Patton Hospitality Management, LLC v. Bella Vista Village Coopershares Owners Ass'n

Cite as 2016 Ark. App. 281
ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-15-771
PATTON HOSPITALITY Opinion Delivered: May 25, 2016
MANAGEMENT, LLC
APPELLANT APPEAL FROM THE BENTON
COUNTY CIRCUIT COURT
V. [NO. CV-14-1620-4]
BELLA VISTA VILLAGE
COOPERSHARES OWNERS HONORABLE JOHN R. SCOTT,
ASSOCIATION, INC. JUDGE
APPELLEE
AFFIRMED
BART F. VIRDEN, Judge
Appellant Patton Hospitality Management, LLC (Patton) brings this appeal to
challenge the Benton County Circuit Court’s orders granting summary judgment in favor
of Bella Vista Village Coopershares Owners Association, Inc. (the Association), awarding
attorney’s fees to the Association, and finding Patton in contempt of court. After
considering the merits of this appeal, we find no error and affirm.
I. Background
We begin by identifying the entities that are integral to the understanding of this
appeal. Appellee the Association owns a resort in Benton County known as Greens I, and
appellant Patton is a management company that entered into a contract to manage Greens
I. Although not a party to the litigation, Escapes Travel Choices, LLC (ETC), a company
that contracted to provide reservation services for Greens I, also factors heavily into the
outcome of this case. The underlying litigation arose when the Association terminated
Cite as 2016 Ark. App. 281
Patton’s management agreement. This appeal boils down to a dispute regarding whether
the Association was contractually bound to notify ETC of its intent to terminate that
agreement with Patton.
In August 2001, the Association and a company known as Escapes II, Inc. (Escapes
II) entered into a management agreement (Management Agreement) wherein Escapes II
agreed to provide management services for Greens I. The Management Agreement
included a provision that allowed Escapes II to assign its rights under the contract to another
management firm if the Association consented.
Escapes II eventually changed its name to Escapes!, Inc., and in October 2004,
Escapes!, Inc., the Association, ETC, and Escapes Property Management, LLC (EPM)
entered into an affiliation agreement (Affiliation Agreement). The Affiliation Agreement
provided for certain aspects of the management of Greens I; it made Greens I an ETC resort
and provided for the implementation of a reservation system for which ETC would be
responsible. It included a provision that “the Developer, the Association, and the
Management Company agree to immediately notify ETC, LLC of any change in any fact
or circumstance affecting the operation of the Resort . . . including but not limited to the
termination of any existing management company.”
Pursuant to the terms of the August 2001 Management Agreement, Escapes II
assigned its rights under the Management Agreement to EPM. A first amendment to the
Management Agreement memorialized this assignment in October 2012. In January 2013,
EPM assigned its rights and responsibilities under the Management Agreement to Patton,
and a second amendment to the Management Agreement was executed.
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The Association, Patton, and ETC executed an agreement referred to as the tri-party
agreement (Tri-Party Agreement) in January 2013. 1 According to the agreement, it was
entered into “to address and/or clarify certain items related directly or indirectly to the
Project and Management Agreement.” Paragraph 12(f) of the Tri-Party Agreement
contained a clause central to this case specifically providing that
[t]his Agreement (including the Exhibits to this Agreement) supercedes any
other agreement, whether written or oral, that may have been made or
entered into by any party or any of their respective Affiliates . . . relating to
the matters contemplated hereby. This Agreement (together with the
Exhibits) constitutes the entire agreement by and among the Parties and there
are no agreements or commitments by or among such Parties except as
expressly set forth herein. 2
Of particular significance is the procedure for terminating the management company.
The Tri-Party Agreement provides that the term of the management agreement will
automatically extend at the end of each contract year for one additional contract year unless
either Patton or the Association notifies the other party of its intent not to extend at least
ninety days prior to the commencement of the subsequent contract year.
In a letter dated July 31, 2013, the Association notified Patton that it intended to
terminate the Management Agreement at the conclusion of its term in January 2015. 3 The
Association sent an additional notice of termination to Patton by letter dated August 15,
1
An entity related to Patton and two entities related to ETC were also parties to the
Tri-Party Agreement, but they are not pertinent to this appeal.
The Affiliation Agreement was not included as an exhibit of the Tri-Party
2
Agreement.
3 This is more than ninety days prior to the commencement of the subsequent
contract year as required by the Tri-Party Agreement.
