Tackett v. Miller-Claborn Oil Distributing Co., Inc.-348

Cite as 2024 Ark. App. 359
ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-22-348

CODY S. TACKETT, INDIVIDUALLY; Opinion Delivered: May 29, 2024

TTC, INC.; RED RIVER SAND AND
APPEAL FROM THE LITTLE RIVER
GRAVEL, INC.; S.W.A.T., INC.;
COUNTY CIRCUIT COURT
SYNERGY LOGISTICS, INC.; AND CST
[NO. 41CV-15-112]
LOGISTICS, INC.
APPELLANTS
HONORABLE CHARLES A.
YEARGAN, JUDGE
V.

MILLER-CLABORN OIL
DISTRIBUTING CO., INC.; AMY
FREEDMAN, SPECIAL
ADMINISTRATRIX OF THE ESTATE
OF JOHN Z. TACKETT, JR.; MELISSA
WRIGHT TACKETT, INDIVIDUALLY;
HWY 71 TRUCKING, LLC; AND JZT’S AFFIRMED
HWY 71 TRUCKING, LLC
APPELLEES

MIKE MURPHY, Judge

This appeal arises from a payment-on-account lawsuit filed by Miller-Claborn Oil

Distributing Co., Inc. (“Miller-Claborn”), against John Tackett, Jr., in 2015. We note that

there was a previous appeal in a related probate action. In the first probate appeal, Tackett v.

Freedman, 2022 Ark. App. 135, 641 S.W.3d 683, we affirmed the circuit court’s order that

approved a settlement between Miller-Claborn and John’s estate. Additional facts and history

can be found in Tackett v. Miller-Claborn, 2024 Ark. App. 360, ___ S.W.3d ___, and Tackett
v. Freedman, 2024 Ark. App. 358, ___ S.W.3d ___, also handed down this date. Because

there are facts that overlap all these appeals, we will reference the probate action that was

filed in Sevier County as the “Probate Action” and the civil action that was filed in Little

River County as the “Civil Action.”

This appeal involves an order of contempt in the Civil Action against John’s son,

Cody, and a subsequent order granting discovery sanctions and striking all Cody’s pleadings,

along with those of the other appellants. This resulted in a default judgment against Cody

and his business entities.

We affirm.

I. Factual and Procedural Background

Before delving further into the facts, it is important to know that John died suddenly—

and intestate—in 2019. He was survived by his spouse, Melissa Tackett, and two adult

children, Cody Tackett and Toni Tackett Womble. Tackett v. Freedman, 2022 Ark. App. 135,

at 1, 641 S.W.3d at 684. In both the Probate Action and the Civil Action, John is alleged to

have started corporations, moved assets between them, and titled property in the names of

those various business entities, his children, his wife, or third parties in an attempt to avoid

creditors.

Before his death, John owned or operated a number of businesses related to the

trucking industry. One of the primary businesses he allegedly operated was TTC, Inc.

(“TTC”), through which John routinely purchased diesel fuel. On December 15, 2015,

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Miller-Claborn sued John; Cody; Steve Womble;1 TTC; Red River Sand and Gravel, Inc.

(“Red River Sand”); S.W.A.T, Inc. (“SWAT”); and Synergy, Inc. (“Synergy”). At various

points throughout the litigation, TTC, Red River Sand, SWAT, and Synergy were alleged to

have been controlled by John and involved in his scheme to hide assets. The complaint, filed

in Little River County, alleged breach of contract and claimed that John had agreed to pay

for $552,564.49 in diesel fuel but had then used several business entities to hide assets and

avoid paying this debt.

The operative complaint for the purpose of these appeals is the sixth amended

complaint. Miller-Claborn filed its fifth amended complaint on February 28, 2020, alleging

suit on open account, breach of contract under common law and the UCC, unjust

enrichment, fraudulent inducement, violation of the Uniform Voidable Transactions Act,

and conspiracy. By this point, Miller-Claborn had added CST Logistics, Inc. (“CST

Logistics”), and had asserted that Cody and CST Logistics were involved in John’s alleged

scheme.

