ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION
DIVISION I

CA02-1095

September 17, 2003

TOMMY ORR, SANDRA ORR, AN APPEAL FROM BENTON COUNTY

and T&S DIVERSIFIED, INC. CIRCUIT COURT

APPELLANTS [CIV-98-460-2]

v.

HONORABLE DAVID S. CLINGER,

ARKANSAS NATIONAL BANK CIRCUIT JUDGE

APPELLEE

AFFIRMED

Wendell L. Griffen, Judge

This is a second appeal from an order granting appellee summary judgment. On March 17, 1999, this court dismissed the appeal for lack of a final order because appellants' counterclaim remained unresolved. Orr v. Arkansas Nat'l Bank, No. CA98-348 (Ark. App. March 17, 1999). The trial court entered a "Revised Order" on April 1, 2002, that incorporated Chancellor Oliver Adams's original 1997 order granting summary judgment and added an Ark. R. Civ. P. 54(b) certification. This appeal followed. We affirm.

Appellants Tommy and Sandra Orr are appealing from the trial court's order granting appellee's motion for summary judgment in a foreclosure action. Appellants, as T&S Diversified, Inc., began operating a night club business in Rogers, Arkansas, in December 1995. The business was subsequently funded by appellee through various loans totaling $780,000. The Orrs personally guaranteed the loans. Appellee filed suit on July 23, 1997, alleging that appellants had defaulted on the loans; appellee sought the unpaid principal, interest, penalties, and attorney's fees in addition to foreclosing the mortgage lien. The complaint also sought reinstatement of the mortgage lien securing the notes that appellee had mistakenly released.1 Appellants answered, admitting execution of the notes but denying the other material allegations of the complaint. Appellants also asserted several affirmative defenses, including payment, release, failure of consideration, breach of contract, duress, and other defenses. On November 7, 1997, three days before the hearing on the motion for summary judgment, appellants filed a counterclaim against appellee, alleging that they were persuaded by appellee to apply for a loan from appellee to be guaranteed by the Small Business Administration (SBA); that appellants informed appellee of their need for a $150,000 line of credit to operate their business during slow seasonal times; that appellants were promised that the line of credit would be provided; that appellee failed to provide the requested line of credit; and that, as a result of the failure to provide the line of credit, appellants were unable to make the payments on the SBA guaranteed loan and were forced to cease business operations. The counterclaim remains pending and unresolved.

Appellee filed a motion for summary judgment, alleging that the facts were undisputed in that appellants admitted in their answer that they executed the notes in question and that appellants have no evidence to controvert facts of the balances owed on the notes or that appellants have defaulted upon the notes. Appellee also alleged that a scrivener's error was involved in the release of the lien. In support of its motion, appellee presented the affidavit of Lloyd Jones, its senior vice president and the official responsible for the loans to appellants. In his affidavit, Jones stated that he was familiar with the loans, that the loans were unpaid, that appellants were in default, and that the correct balances were stated in answers to appellants' interrogatories. Appellants admitted, in response to requests for admissions, that they executed the personal guarantees to the notes and that the insurance on the property required by the notes was canceled for nonpayment of premiums.

Appellee explained in an answer to appellants' interrogatories that, at one time, Southern Signature owned three tracts of land; that Southern Signature sold two of the tracts to appellant T&S Diversified; that T&S sold one of the two tracts to Casey White with the understanding that the tract would be released; but that, instead, both tracts sold to T&S were released. Appellants continued to make the mortgage payments even after the release. The mistake was discovered when appellee had title work prepared prior to filing the foreclosure action. Appellee also presented the affidavit of Angela Fitchue, president of First Title Limited, who stated that there were no liens filed since the release was recorded.

In response to the motion for summary judgment, appellants stated that there were material issues of fact to be resolved and that there had not been adequate time for discovery. In answers to requests for admissions concerning the balances owed on the notes, appellants stated that Tommy Orr made a reasonable inquiry but that the information that was necessary to determine the answers was in the possession of appellee. In addition, appellants offered the affidavits of Tommy Orr concerning the events surrounding the request for the SBA loan and the additional $150,000 line of credit. In his affidavit, Orr stated that he owned property secured by two private mortgages; that he obtained an SBA-guaranteed loan of $700,000 from appellee in November 1996; that he completed the application for the SBA loan in order to acquire a $150,000 line of credit for cash flow during slow business periods; that the need for the line of credit was made clear to Lloyd Jones during the application process; that Jones promised that the line of credit would be provided; that he realized in May 1997 that the requested line of credit would not be provided; and that he would not have completed the application for the SBA loan without the promise that the line of credit would be forthcoming.

