Cite as 2015 Ark. App. 696
ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-15-611
OPINION DELIVERED DECEMBER 9, 2015
BOB DERRICK
APPELLANT APPEAL FROM THE SEBASTIAN
COUNTY CIRCUIT COURT,
GREENWOOD DISTRICT
V. [NO. CV-2013-132-G]
HONORABLE STEPHEN TABOR,
JUANITA DERRICK, SARAH JANE JUDGE
JONES, and JOHN DERRICK JONES
APPELLEES AFFIRMED
ROBERT J. GLADWIN, Chief Judge
Bob Derrick appeals the Sebastian County Circuit Court’s June 2, 2015 order denying
his complaint against appellees Juanita Derrick, Sarah Jane Jones, and John Derrick Jones for
unjust enrichment. He argues that the trial court’s decision was clearly erroneous. We affirm.
Appellee Juanita Derrick deeded the property at issue, 143 acres in Greenwood,
Arkansas, to her three grandchildren, leaving herself a life estate. Appellees Sarah and John
Jones, two of Juanita’s three grandchildren, received the whole property as tenants in common
after the third grandchild had deeded her portion to them.
Appellant Bob Derrick is Juanita’s son and Sarah and John’s uncle. Bob is a doctor
who had been living overseas for an extended period; when he returned to Greenwood, he
built a house for his mother on the property. At the time he built the house, he knew that
Cite as 2015 Ark. App. 696
his mother had only a life estate in the property and that Sarah and John owned title as tenants
in common.
The evidence at trial was that the parties had multiple conversations before
construction began on the house, and Sarah and John offered for Bob to sign a “Ground Lease
for Life” at a lawyer’s office, although that lease was never signed. The lease would have
given Bob a life estate in the property. After one year, construction on the house was
complete, and Bob had spent around $600,000 on a 5000-square-foot house with extensive
landscape, which took another year to construct. He claimed that he had increased the value
of the property from $180,000 to $495,000. He asserted that he was never told not to
construct the home, the construction was visible to anyone, and all the parties knew of the
construction.
Bob filed a complaint in the circuit court alleging that he had built the house with the
expectation that he would be compensated accordingly. He claimed that Sarah and John were
unjustly enriched through his efforts and his funds. He asked for “restitution of or for the
property and/or benefits received, retained, or appropriated as such restitution.” He sought
a lien or interest in the property for the total amount of his investment.
Sarah and John filed an answer and a counterclaim alleging that Bob had cleared
timber, barns, and other fixtures without their permission. They sued him for ejectment,
trespass, and treble damages for clearing timber, barns, and other buildings from the property.
They also sought damages based on conversion for the timber that Bob had cut.
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No evidence was admitted pertaining to the damages sought in the counterclaim, and
the trial court granted Bob’s dismissal motion regarding it. However, in its order of May 7,
2014, wherein the trial court analyzed Bob’s case under unjust enrichment and found that he
was not entitled to relief, the court did not include its dismissal of the counterclaim. The trial
court’s order states:
To sustain an action for unjust enrichment, Plaintiff has the burden of proving the
following elements:
First, that Plaintiff provided the improvements to the property to Defendants, who
received the benefit of them;
Second, that the circumstances were such that Plaintiff reasonably expected to be paid
the value of the improvements by Defendants;
Third, that Defendants were aware the Plaintiff was providing such improvements
with the expectation of being paid and accepted the improvements; and,
Fourth, the reasonable value of the improvements received by Defendants.
The trial court found that Sarah and John had not received the benefit of the
improvements; that Sarah and John had not taken any action to create an expectation from
Bob that he might be compensated; that all the parties knew of the improvements, but Sarah
and John did not know of an expectation that Bob would be reimbursed, especially
considering the hostility among them; and finally, that Bob was not entitled to damages:
As stated in the pleadings of the parties, Arkansas Law does not authorize damages for
improvements that have enhanced the value of property when they were undertaken
at the risk of the actor. Childs v. Adams, 322 Ark. 424, 909 S.W.2d 641 (1995). While
Plaintiff undertook the improvements at the request of, or at least acquiescence of
Separate Defendant, Juanita Derrick, his actions were not at the request or consent of
the record owners, the Jones Defendants. Plaintiff elected to make the improvements
without the consent of the record owners and in the face of hostility and a series of
failed negotiations. In the Court’s view, Plaintiff cannot piggyback off the consent of
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the life estate holder and attribute that consent to the owners to justify his actions and
gain an interest in the property.
