ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION
DIVISION II
JOHN E. ATKINS
APPELLANT
V.
BOB E. FEWELL, ROBERT O.
SMITH, JR., TONEY REALTY CO.,
INC., and WHIPPOORWILL
HEIGHTS SUBDIVISION
PARTNERSHIP
APPELLEES
CA 02-1286
OCTOBER 22, 2003
APPEAL FROM THE PULASKI
COUNTY CIRCUIT COURT
[NO. OT 96-2175]
HONORABLE ALICE GRAY,
JUDGE
REVERSED AND REMANDED
John B. Robbins, Judge
This case was previously before us in Atkins v. Fewell, No. CA00-1302, 2001 WL 1091023 (September 12, 2001). Our recitation of the facts leading up to that appeal are relevant here:
This is an appeal from an order of the Pulaski County Chancery Court that dismissed with prejudice appellant's complaint, first amended complaint, and second amended and substituted complaint for failure to include a corporate party as a plaintiff. We reverse and remand.
Appellant John E. Atkins ("Atkins") is an investment partner and shareholder who brought an action for an accounting and dissolution of the partnership and the corporation. On August 28, 1984, appellees Robert O. Smith ("Smith"), John D. Toney ("Toney"), and Bob Fewell ("Fewell") formed a partnership with appellant called Whippoorwill Heights Subdivision Partnership ("WHSP"). The purpose of the partnership was to buy, develop, and sell land in Saline County. Fewell borrowed the capital to fund the development, and the other partners agreed to execute promissory notes including interest to Fewell, which were to be secured by mortgage liens on the real estate purchased by the partnership for their respective shares. The interest rate on the promissory notes was to be adjusted annually based on the prime lending rate then in effect. On January 2, 1992, three of the partners, Atkins, Smith, and Fewell, formed a sub-chapter "S" corporation called Whippoorwill Heights, Inc. ("WHI"), for tax purposes. They transferred their previously-owned individual interests in WHSP to
WHI. This left WHSP with two partners, Toney Realty Company1 and WHI. Despite having conveyed their individual interests into the corporation, on January 4, 1992, Atkins and appellees Fewell, Smith, and Toney Realty Company entered into an "Amended and Re-Stated Partnership Agreement for Whippoorwill Heights Subdivision."
Apparently, Atkins first sued appellees in 1996 for an accounting and dissolution of the partnership and corporation. That complaint, however, was not made a part of the record for this appeal. Atkins also filed a first amended complaint against the appellees, which also was not made a part of the record.
On August 24, 1999, Atkins filed a motion in limine, objecting to appellees presenting evidence that would establish WHI as a corporate entity separate from the partnership. Atkins stated in the motion that he was told during discovery that the formation of WHI did not change the way the partnership business was handled and, as a result, he did not inquire further into the actual separate-entity status of WHI. However, he said that he later discovered that it was an issue. A hearing was held on his motion on August 24, 1999. On September 17, 1999, Atkins filed a second amended and substituted complaint. The second amended complaint alleged inter alia that Fewell breached the partnership agreement and that he violated his duties to the partners and WHI and that Atkins's requests for an accounting had been refused. He prayed for an accounting and a dissolution of the partnership and the corporation. On October 11, 1999, appellees filed a motion to dismiss and/or strike Atkins's second amended and substituted complaint. On December 21, 1999, the trial court entered a nunc pro tunc order dated August 24, 1999. The order was entered in response to the August 24 hearing, and the court found that Atkins was not the proper party to bring the lawsuit and allowed Atkins thirty days to amend the complaint to substitute the proper plaintiff. The court further ordered that if the complaint was not amended, it would be dismissed in its entirety. This December 21 order neither addressed nor made reference to Atkins's second amended and substituted complaint or appellees' motion to strike. On December 30, 1999, Atkins filed a motion to amend or modify the December 21 order and argued that a corporation is not required to be made a plaintiff in a minority stockholder suit on behalf of the corporation. Appellees filed responses and asked that Atkins's motion to amend be dismissed.