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2014. However, the Association did not notify ETC of Patton’s termination.
This litigation commenced shortly thereafter with Patton suing the Association in
December 2014. Patton claimed that the Association improperly terminated the
Management Agreement, and it sued the Association for breach of contract, specific
performance, promissory estoppel, and declaratory and injunctive relief. The dispute
concerned whether the Association was required to notify ETC of Patton’s termination.
The Association filed an answer and counterclaim wherein it sought declaratory relief that
the 2004 Affiliation Agreement had been superseded by the 2013 Tri-Party Agreement and
that the contract with Patton has been properly terminated. The Association also sought an
injunction requiring that Patton immediately cooperate and provide the Association with
access to and control over its funds. ETC was not a party to the litigation.
In January 2015, the Association filed a motion for summary judgment arguing that
it was entitled to declaratory and injunctive relief. The circuit court granted summary
judgment in the Association’s favor and found that, by granting the relief requested, all of
Patton’s claims against the Association were also effectively resolved in the Association’s
favor. An additional and pertinent portion of the order granting summary judgment is the
circuit court’s directive that “Patton shall immediately transfer and convey all of the
Association’s property unto the Association.”
Following the entry of the order granting summary judgment, the Association
petitioned the circuit court for an award of attorney’s fees based on the ability to recover
attorney’s fees in breach-of-contract cases. Ark. Code Ann. § 16-22-308. Patton resisted
this request, contending that this case was not primarily based in contract and that,
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accordingly, attorney’s fees were not authorized. The Association filed an additional motion
with the circuit court asking that Patton be held in contempt for “failure to transfer and
convey all of the Association’s property unto the Association.”
At the conclusion of a two-day hearing on these motions, the circuit court granted
all of the relief requested by the Association. It awarded the Association $22,941.50 in
attorney’s fees and also found Patton in willful and malicious contempt of the court’s
February 2015 order. This timely appeal followed.
On appeal, we are tasked with determining whether (1) the circuit court erred by
granting summary judgment in favor of the Association, (2) the circuit court abused its
discretion by awarding attorney’s fees to the Association, and (3) the circuit court erred in
finding Patton in contempt of court.
II. Summary Judgment
In reviewing summary-judgment cases, we determine whether the circuit court’s
grant of summary judgment was appropriate based on whether the evidence presented by
the moving party left a material question of fact unanswered. Nichols v. Farmers Ins. Co., 83
Ark. App. 324, 128 S.W.3d 1 (2003) (citing Beaver v. John Q. Hammons Hotels, Inc., 81 Ark.
App. 413, 102 S.W.3d 903 (2003)). The moving party is entitled to summary judgment if
the pleadings, depositions, answers to interrogatories and admissions on file, together with
affidavits, if any, show that there is not a genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law. Id. Summary judgment is not
proper where although the actual facts are not in dispute, they may result in differing
conclusions as to whether the moving party is entitled to judgment as a matter of law. Id.
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(citing Elam v. First Unum Life Ins. Co., 346 Ark. 291, 57 S.W.3d 165 (2001)). Moreover,
where the meaning of a contract does not depend on disputed extrinsic evidence, the
construction and legal effect of the policy are questions of law. Id. (citing Tunnel v.
Progressive N. Ins. Co., 80 Ark. App. 215, 95 S.W.3d 1 (2003)).
First, we consider two procedural challenges raised by Patton that we may dispose of
summarily. Patton contends that summary judgment was improper because ETC was not
a party to this litigation and because discovery needed to be completed.
Patton raised the argument that ETC was an indispensable party to the circuit court.
However, it failed to obtain a ruling on the issue. Failure to obtain a ruling on an issue
constitutes waiver of the issue on appeal. Gatlin v. Gatlin, 306 Ark. 146, 811 S.W.2d 761
(1991). We summarily dispose of this point on appeal.
Additionally, Patton contends that summary judgment was inappropriate because
discovery needed to be completed. Attached to Patton’s response to the motion for
summary judgment were affidavits presented in an attempt to demonstrate that there were
facts in dispute regarding the parties’ intent when the contracts at issue were executed.