Bob then filed a posttrial motion asking that the trial court reconsider its decision and
that the court include its dismissal of the counterclaim in an amended and final order. The
motion was denied by order filed June 17, 2014. This court dismissed Bob’s first appeal for
lack of jurisdiction because, due to the pending counterclaim, the circuit court’s order was not
final. Derrick v. Derrick, 2015 Ark. App. 272. The trial court filed an order on June 2, 2015,
mirroring its earlier ruling denying the unjust-enrichment claim and adding the dismissal of
Sarah and John’s counterclaim. A notice of appeal was filed on June 11, 2015, and this appeal
followed.
The issue of unjust enrichment is a question of fact. Feagin v. Jackson, 2012 Ark. App.
306, at 7, 419 S.W.3d 29, 33. We review findings made at a bench trial to determine
whether they are clearly erroneous or clearly against the preponderance of the evidence. Sims
v. Moser, 373 Ark. 491, 284 S.W.3d 505 (2008); Kapach v. Carroll, 2015 Ark. App. 466, 468
S.W.3d 801. A finding is clearly erroneous when, although there is evidence to support it,
the reviewing court is left with a definite and firm conviction that a mistake was made after
review of all the evidence. Sims, supra. Facts in dispute and credibility determinations are
within the province of the fact-finder. Sims, supra.
For a court to find unjust enrichment, a party must have received something of value
to which he is not entitled and which he must restore. Campbell v. Asbury Auto., Inc., 2011
Ark. 157, 381 S.W.3d 21; Feagin, supra. There also must be some operative act, intent, or
situation to make the enrichment unjust and compensable. Id. One who is free from fault
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cannot be held to be unjustly enriched merely because he has chosen to exercise a legal or
contractual right. Id. It is an equitable principle invoked to render a situation fair under the
circumstances. See Le v. Nguyen, 2010 Ark. App. 712, 379 S.W.3d 573.
Bob argues that the trial court’s denial of his claim was clearly erroneous. He contends
that the trial court added requirements to the unjust-enrichment doctrine. He claims that the
trial court’s findings–that (1) there was no evidence that Sarah and John took any action that
would create an expectation of reimbursement; (2) the evidence did not establish that Sarah
and John knew that Bob expected to be compensated; and (3) the evidence was clear that
their relationship was hostile and that they would never have agreed to reimbursement–were
beyond what he had to prove to be entitled to reimbursement. He argues that he presented
substantial proof to meet the elements for unjust enrichment, as well as the added
requirements as set forth by the trial court.
Sarah and John assert that Arkansas Model Jury Instruction-Civil 2445 (2015) for
unjust enrichment contains the elements that must be proved, and the trial court considered
those elements as listed in its order. Sarah and John argue that the trial court did not impose
additional burdens of proof for unjust enrichment and contend that the court merely
explained why the evidence did not satisfy the elements. We agree with their assertion that
the trial court’s explanation was not an added requirement.
Bob contends that there was clear evidence that he had spent over $600,000 in
improvements. He claims that those improvements increased the value of the property by
about $300,000. Bob claims that the trial court’s finding that Sarah and John have not yet
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received the benefit of the improvements ignores that title is held in their names, subject to
Juanita’s life estate. Thus, he asserts that everyone connected to the property would have
benefited from the improvements. On the contrary, Sarah and John contend that the trial
court was correct that Bob did not prove that they had received any benefit. Sarah testified
that the improvements to the property caused her to pay higher property taxes. Bob is
receiving the benefit, along with Juanita, because he and Juanita are living on the property.
Based on these facts, we hold that it was not erroneous to find that Sarah and John had not
yet received the benefit of Bob’s expenditures.
