Razorbacks Moisture v. Graphic Packaging International Inc

Filing 82

ORDER granting in part and denying in part GPI's 23 motion for partial summary judgment; denying Razorback's 27 motion for partial summary judgment. Signed by Judge Kristine G. Baker on 3/7/2014. (mmd)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION

RAZORBACKS,
A California General Partnership
v.

PLAINTIFF

Case No. 4:12-cv-00158-KGB

GRAPHIC PACKAGING
INTERNATIONAL, INC.

DEFENDANT
ORDER

Razorbacks brings this action against Graphic Packaging International, Inc. (“GPI”),
alleging breach of contract, waste and deliberate destruction, conversion, and unjust enrichment
(Dkt. No. 8). Razorbacks also requests attorney’s fees and punitive damages. On May 30, 2013,
GPI and Razorbacks filed cross-motions for partial summary judgment (Dkt. Nos. 23, 27). The
parties also filed responses and replies (Dkt. Nos. 32, 35, 39, 41).

GPI also filed two

supplemental briefs in support of its motion for partial summary judgment (Dkt. Nos. 62, 72), to
which Razorbacks responded (Dkt. Nos. 68, 76).
For the following reasons, the Court grants in part and denies in part GPI’s motion for
partial summary judgment.

Summary judgment is granted to the extent that Razorbacks

contends that GPI improperly took the overhead cranes, fire extinguishers, bug netting, gas
heaters, air conditioners, security system, fire department access gate, and overhead doors from
the building. GPI’s motion for partial summary judgment is denied in all other respects.
Further, Razorbacks’s motion for partial summary judgment is denied.

The Court

determines that GPI was obligated to maintain certain parts of the premises and deliver the entire
premises in as good condition as at the beginning of the lease term.

I.

Factual Background

On July 30, 1971, Great Plains Realty Company, Inc., (Razorbacks’s predecessor in
interest in regard to the lease) leased a warehouse building located at 1301 Redmond Road,
Jacksonville, Arkansas, to Great Plains Bag Corporation (GPI’s predecessor in interest in regard
to the lease) (Dkt. No. 62-3). On November 3, 1989, a new lease agreement was entered into by
the then-landlord Mid-American Development Company (Razorbacks’s predecessor in interest
in regard to the lease) and then-tenant Stone Container Corporation (GPI’s predecessor in
interest in regard to the lease) (Dkt. No. 27-1). In 2008, GPI became the tenant of the warehouse
building as a result of a series of acquisitions and mergers (Dkt. No. 24, at 1). Razorbacks
purchased the property from Mid-American Development Company in August 2009 (Id.). The
parties agree that the 1989 lease agreement is applicable to Razorbacks and GPI (Id.). At the
expiration of the lease at the end of 2011, GPI vacated the facility. This suit, based on the 1989
lease agreement, concerns the condition of the warehouse building at the time GPI turned the
building over.
II.

Legal Standard

Summary judgment is proper if the evidence, when viewed in the light most favorable to
the nonmoving party, shows that there is no genuine issue of material fact and that the defendant
is entitled to entry of judgment as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986). A factual dispute is genuine if the evidence could cause a reasonable
jury to return a verdict for either party. Miner v. Local 373, 513 F.3d 854, 860 (8th Cir. 2008).
“The mere existence of a factual dispute is insufficient alone to bar summary judgment; rather,
the dispute must be outcome determinative under the prevailing law.” Holloway v. Pigman, 884
F.2d 365, 366 (8th Cir. 1989). However, parties opposing a summary judgment motion may not

2

rest merely upon the allegations in their pleadings. Buford v. Tremayne, 747 F.2d 445, 447 (8th
Cir. 1984). The initial burden is on the moving party to demonstrate the absence of a genuine
issue of material fact. Celotex Corp., 477 U.S. at 323. The burden then shifts to the nonmoving
party to establish that there is a genuine issue to be determined at trial. Prudential Ins. Co. v.
Hinkel, 121 F.3d 364, 366 (8th Cir. 2008). “The evidence of the non-movant is to be believed,
and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986).
III.

