Heinrich v. Anders

Cite as 2017 Ark. App. 413

ARKANSAS COURT OF APPEALS
DIVISION IV
No. CV-16-534

Opinion Delivered August 30, 2017
LARRY DEWAYNE HEINRICH AND
SETH HEINRICH APPEAL FROM THE JEFFERSON
APPELLANTS COUNTY CIRCUIT COURT
[NO. 35CV-13-253]
V.
HONORABLE ROBERT H. WYATT,
JR., JUDGE
ALLISON ANDERS
APPELLEE AFFIRMED

LARRY D. VAUGHT, Judge

Appellants Larry Heinrich and Seth Heinrich appeal from the Jefferson County Circuit

Court’s findings of fact and conclusions of law entered on May 24, 2016, in which the court

found that (1) David Myhand breached the contract for the sale of real property located at

6712 Sheridan Road, Pine Bluff, Arkansas (“the property”), that he entered into with Larry

and appellee Allison Anders (formerly Heinrich); (2) Larry fraudulently transferred the

property to Seth, the son of Larry and Allison; (3) Allison’s March 5, 2001 power of attorney

in favor of Larry was not used in the conveyance of the property; and (4) the unrecorded and

unsigned assignment of the real-estate contract did not meet the requirements of the statute

of frauds. On appeal, Larry and Seth 1 argue that (1) the circuit lacked subject-matter

jurisdiction based on the doctrine of res judicata and (2) the circuit court clearly erred in

1David did not appeal from the circuit court’s findings of fact and conclusions of law.
 Cite as 2017 Ark. App. 413

concluding that the power of attorney was not used in the conveyance of the property from

David to Seth. We affirm.

Allison and Larry were married when they entered into the contract for the sale of the

property with David in May 2009. Under the terms of the contract, Allison and Larry made a

cash payment of $1000 to David when the contract was executed and thereafter paid David

$1050.42 in eleven monthly installments. The facts are undisputed that Allison and Larry made

all payments in a timely fashion. Pursuant to the contract, David was required to execute and

deliver to Allison and Larry a warranty deed conveying the property free and clear of all liens

and encumbrances. However, on July 8, 2010, David signed a warranty deed granting title to

the property to Seth.

On May 16, 2013, Allison filed this action against Larry, Seth, and David alleging that

David was in breach of the contract for the sale of real property that he had entered into with

Larry and Allison. Her complaint also alleged that Larry fraudulently conveyed the property

in question to Seth.

At trial, Jimmy Dill testified that he was serving as David’s attorney in 2009 and that

he prepared the contract for the sale of the property from David to Allison and Larry. Jimmy

stated that David called to advise that the contract had been paid in full and that it was time

for him (David) to deliver the deed. According to Jimmy, David said that Allison and Larry

did not want the deed to be in their names; rather, they wanted the deed to be in Seth’s name.

Jimmy did not talk with Seth or Allison about this, but he did recall talking to Larry. Jimmy

told Larry that David was contractually obligated to grant the property to Allison and Larry

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but that he (Jimmy) could draft an assignment of the contract in order to permit David to

grant the property to Seth.

Jimmy prepared an assignment wherein Allison and Larry authorized David to grant

the property to Seth. It had signature lines for David, Allison, Larry, and Seth. Jimmy also

prepared the warranty deed granting the property to Seth. Jimmy testified that he told David

not to sign the deed until the assignment had been executed by all parties and that David

signed the assignment in his (Jimmy’s) presence. Jimmy could not recall whether Allison, Larry,

or Seth signed the assignment in his presence or whether Allison signed it at all. Jimmy further

stated that he did not have a signed copy of the assignment, yet David signed the deed, which

was introduced at trial. Jimmy produced only an unsigned, unacknowledged, and unrecorded

copy of the assignment, which was also introduced at trial.

According to Jimmy, at some point Larry came to his office with a durable power of

attorney that Allison had signed in favor of Larry in March 2001. Jimmy agreed that under the

power of attorney, Larry had the authority to sign an assignment on behalf of Allison in order

to transfer property. However, Jimmy said that he had no knowledge that Allison and Larry

were using the power of attorney as part of the real-estate transaction with David and that he

(Jimmy) would have prepared the assignment differently had he known that Larry was signing

on behalf of Allison. Jimmy said that he would have stated in the assignment that Larry was

appearing personally and as attorney-in-fact for Allison and that the signature lines would have

had the same designations.

David testified that after Allison and Larry had paid the full amount of the contract,

Larry called David and requested that David convey the property to Seth. David told Larry to

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contact Jimmy. David acknowledged that his signature was on the warranty deed. He did not

recall signing an assignment.