Following arguments on the motion, Chancellor Adams issued a letter opinion on November 24, 1997, in which he found that appellee was entitled to reinstatement of its lien and that it was undisputed that the lien was released by error. He also found that appellee had met its burden of proof that there were no remaining genuine issues of material fact concerning the execution of the notes, the balances owed, and the fact of default. Chancellor Adams also found that the affidavits offered by appellants did not state facts that would be defenses to appellee's foreclosure action but rather contained facts in support of appellants' counterclaim. Following remand, Judge David Clinger issued a "Revised Order" on April 1, 2002, incorporating Chancellor Adams's 1997 letter opinion and adding an Ark. R. Civ. P. 54(b) certificate. This appeal followed.

Appellants raise five points on appeal: (1) that the trial court erred in granting summary judgment while issues of material fact remained controverted; (2) that the trial court erred in granting summary judgment while discovery remained pending and unanswered; (3) that the trial court erred in characterizing appellants' affirmative defenses as counterclaims; (4) that the trial court erred in not making a finding of culpable negligence concerning the reinstatement of appellee's lien; and (5) that the trial court erred in granting reinstatement of appellee's lien that affected the lien of a third party - the Arkansas Employment Security Division.

Our courts have ceased referring to summary judgment as a "drastic" remedy and now simply regard it as one of the tools in a trial court's efficiency arsenal. Bank of Ark. v. Mana Corp., 346 Ark. 469, 58 S.W.3d 366 (2001). Summary judgment should be granted, however, only when it is clear that there are no genuine issues of material fact to be litigated and the moving party is entitled to judgment as a matter of law. Id. The purpose of summary judgment is not to try the issues, but to determine whether there are any issues to be tried. Flentje v. First Nat'l Bank of Wynne, 340 Ark. 563, 11 S.W.3d 531 (2000). Once the moving party has established a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Id. On appellate review, this court determines if summary judgment was appropriate based on whether the evidentiary items presented by the moving party in support of the motion leave a material fact unanswered. Wright v. City of Monticello, 345 Ark. 420, 47 S.W.3d 851 (2001); Flentje, supra. This court views the evidence in a light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party. Pfeifer v. City of Little Rock, 346 Ark. 449, 57 S.W.3d 714 (2001). Our review focuses not only on the pleadings but also on the affidavits and other documents filed by the parties. Id.

For their first point, appellants argue that the trial court erred in granting summary judgment against them. Appellants argue that material facts remain that preclude summary judgment. Appellants have filed affidavits in opposition to appellee's motion, but these affidavits do not contain facts showing that the debt is not unpaid, that appellants had not defaulted on the notes, or that the balance claimed is not correct. Appellants also do not controvert appellee's assertion that the release was filed by mistake. That failure leaves the facts contained in appellee's affidavits as uncontroverted and to be accepted as true and entitles appellee to summary judgment because there is nojusticiable issue on the facts. Ashley v. Eisele, 247 Ark. 281, 445 S.W.2d 76 (1969); Inge v. Walker, 70 Ark. App. 114, 15 S.W.3d 348 (2000). Appellants asserted a laundry list of affirmative defenses, including release and payment, in their answer. However, they do not set forth any facts in either their answer or in the affidavits in opposition to appellee's motion for summary judgment to support the affirmative defenses, even though they were requested to do so in interrogatories. Arkansas is a fact-pleading jurisdiction, Harvey v. Eastman Kodak Co., 271 Ark. 783, 610 S.W.2d 582 (1981), and appellants were required to state sufficient facts in their answer to properly raise the affirmative defenses they seek to assert. See Higgins v. Burnett, 349 Ark. 130, 76 S.W.3d 893 (2002); Southern Transit Co. v. Collums, 333 Ark. 170, 966 S.W.2d 906 (1998). The purpose of the requirement of Ark. R. Civ. P. 8(c) that a party state in ordinary and concise language his affirmative defenses to each claim for relief against him is to give fair notice of what the claim is and the ground on which it is based so that each party may know what issues are to be tried and be in a position to enter the trial with his proof in readiness. Odaware v. Robertson Aerial-Ag, Inc., 13 Ark. App. 285, 683 S.W.2d 624 (1985). Because appellants failed to assert specific facts to support their affirmative defenses, we affirm on this point.