On April 20, 2000, a hearing was held on the motions to dismiss and motion to modify the judgment. The court entered an order on July 18, 2000, in which it found that the parties acknowledged at the August 24, 1999, hearing that the legal partners in WHSP were WHI and Toney Realty Co., Inc.; that it was undisputed that Atkins was not a partner in WHSP and individually had no interest therein; that Atkins requested and was granted additional time in which to amend his complaint to include the corporation as a plaintiff, but that he failed to do so; and that he filed a second amended and substituted complaint for an accounting and dissolution of partnership, which raised issues previously addressed by the court and which failed to comply with the court's December 21, 1999, order. The court dismissed the complaint, first amended complaint, and second amended and substituted complaint with prejudice.
Atkins appeals from the July 18, 2000, order and raises three issues: (1) whether the court erred in dismissing the second amended and substituted complaint because the corporation was not included as a plaintiff; (2) whether the court erred in dismissing the second amended and substituted complaint for an accounting against Bob Fewell as managing partner and officer; and (3) whether the court erred in finding that the second amended and substituted complaint failed to state a cause of action.
We agreed with Atkins's argument that the trial court erred in dismissing the second amended complaint for failure to include the corporation as a plaintiff, and reversed and remanded, explaining:
The appellees contend in their briefs that, to the extent that the second amended complaint could be construed as a derivative action, it failed to comply with Rule 23.1 of the Arkansas Rules of Civil Procedure, which provides:
In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege that the plaintiff was a shareholder or member at the time of the transaction of which he complains or that his share or membership thereafter devolved on him by operation of law. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action he desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for his failure to obtain the action or for not making the effort. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association. The action shall not be dismissed or compromised without the approval of the court and notice of the proposed dismissal or compromise shall be given to shareholders or members in such manner as the court directs.
Specifically, the appellees contend that Atkins failed to comply with the rule because: (1) the second amended complaint was not verified; (2) the complaint failed to allege with particularity any efforts made to obtain the action desired from the directors or shareholder; and (3) Atkins made no effort to establish that he fairly and adequately represented any similarly situated minority shareholders.
We hold that Atkins's second amended complaint adequately apprised the trial court that it purported to be a derivative action and that there was substantial compliance with Rule 23.1. Contrary to appellees' assertion, Atkins filed a verification on October 14, 1999. Moreover, in accordance with Rule 23.1, the complaint averred:
That Defendants, Fewell, with 57.14%, and Smith, with 14.28%, represent the controlling amount of stock of Whippoorwill, Inc., and Fewell controls the financial and record keeping as Treasurer and Secretary, and operates the corporation as his own without stockholder or director's meetings, and without other officer involvement. That Fewell has refused, and Fewell and Smith have opposed an accounting from the Managing Partner and de facto manager of the corporation, and both have vigorously opposed the need for an accounting from Fewell and Smith; and, that any formal action by the corporate entity which is controlled by stockholders Fewell and Smith, to require Fewell and Smith to account for their/Fewell's wrongful actions, would be a futile gesture and a useless demand[.]
In support of his position, Atkins correctly cited Morgan v. Robertson, 271 Ark. 461, 609 S.W.2d 662 (1980), which held:
The law does not require a futile ceremony. Therefore, where a majority of the directors are under the control of a majority of the stockholders, and an action is brought against them by an innocent shareholder in his own name, charging wrongdoing on their part in the manner above indicated, it is not necessary for him to allege and prove, as a condition precedent to the maintenance of the action, that, before instituting the same, he protested to the board of directors against their own mismanagement and appealed to them for redress. Such protest would fall upon deaf ears, because a majority of the directors could not be expected to authorize, or to institute, an action against themselves charging themselves with fraud.