Outside evidence regarding intent is pertinent only when interpreting an ambiguous
contract. Hanners v. Giant Oil Co. of Ark. Inc., 373 Ark. 418, 284 S.W.3d 468 (2008). The
interpretation of an unambiguous contract is a question of law, properly decided by
summary judgment. Roetzel v. Coleman, 2010 Ark. App. 206, 374 S.W.3d 166. As we will
discuss more fully below, we conclude that the circuit court correctly decided that only
issues of law were present. Therefore, the circuit court did not err by refusing to allow
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Patton to engage in discovery. Simply put, the intentions of the parties or circumstances
surrounding the contracts were not relevant to the legal question facing the circuit court.
Turning to the substantive issues on summary judgment, we recognize that the crux
of this case is whether the Association was required to notify ETC of its intent to terminate
the management agreement with Patton. This depends on the meaning and applicability of
certain contract provisions in the 2004 Affiliation Agreement and the 2013 Tri-Party
Agreement. The 2004 Affiliation Agreement imposes this duty on the Association, but the
2013 Tri-Party Agreement includes no such requirement. The circuit court determined as
a matter of law that the 2013 Tri-Party Agreement superseded the 2004 Affiliation
Agreement and found that because the Tri-Party Agreement did not expressly require notice
to ETC, ETC was no longer entitled to notice of termination of the management company.
Patton argues that the Affiliation Agreement was not superseded by the Tri-Party
Agreement. In addressing this argument, we must review the two agreements. In reviewing
contracts, the interpretation of an unambiguous contract is a question of law. Tri-Eagle
Enters. v. Regions Bank, 2010 Ark. App. 64, 373 S.W.3d 399. The initial determination of
an ambiguity rests with the circuit court, and if ambiguity exists, then the meaning of the
term becomes a question of fact for the fact-finder. Fort Smith Appliance & Serv. Co. v.
Smith, 218 Ark. 411, 236 S.W.2d 583 (1951).
In support of its argument, Patton references the merger clause found at paragraph
12(f) of the Tri-Party Agreement:
This Agreement (including the Exhibits to this Agreement) supercedes any
other agreement, whether written or oral, that may have been made or
entered into by any party or any of their respective Affiliates . . . relating to
the matters contemplated hereby. This Agreement (together with the
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Exhibits) constitutes the entire agreement by and among the Parties and there
are no agreements or commitments by or among such Parties except as
expressly set forth herein. 4
Patton claims that the two sentences of paragraph 12(f), when read together, indicate that
the Affiliation Agreement was not superseded. Patton suggests that the first sentence of
paragraph 12(f) was meant to apply retrospectively and that the Tri-Party Agreement only
superseded any prior agreements relating to a matter “contemplated by this agreement.”
Patton continues to offer that the second sentence of paragraph 12(f) merely prospectively
stated that it was the total agreement of the parties.
Taking Patton’s interpretation as correct, the question then becomes whether the
Affiliation Agreement’s notification procedure for the management company’s termination
was “contemplated by” the Tri-Party Agreement. We hold that it was. The Tri-Party
Agreement contemplated the protocol for the termination of the management company,
and it does not require that ETC be notified. Further evidence that the Affiliation
Agreement was contemplated by the parties to the Tri-Party Agreement is that Patton, the
Association, and ETC were parties to both agreements and that the Tri-Party Agreement
does not include the Affiliation Agreement as part of the agreement by making it an exhibit.
An additional argument raised by Patton is that the Tri-Party Agreement’s merger
clause was ineffective. Whether this merger clause is effective depends on whether the
Affiliation Agreement and the Tri-Party Agreement covered the same subject. Merger
happens only when the same parties to an earlier agreement later enter a written integrated
The 2004 Affiliation Agreement was not included as an exhibit of the Tri-Party
4
Agreement.
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agreement covering the same subject. Aceva Techs., LLC v. Tyson Foods, Inc., 2013 Ark.
App. 495, 429 S.W.3d 355. Here, the 2004 Affiliation Agreement and the 2013 Tri-Party
Agreement both provide for the procedures necessary to terminate a management
agreement. It is clear that these agreements cover the same subject, and thus, we hold that
the merger clause in the Tri-Party Agreement is effective.
