City of Tontitown v. First Security Bank, 2017 Ark. App. 326

Background

First Security Bank owned two contiguous tracts in Tontitown (15.64 acres commercial, 22.9 acres residential); part of the commercial tract was later sold to Hillcrest Holdings, LLC. The land bordered the City of Springdale.
On August 22, 2014, the Bank sent a detachment request to Tontitown claiming municipal services were unavailable and available from Springdale; Tontitown responded on September 18, 2014.
The Bank sued Tontitown for declaratory relief; after a September 2015 hearing the Washington County Circuit Court ruled Tontitown had committed to, but not completed, providing requested services.
On October 27, 2015 Springdale adopted an annexation ordinance for the Bank’s property. Tontitown filed a petition under Ark. Code Ann. § 14-40-2004 on November 16, 2015 challenging the annexation, naming Springdale and the Bank (later Hillcrest) as defendants, but never served the Bank—only sent a “courtesy copy.”
The Bank answered asserting lack of personal jurisdiction and insufficiency of process/service; it joined Springdale in motions for summary judgment; later moved to dismiss with prejudice under Ark. R. Civ. P. 4(i) because service was not perfected within 120 days and the 20-day statutory window to challenge annexation had passed.
The circuit court dismissed Tontitown’s petition with prejudice as to the Bank for lack of service and then dismissed the entire action with prejudice as to Springdale and Hillcrest because the Bank was said to be a required party; the court of appeals affirmed dismissal as to the Bank but reversed dismissal of Springdale and Hillcrest.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Bank was properly served under Ark. R. Civ. P. 4(i)	Tontitown: Bank’s counsel accepted service; courtesy copy sufficient; waiver by Bank’s participation	Bank: No service was made; counsel did not accept service; preserved objection by asserting lack of personal jurisdiction and insufficiency of process	No valid service; dismissal of Bank required under Rule 4(i)
Whether Bank waived service objections by filing motions and denying jury demand	Tontitown: Bank’s filings and joint motions constituted affirmative relief/appearance	Bank: Those filings were defensive; it maintained jurisdictional defenses	No waiver; filings were defensive and did not constitute affirmative relief
Whether dismissal for failure to serve must be without prejudice under Rule 4(i)	Tontitown: Rule mandates dismissal without prejudice; savings statute applies because suit was filed within limitations	Bank/Springdale: Statute-of-limitations bar (20-day annexation window) makes dismissal with prejudice proper	Dismissal with prejudice as to Bank affirmed because the annexation-challenge period had expired and savings statute did not apply due to no timely service
Whether dismissal of Bank required dismissal of Springdale and Hillcrest	Springdale/Hillcrest: Bank was a necessary party under § 14-40-2004(b)(1)(B); without Bank there can be no hearing	Tontitown: Statute does not require all listed parties remain in every suit; Hillcrest owned part of parcel and was a separate party	Reversed as to Springdale and Hillcrest; statute does not mandate that all identified persons remain parties in every § 14-40-2004 action, so dismissal of Bank alone did not compel dismissal of others

Key Cases Cited

Smith v. Sidney Moncrief Pontiac, Buick, GMC Co., 353 Ark. 701, 120 S.W.3d 525 (2003) (service of process required for court jurisdiction)
Dobbs v. Discover Bank, 425 S.W.3d 50 (Ark. App. 2012) (service rules are strictly construed)
Trusclair v. McGowan Working Partners, 306 S.W.3d 428 (Ark. 2009) (120-day service deadline under Rule 4 is mandatory)
Nichols v. Lea, 225 S.W.2d 684 (Ark. 1950) (defendant may waive service by seeking affirmative relief)
Farm Bureau Mut. Ins. Co. v. Campbell, 865 S.W.2d 643 (Ark. 1993) (definition of affirmative relief and appearance)
Cagle v. Terwilliger, 458 S.W.3d 770 (Ark. App. 2015) (Rule 4(i) ‘without prejudice’ does not apply when limitations period bars refile)
Forrest City Mach. Works, Inc. v. Lyons, 866 S.W.2d 372 (Ark. 1993) (savings statute requires timely service to preserve refiling rights)