On January 24, 2020, which was after John’s death, Miller-Claborn requested a

temporary restraining order and preliminary injunction against Melissa to prevent her from

selling some of John’s assets. The circuit court granted a temporary restraining order to

prevent any defendant from disposing of potential estate assets.

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Steve Womble was voluntarily dismissed on January 21, 2020, and does not make
any other appearances in the civil suit.

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A few days later, Eddy Johnson, Miller-Claborn’s owner, petitioned the circuit court

in Sevier County2 to appoint a special administrator to John’s estate so Miller-Claborn could

file a claim as a creditor against the estate. The circuit court granted the petition that same

day and appointed Amy Freedman as administratrix. This became the Probate Action.

On February 6, the circuit court in the Civil Action granted a preliminary injunction

against any party possessing estate assets or any other assets “subject to the claims of [Miller-

Claborn][.]” It prohibited those assets from being sold or otherwise disposed of. There were

two exceptions: The preliminary injunction allowed certain personal property to be sold at

auction and the proceeds deposited into the registry of the court. It also stated, “Nothing

contained herein is intended to prevent the legitimate day-to-day operations of any entity

named herein.” This is the preliminary injunction at issue in this appeal.

Meanwhile, on July 8, TCC, SWAT, Red River Sand, Synergy, CST, and Cody filed

counterclaims against Miller-Claborn for fraud and conspiracy. On the same day, Cody filed

a cross-complaint against Melissa and Hwy 71 Trucking, LLC, for conversion. The

counterclaim and cross-claims were eventually dismissed and are discussed in more detail in

Tackett v. Miller-Claborn, 2024 Ark. App. 360, ___ S.W.3d ___.

On October 30, Cody sold a five-bay shop that he had used for the operations of CST

Logistics, even though Miller-Claborn had alleged that Cody and CST Logistics were

2
Although the Civil Action was filed in Little River County and the Probate Action
was filed in Sevier County, Judge Yeargan presided over both matters at all times relevant to
these appeals.

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involved in John’s scheme to defraud creditors. Miller-Claborn reacted by filing a motion for

contempt against Cody on December 8.

On December 28, Cody filed his suggestion of bankruptcy in both the Civil Action

and the Probate Action. Normally, the suggestion of bankruptcy would have resulted in a

stay of the state court proceedings. However, in this case, the bankruptcy court lifted the stay

with regard to Miller-Claborn’s claims against Cody and his businesses. The bankruptcy

court took that action so Miller-Claborn could liquidate its claim against Cody and then

report the result back to the bankruptcy court, which would then integrate the liquidated

claim into the bankruptcy plan if needed.

The circuit court held a hearing on Miller-Claborn’s motion for contempt on April

27, 2021. During the hearing, Cody claimed he had sold the five-bay shop and used some of

the proceeds to outfit and rent a one-bay shop that was owned by Toni. The circuit court

requested documents showing the real estate closing, a copy of the lease of the one-bay shop,

and an outline of what Cody used the sale proceeds for. Cody filed a response to that letter

with the requested documents on May 3. In the letter transmitting the documents, Cody’s

attorney, Stephen Arnold, represented that Cody had used the sales proceeds to outfit the

one-bay shop, pay attorneys’ fees, make a house payment, and give a $2,800 birthday and

Christmas gift to his three-year-old son.

On June 21, the circuit court granted Miller-Claborn’s motion for contempt. In that

order, the circuit court held that Cody had violated the temporary injunction by selling the

shop and ordered him to pay $45,218.24 from the transaction to the registry of the court

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and to pay $4,500 for attorneys’ fees to Miller-Claborn. The contempt order also reopened

discovery for the purpose of deposing Cody and ordered Cody to produce monthly

accountings for him and his business entities. The validity of this order of contempt is one

issue on appeal.

After the circuit court entered the order of contempt, Miller-Claborn sent Arnold

four letters dated July 27, August 17, September 10, and September 24 in an attempt to

schedule Cody’s deposition. Those letters also requested the monthly accountings that Cody

was ordered to produce but never did. Neither Arnold nor Cody responded to the letters.

