any notice given to the
parties that the circuit court was converting the Rule 12(b)(6) motion to a motion for
summary judgment. Failing to provide such notice or an opportunity to present all material
made pertinent by Rule 56 is reversible when it is “manifest” that the error was prejudicial.
See Rankin v. Farmers Tractor & Equip. Co., Inc., 319 Ark. 26, 31, 888 S.W.2d 657, 659 (1994)
(citing BWH, Inc. v. Metro. Nat’l Bank, 267 Ark. 182, 590 S.W.2d 247 (1980)). The circuit
court dismissed the first amended complaint before the appellant had the opportunity to
conduct discovery and gather any documents or other evidence it could use in an attempt to
refute the new factual allegations made in the verified answer. Under these circumstances, it
is manifest that the circuit court’s error was prejudicial.
For these reasons, the circuit court’s order dismissing the first amended complaint is
reversed and remanded for further proceedings.
Reversed and remanded.
ABRAMSON and GLADWIN, JJ., agree.
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Ferguson Law Firm, PLLC, by: J. Brian Ferguson, for appellant.
Tim Snively, for separate appellee Thomas Terminella a/k/a Tom Terminella.
Everett Law Firm, by: John Everett; and Smith, Cohen & Horan, PLC, by: Matthew T.
Horan, for separate appellees Monica Terminella; The Terminella Company, Inc.; and
Monica’s Meadow, LLC.
Friday, Eldredge & Clark, LLP, by: Joshua C. Ashley and Kael K. Bowling, for separate
appellees Wedington Mine, LLC; and Johnson Mine, LLC.
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