Analysis

Razorbacks’s amended complaint alleges four substantive claims: (1) breach of contract;
(2) waste and deliberate destruction; (3) conversion; and (4) unjust enrichment. Each of the four
claims are based on one of three theories: (1) that GPI failed to maintain the premises; (2) that
GPI improperly took equipment and fixtures out of the building; and (3) that, in taking out
certain equipment and fixtures, GPI damaged the building.
GPI moves for summary judgment on all claims based on the first and second theories
because Razorbacks allegedly “has no evidence of the condition the property was [in] at the
beginning of the leasehold nor what items belonged to the owner,” and the “evidence existing is
that GPI turned the property over in the same, or better, condition than it was in 1989” (Dkt. No.
23, at 1). GPI also moves for summary judgment on Razorbacks’s claim for punitive damages.
GPI acknowledges that there is a genuine issue of material fact regarding whether removal of
certain equipment and fixtures damaged the building.
Razorbacks moves for summary judgment regarding GPI’s maintenance obligations
under the lease and requests that this Court define that obligation.

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Even so, Razorbacks

acknowledges the existence of a genuine issue of material fact with respect to the extent of GPI’s
alleged breach of its maintenance obligation and the purported resulting damages.
A.

Alleged Violations Of Local Rule 56.1 And Local Rule 7.2(b)

To begin, GPI argues that Razorbacks’s motion for partial summary judgment should be
denied because Razorbacks violated Local Rule 56.1, which provides that “[a]ny party moving
for summary judgment . . . shall annex to the notice of motion a separate, short and concise
statement of the material facts as to which it contends there is no genuine dispute to be tried.” In
turn, Razorbacks argues that GPI failed to respond to its motion for partial summary judgment
within 14 days, as required by Local Rule 7.2(b), and thus the Court should not consider GPI’s
late response. The Court declines to grant GPI’s motion for partial summary judgment based on
Local Rule 56.1 and declines to strike GPI’s response to Razorbacks’s motion for partial
summary judgment based on Local Rule 7.2(b).
B.

The Theory That GPI Failed To Maintain The Premises

GPI moves for summary judgment as to Razorbacks’s theory that GPI failed to maintain
the premises. The Court first must determine GPI’s maintenance obligation under the lease.
Then the Court will consider whether there is a genuine issue of material fact as to whether GPI
failed to meet its maintenance obligation.
1.

GPI’s Maintenance Obligation Under The Lease

“When a contract is unambiguous, its construction is a question of law.” GeoVera
Specialty Ins. Co. v. Graham Rogers, Inc., 636 F.3d 445, 449 (8th Cir. 2011) (quoting Artman v.
Hoy, 257 S.W.3d 864, 869 (Ark. 2007)); see Triple H Debris Removal, Inc. v. Companion Prop.
& Cas. Ins. Co., 647 F.3d 780, 787 (8th Cir. 2011) (“Whether the contract language is
ambiguous is a question of law for the court.” (citing Nichols v. Farmers Ins. Co., 128 S.W.3d 1,

