Turnbo v. Hamlett

686 S.W.3d 813

2024 Ark. App. 128

Clarence E. TURNBO, individually and as Trustee of Beau Turnbo Trust Number One, Appellant

v.Oscar HAMLETT, Jr., Appellee

No. CV-22-140

Court of Appeals of Arkansas, DIVISION III.

Opinion Delivered February 21, 2024

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, FIFTH DIVISION [NO. 60CV-20-3293], HONORABLE WENDELL GRIFFEN, JUDGE

McMullan & Brown, Benton, by: Amy Clemmons Brown, for appellant.

Gill Ragon Owen, P.A., by: Jason A. Lee and Mitchell S. Dennis, Little Rock, for appellee.

WENDY SCHOLTENS WOOD, Judge

₁Clarence E. Turnbo, individually and as trustee of Beau Turnbo Trust Number One ("Turnbo"), appeals an order entered by the Pulaski County Circuit Court granting summary judgment in favor of Oscar Hamlett, Jr., in this land-sale contract case. On appeal, Turnbo contends that the circuit court erred by (1) rejecting Turnbo’s statute-of-limitations defenses to Hamlett’s counterclaim for unlawful detainer and breach of contract; (2) granting Hamlett’s motion for summary judgment and denying Turnbo’s motion for summary judgment; (3) adjudicating the unlawful-detainer counterclaim before Turnbo’s complaint for declaratory judgment; and (4) denying Turnbo’s motion for stay of the writ of possession. We affirm.

₂I. Relevant Background

On August 28, 2013, Turnbo and Hamlett entered into a written contract wherein Turnbo agreed to buy and Hamlett agreed to sell a commercial property in North Little Rock for $394,959.60. The purchase price was to be paid within fifteen years in 180 monthly payments of $2,500, with $305.78 of each amount to be applied to the property taxes. Upon full payment of the $394,959.60 purchase price, Turnbo would receive a warranty deed conveying the fee-simple title to the property.

Under the terms of the 2013 contract, Turnbo was obligated to furnish and maintain insurance on the property and name Hamlett as the beneficiary of the insurance policy. The contract also provided that until the purchase price was paid in full, the payments thereunder and any improvements made to the premises would be regarded as rent. It further included a forfeiture clause that provided that time was of the essence and that Hamlett could take possession and remove Turnbo from the premises for the nonpayment of such sums or for any breach of the contract with the same force and effect as the nonpayment of rent in the usual landlordtenant relationship. The forfeiture clause also provided that, in the event of any breach, Hamlett would be deemed relieved and discharged of any claim or obligation of any kind under the contract, and all payments and improvements would be deemed rent for the use and occupancy of the premises. The contract also provided that a waiver by Hamlett of any breach by Turnbo would not bar Hamlett from pursuing subsequent breaches by Turnbo, and it contained a "no-unwritten-modification clause" that provided that the terms ₃and conditions of the contract could be amended or modified only by a written instrument signed by the parties. Finally, Turnbo promised to personally guarantee the contract.

On May 18, 2020, Hamlett gave Turnbo notice of his intent to enforce the forfeiture clause and terminate the contract because Turnbo failed, after multiple requests, to cure the following defaults: (1) failure to insure the property; (2) nonpayment of twelve payments; (3) failure to pay the property taxes; and (4) breach of the personal guarantee. The notice informed Turnbo that he had ten days to have his personal property removed from the premises. Turnbo did not remove his personal property.

On June 5, Turnbo filed a complaint for declaratory judgment that Hamlett waived any default by Turnbo and was barred from enforcing the forfeiture clause. Three days later, Turnbo was served with a notice to quit, demanding that he surrender possession of the property to Hamlett within three days. Turnbo did not surrender possession.

On June 18, Hamlett filed an answer and counterclaim for unlawful detainer and breach of contract, seeking immediate possession of the property and damages under the unlawful-detainer statute, Arkansas Code Annotated section 18-61-104 (Repl. 2015). Relevant to this appeal, Hamlett alleged that Turnbo was in default for failure to obtain insurance on the property, failure to pay increased property taxes in 2017 and 2019, and nonpayment of rent between March and August 2014 in the amount of $15,000. Hamlett also alleged that because Turnbo had been convicted and sentenced to prison earlier that year for raping a thirteen-year-old girl on the subject property, he could not satisfy his obligation to personally guarantee the contract.