Allison testified that she and Larry separated in February 2010, after they had entered

into the contract to purchase the property in question, but before they had paid the contract

in full. She testified that the divorce was a “real rough situation.” 2 Allison said that in August

2010, she and Larry retained an attorney to file for bankruptcy, and during that process, she

learned that the property was not in her and Larry’s names. She learned that David had

transferred the property to Seth. Allison testified that when she discovered this, she “fell to

the ground. I freaked out. I had no idea that it wasn’t in my name or Larry’s name.” She said

that she, Larry, and Seth never had any discussions about putting the property in Seth’s name

to help him with college expenses. She said that if Seth testified that such conversations took

place, he was lying because he was afraid that Larry would stop giving him money.

Allison further stated that she had never seen the unsigned, unrecorded assignment

until trial, she had never been asked to sign it, and she did not sign it. She agreed that she had

signed the power of attorney in 2001; however, she said that she and Larry did not discuss

using the power of attorney in any way in connection with the purchase of the property and

that she did not authorize Larry to use it to convey title to the property to their son.

Seth 3 testified that he was not a party to the contract and that he did not pay for the

property. He stated that he remembered signing the assignment, although he could not

2They were divorced in January 2012.

3Seth was twenty-six years old at the time of trial.

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remember where he signed it, when he signed it, or who was present. He said that he had not

lived on the property since it was deeded to him; Larry had been living there with his girlfriend.

Seth also testified that Allison and Larry told him they planned to deed the property to him to

help with his college expenses.

Larry did not testify.

The circuit court entered findings of fact and conclusions of law finding that David

had breached his contractual obligation to Larry and Allison by conveying title to the property

to Seth. The circuit court found that the unsigned and unrecorded assignment of the contract

and Allison’s power of attorney in favor of Larry failed to relieve David of his contractual

obligation. The court further found that the conveyance of the property to Seth was

fraudulent. The circuit court ordered David to execute a new warranty deed conveying the

property to Larry and Allison as tenants in common; ordered Seth to execute a quitclaim deed

conveying any interest in the property to Larry and Allison as tenants in common; and ordered

the Jefferson County clerk to strike the warranty deed that David executed in favor of Seth.

This appeal followed. 4

Larry and Seth’s first point on appeal challenges the circuit court’s subject-matter

jurisdiction. During trial, counsel for Larry and Seth moved to dismiss Allison’s complaint,

relying on the doctrine of res judicata. Counsel contended that the property had been disposed

of as part of the parties’ 2012 divorce proceeding. The circuit court suspended the trial,

4This is the second time Larry and Seth’s appeal has been before us. In an opinion
dated March 8, 2017, we remanded their appeal to supplement the record and addendum, and
we ordered rebriefing due to deficiencies in the brief. Heinrich v. Anders, 2017 Ark. App. 153.
Larry and Seth have corrected the deficiencies, and we may now consider the appeal.
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reviewed pleadings from the divorce file, and permitted the parties to brief the issue. On

January 12, 2015, the circuit court entered a letter opinion denying Larry and Seth’s oral motion

to dismiss. Citing the parties’ 2012 divorce decree, the court found that “the decree did not

address any specific real property, either by reference or otherwise,” and that res judicata did

not apply to Allison’s cause of action for breach of contract because the matter had not

previously been adjudicated. On appeal, Larry and Seth argue that the circuit court erred in

concluding that res judicata did not apply. They contend that the disposition of the property

had been adjudicated as part of the parties’ prior divorce proceedings and could not be

relitigated.

Pursuant to Ark. R. Civ. P. 12(b) and (c), 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. Francis v. Francis, 343 Ark. 104, 109–10, 31 S.W.3d 841, 844 (2000). Because it is

clear from the wording of the letter opinion that the circuit court considered matters outside

the pleadings, we review this issue as one from summary judgment. Ordinarily, upon reviewing

a court’s decision on a summary-judgment motion, we would examine the record to determine

if genuine issues of material fact exist. Ruth R. Remmel Revocable Tr. v. Regions Fin. Corp., 369

Ark. 392, 402, 255 S.W.3d 453, 461 (2007). However, in a case like this one that does not

involve the question of whether factual issues exist but rather the application of the legal

doctrine of res judicata, we simply determine whether appellee was entitled to judgment as a

matter of law. Id., 255 S.W.3d at 461.