4

4 (Ark. Ct. App. 2003))). “The first rule of interpretation of a contract is to give to the language
employed the meaning that the parties intended.” Coleman v. Regions Bank, 216 S.W.3d 569,
574 (Ark. 2005). In construing a contract, courts “must consider the sense and meaning of the
words used by the parties as they are taken and understood in their plain and ordinary meaning.”
Id. The intention of the parties, however, is not gathered from particular words and phrases but
from the whole context of the agreement. Id. If possible, “[d]ifferent clauses of a contract must
be read together and the contract be construed so that all of its parts harmonize.” Fryer v. Boyett,
978 S.W.2d 304, 306 (Ark. 1998).
GPI contends that, under the lease, it was obligated to return the premises in as good
order, repair, and condition as the premises was in at the beginning of the lease. Razorbacks
argues that GPI was obligated to maintain the premises in “good condition,” irrespective of the
condition at the beginning of the lease. The parties agree that the relevant clauses in the lease
regarding GPI’s maintenance obligation are paragraphs 15 and 24.
Paragraph 15 provides that:
Tenant shall maintain and keep in good repair and condition the roof, exterior
walls, foundations and structural frame of the building and the complete exterior
and interior of the leased premises, including all glass, and the parking lot and all
landscaping on the leased premises. It is understood and agreed that the Landlord
shall have no obligation to make repairs or replacements during the term of the
lease, and that the sole responsibility for maintaining the leased premises in good
condition as to repairs and replacements is that of the Tenant.
(Dkt. No. 8-1, at 7).
Paragraph 24 provides in pertinent part that:
Tenant shall deliver up possession of the leased premises in as good order, repair
and condition as the same are in at the beginning of the term of this lease, except
as in this lease otherwise specifically provided and except for normal wear and
tear.
(Id. at 9-10).

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The Court determines that, under paragraph 15, GPI was obligated to maintain certain
parts of the premises, including the roof, in as good condition as at the beginning of the lease
term. The plain language of the lease leads to this conclusion, see Holt v. State, 290 S.W.3d 21,
27 (Ark. Ct. App. 2008) (quoting Webster’s II Dictionary to define “keep” as “to remain in a
given state: stay” and “maintain” as “to keep an existing state”), rev’d in part on other grounds,
348 S.W.3d 562 (Ark. 2009); Garrett v. Faubus, 323 S.W.2d 877, 899 n.4 (Ark. 1959) (quoting
Webster’s Unabridged Dictionary to define “maintain” as “to hold or keep in any particular state
or condition . . . to support . . . not to suffer to fail or decline . . . to bear the expense of . . . to
carry on . . . to give support to . . .”), and other courts that have ruled on this issue have found the
same, see Kingsted v. Wright Cnty. Co-op. Co., 133 N.W. 399, 400 (Minn. 1911) (finding that a
lease provision requiring the lessor to “keep the building in good repair during the life of this
lease” “did not impose upon him an obligation to make improvements or betterments”); New
York v. United States, 97 F. Supp. 808, 818-19 (Cl. Ct. 1951) (holding that “where the lease
contract specifically requires the tenant to keep the premises in good repair the only obligation is
to return the property in substantially the same condition as it was at the beginning of the
tenancy, ordinary wear and tear excepted”); Taylor v. Gunn, 227 S.W.2d 52, 56 (Tenn. 1950)
(holding that “[a] covenant to keep in repair imposes on the tenant an obligation merely to keep
the premises in as good repair as they were when the agreement was made”).
Razorbacks points to the Arkansas Supreme Court case Sparkman v. Etter to argue that
Arkansas law differs from that cited above. 458 S.W.2d 129 (Ark. 1970). According to
Razorbacks, Sparkman implicitly held that whether a tenant violated a “good condition” clause
in a lease does not depend on the leased property’s condition at the beginning of the lease term.
The Court disagrees.

6

In Sparkman, the court determined that a tenant was liable for the costs to repair the
bathrooms and the tile floor of the leased property, despite the bathrooms and the tile floor not
being there at the beginning of the lease because the tenant had installed them himself. Id. at
133-34. The court also remanded with instructions that the tenant should be directed to replace a
party wall that the tenant had removed, the front of the building, and the electrical wiring in
accordance with the plans and specifications submitted by the tenant’s architect. Id. at 132-35.
The landlord and contractor did not remember the property’s condition at the beginning of the
lease term. Id. at 132.
The tenant in Sparkman had entered into two separate lease agreements with two
different landlords, each of whom owned half of the leased property. Id. at 130. Each lease
contained a “good condition” clause and provisions dealing directly with improvements made by
the tenant. Id. The first lease’s improvement clause authorized the tenant to remodel the front of
the building and remove the party wall, provided that it was “done in a good and workmanlike
manner” and was restored to its “present condition” at the end of the lease term. Id. The second
lease’s improvements clause provided that “alterations and changes, structural or otherwise, . . .
shall be considered as improvements and become a part of the real estate. Tenant agrees that all
alterations and changes made by it will be erected or made in a first-class, workmanlike
manner.” Id.
In this Court’s view, despite the lack of knowledge by the landlord and contractor as to
the property’s condition at the beginning of the lease, the Sparkman court had evidence of the
property’s prior condition at the relevant times. The dispute in Sparkman centered on the
condition of improvements—the bathrooms and tile floor—that had become part of the real
property when built, pursuant to the second lease. Because the second lease’s improvements

