Lipsey v. Giles , 439 S.W.3d 13 ( 2014 )

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SUPREME COURT OF ARKANSAS
No. CV-14-9
MAURICE R. LIPSEY, WILLIAM Opinion Delivered June 26, 2014
LARRY COX, AND CONNIE L. COX
APPELLANTS APPEAL FROM THE CLEBURNE
COUNTY CIRCUIT COURT
V. [NO. CV-2011-223-4]
HONORABLE TIM WEAVER,
KAREN GILES JUDGE
APPELLEE
REVERSED AND REMANDED.
COURTNEY HUDSON GOODSON, Associate Justice
Appellants Maurice R. Lipsey, William Larry Cox, and Connie L. Cox, appeal the
order entered by the Cleburne County Circuit Court dismissing their class-action complaint
for injunctive and other relief filed against appellee Karen Giles, in her official capacity as
Cleburne County Circuit Court Clerk. For reversal, appellants contend that the circuit court
erred in dismissing their complaint, sua sponte, based on a lack of damages. Appellants also
contend that the circuit court erred in dismissing the complaint because Arkansas law
recognizes the ability of a court to enjoin the actions of a state agency or official if their
actions are ultra vires. The order dismissing appellants’ complaint is a final judgment or
decree pursuant to Arkansas Rule of Appellate Procedure–Civil 2(a)(1). This court’s
jurisdiction is proper as this case involves an issue of substantial public interest relating to the
recording of oil-and-gas leases in Cleburne County. Ark. Sup. Ct. R. 1-2(b)(4). Because we
conclude that the circuit court improperly dismissed appellants’ complaint sua sponte, we
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reverse and remand.
Appellants filed a class-action complaint requesting an injunction and other relief on
October 31, 2011. The complaint alleges that Giles, along with Cleburne County Circuit
Court Deputy Clerks Heather Smith and Wanda Jensen, falsely and fraudulently notarized oil-
and-gas leases outside the presence of the landowners. According to the complaint, landmen,
who were procuring leases for oil-and-gas companies, would obtain the signatures of
landowners on the leases and then deliver the leases en masse to the clerk’s office. There, the
clerks would notarize the signatures and then record the leases, although the clerks had not
witnessed the landowners’ signing the leases.1 The complaint requested that the court grant
an injunction to require Giles to “inspect and verify each and every oil and gas lease received
for recording and determine if the notarial acknowledgment is accurate, true, and correct.”
Appellants further requested that the court enjoin Giles “to purge any and all oil and gas leases
which contain a false notarial acknowledgment.” Finally, the complaint requested costs and
attorney’s fees.
On November 30, 2011, Giles filed an answer to the complaint and a motion to
dismiss. In her motion to dismiss, Giles asserted that the complaint failed to state facts upon
which relief can be granted pursuant to Arkansas Rule of Civil Procedure 12(b)(6), failed to
join necessary parties including the lessee oil companies, the operators of the drilling units, and
the Arkansas Oil and Gas Commission, and that the complaint failed to meet the requirements
1
Although appellants contend that the leases were fraudulently notarized, there is no
allegation that appellants’ leases were procured fraudulently or illegally.
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for class-action certification. Finally, Giles asserted the defense of sovereign immunity.
Appellants filed an amended complaint on December 12, 2011, contending that they
had been “damaged and harmed by the practice of falsifying notarial acknowledgments,” and
that they “rely on the Cleburne County Circuit clerk to accept for filing only validly executed
documents which are not falsified and fraudulent.” Appellants also filed a response to Giles’s
motion to dismiss on that same date. Subsequently, on December 21, 2011, Giles filed an
amended motion to dismiss. In her amended motion, Giles contended that appellants had no
standing to bring the action because they have incurred no harm as a result of the allegations
in the complaint. She further asserted that the complaint stated no facts upon which she could
be found liable to appellants and again requested that the complaint be dismissed pursuant to
Arkansas Rule of Civil Procedure 12(b)(6). Appellants filed an answer to the motion to
dismiss on January 24, 2012. Giles then filed an answer to the amended complaint on May
4, 2012.
After discovery had begun, appellants filed a motion for an injunction on May 23,
2012. Giles filed an answer to the motion for an injunction two days later. After briefing
from the parties regarding the circuit court’s authority to grant the relief requested, the court
held a hearing on appellants’ motion for injunction on August 12, 2013. During the hearing,
the circuit court questioned appellants concerning their damages in the following colloquy:
THE COURT: Then what damage [have] your clients suffered that would require
anymore time of this Court in a case like this?