The claim-preclusion aspect of res judicata forecloses relitigation in a subsequent suit

when (1) the first suit resulted in a final judgment on the merits; (2) the first suit was based on

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proper jurisdiction; (3) the first suit was fully contested in good faith; (4) both suits involved

the same claim or cause of action; and (5) both suits involved the same parties or their privies.

McCoy v. Jackson, 2011 Ark. App. 456, at 2 (citing Pentz v. Romine, 75 Ark. App. 274, 57 S.W.3d

235 (2001)). Additionally, claim preclusion bars not only the relitigation of issues that were

actually litigated in the first suit but also those that could have been litigated but were not. Id.

The first three requirements are satisfied in this case. The 2012 divorce proceedings

resulted in a final judgment on the merits, it was based on proper jurisdiction, and it was fully

contested in good faith. However, the fourth and fifth requirements are not satisfied. The

2012 divorce action did not include Allison’s breach-of-contract claim, and David and Seth

were not parties to the divorce action. Further, the property in question could not have been

disposed of by the parties in the divorce action because the parties did not own it—it belonged

to Seth. Therefore, we hold that the circuit court did not err in finding that res judicata did

not apply because the disposition of the property was not litigated in the parties’ divorce

proceedings.

Larry and Seth’s second point on appeal is that the circuit court erred in finding that

Allison’s power of attorney in favor of Larry was not used to convey the property from David

to Seth. In civil bench trials, the standard of review on appeal is whether the circuit court’s

findings were clearly erroneous or clearly against a preponderance of the evidence. Waddell v.

Ferguson Home Builders, LLC, 2017 Ark. App. 66, at 5, 513 S.W.3d 271, 275. A finding is clearly

erroneous when, although there is evidence to support it, the reviewing court, on the entire

evidence, is left with a firm conviction that a mistake has been committed. Id., 513 S.W.3d at

275.

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There is no dispute in this case that on March 5, 2001, Allison executed a durable power

of attorney authorizing Larry to execute assignments on her behalf and that the power of

attorney was in effect in July 2010 5 when David deeded the property to Seth. Nevertheless,

the circuit court found that the power of attorney was not used to convey the property from

David to Seth because it concluded that the assignment, in which Allison and Larry authorized

David to grant the property to Seth, was not signed and not recorded. We hold that the circuit

court was not clearly erroneous in reaching these findings.

Whether the assignment was signed by Allison, by Larry as attorney-in-fact for Allison,

or by any other party were facts in dispute. The only person to testify that he signed the

assignment was Seth, although he could not remember where he signed it, when he signed it,

or who was present. There is no evidence that Larry signed the assignment as Allison’s power

of attorney—Larry did not testify. David did not recall signing the assignment. Jimmy could

not recall whether Allison, Larry, or Seth had signed in his presence or whether Allison had

signed it at all. Allison testified that she had never seen the assignment until trial, she had

never been asked to sign it, and she did not sign it. The only assignment introduced into

evidence was an unsigned, unrecorded, and unacknowledged copy.

Additionally, Allison testified that she and Larry did not discuss using the power of

attorney in any way with the property and that she did not authorize Larry to use it to convey

title to the property to their son. Likewise, Jimmy testified that he had no knowledge that Larry

intended to use Allison’s power of attorney to sign the assignment on her behalf. Jimmy said

5Allison revoked her power of attorney in July 2011.

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that had he known this, he would have prepared the language of the assignment to reflect that.

The unsigned assignment contains no such language.

There is overwhelming evidence in this case that the assignment was never signed by

the parties. The only evidence to the contrary was Seth’s testimony. Facts in dispute and

determinations of credibility are within the province of the fact-finder. El Paso Prod. Co. v.

Blanchard, 371 Ark. 634, 640, 269 S.W.3d 362, 368 (2007). After hearing the evidence, the

circuit court weighed it in favor of Allison and found that there was no signed or recorded

assignment; thus, the power of attorney was not used to convey the property from David to

Seth. In our review, we are not left with a firm conviction that a mistake has been committed

and affirm on this point. 6

Affirmed.

KLAPPENBACH and MURPHY, JJ., agree.

The Brad Hendricks Law Firm, by: Lloyd W. Kitchens, for appellants.

Maxie G. Kizer, P.A., by: Maxie G. Kizer, for appellee.

6Under this same point on appeal, Larry and Seth challenge the circuit court’s finding
that had Larry used the power of attorney his action would have been contrary to law because
“an agent’s duty is to act solely for his principal’s benefit in all matters connected with agency
. . . .” We need not reach the merits of this argument because we affirm the circuit court’s
finding that the power of attorney was not used to convey the property from David to Seth.
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