For their second point, appellants argue that the trial court erred in granting summary judgment in 1997 while discovery was still pending and unanswered. In their response to appellee's motion for summary judgment, appellants stated that there had not been adequate time for proper discovery. However, appellants did not formally request a continuance to complete further discovery, as permitted under Ark. R. Civ. P. 56(f). Whether to grant a continuance to allow for further discovery is a matter within the discretion of the trial court. Alexander v. Flake, 322 Ark. 239, 910 S.W.2d 190 (1995); Jenkins v. International Paper Co., 318 Ark. 663, 887 S.W.2d 300 (1994); Mills v. Crone, 63 Ark. App. 45, 973 S.W.2d 828 (1998). In order for this court to reverse, appellants must show that the trial court abused its discretion and that the additional discovery would have changed the outcome of the case. Alexander, supra. Appellants have not demonstrated that the trial court abused its discretion in granting the summary judgment prior to the completion of all discovery or that additional discovery would have changed the outcome of the case. See Pinkston v. Lovell, 296 Ark. 543, 759 S.W.2d 20 (1988). As noted above, appellants listed their affirmative defenses in laundry-list fashion, without any factual allegations to support them. The discovery was directed to the issue of the breach of the alleged agreement to provide a $150,000 line of credit. Under these circumstances, we do not believe that this court can say that the trial court abused its discretion in granting summary judgment without further discovery.

In their third point, appellants argue that the trial court erred in characterizing appellants' affirmative defenses as counterclaims. Chancellor Adams, in his letter opinion and in the order granting summary judgment, found that the allegations contained in appellants' affidavits in opposition to the motion were in the nature of allegations supporting appellants' counterclaim and not defenses to appellee's foreclosure complaint. As stated above, appellants did not provide any factual allegations supporting these affirmative defenses in their answer. We note that, in his affidavit, appellant Tommy Orr stated that he realized in May 1997 that appellee was not processing the request for the $150,000 line of credit. This was some six months after the SBA-guaranteed loan was closed, and any breach of the alleged agreement to provide the $150,000 line of credit would not serve as a defense to the making of the SBA loan. See Manpower, Inc., of Tenn. v. Manpower, Inc., of Pulaski County, 246 Ark. 1204, 441 S.W.2d 796 (1969); Bale v. Mammoth Cave Prod. Credit Ass'n, 652 S.W.2d 851 (Ky. 1983). Further, in motions to transfer and consolidate filed after this court dismissed the first appeal, appellants characterized their counterclaim as one for damages and made no reference to the claims asserted as being affirmative defenses to the foreclosure action. We find no error.

As their fourth point, appellants argue that the trial court erred in failing to make a finding of culpable negligence in reinstating appellee's lien. Citing Swor v. Looney, 205 Ark. 1117, 172 S.W.2d 674 (1943), appellants argue that the trial court erred in reinstating appellee's lien without making a finding of culpable negligence. However, we do not read Looney to require such a finding. The Looney court quoted the rule from American Jurisprudence as follows: "The owner of a mortgage may, however, prove that a cancellation thereof of record was made by accident, mistake or fraud, and in a proper case relief may be granted in equity from the recording of a release of a mortgage." 205Ark. at 1121, 172 S.W.2d at 675. The trial court found that there was no dispute that the release was recorded in error - in other words, by accident or mistake. The trial court made a finding sufficient to bring the present case within the rule in Looney. Appellants did not assert any specific facts in their affidavits or discovery answers to controvert appellee's allegation that the release was given by mistake and it was their burden to do so. See Turner v. Baptist Med. Ctr., 275 Ark. 424, 631 S.W.2d 275 (1982).

In their fifth point, appellants argue that the trial court erred in reinstating appellee's lien because the rights of a third party - the Arkansas Employment Security Division - had intervened. Appellants do not have standing to raise this issue. Once the mortgage lien was foreclosed, appellants' interest in the property was terminated except to the amount of their personal liability, see Pulaski Federal Savings & Loan Association v. Woolsey, 242 Ark. 612, 414 S.W.2d 633 (1967), and the dispute became one of priorities between appellee and AESD. Because AESD did not object or contest this issue, appellants cannot raise AESD's rights in the priority of the proceeds as a defense to the summary judgment motion. See Kennedy v. Kelly, 295 Ark. 678, 751 S.W.2d 6 (1988); Ford Motor Credit Co. v. Rogers, 285 Ark. 64, 685 S.W.2d 145 (1985).

Affirmed.

Robbins and Neal, JJ., agree.

1 The Arkansas Employment Security Division (AESD) had filed the first of two judgment liens against appellant T&S prior to appellee releasing its lien and was made a defendant because of its lien interest. AESD filed an answer to appellee's complaint but did not otherwise appear in the trial court and has not filed a brief in this court.