Id. at 467, 609 S.W.2d at 665 (citing Red Bud Realty Co. v. South, 153 Ark. 380, 241 S.W.2d 21 (1922)). Finally, Atkins's complaint asserted that "Atkins, as a minority stockholder of Whippoorwill, Inc., is uniquely qualified to and will fairly and adequately represent the interest of the stockholders similarly situated." The burden of showing that the party bringing a derivative action does not fairly and adequately represent the interests of the shareholders is always on the defendant, Brandon v. Brandon Construction Co., 300 Ark. 44, 776 S.W.2d 349 (1989), and the record in the instant case fails to reflect that the appellees met that burden.
Rule 41(b) of the Arkansas Rules of Civil Procedure gives the trial court the authority to dismiss cases in which the plaintiff has failed to comply with any order of the court. Wolford v. St. Paul Fire & Marine Ins. Co., 331 Ark. 426, 961 S.W.2d 743 (1998). Our standard of review of such a dismissal is whether the trial court abused its discretion. Id. We hold that the chancery court abused its discretion in dismissing Atkins's derivative action because the corporation was not a necessary plaintiff.
We are unable to address Atkins's remaining two arguments due to deficiencies in the record. In its final order, the chancery court found that Atkins's second amended complaint was being dismissed in part because the complaint raised "issues previously addressed by the court[.]" Prior complaints and orders of the trial court in this proceeding are absent from the record. The original complaint was filed in 1996, but Atkins has failed to provide any record preceding August 24, 1999. Because we are unable to ascertain the previous rulings by the trial court pertaining to Atkins's personal claims for an accounting and dissolution, our reversal pertains only to the dismissal of his derivative action.
Reversed and remanded for further proceedings consistent with this opinion.
On remand, the parties differed in their interpretation of our opinion. According to appellant, many of the claims for relief set forth in the second amended complaint, such as the requests for an accounting and the setting aside of the sale to Fewell, remained to be tried in regard to the corporation. Appellees and the trial court disagreed, and the trial court refused to permit appellant's attempts at discovery pertaining to the corporation. After a trial, the trial court issued judgment for appellees. Appellant appeals from that decision.
Law of the Case
On appeal, appellant makes seven arguments. Appellant first contends that the trial court erred in failing to apply corporate law to determine the duties that appellee Fewell owed WHI. Fewell was the managing partner of WHSP. After three of the partners, including Fewell and appellant, transferred their partnership interests in WHSP to WHI, the corporation owned eighty-seven and one-half percent of WHSP. Fewell was the corporate secretary and treasurer, and appellant was its president. However, appellant refers to Fewell as the "de facto manager" of the corporation, and there is no dispute that Fewell continued to run the business. According to appellant, Fewell's purchase in 1994 of land in which the corporation had a significant interest violated his fiduciary duty to the corporation. Appellant argues that, under Ark. Code Ann. § 4-27-831 (Repl. 2001), Fewell could not vote on a proposal in which he had an interest and that he owes the corporation's shareholders an accounting for that transaction as well as for the unauthorized payment of certain professional fees.
The trial court held that its May 27, 1997, order, which is the law of the case, as explained below, applied to WHI's action against Fewell for breach of his fiduciary duty to the corporation and for an accounting for profits related to the sale of the land. Appellant contends that the shareholders' rights were not in issue until the second amended complaint was filed in 1999, when WHI was added as a party, and that they were not determined in the May 27, 1997, order. Appellant argues, therefore, that the trial court's 1997 decision is not the law of the case as to the derivative claims.
The law-of-the-case doctrine provides that the decision of an appellate court establishes the law of the case for the trial court upon remand and for the appellate court itself upon subsequent review and is conclusive of every question of law and fact previously decided by the appellate court. Linder v. Linder, 348 Ark. 322, 72 S.W.3d 841 (2002). Accordingly, a trial court must give deference to an appellate court's mandate, implementing both the letter and spirit of the mandate, given the appellate court's opinion and the circumstances it embraces. Dolphin v. Wilson, 335 Ark. 113, 983 S.W.2d 113 (1998). On a second appeal, the decision of the first appeal becomes the law of the case and is conclusive of every question of law or fact decided in the former appeal, and also of those which might have been, but were not, decided. Skokos v. Skokos, 344 Ark. 420, 40 S.W.3d 768 (2001); Helena/W. Helena Schs. v. Hislip, 78 Ark. App. 109, 79 S.W.3d 404 (2002).