Miller-Claborn next sent a notice of deposition and a subpoena duces tecum to Arnold. The

subpoena duces tecum requested multiple financial records, including the accountings that

the circuit court had ordered Cody to produce. During the hearing on this matter, Miller-

Claborn’s counsel represented to the circuit court that Arnold had come to his office after

receiving the notice of deposition and “advised us that he did not intend to produce the

documents that we subpoenaed, and he did not intend to appear for the deposition.” Indeed,

Cody did not show up for the deposition on October 20 nor did he produce any of the

requested documents. On October 22, Miller-Claborn moved for discovery sanctions.

At some point during the pendency of the Civil Action, Cody moved for summary

judgment regarding Miller-Claborn’s claims in bankruptcy court, despite the fact that the

stay had been lifted in state court to litigate those very claims. During a hearing on October

25, 2021, just five days after Cody had failed to show up for his noticed deposition, the

bankruptcy court asked about Arnold’s motives for asking for a ruling on the motion for

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summary judgment, considering the bankruptcy court had specifically ordered Miller-

Claborn’s claims to be litigated in state court. At the end of the exchange, the bankruptcy

court stated it believed that Arnold was attempting to circumvent the order lifting the

automatic stay. In response, Arnold stated, “[W]e’re trying to get this case finished. . . . [T]he

Little River County court wants to reopen discovery, start taking new depositions. I mean,

that just seemed over the top.”

Cody followed the hearing by moving for contempt against Miller-Claborn in the

bankruptcy court on November 21, asking the bankruptcy court to sanction Miller-Claborn

for filing its motion for sanctions in state court. That motion was denied after a hearing in

which the bankruptcy court again chided Arnold for attempting to circumvent the order

lifting the stay.

On January 18, 2022, in Little River County, the circuit court held a hearing on the

motion for discovery sanctions. During that hearing, Miller-Claborn’s attorney represented

to the circuit court that Cody had finally agreed to a deposition, but it had to be reset due

to a COVID-19 outbreak in the office. However, it was only after the order of contempt, the

multiple letters, the deposition notice and subpoena duces tecum, a motion for sanctions,

and being told by the bankruptcy court multiple times that his behavior was unacceptable

that Arnold finally agreed to discuss setting a deposition for his client.

After the hearing, on January 26, the circuit court granted Miller-Claborn’s request

for discovery sanctions. The circuit court struck every pleading and document filed by Cody

and “his related business entities.” As a result, the circuit court entered a default judgment

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against Cody and his related entities for the total damages claimed for suit on account plus

prejudgment interest. The damages award was based on the affidavit and invoices attached

to Miller-Claborn’s fifth amended complaint. This order and entry of judgment is the second

order involved in this appeal.

Cody moved to set aside the judgment on February 9, which was deemed denied after

the circuit court did not rule on it. This deemed denial is the third issue involved in this

appeal.

II. Issues on Appeal
A. The Contempt Order

Cody first urges us to reverse the circuit court’s order finding him in contempt for

violating the preliminary injunction. Because Cody’s appeal of that order was not timely

filed, we cannot reach the merits of his argument and must affirm.

An order that imposes a sanction and constitutes the final disposition of a contempt

matter is immediately appealable as an interlocutory order under Arkansas Rule of Appellate

Procedure–Civil 2(a)(13).

The supreme court analyzed the procedure for appealing interlocutory orders in In re

Est. of Stinnett, 2011 Ark. 278, 383 S.W.3d 357. In Stinnett, the supreme court held that

interlocutory orders that are reviewable under Rule 2(a) must be appealed within thirty days

of entry. Id. at 7, 383 S.W.3d at 361. If the appellant fails to appeal within thirty days, then

the interlocutory order is not later reviewable under Rule 2(b). Id. at 8, 383 S.W.3d at 361.

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The circuit court in this case entered the contempt order on June 21, 2021. The order

found Cody in contempt of the preliminary injunction, and it imposed a sanction. It did

not contemplate continuing judicial action, so the order is a final disposition of the

contempt matter. See Potter v. Holmes, 2020 Ark. App. 391, at 5–6, 609 S.W.3d 422, 427

(contempt order appealable); Heileman v. Cahoon, 2024 Ark. App. 72, at 11, 685 S.W.3d 256,

262–63 (contempt order not appealable). Because Cody did not appeal the contempt order

within thirty days as required by Arkansas Rule of Appellate Procedure–Civil 4, we cannot

review the order.

