Serio v. Copeland Holdings, LLC
2017 Ark. App. 280
| Ark. Ct. App. | 2017Background
- Stan and Jo Serio owned ~850 acres subject to a Yax first mortgage, a First Arkansas second mortgage, and federal and state tax liens; the Yaxes foreclosed and the court ordered a sale.
- Barry Copeland (Copeland Holdings, LLC), a Texas investor, negotiated to buy 397 acres from the Serios during the foreclosure process; an Offer and Acceptance was signed by Jo (not Stan) and included owner-financing as a condition.
- Lienholders (IRS and the Yaxes) refused to permit the owner-financing required by the contract; the Serios could not obtain the necessary approvals.
- Copeland intervened and sued for specific performance/breach of contract; he later obtained partial summary judgment against Jo Serio and a damages award of $178,993.
- The Serios argued (1) Copeland, a foreign LLC, was transacting business in Arkansas and unregistered (Ark. Code Ann. § 4-32-1007), and (2) performance was impossible because third-party lienholders would not approve owner-financing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an unregistered foreign LLC transacting business in Arkansas may maintain suit (Ark. Code Ann. § 4-32-1007) | Copeland: Not merely owning property; his prior, ongoing arrangements with a local realtor and active acquisitions show he was not "transacting business" requiring registration | Serios: Copeland was doing business in Arkansas (regular property-search relationship, active acquisition efforts) and, being unregistered, may not sue | Court: Material fact issue existed whether Copeland was transacting business; summary judgment improper on this ground |
| Whether a binding contract existed enforceable against Jo (and Stan) despite only Jo signing | Copeland: Jo signed and warranted she could convey title; she had actual or apparent authority to bind Stan | Serios: Stan did not sign; Jo could not unilaterally convey tenancy-by-entirety property; no final agreement on addendum terms | Court: Did not resolve all signature/authority claims because performance-defense dispositive; contract enforcement overturned on impossibility grounds |
| Whether impossibility/impracticability of performance excuses nonperformance where third-party lienholders refuse assent | Copeland: Jo knew of encumbrances and thus created the risk; impossibility defense fails | Serios: IRS and mortgagee refused required approvals (owner-financing), making performance impossible despite reasonable efforts | Court: Serios established impossibility/impracticability; third-party refusals excused performance and defeated breach claim |
| Whether damages award based on appraiser testimony was excessive | Copeland: Appraisal supported damages award | Serios: Appraiser failed to account for foreclosure/lien effects so award excessive | Court: Did not decide; reversed damages as consequence of reversing liability and remanded |
Key Cases Cited
- Lloyd v. Pier West Prop. Owners Ass’n, 470 S.W.3d 293 (summary-judgment standard)
- Frigillana v. Frigillana, 584 S.W.2d 30 (impossibility burden and standard)
- Whipple v. Driver, 215 S.W. 669 (impossibility must be inherent in the thing to be done)
- Mathews v. Garner, 751 S.W.2d 359 (government action preventing performance can create impracticability)
- Dennis v. Binz, 328 S.W.2d 85 (equity will not decree performance requiring third-party assent where assent unlikely)