It is, therefore, necessary to determine what the trial court actually decided in the May 27, 1997, decision, which was not addressed by us in the first appeal. It is appropriate to begin with the allegations in appellant's second amended complaint. In addition to appellant's individual and partnership claims, appellant made the following statements about the corporation:
5. That in 1991, as income from the partnership increased and incomplete financial records were being maintained, Smith and Atkins, with Fewell's approval and concurrence, inter alia, determined that they should do business in a form that would decrease their self employment taxes, and permit sales without all partners, and their spouses, executing all sales documents, and agreed that the partnership agreement should be more clearly stated; and that the controlling management position of Fewell should be re-confirmed. On or about January 2, 1992, Whippoorwill Heights, Inc., hereinafter called "Whippoorwill, Inc.," was formed by Fewell's selected attorney, Randy Coleman, and Whippoorwill, Inc. and the stockholders therein, i.e. Atkins, Smith and Fewell, elected to be taxed as a Sub-Chapter "S" Corporation, with pass through profits and losses to the three partners/stockholders. Atkins was elected/ designated as Treasurer and Secretary in the organization process, and no stockholders meetings or directors meetings have been held since its organization; and, Fewell and his representatives have prepared and filed all necessary documents, paid the franchise tax from partnership funds, and have otherwise treated the corporation as merely a convenient form in which to do the partnership real estate business.
6. That Defendants, Fewell, with 57.14%, and Smith, with 14.28%, represent the controlling amount of stock in Whippoorwill, Inc., and Fewell controls the financial and record keeping as Treasurer and Secretary, and operates the corporation as his own without stockholder or director's meetings, and without other officer involvement. That Fewell has refused, and Fewell and Smith have opposed an accounting from the Managing Partner and de facto manager of the corporation, and both have vigorously opposed the need for an accounting from Fewell and Smith; and, that any formal action by the corporate entity which is controlled by stockholders Fewell and Smith, to require Fewell and Smith to account for their/Fewell's wrongful actions, would be a futile gesture and a useless demand as found in Morgan v. Robertson, 271 Ark. 461, 467, 468 (1980), and the authorities cited therein.
7. That Atkins, as a minority stockholder of Whippoorwill, Inc., is uniquely qualified to and will fairly and adequately represent the interest of the stockholders similarly situated. Brandon v. Brandon Construction Co., Inc., 300 Ark. 44, 776 S. W.2d 344 (1989).
....
17. That the Defendant Fewell breached the Partnership Agreement and violated his duties to the partners and Whippoorwill, Inc., in another substantial transaction on or about March 31, 1994. The agreement required the written consent of 75% of the owners equity interest to sell or exchange the assets of the partnership. The corporation, Whippoorwill, Inc., had no stockholders meeting, nor board meeting, and the President did not consent to the sale of 139.6 acres to Fewell, nor was there obtained the written consent of each of the partners who in aggregate owned 75% of the partnership before Fewell purchased and deeded himself the property. In particular, on or about March 31, 1994, Fewell, the Managing partner of Whippoorwill Heights Subdivision Partnership sold to himself individually 139.6 acres of land, as described in the deed from the partnership recorded in Deed Book 386 at page 068, for $190,210.00, without first obtaining a 75% written approval of the partners or corporate owners, as required in Paragraph 10(b)(2) of Exhibit 1, supra; and without attempting to request a higher price therefor, and without paying the then offered purchase price of $206,750.00. The Sale to himself was in contravention of the limitation on asset sales in paragraph 10(g) of the Partnership Agreement and Fewell did not communicate to Toney Realty and Smith that $206,750.00 had been offered for the land. A copy of said Deed is attached as Exhibit 9, and made a part hereof as though set out herein word for word. Smith and Fewell have caused the development and sale of parcels of the property; and, the profits from such venture should be accounted for and the remainder of the asset restored to the corporation and/or the partners.