7

clause required improvements to be made in a “first-class, workmanlike manner,” the Sparkman
court apparently assumed that the bathrooms and tile floor were in good condition at the time
they were built and became part of the real estate, the relevant time under the lease. Based on
this assumption, the court required the tenant to return the improvements to good condition. As
for the party wall, front of the building, and electrical wiring, the tenant apparently admitted to
altering them, and the plans and specifications of the tenant’s architects apparently showed their
condition before being altered.

The court required the tenant to replace these items in

accordance with the architect’s plans and specifications. Based on this Court’s reading of
Sparkman, Arkansas law is not inconsistent with that cited above. Here, because the dispute
centers on parts of the premises that existed at the time the 1989 lease was signed, not
improvements that became part of the real estate when built, the beginning of the lease is the
relevant time at which to consider the property’s prior condition.
Razorbacks contends that the Court’s interpretation of paragraph 15 renders it “moot”
and “neutralizes” that portion of paragraph 24 that states “except as in this lease otherwise
specifically provided.” According to Razorbacks, paragraph 15 sets the maintenance obligation
for certain parts of the premises, while paragraph 24, because of its exception language, operates
as a catch-all provision setting the standard for portions of the premises not covered by
paragraph 15 or other provisions of the lease. Only this interpretation, Razorbacks contends,
gives viability and harmony to all provisions of the lease agreement.
The Court rejects Razorbacks’s mootness and neutralization arguments. Paragraph 15
requires the tenant to keep and maintain certain parts of the premises, while paragraph 24
requires the tenant to deliver the entire premises. Thus, paragraph 15 is not moot because it
imposes an additional obligation on the tenant that is not included in paragraph 24: to keep and

8

maintain the condition of parts of the premises, including the roof, throughout the lease period.
On the other hand, paragraph 24 covers the condition of the entire property at the time it is
delivered. Essentially, paragraph 15 is a “repair clause” covering certain parts of the premises
during the lease, and paragraph 24 is a “surrender clause” covering all of the premises at the end
of the lease. See Whyzmuzis v. Plaza Shoe Store, Inc., 375 S.W.3d 928, 932 (Mo. Ct. App. 2012)
(“A repair clause should be construed in light of any surrender clause.”). Accordingly, pursuant
to paragraph 24, GPI was obligated to deliver at the end of the lease the premises in as good
order, repair, and condition as it was in at the beginning of the lease term. Conversely, GPI was
obligated to maintain during the lease only “the roof, exterior walls, foundations and structural
frame of the building and the complete exterior and interior of the leased premises, including all
glass, and the parking lot and all landscaping on the leased premises” (Dkt. No. 8-1, at 7).
Further, the exception language in paragraph 24 is not neutralized. Instead of referring to
the condition of the premises, the first clause of the exception language of paragraph 24 applies
to parts of the premises that the tenant does not have to deliver at the end of the lease term.
Specifically, paragraph 18 provides that the tenant “shall have the right to install in or place on
the leased premises” certain fixtures and equipment and that such fixtures and equipment “shall
at all times remain the property of Tenant . . . and may be removed at any time by Tenant” (Id. at
7-8). In contrast, paragraph 17 provides that the tenant “shall have the right to make such
alterations, additions or improvements in or to the leased premises as it shall consider necessary
or desirable . . . provided that all such work shall be done in good and workmanlike manner, that
the structural integrity of any building shall not be impaired, and that no liens shall attach to the
leased premises by reason thereof” and that “[u]pon termination of this lease, such alterations,
additions or improvements shall become the property of the Landlord” (Id. at 7). Paragraph 18