PLAINTIFFS’ COUNSEL: Well, the issue is this. My clients are residents of Cleburne
County. And they rely on these records just as everybody else does. And so does
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everyone else in Cleburne County. That’s why we filed this as a class action. And
that is the damages. Ms. Giles has said herself, in her deposition, under oath, that her
records are now unreliable. That nobody can rely on them because they don’t know
which things were properly—you know, my clients did enter into leases. And
they—there was no coercion. The Court is correct about that. Now, all the other
ones, we don’t know whether the people were of firm mind. Whether they knew
what they were doing. Whether somebody just put their name on the thing and went
down there and had it notarized. That’s why we brought this as a class. But the
damage is, is the disarray that the county’s records are in, Your Honor. And as
residents they’re entitled to be able to rely on them.
After that, the circuit court announced that “with the admission that none of the
plaintiffs have been damaged . . . I’m going to, on my own motion, I’m dismissing this case.”
On September 18, 2013, the circuit court filed a written order. In its written order, the
circuit court made the following findings: “(1) The Court finds that the Plaintiffs have suffered
no damages; and (2) The Court, sua sponte, dismissed the Plaintiffs’ Complaint.” The court
also incorporated its oral ruling by attaching a transcript of the hearing to its written order.
On appeal, appellants contend that the circuit court erred in dismissing their complaint, sua
sponte, for lack of damages. They further contend that the court has the authority to enjoin
ultra vires acts by a state agency or official.
We begin our analysis by determining the appropriate standard of review. Appellants
contend that the circuit court dismissed their complaint after considering matters outside the
pleadings. They assert, therefore, that this court should treat the court’s order as a granted
motion for summary judgment. Giles, however, contends that the circuit court dismissed the
complaint pursuant to Rule 12(b)(6), which she cited in her motion to dismiss. Giles
contends that this court should apply the abuse-of-discretion standard on review.
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It is well settled that a motion to dismiss is converted to a motion for summary
judgment when matters outside the pleadings are presented to and not excluded by the court.
Koch v. Adams, 2010 Ark. 131, 361 S.W.3d 817. Here, the court explicitly stated that it
dismissed the appellants’ complaint after a hearing on the motion for injunction. Attached
to that motion for an injunction were transcripts from Giles’s, Smith’s, and Jensen’s
depositions. In addition, the court incorporated the transcript from the hearing in which it
relied on statements from counsel that appellants’ leases were not fraudulent. Moreover, both
parties relied on the depositions attached to appellants’ motion for injunction during the
hearing. Because it is clear to this court that the circuit court considered matters outside the
pleadings in making its ruling, we treat the court’s dismissal as a granted motion for summary
judgment.
Summary judgment is appropriate when there are no genuine issues of material fact,
and the moving party is entitled to judgment as a matter of law. Koch, supra. On appeal, this
court determines if summary judgment was appropriate based on whether the evidentiary
items presented by the moving party in support of the motion leave a material fact
unanswered. Gentry v. Robinson, 2009 Ark. 634, 361 S.W.3d 788. This court views the
evidence in the light most favorable to the party against whom the motion was filed, resolving
all doubts and inferences against the moving party. Kyzar v. City of W. Memphis, 360 Ark.
454, 201 S.W.3d 923 (2005). Our review focuses not only on the pleadings, but also on the
affidavits and documents filed by the parties. Neal v. Sparks Reg’l Med. Ctr., 2012 Ark. 328,
422 S.W.3d 116. While we have recognized that summary judgment is simply one of the
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tools in a trial court’s efficiency arsenal; we only approve the granting of the motion when the
state of the evidence as portrayed by the pleadings, affidavits, discovery responses, and
admissions on file is such that the nonmoving party is not entitled to a day in court, i.e., when
there is not any genuine remaining issue of fact and the moving party is entitled to judgment
as a matter of law. Flentje v. First Nat. Bank of Wynne, 340 Ark. 563, 11 S.W.3d 531 (2000).
Moreover, we have held that, even when there is no material dispute as to the facts, the court
will determine whether “reasonable minds” could draw “reasonable” inconsistent hypotheses
to render summary judgment inappropriate. In other words, when the facts are not at issue
but possible inferences therefrom are, the court will consider whether those inferences can be
reasonably drawn from the undisputed facts and whether reasonable minds might differ on
those hypotheses. Id. If so, summary judgment is not appropriate.
For their first point on appeal, appellants contend that the circuit court erred in
dismissing their complaint sua sponte. We have recognized that it is error for a court to
dismiss a complaint without a motion, hearing, or other evidence in support of the dismissal.