18. That such transfer of partnership assets to the Managing Partner was a breach of fiduciary duty to Whippoorwill, Inc. and to the remaining partners and such transfer should be declared a nullity, and all sums therefrom acquired by Fewell from the sale of the lands conveyed should be re-paid to the partnership and Whippoorwill, Inc., and to the extent applicable, the partners' notes should be credited accordingly from the date of Fewell's receipt.
19. Fewell and Smith have participated jointly in the sale and development of the 139.6 acres originally owned by the partnership, and/or Whippoorwill, Inc., and have converted sums to their own uses, and have refused to account to the Plaintiff, or any other entity/partner, for the funds converted to their own uses. The profits converted to the personal use through the efforts of Fewell and Smith exceed $500,000.00.
....
22. That the Defendant Fewell, as Managing Partner of Whippoorwill Heights Subdivision Partnership, Toney Realty, and Smith, as their liability may appear, should account to Atkins, as a stockholder acting on behalf of Whippoorwill, Inc., and as a minority partner in Whippoorwill Heights Subdivision Partnership for the following actions, to-wit:
(a) For any sums paid from partnership funds to Robert Anthony or Peat, Marwich and Mitchell, for accounting or review on the promissory note, credits and balances, that was performed in 1993, 1994 and 1995;
(b) for any profits derived by Fewell and Smith arising out of the purchase by Fewell of the 139.6 acres of real estate in Saline County, Arkansas, deeded Fewell by Fewell, as Managing Partner on or about March 31, 1994;
(c) the interest upon, and the value of, any and all withdrawals of funds made from the corporate and partnership accounts by Fewell and designated by accountants as withdrawals from Fewell's capital account;
(d) any corporate funds diverted from, or not deposited in, the corporate bank account;
(e) any non-partnership debts paid for from assets belonging to the corporation, the stockholders, or partnership, including any legal and accounting expenses incurred, or paid for, in the defense of individual partners;
(f) the excess taxes incurred by the corporation, which were imputed to and incurred by, the individual corporate stockholders, when Fewell withdrew partnership funds from his capital account, rather than withdrawing from the after-tax profits of the corporation;
(g) for any funds belonging to, or in which Whippoorwill, Inc. had interest, which may be found to have been received by Fewell during the life of the partnership, and not spent on the account of such corporation;
(h) any other interest that the corporation may be found to have, or which may be discovered during the accounting process, for which Whippoorwill, Inc., has not received a benefit.
The decision previously entered on May 27, 1997, however, dealt with partnership, not corporate, issues. In that decision, the court stated:
1. The allegations set out in Plaintiff's Complaint can essentially be organized into four separate but related issues. First, Plaintiff seeks an accounting of the Partnership's assets and liabilities by reason of certain alleged miscalculations of interestrates on notes, advances and repayments to partners. Second, Plaintiff contends that separate Defendant Fewell breached the Partnership Agreement in that Fewell, as managing partner of the Partnership, caused certain real property owned by the Partnership to be sold to Fewell individually in violation of the Partnership Agreement. Third, Plaintiff asserts that in so transferring real property owned by the Partnership to Fewell individually, Fewell breached fiduciary duties owed to Plaintiff and the other partners in the Partnership. Finally, Plaintiff contended that separate Defendants Fewell and Smith converted Partnership funds to their own personal uses and refused to account to Plaintiff or other partners when they sold and developed the real property purchased by Fewell from the Partnership.
2. As to Plaintiff's claim for an accounting set forth in his first claim for relief, the Court finds that the Plaintiff has stated facts upon which relief may be granted as to this claim, and therefore denies Defendant's Joint Motion to Dismiss as to Plaintiff's claim for an accounting.