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falls within the exception language of paragraph 24 while paragraph 17 does not. In fact,
Razorbacks’s interpretation that the exception language of paragraph 24 refers to the condition of
the premises would neutralize it, as the plain language and case law cited above show that
paragraph 15 requires the same condition as paragraph 24. Only the Court’s interpretation of the
exception language of paragraph 24 harmonizes all parts of the lease when read together while
following the plain language of the lease and Arkansas law. See Coleman, 216 S.W.3d at 574;
Fryer, 978 S.W.2d at 306.
In sum and based on the above, the Court determines that GPI was obligated to maintain
certain parts of the premises and deliver the entire premises in as good condition as at the
beginning of the lease term.
2.

Evidence Of The Condition At The Beginning Of The Lease
Term

GPI argues that, because it was obligated to maintain certain parts of the premises and
deliver the entire premises only in as good condition as at the beginning of the lease term,
Razorbacks, who has the burden of proof, must provide evidence about the condition of the
property at the beginning of the lease. See Short v. Little Rock Dodge, Inc., 759 S.W.2d 553, 554
(Ark. 1988) (“[W]hen a party cannot present proof on an essential element of her claim there is
no remaining genuine issue of material fact, and the party moving for a summary judgment is
entitled to judgment as a matter of law.”); see also Fortune Funding, LLC v. Ceridian Corp., 368
F.3d 985, 989 n.3, 990 (8th Cir. 2003) (affirming exclusion of evidence on the property’s
condition in 1997 because the “relevant inquiry at trial” was the condition in 1985 when the
party’s entered into the sale-leaseback transaction).
Razorbacks claims that it has presented evidence that the condition of the facility at the
end of the lease was substantially worse than when the lease began. First, Razorbacks contends

10

that the language of the lease itself shows that the property was in good condition at the
beginning of the lease term. Specifically, Razorbacks argues that the requirement in paragraph
15 that the tenant “maintain” and “keep” the premises in good condition, along with the plain
meanings of “maintain” and “keep,” indicate that the premises was in good condition at the
beginning of the lease term.
Second, Razorbacks cites the deposition testimony of Bobby Bowen, who worked for
GPI and its predecessors for over 25 years until he retired in 2011 (Dkt. No. 39-2, at 3). Mr.
Bowen testified that GPI had roof leakage problems for less than ten years, though there may
have been “a couple minor leaks . . . past the ten year mark” (Id.). Though unclear from this
statement alone when in his 25-year tenure this ten-year span of leaks occurred, Mr. Bowen later
testified that leaks requiring repairs occurred maybe four or five times per year in the past four to
five years (Id. at 4-5).
Third, Razorbacks cites the report of defendant’s expert Jeff Maxwell. After inspecting
the site, Mr. Maxwell concluded that the original roof remained on the building (Dkt. No. 32-7,
at 1-2). Although Mr. Maxwell stated that he did not “know how to determine whether or not the
building was returned to the owner in the same condition as it was at the commencement of the
lease,” he went on to state that “[b]ased on the information [he] was given about the age of the
building, [he could] assume that the roof was near the end of its expected life-cycle when [GPI]
took occupancy, but would also assume that it was weather-tight at that point,” and that it “no
longer meets the weather-tight criteria” today (Id. at 4).
Based on this record evidence, construed in the light most favorable to the non-moving
party Razorbacks, a reasonable juror could conclude that the roof was in worse condition at the
end of the lease term than it was at the beginning.

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3.

