Arkansas Law Review

Fitton v. Bank of Little Rock, 2010 Ark. 280, _S.W.3d_ (2010)

          In June, the Arkansas Supreme court issued an important decision for those who seek to create or who already maintain a revocable trust.

          In a case of first impression, the Arkansas Supreme Court decided that the Arkansas homestead exemption—which protects debtors from losing their primary place of residence to creditors—extends to property held by spouses in a revocable trust.  The case of Fitton v. Bank of Little Rock is a great addition to Arkansas’s property law with respect to the popular and widely known homestead exemption.  

          In Fitton v. Bank of Little Rock, decided on June 3, 2010, the Arkansas Supreme Court was faced with the interesting question of whether property owned in a revocable trust by spouses as tenants in common with a right of survivorship was subject to the homestead exemption.  In this case, two individuals prior to marriage created a separate revocable trust and executed a quitclaim deed whereby the future spouses deeded their one-half interest in the residence to their respective trust as tenants in common. 

          After marriage, but before divorce, the husband individually signed a promissory note to institute a mortgage with the Bank of Little Rock for his undivided one-half interest.  The wife was left in the dark about the mortgage at the conclusion of the divorce and was conveyed the husband’s one-half interest in the real estate in the property settlement.  The wife did not pay the outstanding mortgage and the Bank of Little Rock sued to foreclose on the property. The wife, in answering the complaint, argued that she did not lose her homestead exemption by conveying the property to a revocable trust in which she was the settler, trustee, beneficiary, and occupant of the real estate.  The trial court granted partial summary judgment because, in their view, the homestead exemption did not apply to a revocable trust.

          The Arkansas Supreme Court, in reversing and remanding the trial court’s decision, held that a married person with a beneficiary interest in a property who maintains a principal residence is entitled to a homestead exemption, although the title of the property is held by a revocable trust.    The court used the same definition of the homestead exemption used in the context of property tax assessments on property conveyances.  The definition included “a dwelling owned by a revocable trust and used as the principal place of residence of a person who formed the trust.”  The court then applied the same rationale from the recent case of Richardson v. Klaesson, 210 F.3d 811 (8th Cir. 2001), which provided persuasive support for the court’s holding that “a person in possession as the beneficiary of a trust [can] claim the protection of the homestead exemption.”  Therefore, the homestead exemption was deemed to apply to revocable trusts, although maintaining the property as the individual’s principal residence was perceived as an important factor.

Posted by Brandon Tittle

Johnson v. Dawson, 2010 Ark. 308, _S.W.3d_ (2010)

          In recent case Johnson v. Dawson, the Arkansas Supreme Court made clear that Arkansas attorneys wishing to perfect an appeal to the state’s circuit court must strictly adhere to Arkansas District Court Rule 9.  Strict compliance requires the filing of a docket sheet–and not its equivalent–in order to perfect an appeal.  Attorneys seeking to perfect an appeal without filing a docket sheet will find no sympathy from the court.   

          In Johnson v. Dawson, decided on June 24, 2010, the Arkansas Supreme Court analyzed the requirements of Arkansas District Court Rule 9 for perfecting an appeal, which was recently amended on January 1, 2009.  The original appellant in Johnson filed an “appeal transcript” in order to appeal two default judgments from a small claims court to the circuit court.  The appellee moved for a motion to dismiss the appeal for failure to comply with District Court Rule 9, which requires the party seeking an appeal to a circuit court to file a certified copy of the docket sheet.  The appellant argued that even the district court clerk was unaware of the existence of a “docket sheet” and that despite his own negligence, the “appeal transcript” was sufficient for perfecting an appeal because there was nothing on the ‘docket sheet’ that was not included in the appeal transcript he had filed.   The circuit court held that the appeal transcript was equivalent to the docket sheet and found that the appellant complied with Rule 9.  The appellee then became the appellant, appealing the circuit court’s decision.

          The Arkansas Supreme Court held that the appeal transcript was not the proper equivalent of the docket sheet, taking a strict stance on the newly amended statutory provision, noting that “substantial compliance will not suffice.” 

          The court reasoned that the statute does not allow a party to take an appeal by filing a certified copy of the docket sheet or its equivalent.  The court held that only the docket sheet will suffice to make an appeal even if the required information is ultimately provided in another form.  It then stated in a somewhat non-sympathetic tone that it is the “duty of counsel, not the judge, clerk or reporter, to perfect the appeal” and that incompliance with the clear language of Rule 9 may not be excused.

Posted by Brandon Tittle