Coleman's Service Center, Inc. v. Southern Inns Management, Inc.

John E. Jennings, Chief Judge. In 1984 D’Jer, Inc., an Arkansas corporation, borrowed 4.2 million dollars from Audubon Federal Savings and Loan Association, a Louisiana institution, to build a truck stop at Brinkley, Arkansas. The note was secured by a deed of trust. D’Jer leased the “convenience store” part of the project to the appellant, Coleman’s Service Center, Inc., also an Arkansas corporation. D’Jer defaulted on the note, the project was refinanced, and the real property was conveyed and recon-veyed several times. In 1986 Audubon Savings and Loan failed, and the Federal Deposit Insurance Corporation (as receiver for Audubon and successor to the FSLIC) sued in federal district court to foreclose the deed of trust for nonpayment on the note. Coleman’s was made a party to that action. The United States District Court for the Eastern District of Arkansas appointed the appellee, Southern Inns Management, Inc., as the receiver for the project property. In that capacity Southern Inns then dismissed its cause of action against Coleman’s in federal court and filed an action for a writ of possession in Monroe County Circuit Court, based on Coleman’s alleged nonpayment of rent. On February 13, 1991, the circuit court entered a “judgment” directing the clerk of the court to issue a writ of possession. The order recites “that plaintiffs have presented prima facie evidence that they are entitled to judgment against defendant in the amount of $143,240.90 with interest On March 22, 1991, Coleman’s filed a counterclaim against Southern Inns and the FDIC, and a third-party complaint against Don Dedman, alleging that the counter-defendants and cross-defendant took possession of Coleman’s property “without justification or adequate basis.” The pleading alleged both breach of contract and slander. On January 23, 1992, the circuit court dismissed Coleman’s counterclaim and third-party complaint based upon lack of subject matter jurisdiction under Ark. R. Civ. Pro. 12(b)(1).1 On February 7, 1992, the court entered an order pursuant to Rule 54(b) of the Rules of Civil Procedure finding “that it would be highly prejudicial for the plaintiff [Southern Inns and the FDIC] to proceed to trial and obtain judgment against Coleman’s Service Center, Inc. on its cause of action without first having a final adjudication of said Coleman’s Service Center, Inc.’s right to assert its counterclaim and third-party complaint.” Based on that finding, the court directed “that final judgment be entered as to the counterclaims and third-party complaint of Coleman’s Service Center, Inc. as amended pursuant to the above mentioned express determinations by the court.” On February 14, 1992, Coleman’s filed a notice of appeal reciting that “it appeals all orders and judgments entered herein.” Coleman’s subsequently retained its present counsel. Coleman’s now raises four “points to be relied upon” which follow verbatim: 1) This court has no jurisdiction of the subject matter of this case since the dismissal of the issues relating to the D’Jer-Coleman lease from the federal case does not permit refiling of these issues in the state court; 2) The trial court erred in refusing to set aside the judgment rendered in favor of the plaintiffs against the defendants at the September 12, 1991 hearing; 3) The “restructuring” of the original indebtedness to FDIC by Audubon was a novation, an entirely new obligation between different parties; 4) The order of the court finding that the super-sedeas bond proffered by defendant Coleman’s was not timely filed and did not otherwise comply with the statute is clearly erroneous. We note at the outset the appellees’ argument that the trial court erred in permitting the appellant to take an interlocutory appeal under Rule 54(b). The trial judge expressly relied on Austin v. First National Bank, 305 Ark. 456, 808 S.W.2d 773 (1991). The subsequent decision by the supreme court in Fisher v. Citizens Bank, 307 Ark. 258, 819 S.W.2d 8 (1991), seems to take a more restrictive approach. In Fisher the court said: [Mjerely tracking language of Rule 54(b) will not suffice; the record must show facts to support the conclusion that there is likelihood of hardship or injustice which would be alleviated by an immediate appeal rather than at the conclusion of the case. Those essential findings, and the facts which undergird them, are wholly lacking in this order. The rule is not intended to create an avenue for two stages of review simply by citing Rule 54(b). It is intended to permit review before the entire case is concluded, but only in those exceptional situations where a compelling, discernible hardship will be alleviated by an appeal at an intermediate stage. Even so, we cannot say in the case at bar that the trial court’s findings are clearly wrong. We therefore conclude that we are not without jurisdiction to hear the appeal. Whether the issues raised by the appellant are within the scope of the appeal is a different matter. The appellee contends that they are not, and we agree. Under Ark. Code Ann. § 18-60-307 (Supp. 1991), an action for unlawful detainer is a two-step process. The statute contemplates that the right to possession will be preliminarily determined and, if appropriate, a writ of possession issued, but that the question of damages will be left for a subsequent hearing. The statute expressly provides that an order directing the issuance of a writ of possession shall not be a “final adjudication of the parties’ rights in the action.” Ark. Code Ann. § 18-60-307(d)(l). In the case at bar, the parties are in the middle of the primary lawsuit. While the circuit court has directed the issuance of a writ of possession, its orders clearly contemplate a further hearing on the question of damages. A money judgment has not yet been entered. The first sentence of Rule 54(b) states: “When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination, supported by specific factual findings, that there is no just reason for delay and upon an express direction for the entry of judgment.” This, of course, is what the circuit court did in the case at bar — it directed the entry of final judgment as to the dismissal of appellant’s counterclaim and third-party complaint, in order to permit Coleman’s to appeal that dismissal. The issues Coleman’s raises, however, are totally unrelated to the interlocutory order that it has been permitted to appeal. All of the issues raised relate to the primary cause of action, the suit for unlawful detainer, which is still pending in the circuit court. In the language of Rule 54(b) no “final judgment as to” this “claim” has been entered by the trial judge. Our view is that when the trial court permits an interlocutory appeal under Rule 54(b) the issues raised must be reasonably related to the order or orders appealed from. A Rule 54(b) order may not be used as a vehicle to bring up for review matters which are still pending before the trial court. Because there is no contention that the trial court erred in dismissing the appellant’s counterclaim and third-party complaint, the decision of the trial court is affirmed. Affirmed. Mayfield, J., dissents. Pittman, J., not participating. Footnotes [1] Neither the correctness of the circuit court’s decision to dismiss nor of its stated basis are issues raised on this appeal.