Evidence That The Roof Wore Out Because Of GPI’s Alleged
Failure To Maintain

GPI, in its second supplemental brief, argues that summary judgment should be granted
as to Razorbacks’s failure to maintain theory because Razorbacks does not have “any evidence to
support the theory that the roof wore out because of a failure to maintain” (Dkt. No. 72, at 2).
According to GPI, Razorbacks’s experts agree that the roof, as a “component part,” has a
lifespan and that, no matter how well maintained, it will wear out (Id.). Despite the fact that “it
is entirely possible that the subject roof simply lived past its life span,” GPI argues, “no one has
made any determination of the age of the roof” (Id.). Razorbacks responds that “GPI’s assertion
that the roof was beyond its life span [sic] does not absolve it from liability as its obligation was
to maintain the facility” and that “[t]he fact that the roof was allowed to regress to such a
condition is evidence in and of itself that GPI . . . failed to meet its responsibility regarding
replacements” (Dkt. No. 76, at 2). Razorbacks claims that “[i]f the roof was beyond its lifespan
and needed to be replaced, it was GPI’s obligation to do so” (Id.).
The Court agrees with Razorbacks. As determined above, paragraph 15 of the lease
agreement obligated GPI to maintain certain parts of the premises, including the roof, in as good
condition as at the beginning of the lease term. Paragraph 15 also provides that the landlord,
Razorbacks, “shall have no obligation to make repairs or replacements during the term of this
lease” and that the tenant, GPI, has “the sole responsibility for maintaining the leased premises in
good condition as to repairs and replacements” (Dkt. No. 8-1, at 7 (emphasis added)). Experts
for both GPI and Razorbacks appear to agree that, under the lease, if the roof needed to be
replaced, it was GPI’s obligation to do so (Dkt. Nos. 72-2, at 9, 76-1, at 20-21). The Court also
notes that paragraph 15, unlike paragraph 24, does not contain a “normal wear and tear”
exception, and the parties have cited no case law suggesting that such an exception should be

12

read into it. Because Razorbacks has provided evidence sufficient to allow a reasonable juror to
conclude that the roof was in worse condition at the end of the lease term than it was at the
beginning, a reasonable juror could conclude that the roof was beyond its lifespan at the end of
the lease term but not at the beginning. If a jury does so find, GPI was obligated to replace the
roof under paragraph 15. For this reason and the reasons above, the Court denies GPI’s motion
for summary judgment as to Razorback’s theory that GPI failed to maintain the premises.
C.

The Theory That GPI Improperly Took Equipment And Fixtures Out
Of The Building

GPI moves for summary judgment as to Razorbacks’s theory that GPI improperly took
equipment and fixtures out of the building. GPI argues that, to survive summary judgment,
Razorbacks must have evidence of what was installed in the building, when, and by which entity.
Specifically, GPI contends that it is entitled to summary judgment as to its removal of the
overhead cranes, fire extinguishers, a boiler, transformers, bug netting, gas heaters, air
conditioners, security system, fire department access gate, auto-locking door systems, and
overhead doors. GPI’s argument is based on paragraph 18 of the lease, which provides that:
Tenant shall have the right to install in or place on the leased premises, such as
fixtures, machines, tools or other equipment (including but not limited to trade
fixtures, lighting fixtures, water coolers and air conditioning equipment) as it may
choose. Such fixtures, machines, tools or other equipment shall at all times
remain the personal property of Tenant regardless of the manner or degree of
attachment thereof to the premises, and may be removed at any time by Tenant,
whether at the termination of this lease or otherwise; provided, however, that
Tenant shall make reasonable restoration of the leased premises in the event that
any substantial damage is done thereto in the removal of any such property.
(Dkt. No. 8-1, at 7). Razorbacks agrees that GPI may remove fixtures that it, or a predecessor
tenant in the time period covered by the controlling lease, installed on the premises, but claims to
have evidence that neither GPI nor its predecessor tenants installed certain fixtures that GPI
removed.