Patton also advances an argument in support of the enforceability of the 2004
Affiliation Agreement based on the Restatement of the Law of Contracts, § 240. Section
240(1) provides generally that a written agreement “is not superseded or invalidated by a
subsequent or contemporaneous integration . . . relating to the same subject-matter, if the
agreement is not inconsistent with the integrated contract, and (a) is made for separate
consideration, or (b) is such an agreement as might naturally be made as a separate agreement
by parties situated as were the parties to the contract.” Restatement (First) of Contracts §
240(1) (1932) (emphasis added). Here, the Tri-Party Agreement was made for separate
consideration and is such an agreement that might naturally be made as a separate agreement
by the parties. Thus, the pertinent question becomes whether the Tri-Party Agreement is
inconsistent with the Affiliation Agreement. These contracts are inconsistent in that they
provide for differing ways to effectuate the termination of a management agreement.
We hold that the circuit court correctly determined that the 2013 Tri-Party
Agreement supersedes the 2004 Affiliation Agreement. The Association was not required
to provide notice of Patton’s termination to ETC.
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III. Attorney’s Fees
We now direct our attention to the circuit court’s award of attorney’s fees to the
Association. Following the entry of the order granting summary judgment, the Association
petitioned the court for an award of $22,941.59 in attorney’s fees pursuant to Arkansas Code
Annotated section 16-22-308. The circuit court granted the petition and awarded the
Association its full requested amount. Patton challenges this award, arguing that it was
improper because (1) attorney’s fees were not authorized because the breach-of-contract
claim was not the primary basis for recovery, (2) the award included fees associated with
Patton’s claim against the Association’s individual board members and that claim was not
based on a breach of contract, and (3) the award gave fees for duplicative and unnecessary
dual representation.
Our well-established rule relating to attorney’s fees is that they are not allowed except
when expressly provided by statute. Hanners, supra. Assuming fees are authorized by statute,
a circuit court’s decision to grant or deny attorney’s fees, and in what amount, lies within
the sound discretion of the court, and the appellate court will not reverse absent a showing
of abuse of discretion. Harris v. City of Fort Smith, 366 Ark. 277, 234 S.W.3d 875 (2006).
In determining whether the circuit court was authorized to award attorney’s fees, we
must examine whether Arkansas Code Annotated section 16-22-308 applied. Arkansas
Code Annotated section 16-22-308 provides for the award of “a reasonable attorney’s fee
to the prevailing party in a breach-of-contract case.” It is uncontroverted that attorney’s
fees are not recoverable for actions based in tort or for actions seeking injunctive relief. See
Wheeler Motor Co., Inc. v. Roth, 315 Ark. 318, 867 S.W.2d 446 (1993); see also Ark. Okla.
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Gas Corp. v. Waelder Oil & Gas, Inc., 332 Ark. 548, 966 S.W.2d 259 (1998). However,
where multiple claims are advanced—including a breach-of-contract claim—an attorney’s
fee award is proper when the action is primarily based in contract. Barringer v. Hall, 89 Ark.
App. 293, 305, 202 S.W.3d 568, 576 (2005).
We acknowledge that the dismissal of this case was prompted by the Association’s
request for summary judgment on its claims for declaratory and injunctive relief. However,
the grant of summary judgment on the Association’s counterclaim also prompted the
dismissal of the entire case, including Patton’s claims for breach of contract, specific
performance, and injunctive and declaratory relief against the Association. More
importantly, the resolution of each of the claims advanced by Patton and the Association
hinged on the interpretation of two contracts—the 2004 Affiliation Agreement and the
2013 Tri-Party Agreement. This action was clearly based primarily in contract, and
accordingly, the circuit court was authorized to award a reasonable attorney’s fee pursuant
to Arkansas Code Annotated section 16-22-308.
Patton focuses its remaining arguments on the impropriety of the amount of fees
awarded, contending that the award improperly included fees for duplicative and
unnecessary dual representation and for work not based on breach-of-contract issues. When
reviewing an order for attorney’s fees, we are charged with determining only whether there
has been an abuse of discretion. Harris, supra. In this case, the vast majority of the work
was related to issues primarily based in contract, and it is certainly common and allowable
for more than one lawyer to work on a case—especially a difficult one. We hold that the
circuit court did not abuse its discretion in its award of attorney’s fees and affirm on this
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point.
IV. Contempt
As its final point on appeal, Patton claims that the circuit court erred in holding it in
civil contempt for failure to comply with the order that it return all of the Association’s
property. 5 In the order granting summary judgment, Patton was required to “immediately
transfer and convey all of the Association’s property unto the Association.” After the entry
of the order, the Association filed a motion for contempt complaining that Patton had failed
and refused to turn over bank account information and its tangible personal property. Patton
responded by asserting that it had relinquished the bank account information but that it had
not relinquished the Association’s tangible personal property because the circuit court’s
order did not contemplate the exchange of tangible personal property.