3. As to Plaintiff's claim that separate Defendant Fewell breached the Partnership Agreement by selling real property owned by the Partnership to himself, the Court will treat Defendants' Motion under Ark. R. Civ. P. 12 (b)(6) as a motion for summary judgment under Ark. R. Civ. P. 56 because matters outside the pleadings were presented to the Court by the parties herein. The Court concludes that because Fewell did indeed obtain the consent of partners of the Partnership owning seventy-five percent (75%) of the equity interest in the Partnership to Fewell's purchase of the property from the Partnership, Defendants' Joint Motion to Dismiss regarding Plaintiff's claim for breach of the Partnership Agreement is meritorious and should, therefore, be granted.
4. As to Plaintiff's claim that separate Defendant Fewell's purchase of the real property owned by the Partnership was a breach of fiduciary duty, the Court treated Defendants' Joint Motion to Dismiss under Ark. R. Civ. P. 12(b)(6) as a motion for summary judgment under Ark. R. Civ. P. 56. Based upon the evidence presented, and the fact that the Partnership Agreement specifically contemplated and permitted a purchase of real property owned by the Partnership by a partner, Defendants' Joint Motion to Dismiss as to the claim for breach of fiduciary duty will be granted.
5. As to Plaintiff's contention that separate Defendants Fewell and Smith are liable for conversion of partnership funds and for failing to account to Plaintiff or the other partners, the Court likewise treated Defendants' Joint Motion as a motion for summary judgment under Ark. R. Civ. P. 56. Based upon the pleadings and evidence presented, the Court finds that the Motion is meritorious, in that Plaintiff's claim for conversion fails to state facts upon which relief can be granted, and because the Partnership Agreement specifically contemplated and authorized Defendants' conduct.
6. The Court will reserve ruling on Plaintiff's request for dissolution of the Partnership pending the disposition of Plaintiff's remaining claim for an accounting and the Court's review of any evidence developed in such claim should it be pursued by Plaintiff.
In the July 2000 order, from which followed the first appeal, the trial court dismissed with prejudice Atkins's complaint, first amended complaint, and second amended complaint, including his individual claims regarding the notes and mortgages that he and his wife signed in 1984. The partnership and individual issues became the law of the case after our decision in 2001.
Appellant is, therefore, correct in arguing that his derivative claims for an accounting and for the setting aside of the 1994 sale are not the law of the case but remained viable for trial on remand. We reverse on this issue and remand the shareholder-derivative claims for trial.
Duty to Account
Appellant argues in his second point that the trial court erred in finding that he failed to prove that Fewell breached his fiduciary duty to the corporation, because the burden of proof should have been placed on Fewell, who was the de facto manager of the corporation. Appellant points out that the trial court, in the August 20, 2002, judgment, found that the sale of the land was done with the consent of the partners. According to appellant, there is no evidence that the corporation consented to the sale. In his related sixth point, appellant asserts that the trial court erred in failing to order an accounting on behalf of the corporation. Appellant is correct on both counts.
The law imposes a high standard of conduct upon an officer or director of a corporation. Raines v. Toney, 228 Ark. 1170, 313 S.W.2d 802 (1958). An accounting is an equitable remedy designed to provide a means for compelling one who, because of a confidential or trust relationship has been entrusted with property of another, to render an account of his actions and for the recovery of any balance found to be due. A&P's Hole-In-One, Inc. v. Moskop, 38 Ark. App. 234, 832 S.W.2d 860 (1992). An officer or director of a corporation occupies a fiduciary relation to his corporation. Id. This relation is predicated on the fact that he has voluntarily accepted a position of trust and has assumed the control of the property of others and, as such, occupies a fiduciary relationship to the corporation and its stockholders. Id. The duty to account has been specifically applied to corporate officers who control a corporate enterprise and its funds. Id. There is no dispute that Fewell managed the corporation's assets.