The contempt order is affirmed.

B. Discovery Sanctions and Entry of Judgment

Appellants next appeal the circuit court’s order granting discovery sanctions to Miller-

Claborn and striking all the appellants’ pleadings and other filings. The circuit court also

granted a default judgment to Miller-Claborn in the full amount sought in its complaint—

$552,564.49 plus prejudgment interest in the amount of $198,923.19.

1. Discovery sanctions

Discovery sanctions are governed by Rule 37 of the Arkansas Rules of Civil

Procedure. That rule states that if a party “fails to obey an order to provide or permit

discovery” then the circuit court

may make such orders in regard to the failure as are just, and among others the
following: . . . (C) An order striking out pleadings or parts thereof, or staying further
proceedings until the order is obeyed, or dismissing the action or proceeding or any
part thereof, or rendering a judgment by default against the disobedient party[.]

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Ark. R. Civ. P. 37(b)(2)(C).

Earlier this year, we decided a case in which the appellant’s answer was struck and a

default judgment entered as a discovery sanction. We review

the imposition of discovery sanctions for an abuse of discretion, and our court has
noted that the bar to demonstrate that the circuit court has abused its discretion in
an order under Rule 37 is very high. The circuit court is in a superior position to
judge the actions and motives of the litigants, and the circuit court’s rulings should
not be second-guessed. Our appellate courts have repeatedly upheld the circuit court’s
exercise of discretion in fashioning severe sanctions for flagrant discovery violations.
A circuit court commits an abuse of discretion when it improvidently exercises its
discretion, as when it is exercised thoughtlessly and without due consideration.

Johnson Indus. Maint. Co. v. Borkowski, 2024 Ark. App. 146, at 7–8, 686 S.W.3d 825, 830

(citing S.A.M. Grp., LLC v. CR Crawford Constr., LLC, 2020 Ark. App. 173, at 2–3, 596

S.W.3d 590, 591; Russellville Holdings, LLC v. Peters, 2017 Ark. App. 561, at 13, 533 S.W.3d

119, 127; Coulson Oil Co. v. Tully, 84 Ark. App. 241, 251–52, 139 S.W.3d 158, 164 (2003);

Merica v. S&S Home Improvements, Inc., 2021 Ark. App. 197, at 5–6, 625 S.W.3d 356, 359).

In other words, even though striking a party’s answer and entering a default judgment

are severe sanctions, they are permissible sanctions as long as the circuit court did not abuse

its discretion. Further, there is no requirement that the circuit court make a finding of willful

or deliberate disregard in order to impose this sanction. Johnson, 2024 Ark. App. 146, at 7,

686 S.W.3d at 830 (quoting Calandro v. Parkerson, 333 Ark. 603, 608, 970 S.W.2d 796, 799

(1998)). Circuit courts have the power to impose discovery sanctions, even harsh ones,

because “it is crucial to the judicial system that the trial courts retain the discretion to control

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their dockets and imposition of discovery sanctions is one method to facilitate that

function.” S.A.M. Grp., LLC, 2020 Ark. App. 173, at 4, 596 S.W.3d at 592.

Before it imposed sanctions, the circuit court entered the contempt order, which

permitted discovery. The contempt order detailed exactly how Cody had violated the

preliminary injunction and then mandated that Cody disgorge the proceeds from the sale of

the real property, pay Miller-Claborn’s attorneys’ fees, produce monthly accountings, and

“be made available for additional depositions.” The order was clear and unambiguous, and

it mandated that Cody permit and provide discovery.

There is no dispute that Cody did not permit and provide discovery. The contempt

order required that Cody provide monthly accountings. Cody and his counsel repeatedly

ignored Miller-Claborn’s attempts to obtain the accountings. Although some documents

were produced days before the sanctions hearing, the circuit court held that “this refusal to

participate in discovery by producing the Court ordered production in a timely manner

represents a continued pattern of delay on behalf of Cody Tackett which has continued to

frustrate this Court’s docket and has prejudiced the Plaintiff.”