The circuit court scheduled a two-day hearing on this motion and the motion for
attorney’s fees. At the conclusion of the first day of the hearing, the circuit court determined
that the order was not ambiguous and found Patton in willful and malicious contempt. That
evening, a representative of Patton provided to the Association the property it requested.
Ultimately, the circuit court entered an order for contempt that memorialized its contempt
finding and imposed a sanction against Patton.
We first address whether ambiguity in the order granting summary judgment
precluded the circuit court from holding Patton in contempt. Disobedience of any valid
judgment, order, or decree of a court having jurisdiction to enter it may constitute
5
The parties agree that the circuit court’s contempt finding was one for civil
contempt.
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contempt. Ivy v. Keith, 351 Ark. 269, 279, 92 S.W.3d 671, 677 (2002). But before a party
can be held in contempt for violating a court order, the order must be definite in its terms,
clear as to what duty it imposes, and express in its commands. Id.
Patton advances three arguments in support of this proposition; it alleges that the
circuit court’s order (1) did not identify the property to be relinquished, (2) did not specify
how to manage property jointly owned by Greens I and Greens II, and (3) did not impose
a timeframe for compliance.
Patton contends that the requirement that all property be relinquished was
ambiguous. Patton argues that it did not understand that it was required to relinquish items
of tangible personal property. However, the plain language of the order requires the transfer
of all personal property. For Patton to claim that it did not understand the meaning of the
word “all” is implausible and strains credulity. This is especially apparent when confronted
with the testimony that Patton did not relinquish items such as lawn equipment, vehicles,
and keys that are necessary for the daily operations of a resort.
Patton also argues that the issue of jointly held property made the court’s order
ambiguous. Patton claimed that it did not turn over the property jointly owned by Greens
I and Greens II because it was unclear how to effectuate this transfer. We are not persuaded
by this argument. Regardless of the rights of Greens II to some items of property, the
Association was entitled to all property in which it had an ownership interest. The
Association’s rights to its property were superior to those of Patton.
Patton also contends that the circuit court’s directive that required Patton to
“immediately transfer and convey all of the Association’s property unto the Association” was
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ambiguous. (Emphasis added.) We disagree. Again, the definition of the word
“immediately” should have been apparent to an entity such as Patton accustomed to
complicated, multiparty contracts. The circuit court clearly wanted the property transfer to
occur as quickly as possible, and the evidence indicates that Patton failed and refused to
comply with this directive.
Accordingly, we hold Patton’s arguments relating to ambiguity are without merit
and conclude that the circuit court’s order is definite in its terms and clear as to what duty
it imposes. Id.
Patton makes an additional argument that there is no evidence that it did not comply
with the circuit court’s order. We reverse a circuit court’s finding of civil contempt only
when it is clearly against the preponderance of the evidence. 6 Here, there is ample evidence
to support the circuit court’s finding of contempt. After the entry of the order granting
summary judgment, Patton continued to maintain control over many of the Association’s
tangible personal-property items. To continue to exert control over items of tangible
personal property after the entry of summary judgment begs the conclusion that the
interference was malicious and willful, and the evidence reflects that court intervention was
necessary to effectuate the return of the Association’s property. We affirm the circuit court’s
contempt finding against Patton.
6
While the parties agree that the circuit court held Patton in civil contempt, we
recognize that the contempt finding has some characteristics of criminal contempt. Our
standard of review of an order for criminal contempt is whether there is substantial evidence
to support the finding. Conlee v. Conlee, 370 Ark. 89, 97, 257 S.W.3d 543, 550 (2007).
Regardless of whether the circuit court’s finding was for civil or criminal contempt, the
evidence supports the contempt finding.
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V. Conclusion
Having considered the merits of Patton’s appeal, we affirm the circuit court’s orders
granting summary judgment, awarding attorney’s fees, and finding Patton in contempt.
Affirmed.
VAUGHT and HOOFMAN, JJ., agree.
Gill Ragon Owen, P.A., by: Matthew B. Finch and Heartsill H. Ragon III; and
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, LLC, by: Miles C.Thomas, pro hac vice, for
appellant.
Wright, Lindsey & Jennings LLP, by: Paul D. Morris; and Byars & Hall, by: Joe D. Byars,
Jr., for appellees.
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