₄On June 22, a notice of intention to issue writ of possession was filed, advising Turnbo that he had five days to file an objection to Hamlett’s unlawful-detainer action. The notice also stated that if Turnbo continued to possess the property, he would be required to deposit into the court’s registry a sum equal to the amount of rent due on the property and to continue paying rent into the court’s registry during the pendency of the proceedings in accordance with the terms of the contract. The notice warned that "failure to tender the rent due without justification is grounds for the court to grant the writ of possession."¹

On June 26, Turnbo filed an objection and a motion to dismiss Hamlett’s counterclaim, alleging that Hamlett’s unlawful-detainer claim was barred by the three-year "peaceable and uninterrupted" possession defense set forth in Arkansas Code Annotated section 18-61-104 (Repl. 2015). He also alleged that Hamlett’s breach-of-contract claim for nonpayment of rent in 2014 was barred by the five-year statute of limitations applicable to written contracts set forth in Arkansas Code Annotated section 16-56-111 (Repl. 2005). Following a hearing, the circuit court denied Turnbo’s motion to dismiss.

On November 5, the circuit court held a hearing on Hamlett’s unlawful-detainer claim. Hamlett testified that Turnbo had not paid approximately $15,000 in rent. Several checks totaling $15,000, signed by Turnbo and given to Hamlett between March and August ₅2014, were introduced. It was undisputed that when Turnbo tendered the checks to Hamlett, he (Turnbo) did not have the funds to cover them. Hamlett testified that because of Turnbo’s financial difficulty, he held the checks on Turnbo’s promise to make the checks good as soon as business picked up. According to Hamlett, Turnbo never made the checks good or paid the unpaid rent, despite Hamlett’s having talked to Turnbo about the outstanding payments both himself, and through his attorney.

Hamlett also testified that he spoke to Turnbo multiple times about Turnbo’s obligation to furnish and maintain insurance on the property, but Turnbo still had failed to do so. An October 16, 2013 letter from Hamlett’s former attorney, Herman Eubanks, to Turnbo was admitted into evidence. According to Hamlett, this letter was sent as a reminder to Turnbo of his unfulfilled obligation to insure the property. Hamlett further testified that he had paid an increase in property taxes in 2017 and 2019 that Turnbo was contractually obligated to pay but had failed to pay.

Turnbo testified and admitted that he had gotten behind on his payment obligations under the contract but claimed that he had eventually caught up, paid the outstanding balance, and paid the property taxes. He confirmed, however, that he had no documentation showing that he made any payments to Hamlett between March and August 2014 other than one partial payment in the amount of $250.

Turnbo’s ex-wife, Cynthia, testified that she was given power of attorney for Turnbo when he went to prison for his rape conviction, and she took over Turnbo’s bookkeeping in ₆February 2020. She stated that, at that time, Turnbo was behind on payments to Hamlett. She claimed to have eventually paid the outstanding payments on Turnbo’s behalf.

On December 14, 2020, the circuit court entered an order concluding that Hamlett was entitled to possession of the property on the basis of these findings: (1) Turnbo owed past-due rental payments in the amount of $15,000; (2) the contract required Turnbo to purchase insurance for the property, and he failed to do so; (3) Hamlett presented evidence sufficient to make a prima facie case of entitlement to possession of the property as required by Arkansas Code Annotated section 18-60-307(d)(1)(A) (Repl. 2021); and (4) based on all the evidence, Hamlett was likely to succeed on the merits at a full hearing.

That same day, Turnbo moved for stay of the writ of possession and to provide security pursuant to section 18-60-307(e), proposing to deposit into the court’s registry a $15,000 cash bond to represent future rent payments that would become due from January 2021 through June 2021. The circuit court denied Turnbo’s motion and entered an order directing the clerk to release to Hamlett the $15,000 Turnbo had previously deposited into the court’s registry.

On March 24, Turnbo moved for summary judgment on his complaint for declaratory judgment, arguing that enforcement of the forfeiture clause was barred. He alleged that Hamlett waived forfeiture (1) by accepting late and partial payments in the past without declaring a default; (2) by his "silence" regarding Turnbo’s failure to insure the property for many years; and (3) by his delay in declaring defaults on the property-tax and personal-guarantee obligations. He also reasserted his statute-of-limitations defense to ₇Hamlett’s breach-of-contract claim for nonpayment in 2014. On August 5, Hamlett filed a motion for partial summary judgment on his counterclaim for breach of contract.

On September 3, the circuit court held a hearing on the parties’ cross-motions for summary judgment where the parties presented their respective arguments. On November 8, the court entered an order denying Turnbo’s motion for summary judgment and granting Hamlett’s motion for...