Cody’s refusal to sit for a deposition in defiance of the circuit court’s order was even

more egregious. Miller-Claborn’s attorneys contacted Arnold four times through e-mail and

letters attempting to schedule Cody’s deposition that the circuit court had specifically

ordered. When Arnold ignored that communication, Miller-Claborn noticed the deposition.

Cody did not seek a protective order, seek an order to quash, or appear at that deposition.

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Instead of taking any action in the Little River County Circuit Court to prevent the

deposition, five days after the deposition was supposed to have taken place, Arnold appeared

at a hearing on Cody’s bankruptcy matter and attempted to obtain a ruling on a motion for

summary judgment that would resolve Miller-Claborn’s claims against Cody. After some

questioning, the bankruptcy court stated its belief that Cody was attempting to “circumvent

the previous order of [the bankruptcy court], which was to lift the stay and allow that matter

to be litigated [in Little River County].” In response, Arnold stated that he wanted the

bankruptcy court to decide the issue between the parties because Judge Yeargan’s contempt

order “just seemed over the top.” In other words, Cody and Arnold were attempting to forum

shop and litigate Miller-Claborn’s claims in the bankruptcy court—which had already

declined to hear the claims—to avoid complying with the contempt order.

A contempt order that imposes a sanction and constitutes the final disposition on a

contempt matter is subject to interlocutory appeal. Ark. R. App. P.–Civ. 2(a)(13). That was

the proper avenue for Cody to challenge a contempt order he believed was “over the top.”

Even after being told he was “circumventing” the bankruptcy proceedings, Arnold proceeded

to move for contempt in the bankruptcy court against Miller-Claborn. The bankruptcy court

once again told Arnold his use of the bankruptcy proceeding was improper and that he

would also have the power to sanction flagrant discovery violations. It was not until after all

this that Cody and Arnold began discussing potential dates for the deposition that the circuit

court had ordered months previously.

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Refusal to comply with discovery explicitly ordered by the circuit court would be

grounds for discovery sanctions. Attempting to litigate the issue in a completely different

forum because of a belief that the contempt order was “over the top” is flagrant. The circuit

court did not improvidently exercise its discretion, and the imposition of sanctions was not

exercised thoughtlessly and without due consideration. For this reason, we affirm the circuit

court’s order striking Cody’s pleadings and entering default judgment.

2. Damages
Appellants’ arguments regarding damages can be summarized as follows: (1) the

circuit court should have held a hearing as to damages, and (2) Miller-Claborn’s verified

statement of account was insufficient. We will address each argument in turn.

It is true that Rule 55(b) requires a hearing regarding damages when a default

judgment has been entered, in certain circumstances. However, we have noted that “the

supreme court expressly held that ‘Rule 55 requirements do not apply to Rule 37 sanctions.’”

Johnson, 2024 Ark. App. 146, at 10, 686 S.W.3d at 831 (quoting Nat’l Front Page, LLC v. State

ex rel. Pryor, 350 Ark. 286, 290, 86 S.W.3d 848, 850 (2002)). In fact, in Johnson, we refused

to consider the appellant’s arguments regarding whether a hearing was required because all

the appellant’s citations were to cases interpreting Rule 55. The same is true here. We hold

that the circuit court did not err when it chose not to hold a hearing on damages.

We now turn to whether the circuit court erred in the amount of damages it awarded.

The requirements for a verified suit on account are listed in Arkansas Code Annotated

section 16-45-104(b). Those requirements are:

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(1) The name of:

(A) The creditor to whom the account is owed;

(B) The creditor pursuing collection of the account; and

(C) The debtor obligated to pay the account;

(2)(A) A statement or disclosure of whether or not the debtor’s account has been
assigned or is held by the original creditor.

....