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GPI removed overhead cranes and fire extinguishers. In his affidavit, Mr. Bowen swears
that the overhead cranes and fire extinguishers were installed by Great Plains Bag Corporation
(Dkt. No. 23-10). Great Plains Bag Corporation preceded Stone Container Corporation, which
re-leased the property through the 1989 lease (Dkt. No. 39, at 12).
The Court determines that the 1989 lease is not controlling because the overhead cranes
and fire extinguishers were installed before 1989 and because the 1989 lease does not establish
that it is a renewal of a prior lease or provide any right for the tenant in existing fixtures and
equipment. However, in its supplemental brief, GPI provided the previous lease between Great
Plains Bag Corporation, GPI’s predecessor in interest, and Great Plains Realty Company,
Razorbacks’s predecessor in interest. Paragraph 18 of the previous lease, like paragraph 18 of
the 1989 lease, provides that fixtures and equipment installed by the tenant remain the personal
property of the tenant “at all times” and “may be removed at any time by Tenant, whether at the
termination of this lease or otherwise” (Dkt. No. 62-3, at 10).
The parties agree that the overhead cranes and fire extinguishers were installed by Great
Plains Bag Corporation. GPI argues that Great Plains Bag Corporation was its predecessor in
interest and, thus, GPI was entitled to remove fixtures and equipment that Great Plains Bag
Corporation installed under the previous lease. Razorbacks appears to argue that only tenants
directly under the 1989 lease are GPI’s predecessors in interest (Dkt. No. 33, at 10-11). To the
extent that Razorbacks makes this argument, the Court disagrees. It is undisputed that GPI is the
successor in interest to Stone Container Corporation in regard to the leased interest, through a
series of mergers and acquisitions.

Stone Container Corporation, also through a series of

mergers and acquisitions, is the successor in interest to Great Plains Bag Corporation in regard to
the leased interest. Accordingly, pursuant to the previous lease, GPI retains the right to “remove

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at any time . . . whether at the termination of the lease or otherwise” fixtures and equipment
installed by Great Plains Bag Corporation. The Court grants GPI’s motion for partial summary
judgment as to Razorbacks’s theory that GPI improperly took the overhead cranes and fire
extinguishers.
GPI also removed from the building a boiler—which the parties appear to agree GPI or
its predecessors installed to replace a preexisting smaller boiler—and six to eight transformers.
Razorbacks points to Mr. Bowen’s deposition testimony as evidence that the smaller boiler was
not installed by GPI or its predecessors:
Q.

Do you know if the boiler was in the building when you leased it?

A.

We put the boiler in.

Q.

Okay. Did you replace a previous boiler?

A.

Yes. We had a smaller one, and we went with the next size up because the
smaller one couldn’t keep up.

(Dkt. No. 39-2, at 9). Regarding the transformers, Mr. Bowen, who had been employed at the
facility since 1976, testified that he does not recall the transformers ever being replaced (Id.).
Based on the evidence presented by Razorbacks, a reasonable juror could conclude that
the smaller boiler and the transformers were not installed by GPI or its predecessors, meaning the
Court must apply general Arkansas law regarding fixtures. Arkansas law provides a three-part
test to determine whether an item is a irremovable fixture: “(1) whether it is annexed to the
realty; (2) whether it is appropriate and adapted to the use or purpose of that part of the realty to
which it is connected; (3) whether the party making the annexation intended to make it
permanent.” Adamson v. Sims, 151 S.W.3d 23, 26-27 (Ark. Ct. App. 2004) (citing Pledger v.
Halvorson, 921 S.W.2d 576 (Ark. 1996)). “The third factor—the intention of the party who
made the annexation—is considered of primary importance.” Id. The question of whether

