Gemini Capital Grp. LLC v. McFarland

Cite as 2014 Ark. App. 83
ARKANSAS COURT OF APPEALS
DIVISION II
No. CV-13-645
Opinion Delivered February 12, 2014
GEMINI CAPITAL GROUP, LLC
APPELLANT APPEAL FROM THE SHARP
COUNTY CIRCUIT COURT
V. [NO. CV-2012-226]
HONORABLE KEVIN KING, JUDGE
KENNETH DEAN MCFARLAND
APPELLEE REVERSED AND REMANDED
ROBERT J. GLADWIN, Chief Judge
Appellant Gemini Capital Group, LLC, appeals the April 1, 2013 order of the Sharp
County Circuit Court granting appellee Kenneth McFarland’s motion for judgment on the
pleadings, thereby dismissing appellant’s complaint with prejudice. On appeal, appellant
claims that the circuit court erred in three ways: (1) dismissing the complaint because the
amended complaint cured any defects in the original; (2) dismissing appellant’s complaint
with prejudice rather than without; and (3) allowing a circuit court judge not assigned to the
case to render judgment. We reverse the dismissal and remand for further proceedings.
Appellant filed a complaint against appellee on December 14, 2012, alleging that
appellee had purchased items with a credit account that was assigned to appellant from Chase
Bank USA, N.A. (Chase). Appellant claimed that appellee owed $8,462.75 plus interest and
attached an affidavit of account signed by Roger Neustadt, appellant’s chief executive officer.
Appellee filed a pro se answer on January 4, 2013, alleging that appellant lacked standing, had
Cite as 2014 Ark. App. 83
an invalid assignment, and was not the owner of the alleged instrument or debt. No
certificate of service was attached.
On February 6, 2013, appellant filed a motion for default judgment against appellee
claiming that appellee had failed to appear or file an answer. On February 26, 2013, appellee,
through counsel, filed a motion for judgment on the pleadings arguing that appellant’s
complaint was deficient for failure to attach a copy of the agreement between appellee and
Chase in violation of Arkansas Rule of Civil Procedure 10(d) (2012), which requires a copy
of any written instrument or document upon which a claim is based to be attached to the
complaint. In his brief in support of the motion, appellee alleged that compliance with Rule
10(d) is mandatory and argued for summary judgment, citing LVNV Funding, LLC v. Nardi,
2012 Ark. 460.
Appellant filed an amended complaint on March 12, 2013, and attached the
cardmember agreement between Chase and appellee. Also on that date, appellant filed a
response to appellee’s motion for judgment on the pleadings, claiming that appellee’s motion
was moot due to the filing of the amended complaint with the required attachment and
citing Arkansas Rules of Civil Procedure 12(c) and 15(a). Rule 12(c) provides that any party
may move for judgment on the pleadings after the pleadings are closed. Ark. R. Civ. P.
12(c) (2012). Appellant argued that the pleadings were not closed and that appellee’s motion
for judgment was premature. Rule 15(a) allows for a party to amend its pleadings at any time
without leave of the court. Ark. R. Civ. P. 15(a) (2012). Appellant argued that by
amending its complaint with the cardmember agreement attached, it was in compliance with
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Rule 10(d). Appellee filed an answer to the amended complaint, relying on his motion for
judgment on the pleadings and claiming Rule 10(d) as an affirmative defense.
On April 1, 2013, the circuit court granted appellee’s motion for judgment on the
pleadings, citing Nardi, supra, and Rule 10(d). Although the circuit court acknowledged that
Rule 15(a) provides that a party may amend his pleadings at any time without leave of court,
it ruled that appellant failed to “set forth any facts upon which the Court can make a finding
of ‘good cause’ for omitting the ‘written instrument of document upon which such claim or
defense is averred.’” The dismissal was with prejudice.
Appellant filed a timely notice of appeal on April 30, 2013. However, on May 1,
2013, appellant filed a motion to set aside the April 1, 2013 order, alleging that appellant’s
counsel was only made aware of the circuit court’s dismissal order when he received a letter
from appellee’s attorney explaining that he would not be responding to appellant’s discovery
requests due to the dismissal order. Appellant filed a motion to set aside the order, citing
Arkansas Rule of Civil Procedure 60(a) (2012), which provides that the court retains
jurisdiction for ninety days to prevent a miscarriage of justice. No response was filed and no
order resulted from this motion. This appeal timely followed.
We construe court rules using the same canons of construction as are used to construe
statutes. Moon v. Citty, 344 Ark. 500, 42 S.W.3d 459 (2001). The first rule in considering the
meaning and effect of a statute is to construe it just as it reads, giving the words their ordinary
and usually accepted meaning in common language. Id. When the language of a statute is
plain and unambiguous, there is no need to resort to rules of statutory construction, and the
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analysis need go no further. Id. We review issues of statutory construction de novo as it is for
us to decide what a statute means. Hodges v. Huckabee, 338 Ark. 454, 995 S.W.2d 341 (1999).
We are not bound by the decision of the trial court; however, in the absence of a showing
that the trial court erred in its interpretation of the law, that interpretation will be accepted
as correct on appeal. Id.
Rule 15(a) provides that
[w]ith the exception of pleading the defenses mentioned in Rule 12(h)(1), a party may
amend his pleadings at any time without leave of the court. Where, however, upon
motion of an opposing party, the court determines that prejudice would result or the
disposition of the cause would be unduly delayed because of the filing of an
amendment, the court may strike such amended pleading or grant a continuance of
the proceeding.
