Spann v. Lovett & Co., 2012 Ark. App. 107

Spann & Associates sold its Pine Bluff office to Lovett & Company for $850,000, transferring assets including client lists, goodwill, and records, with a 700k cash payment and a 150k promissory note.
The purchase price allocated 5,000 to the covenant not to compete, 733,500 to client lists/files, and 111,500 to furniture and equipment; a true-up provision could refund part of the price if professional fees were low in year one.
The contract defined professional fees as all fees collected July 1, 2005 through September 30, 2006 for services through June 30, 2006, excluding certain expenses, with a 3% interest refund provision if true-up triggered.
The covenant not to compete barred Spann & Associates and shareholders from practicing within 50 miles of Pine Bluff for five years, with Exhibit D listing excluded clients; additional agreements with Corkins, Birge, and Milum contained similar noncompete language.
After closing, Lovett alleged client defections and miscalculated damages, pursued breach-of-contract claims, and sought a true-up adjustment; Spann & Associates and Beckwith defended, raising multiple affirmative defenses.
The circuit court granted partial summary judgment on several issues, submitted key questions to a jury, and eventually awarded Lovett (i) breach-of-covenant damages of 434,477, (ii) price-adjustment damages of 165,566.91, (iii) attorney’s fees of 252,182.25, and prejudgment interest of 27,216.48; appellants appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Covenant scope ambiguity	Spann argues covenants tied to client location, not just office location.	Spann contends covenants cover both location and clients, with broader restraint.	Covenant unambiguous; prohibits serving within 50 miles.
Joint vs. separate liability for covenant	Liability should be joint as the contract does not specify separate liability.	Liability could be separate because individuals signed individually.	Liability is joint.
Directed verdict on damages sufficiency	Evidence shows causation and substantial damages for lost profits from leaving clients.	Damages rely on speculative client action and may be overstated.	Sufficient evidence supported jury damages.
Waiver/estoppel and Birge’s conduct	Lovett waived rights by Birge’s resumption for Spann; estoppel bars liability.	No proof Lovett relied to detriment; no waiver instruction warranted.	Waiver/estoppel instruction inappropriate; no evidence of reliance.
Prejudgment interest and price-adjustment damages	3% prejudgment interest should apply under the true-up; damages calculable by contract method.	Discretion in damages; the court should not multiply figures beyond what contract allows.	Prejudgment interest proper; true-up method affirmed.

Hudgens v. Olmstead Manufacturing Co., 227 Ark. 475 (1957 Ark.) (breach possible despite outside-prohibited area; area-based restraint valid)
Machen v. Machen, 2011 Ark. App. 47 (Ark. App. 2011) (ambiguity questions are legal questions for court)
NCCF Support, Inc. v. Harris McHaney Real Estate Co., 2010 Ark. App. 384 (Ark. App. 2010) (parol evidence and ambiguity principles in contract interpretation)
Conway Commercial Warehousing, LLC v. FedEx Freight East, Inc., 2011 Ark. App. 51 (Ark. App. 2011) (considerations for determining breach and contract terms)
Taylor v. George, 92 Ark.App. 264 (2005 Ark. App.) (duty performance and breach basics in contracts)
T Tremco, Inc. v. Valley Aluminum Prods. Corp., 38 Ark.App. 143 (1992 Ark. App.) (losses and proof of damages in contract cases)
Boellner v. Clinical Study Ctrs., LLC, 2011 Ark. 83 (2011 Ark.) (standards for evidence and damages in appeals)
Isbell v. Ed Ball Constr. Co., 310 Ark. 81 (1992 Ark.) (integration of contracts and related instruments)
Smith v. Farm Bureau Mut. Ins. Co. of Ark., Inc., 88 Ark.App. 22 (2004 Ark. App.) (contract interpretation and related determinations)