Matsukis v. Joy, 2010 Ark. 403, 377 S.W.3d 245 (holding that the circuit court lacked
authority to enter a sua sponte order of dismissal pursuant to Ark. R. Civ. P. 12(b)(6) where
appellees never filed a motion seeking such a dismissal); Country Pride Foods Ltd. v. Medina &
Medina, 279 Ark. 75, 77, 648 S.W.2d 485, 486 (1983) (holding it was error for the circuit
court to dismiss the complaint sua sponte based on inconvenient forum, without hearing
evidence, when there had been no motion to dismiss filed by either party).
In Rogers v. Lamb, 347 Ark. 102, 60 S.W.3d 456 (2001), this court held that the circuit
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court erred in settling a case in favor of the plaintiff in the absence of any party’s filing of a
motion to dismiss or a motion for summary judgment. In that case, the plaintiff, Lamb, filed
a petition for ejectment against the defendant, Rogers, who filed an answer and a
counterclaim against Lamb. The circuit court held a preliminary hearing and received briefs
from the parties, and it then, sua sponte, entered an order resolving the merits of the case in
Lamb’s favor. On appeal, Rogers made several arguments, including that the court erred in
rendering its decision in the absence of an appropriate motion filed by either party. Rogers,
347 Ark. at 103, 60 S.W.3d at 457. This court agreed, noting that the trial court’s sua sponte
ruling deprived the parties of any opportunity to present evidence or witness testimony in
support of their positions.
More recently, we concluded that the circuit court erred in dismissing a case pursuant
to Rule 12(b)(6) because it converted the matter to a summary-judgment proceeding without
putting the party whose complaint was dismissed on notice that they would need to meet the
opposing party’s proof with their own. Matsukis, supra. We stated that, “[g]iven notice of the
court’s intentions and an opportunity to rebut Appellees’ proof with evidence of their own,
Appellants might have been able to submit additional evidence that indicated that there
remained a genuine issue of material fact.” Matsukis, 2010 Ark. 403, at 11–12, 377 S.W.3d
at 251. Because the circuit court’s actions foreclosed that possibility, we held that the sua
sponte dismissal of the complaint on summary judgment constituted reversible error.
In the present case, Giles filed motions to dismiss appellants’ complaint and amended
complaint pursuant to Rule 12(b)(6). Giles specifically alleged that the amended complaint
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did not state any facts to show that appellants “have standing to bring this action, as they have
incurred no harm as a result of the allegations in the Complaint.” While appellants contend
that Giles’s motion to dismiss was “denied in its entirety,” the record does not reflect any such
ruling.2 Giles’s motion to dismiss was filed approximately nineteen months prior to the
hearing. Approximately seven months before the hearing, the parties filed briefs on the issue
of the circuit court’s authority to grant the injunction. These briefs did not discuss the prior
motion to dismiss or discuss the issue of damages. Furthermore, the preliminary hearing was
set after appellants filed a motion for an injunction.3 Thus, appellants had no notice that the
circuit court was considering dismissing their complaint. During the hearing Giles did not
mention or renew her motion to dismiss. Moreover, the circuit court’s order dismissing the
complaint clearly states that the dismissal is sua sponte and makes no reference to any other
pending motions. The circuit court’s sua sponte dismissal of appellants’ complaint deprived
them of their day in court, despite the fact that appellants maintained that there were disputed
issues of fact outstanding, i.e., that they had suffered damages. Therefore, because appellants
were not given notice of the court’s intentions and had no opportunity to meet proof with
2
The record reflects that the circuit court set a hearing date of February 27, 2012, on
Giles’s motion to dismiss. However, the record contains no transcript of a hearing held on
that date nor does it contain any written order on Giles’s motion to dismiss. A motion to
dismiss is not subject to the “deemed denied” provisions of Arkansas Rule of Civil Procedure
59(b), which provides that a motion for new trial is deemed denied “if the court neither
grants nor denies the motion within 30 days of the date on which it is filed or treated as filed
. . . .”
3
In her motion for a continuance, Giles indicated that the hearing concerned “the
Motion for Injunction and Motions to Reopen/Reconvene Depositions.” There is no
mention of her motion to dismiss.
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proof and show that a material issue of fact existed, we hold that the circuit court erred in
dismissing their complaint sua sponte.
Because we reverse and remand on this point, we do not reach the remaining point
on appeal. See, e.g., Hobbs v. Gordon, 2014 Ark. 255, ___ S.W.3d ___.
Reversed and remanded.
Deal, Cooper & Holton PLLC, by: John R. Holton, for appellants.
Eric Bray; and PPGMR Law, PLLC, by: Kimberly D. Logue, for appellee.
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