The burden of proving that the accounts have been properly handled should be placed on the fiduciary rather than the corporation. In Red Bud Realty Co. v. South, 96 Ark. 281, 299, 131 S.W. 340, 348 (1910), the supreme court explained:
In the case of McNeil v. Gates, 41 Ark. 264, it is said:
"The dealings of a trustee with the trust property are narrowly scrutinized by courts of equity. If impugned, they cannot stand unless characterized by the utmost good faith and candor. And the burden is upon the trustee to show their entire fairness." Where the duty of the trustee or agent requires it, he must keep true, regular, and accurate accounts of all his transactions, both of receipts and disbursements, and should render a full and complete statement, supported by proper vouchers. As is said in the case of Landis v. Scott, 32 Pa. 495: "If he does not, every presumption of fact is against him. He cannot impose upon his principal, or cestui que trust, the obligation to prove that he has actually received what he might have received," or that he has not expended what he claims to have paid out. If he does not keep clear, distinct and accurate accounts, with proper vouchers, "all presumptions are against him, and doubts are taken adversely to him."
Accordingly, we hold that the trial court erred in failing to place the burden of proof on Fewell and in denying appellant's request for an accounting to the corporation for the sale of the land and the professional fees paid by the corporation.
Discovery
Appellant further contends that the trial court erred in denying his attempts at further discovery regarding corporate affairs on remand. Before the trial on remand, appellant sent requests for admission to Fewell, who objected to most of them on the ground that they were irrelevant because they concerned matters previously ruled on by the court. The trial court denied appellant's motion to compel.
The trial court has a wide latitude of discretion in matters pertaining to discovery, and the appellate court will not reverse the trial court's exercise of discretion in the absence of an abuse of discretion that is prejudicial to the appealing party. Rush v. Wallace, 23 Ark. App. 61, 742 S.W.2d 952 (1988). The goal of all discovery is to permit a litigant to obtain whatever information he may need to prepare adequately for issues that may develop without imposing an onerous burden on his adversary. Id.
We agree with appellant that the trial court erred in barring further discovery regarding corporate matters on remand. Because the derivative claims remained viable, appellant was entitled to some discovery, even though, as the trial court found, appellant was president of the corporation. Fewell admitted that he handled the corporation's money and that he had refused to speak to appellant for some period of time. However, we note that this action has been pending since 1996 and that appellant has already had a significant amount of time in which to obtain discovery. On remand, the trial court certainly may impose reasonable limits on the time during which additional discovery may be obtained.
Admission of Evidence
Appellant also asserts that the trial court erred in refusing to admit certain evidence at trial. At oral argument, appellant acknowledged that he challenges only the trial court's refusal to admit an accounting report. The court based its refusal to admit the report on the fact that it had not been provided to appellees. Appellant points out that appellees had not filed any requests for production of documents but had simply requested that appellant identify the documents that he intended to introduce or to which he intended to refer. According to appellant, this report came within the terms of the documents that he had already identified for appellees. We agree. The admission of evidence is at the discretion of the trial judge, and we will not reverse absent an abuse of that discretion and a showing of prejudice. Dodson v. Allstate Ins. Co., 345 Ark. 430, 47 S.W.3d 866 (2001). We believe that an abuse of discretion occurred in regard to this report and direct that it be admitted at trial on remand.
Costs Previously Awarded
Appellant further argues that the trial court erred in failing to grant judgment to appellant for the costs awarded by this court on the first appeal. We disagree. An inferior court cannot vary an appellate mandate or judicially examine it for any purpose other than execution. National Cashflow Sys., Inc. v. Race, 307 Ark. 131, 817 S.W.2d 876 (1991). In our first decision, we awarded costs to appellant pursuant to our authority granted by Ark. Code Ann. § 16-68-408 (1987). According to Ark. Code Ann. § 16-68-410 (1987), appellant was immediately entitled to execute upon that award; no further action was required.
Trial Court's Findings of Fact
Appellant contends in his seventh point that the trial court's findings were not sufficiently specific to comply with Ark. R. Civ. P. 52. He points out that, although only the derivative action was at issue on remand, the trial court made findings regarding partnership issues. Although the trial judge's findings were specific, they did not, for the most part, concern the rights of the corporation, which were in issue. Our remand of the derivative action for trial adequately addresses this concern.
Reversed and remanded.
Gladwin and Bird, JJ., agree.
1 It is not clear from the record when John Toney incorporated and transferred his partnership interest into his corporation.