Daily v. Langham
2017 Ark. App. 310
Ark. Ct. App.2017Background
- Marvin and Tamara Daily (husband and wife), and their companies Daily’s Fleeting & Harbor Service, Inc. and T&M Grocery Services, Inc., entered a July 2012 contract selling Marvin Properties (including an 18.9-acre riverfront tract) to John Langham for $300,000, with assumption of a creditor debt and seller financing; the contract conditioned closing on resolution of prior litigation between Marvin and Elizabeth Perry.
- The Perry litigation (Perry v. Marvin/Marvin Properties/Fleeting & Harbor) sought division of Marvin Properties’ interests; the Sebastian County Circuit Court ordered net proceeds from the July 2012 sale divided equally between Perry and Marvin.
- Langham assigned his interest to Old Fort Properties, LLC. Old Fort intervened in the Perry litigation, asserting specific performance and breach claims against Marvin/Marvin Properties/Perry, alleging Perry refused to accept payments and transfer the property.
- On October 19, 2015, the parties filed a joint motion and the court dismissed with prejudice Perry’s complaint and Old Fort’s third‑party complaint, stating all claims between them were resolved.
- On March 22, 2016, the Dailys and their companies sued Langham and Old Fort for breach of the July 2012 contract (failure to pay the remaining balance). Defendants moved to dismiss under Rule 12(b)(6) on res judicata grounds; the circuit court granted the motion and dismissed. The Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2016 breach claim is barred by claim preclusion (res judicata) | The Dailys: claim could not have been brought earlier because contract required closing after resolution of the Perry litigation, so the breach claim only arose after dismissal | Langham/Old Fort: the 2015 dismissal resolved all claims between the parties and barred relitigation of the same contract-based dispute | Held: barred. The 2016 suit arises from the same contract and subject matter as Old Fort’s claims in the Perry litigation, so claim preclusion applies |
| Whether non-party Tamara and T&M are precluded by the prior judgment (privity) | Tamara/T&M: were not parties to the Perry litigation, so res judicata should not bind them | Langham/Old Fort: Tamara and T&M are in privity with Marvin (family/business identity and they were parties to the contract collectively identified as “Daily”) | Held: privity exists. Tamara and T&M were sufficiently identified in interest with Marvin, so the dismissal binds them |
Key Cases Cited
- Baptist Health v. Murphy, 373 S.W.3d 269 (Ark. 2010) (explaining claim-preclusion elements and that res judicata bars claims that could have been litigated)
- Winrock Grass Farm, Inc. v. Affiliated Real Estate Appraisers of Ark., Inc., 373 S.W.3d 907 (Ark. App. 2010) (standard of review on dismissal and treatment of pleadings/extraneous documents)
- Francis v. Francis, 31 S.W.3d 841 (Ark. 2000) (privity and substantial identity of parties for res judicata)
- Jayel Corp. v. Cochran, 234 S.W.3d 278 (Ark. 2006) (principal-agent relationship can satisfy privity requirement)
- Collum v. Hervey, 3 S.W.2d 993 (Ark. 1928) (judgment against one spouse can bind the other in land disputes)
- Beebe v. Fountain Lake School Dist., 231 S.W.3d 628 (Ark. 2006) (definition of res judicata as final determination on the merits)