Moore v. Wallace

David M. Glover, Judge.

In the original complaint filed in this case, appellants Connie Moore and Margaret Davis named themselves as plaintiffs, doing business as “Moore’s Furniture.” They filed the complaint against appellees, Frank Wallace and First State Bank, alleging causes of action for breach of contract, estoppel, unjust enrichment, and fraud. The complaint was subsequently amended to eliminate the “dba” notation and to list as plaintiffs Connie Moore, Margaret Davis, and “Moore’s Furniture & Interior Gallery.” First State Bank filed a motion to dismiss and a motion for summary judgment. The trial court dismissed the case, and this appeal followed. We affirm the trial court.

The amended complaint alleged, inter alia, that the plaintiffs were owners of an incorporated family business called “Moore’s Furniture and Interior Gallery Limited,” that the business was destroyed by fire in January 1999, and that they received insurance proceeds in the amount of $20,000. They further alleged that appellee Frank Wallace, who was president of First State Bank at the time, encouraged them to apply the insurance proceeds to their outstanding bank-loan balance of $26,000. They asserted that Wallace orally agreed that in exchange for the $20,000 insurance check, First State Bank would issue a new $35,000 loan to “Moore’s Furniture Company” to restart the business. Appellants alleged that after appellees received the $20,000, they reneged on the oral agreement.

In answering the complaint, the bank denied several of the allegations and sought dismissal of the contract, estoppel, and unjust-enrichment actions for failure to state facts upon which relief could be granted. The bank also urged dismissal of the contract action based upon the statute of frauds set forth in Arkansas Code Annotated section 4-59-101(d)(l) (Repl. 2001), which provides:

No action may be maintained by or against any person or entity on any agreement to extend credit or to renew or modify existing credit in an amount greater than ten thousand dollars ($10,000) or to make any other accommodation relating to such credit, unless the agreement is in writing and is signed by the party to be charged with the agreement, or the duly authorized agent of such party.

In addition, the bank filed a motion for summary judgment, arguing among other things that the plaintiffs were not the real party in interest and therefore could not prosecute the action.

The trial court concluded that appellants’ claims for breach of contract and unjust enrichment were barred by Ark. Code Ann. § 4-59~101(d)(l) (Repl. 2001) and, therefore, granted the motion to dismiss. The court further found that Moore’s Furniture & Interior Gallery Limited, an Arkansas corporation, was the real party in interest and that appellants had no right or standing to bring the action in their individual capacities. Therefore, the trial court also granted the motion for summary judgment and dismissed the complaint.

Appellants raise three points of appeal: (1) whether the trial court erred in holding that the appellants’ claims for breach of contract and unjust enrichment were barred by Ark. Code Ann. § 4-59-101 (d), (2) whether the trial court erred in finding that the appellants were not the real parties in interest and lacked standing, (3) whether the trial court erred when it held that the appellants could not recover damages for loss of income.

In arguing the first point of appeal, appellants do not challenge the fact that the alleged oral contract, falls within the statute of frauds. They contend, however, that an oral contract may be removed from the statute of frauds by part performance of the parties, and that their payment of the $20,000 insurance proceeds to the bank constituted part performance. Alternatively, they also argue that unjust enrichment does not involve the enforcement of a contract, and that the statute of frauds was therefore inapplicable and that dismissal was inappropriate. We hold that the trial court did not err in dismissing either of these causes of action.

In order for part performance to take an oral contract out of the statute of frauds, it must be solely referable to the oral agreement. See Smith v. Malone, 83 Ark. App. 99, 117 S.W.3d 643 (2003). Here, appellants acknowledged in their depositions that the bank held a lien on the business inventory and assets, and that the $20,000 insurance proceeds were from coverage of the business’s inventory that was destroyed by fire. The promissory note for the money that was borrowed from First State Bank was also individually guaranteed by appellants Moore and Davis. Consequently, appellants were obligated on the loan pursuant to either the promissory note or the guaranty agreement.

Moreover, the security agreement securing the promissory note gave appellee bank a security interest in, among other things, the business’s inventory, equipment, and all proceeds from the collateral. The note and the security agreement provided that the appellants would insure the collateral and have appellee bank named as the loss-payee of the insurance. Appellants purchased the insurance for the collateral prior to the loan, but did not thereafter have the bank named as loss-payee. In short, appellants’ payment of the insurance proceeds to the bank was not solely referable to the alleged oral contract, and did not constitute partial performance to take the alleged oral agreement out of the statute of frauds.

Similarly, the trial court did not err in dismissing the claim for unjust enrichment because appellee bank was entitled to the insurance proceeds pursuant to its security interest in the proceeds of the collateral. One is not unjustly enriched by the receipt of that to which he is legally entitled. Smith v. Whitener, 42 Ark. App. 225, 856 S.W.2d 328 (1993). Moreover, we will affirm the ruling of a trial court if it reached the right result, even though it may be for a different reason. Almobarak v. McCoy, 84 Ark. App. 152, 137 S.W.3d 440 (2003).

For their second point of appeal, appellants contend that the trial court erred in finding that the appellants were not the real parties in interest and that they therefore lacked standing. We find no basis for reversal because the trial court reached the right result, even though it incorrectly found that appellants were not the real parties in interest. That is, appellants’ remaining allegations of estoppel and fraud arose from the same set of facts upon which they based their contract and unjust-enrichment claims. Analogous to our previous discussion of the claim for unjust enrichment, under the circumstances of this case the bank’s receipt of that to which it was legally entitled could not serve as the basis for asserting fraud or estoppel. Consequently, the trial court’s dismissal was appropriate.

For the final point of appeal, appellants contend that the trial court erred when it held that the appellants could not recover damages for loss of income. We find it unnecessary to address this remaining point because it has been rendered moot by our affirmance of the trial court’s dismissal of the case.

Affirmed.

Pittman, C.J., Gladwin, Robbins, and Neal, JJ., agree. Baker, J., dissents.