Bob argues that the trial court’s findings that Sarah and John did not act to create an
expectation for Bob to be reimbursed overlooks their offer to give him a leasehold interest for
life without payment of rent before the construction. He claims that, even though the lease
was not executed, it shows that everyone knew he was entitled to compensation for his
improvements. He contends that from his rejection of the lease, all knew he expected
payment. However, Sarah and John argue that they did nothing to create such an
expectation, claiming that the facts that they never signed the lease agreement with Bob and
did not visit the property during the construction were evidence that a reasonable person
would not have made the improvements with the expectation of compensation. They urge
this court to affirm the trial court’s finding that surrounding circumstances of the parties’
hostility and a lack of action by Sarah and John would not create a reasonable expectation in
Bob for compensation.
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However, Bob asserts that no one told him to stop building. He argues that one
cannot sit back and watch an action being taken and remain silent and then assert a privilege
that would cut against the effort that had been made, citing Baker-Matthews Lumber Co. v.
Bank of Lepanto, 170 Ark. 1146, 282 S.W. 995 (1926); and People’s Nat’l. Bank of Little Rock
v. Linebarger Constr. Co., 219 Ark. 11, 240 S.W.2d 12 (1951). Sarah and John argue that they
had no duty to tell Bob to stop construction. They assert that the evidence was that they did
not go to the house while it was being built. Further, they had a remainder interest, subject
to Juanita’s life estate. Thus, they contend that they did not have a duty or a right to stop him
during Juanita’s lifetime.
Bob also claims that the trial court required him to establish the consent of Sarah and
John, but he maintains that consent is not an element of proof for unjust enrichment.
However, he also contends that, even though John did not testify, his admissions to Juanita
and Bob were presented, and Juanita clearly consented. He claims that only Sarah did not
consent, but it served her purpose not to because she received an increased property value.
Bob claims further that, Sarah, along with John, offered the lease to him, recognizing that he
was entitled to compensation in the form of free rent for life conditioned upon him
constructing a home.
Sarah and John contend that their hostile relationship with Bob reveals Bob’s
unreasonableness and their own lack of awareness. The hostility decreases the chances that
they were aware of Bob’s expectation; thus, they claim that hostility was therefore a proper
consideration. Sarah and John maintain that they were not aware of Bob’s expectations for
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compensation, and the trial court was correct in holding that the evidence did not establish
their knowledge. Had Bob signed the lease, Sarah and John would have been aware of his
expectation. However, there was no lease, and they gave Bob no consent for the
construction. Thus, we hold that the trial court’s determination that they had no knowledge
of any expectation for compensation by Bob was not clearly erroneous.
Finally, Bob contends that the trial court’s reliance on Childs v. Adams, 322 Ark. 424,
909 S.W.2d 641 (1995), was misplaced. He maintains that the case is distinguishable because
it involved a breach of contract for sale of real property.
Sarah and John argue that Childs, supra, was not based solely on the contractual nature
of the claim but also on the principles of unjust enrichment and equity. They contend that
Bob seeks reimbursement for expenditures made without their consent. They maintain that
he should not be entitled to restitution because the improvements were made without
mistake, coercion, request, or consent. Sarah and John claim that Bob assumed the risks and
barred himself from recovery under the theory of unjust enrichment.
Sarah and John cite Acord v. Acord, 70 Ark. App. 409, 19 S.W.3d 644 (2000), where
the life tenant could not get reimbursement from the owner of the remainder interest for
monies spent to improve the property and pay property taxes. As in Acord, Sarah and John
insist that Bob assumed the risk. In the instant matter, the trial court agreed. Life tenants
ordinarily are not compensated by remaindermen when they make permanent improvements
to the estate. Kelley v. Acker, 216 Ark. 867, 228 S.W.2d 49 (1950). It logically flows that
when a third party makes improvements at the request of a life tenant, with full knowledge
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of the ownership interests and without any agreement from the remaindermen, that third
party cannot recover from the remaindermen either. Accordingly, the trial court’s
determination that restitution was not warranted is not clearly erroneous.
Affirmed.
ABRAMSON and KINARD, JJ., agree.
Gean, Gean & Gean, by: Roy Gean III, for appellant.
The McHughes Law Firm, PLLC, by: Becky A. McHughes, for appellees.
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