15

particular property is an irremovable fixture is usually a mixed question of law and fact. See
Corning Bank v. Bank of Rector, 576 S.W.2d 949, 952 (Ark. 1979).
Here, based on the record before the Court viewed in the light most favorable to the nonmoving party Razorbacks, a reasonable juror could conclude that the boiler and transformers
were fixtures and that GPI was not entitled to remove them. A reasonable juror could conclude
that the boiler and transformers were annexed to the realty and used for the purpose of the part of
the realty to which they were connected, and that the installers of the boiler and transformers
intended they stay with the facility. Therefore, the Court denies GPI’s motion for partial
summary judgment as to Razorback’s theory that GPI improperly took the boiler and
transformers.
Lastly, GPI contends that Razorbacks has provided no evidence as to the bug netting, gas
heaters, air conditioners, security system, fire department access gate, and overhead doors.
Razorbacks, in its response to GPI’s motion for partial summary judgment, does not address
these items. The Court grants GPI’s motion for partial summary judgment to the extent that
Razorbacks contends that GPI improperly took these items from the building.
D.

Claim For Punitive Damages

“Punitive damages are to be a penalty for conduct that is malicious or done with the
deliberate intent to injure another.” E.g., Edwards v. Stills, 984 S.W.2d 366, 483 (Ark. 1998);
United Ins. Co. of Am. v. Murphy, 961 S.W.2d 752, 757 (Ark. 1998). “Malice” does not
necessarily mean personal hate but “an intent and disposition to do a wrongful act greatly
injurious to another.” Chi., R.I. & P.R. Co. v. Whitten, 119 S.W. 835, 837 (Ark. 1909). To be
entitled to an award of punitive damages, a plaintiff must show that the defendant knew or
should have known that “its conduct would naturally or probably result in injury and that it

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continued such conduct in reckless disregard of the circumstances from which malice may be
inferred.” Carpenter v. Auto. Club Interinsurance Exch., 58 F.3d 1296, 1304 (8th Cir. 1995)
(quoting HCA Health Servs. v. Nat’l Bank of Commerce, 745 S.W.2d 120, 125 n.1 (Ark. 1988)).
“Negligence, however gross, will not support an award of punitive damages.” E.g., Edwards,
984 S.W.2d at 484; J.B. Hunt Transp., Inc. v. Doss, 899 S.W.2d 464, 469 (Ark. 1995). “The
question of whether evidence in the record is sufficient to support a finding of actual malice is a
question of law.” Southall v. Little Rock Newspapers, Inc., 964 S.W.2d 187, 193 (Ark. 1998).
Razorbacks argues that GPI acted with malice in declining to address the roof with
knowledge that doing so would cause grater damage to the roof and roof structure, actively
concealing a leak in the fire suppression system, and converting Razorbacks’s property.
Regarding GPI’s alleged failure to address the roof, malice “may be inferred from a conscious
indifference to attendant circumstances.” Olson v. Riddle, 659 S.W.2d 759, 761 (Ark. 1983).
Likewise, GPI’s alleged intentional concealment of a defect, taken as true, could allow an
inference of malice. In the context of conversion, punitive damages are appropriate where a
plaintiff shows an “intentional exercise of control or dominion over the converted property for
the purpose of violating the owner’s right to the property, or for the purpose of causing
damages.” Hudson v. Cook, 105 S.W.3d 821, 829 (Ark. Ct. App. 2003). Taken as true,
Razorbacks’s allegations that GPI took the boiler and transformers and that GPI knew that the
boiler and transformers as fixtures belonged to the owner of the facility could support an
inference of malice. For these reasons, the Court denies GPI’s motion for partial summary
judgment as to Razorbacks’s claim for punitive damages.

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***
In sum, the Court grants in part and denies in part GPI’s motion for partial summary
judgment. Summary judgment is granted in favor of GPI to the extent that Razorbacks contends
that GPI improperly took the overhead cranes, fire extinguishers, bug netting, gas heaters, air
conditioners, security system, fire department access gate, and overhead doors from the building.
Razorbacks’s motion for partial summary judgment is denied.
IT IS SO ORDERED this the 7th day of March, 2014.

________________________________
KRISTINE G. BAKER
UNITED STATES DISTRICT JUDGE 

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