In Harris v. First State Bank of Warren, 22 Ark. App. 37, 732 S.W.2d 501 (1987), this
court held that, because there had been no determination of either undue delay or prejudice
under Rule 15(a), the trial court erred in dismissing the amended answer. In Cavalry SPV,
LLC v. Anderson, 99 Ark. App. 309, 311–12, 260 S.W.3d 331, 332–33 (2007), this court
stated:
Arkansas Rule of Civil Procedure 15(a) permits liberal amendments to pleadings at
any time without leave of the court. Nat’l Sec. Fire & Cas. Co. v. Shaver, 14 Ark. App.
217, 686 S.W.2d 808 (1985). A trial court is vested with broad discretion in allowing
or denying amendments to pleadings. Turner v. Stewart, 330 Ark. 134, 952 S.W.2d 156
(1997). But, a court abuses its discretion in striking an amended pleading where no
prejudice is found and no undue delay is caused by the amendment. See Ultracuts Ltd.
v. Wal-Mart Stores, Inc., 343 Ark. 224, 33 S.W.3d 128 (2000); Travis v. Houk, 307 Ark.
84, 817 S.W.2d 207 (1991). Failure of the opposing party to seek a continuance is a
factor to be considered in determining whether prejudice is shown, as is the ability
of the opposing party to have a fair opportunity to defend after the amendment. See
Turner v. Stewart, supra. Where neither a continuance is requested nor a demonstration
of any prejudice resulting from an amendment is shown, the amendment should be
allowed. Id.
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Rule 10(d) concerns form of pleadings and required exhibits and states that “[a] copy
of any written instrument or document upon which a claim or defense is based shall be
attached as an exhibit to the pleading in which such claim or defense is averred unless good
cause is shown for its absence in such pleading.” In Nardi, supra, relied on here by the circuit
court to dismiss appellant’s complaint, our supreme court affirmed the circuit court’s granting
of summary judgment because LVNV had failed to attach a copy of the agreement between
Nardi and Citibank, LVNV’s assignor, to its complaint. When LVNV attached the
agreement to its motion for summary judgment, our supreme court held:
LVNV attached to its motion for summary judgment a written “Card Agreement”
alleged to be the instrument upon which the claim was based. Pursuant to Rule 10(d),
any instrument upon which the claim was based had to be attached as an exhibit to
the complaint. Compliance with Rule 10(d) is mandatory. See Ray & Sons Masonry
Contractors, Inc. v. U.S. Fid. & Guar. Co., 353 Ark. 201, 114 S.W.3d 189 (2003).
Nardi, 2012 Ark. 460 at 2–3.
The instant case is distinguishable from Nardi, supra, because there, LVNV attached
the required documents to its motion for summary judgment. Here, appellant attached the
required documents to its amended complaint, which follows the requirements as set forth
under Rule 10(d). A similar distinction can be made with Ray & Sons, supra, where our
supreme court held it to be a violation of Rule 10(d) to allow a second amended complaint
against Ray & Sons for work on a Wal-Mart store in McKinney, Texas, filed after the statute
of limitations had expired, where neither the first nor second amended complaints alleged
any specific allegations against Ray & Sons based on its contract for work on the McKinney
store and did not have the McKinney contract attached. Ray & Sons, 353 Ark. at 213–14,
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114 S.W.3d at 196–97. Here, appellant sued appellee on a credit card account—the same
account referenced in the amended complaint to which the cardmember agreement was
attached. Therefore, there was no surprise to appellee, as was disallowed in Ray & Sons.
Appellee argues that the circuit court did not err in dismissing the complaint. He
contends that appellant’s argument is contrary to the clear language contained in Rule 10(d),
which requires a showing of “good cause” when a copy of the written instrument or
document upon which its claim is based is not attached as an exhibit. He asserts that the
plain language of the rule requires the “good cause” showing and without enforcing it, the
rule would be a nullity. Appellee also contends that Rule 10(d) and Rule 15(a) should be
read so as to give effect to both.
However, we agree with appellant’s contention that the circuit court erred as a matter
of law by dismissing its complaint because the amended complaint should have related back
to the filing of the original complaint, thereby curing any defects by complying with Rule
10(d) with the attachment of the required document. Rule 15 provides that an amendment
of a pleading relates back to the date of the original pleading when the claim in the amended
pleading arose out of the conduct, transaction, or occurrence set forth in the original
pleading. Ark. R. Civ. P. 15(c)(1). Therefore, giving effect to both Rules 10(d) and 15(a),
the amendment to the complaint brought appellant into compliance with Rule 10(d), and
appellant no longer had to give “good cause” for noncompliance. Thus, we reverse and hold
that appellee’s argument regarding Rule 10(d) became moot, and the trial court erred by
dismissing the complaint for noncompliance with the rule.
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Under Rule 15(a), upon motion of an opposing party, a court may strike an amended
pleading when prejudice would result or the disposition of the cause would be unduly
delayed because of the filing of an amendment. Prejudice was not addressed here, and,
relying on Harris, supra, where it was error for the trial court to dismiss an amended answer
when there was no determination of undue delay or prejudice, we remand for further
proceedings. Accordingly, we do not address appellant’s remaining points on appeal.
Reversed and remanded.
WOOD and BROWN , JJ., agree.
Allen and Withrow, by: Teaven Stamatis, for appellant.
R.T. Starken, for appellee.
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