(3) A statement of the affiant’s authority to execute the affidavit on behalf of the
creditor, including the affiant’s job title or relationship to the creditor;

(4) A statement that the affiant is familiar with the books and records of the creditor
and the account;

(5) A statement that the information and amount stated in the affidavit is true and
correct to the best of affiant’s knowledge, information, and belief;

(6) The interest rate and the source of the interest rate; and

(7) The total amount due, including interest, at the time the affidavit is executed.

Ark. Code Ann. § 16-45-104(b) (Supp. 2023).

Miller-Claborn brought a claim for suit on account. The complaint incorporated

exhibits, including a verified statement of account. Appellants agree in their briefing that the

invoices attached in exhibit A to the complaint add up to $`552,564.49. The invoices are

verified in an affidavit attached to the complaint as exhibit B.

As to the elements of the statute, the invoices contain the name of the creditor and

the debtor. The affidavit states that the affiant is the owner and authorized representative of

the creditor. It states that the invoices and figures are true and correct to the best of the

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affiant’s knowledge. The statutory elements that are missing are (1) an explicit statement that

the account is still owned by the original creditor, (2) an explicit statement that the affiant is

familiar with Miller-Claborn’s books and accounts, (3) the interest rate, and (4) the amount

including interest as of the time of signing. Instead, the affidavit included the principal

amount that was due.

Appellants argue that the verified statement of account does not comply with the

statute and is, therefore, invalid. However, we affirmed a default judgment based on a

verified statement on account in Miller v. Transamerica Commercial Finance Corp., 74 Ark.

App. 237, 47 S.W.3d 288 (2001). While that opinion does not set out the contents of the

statement word for word, it does hold that “appellee filed a statement listing the outstanding

inventory items and an affidavit certifying the amount of the debt.” Miller, 74 Ark. App. at

242, 47 S.W.3d at 292. The invoices and affidavit in this case contain this information.

Similarly, in Smith v. Chicot-Lipe Insurance Agency, 11 Ark. App. 49, 51, 665 S.W.2d

907, 908 (1984), we held that a verified complaint complied with the statute when it “set

forth appellant’s account and the payment due.” These cases make clear that strict

compliance with the statute is not required in order for a verified statement on account to

be valid as evidence of damages. The elements not present in the affidavit in this case are

minor. For example, the president and owner of the creditor is (or should be) familiar with

its books. Miller-Claborn brought the lawsuit, so it is also clear that the account had not

been transferred to another creditor. It is evident from the complaint to which they are

attached exactly what damages Miller-Claborn is seeking for the suit on account. Miller-

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Claborn substantially complied with the statute, and its exhibit A and exhibit B are sufficient

to serve as a verified statement of account.

Further, if a defendant does not deny a verified statement of account under oath,

then the statement is considered correct, and it is proper for a court to enter judgment in

that amount. Miller, 74 Ark. App. 237, 47 S.W.3d 288; Clarke v. John Wanamaker, N. Y., 184

Ark. 73, 40 S.W.2d 784 (1931). Cody’s verified answer in which he denied the statement on

account was struck. The remaining denials cited by appellants were not under oath.

For these reasons, the verified statement of account was sufficient, and it was not an

abuse of discretion for the circuit court to rely on it to assign damages for the default

judgment.

For these reasons, we affirm the circuit court’s order and entry of judgment.

C. Denial of Motion to Alter or Amend

Appellants’ third point on appeal is that the circuit court improperly denied their

motion to alter or amend. The motion granting discovery sanctions and awarding a default

judgment was entered on January 26, 2022. On February 9, the appellants moved to set aside

judgment as to certification, damages, and liability. Under Rule 4 of the Arkansas Rules of

Appellate Procedure–Civil, this motion was deemed denied because the circuit court did not

rule on it.

In support of this point on appeal, Cody simply restates his arguments from other

sections of his brief. As thoroughly discussed above, all those arguments fail.

For these reasons, we affirm the circuit court’s orders.

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Affirmed.

HARRISON, C.J., and KLAPPENBACH, J., agree.

Arnold & Arnold, by: Stephen T. Arnold; and Robert S. Tschiemer, for appellants.

Norton & Wood, by: Marshall C. Wood and Richard J. Kroll, for separate appellee Miller-

Claborn Oil Distributing Co., Inc.

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