Crain v. Crain

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FORT SMITH DIVISION

LISA CRAIN; CATHEE CRAIN;

MARILLYN CRAIN BRODY; and

KRISTAN SNELL PLAINTIFFS

V. CASE NO. 2:20-CV-2038

SHIRLEY CRAIN and RAY FULMER,

as Representative of the Estate

of H.C. “Dude” Crain, Jr., Deceased DEFENDANTS

MEMORANDUM OPINION AND ORDER

Separate Defendant Shirley Crain has filed a Motion to Alter Judgment (Docs.

231 & 242) and a Motion to Stay Judgment Pending Post-Judgment Motion and Appeal

(Doc. 218). For the reasons discussed below, the Motion to Alter Judgment is DENIED,

and the Motion to Stay Judgment Pending Post-Judgment Motion and Appeal is

GRANTED IN PART AND DENIED IN PART.

I. BACKGROUND

The Court incorporates by reference the factual and procedural history of the

case as set forth in its order on summary judgment (Doc. 147) and its Findings of Fact,

Conclusions of Law, and Rulings (Doc. 203) issued following the bench trial of this

matter. The following facts are included only to give context to the Court’s rulings below;

they are not meant to be detailed or exhaustive.

Plaintiffs are four sisters who sued their stepmother, separate Defendant Shirley

Crain, and the probate estate of their father, H.C. “Dude” Crain, Jr., to enforce a

contract Dude made with Plaintiffs’ mother, Marillyn. Dude and Marillyn divorced in

1989, and as part of their property settlement agreement (“PSA”), they promised to

make wills that would leave at least half the property they owned and controlled at the

time of their deaths to their children, the Plaintiffs. It was undisputed that the PSA was

a valid and enforceable contract to make a will. It was also undisputed that Dude’s

operative will, as amended, was the one he made in 2012. The threshold dispute was a

legal one: whether the terms of Dude’s 2012 will satisfied his contractual obligations

under the PSA. On cross motions for summary judgment––where the parties agreed

that all pertinent facts were undisputed––the Court ruled in Plaintiffs’ favor, finding that:

Because Dude failed to engage in appropriate estate planning that would

have left at least half of his estate to the Plaintiffs, he breached the

promise he made to Marillyn as memorialized in the PSA. The breach

here is obvious; it is not a close call. The remedy is specific performance

of the PSA’s will provision. See Janes v. Rogers, 271 S.W.2d 930, 934

(Ark. 1954) (finding that the appropriate remedy for breach of contract to

make a will is specific performance).

(Doc. 147, p. 12).

However, by the time Plaintiffs brought suit, Dude had been dead approximately

three years. In the interim, Shirley had taken sole possession and control of all assets

that Dude had owned and controlled at the time of his death. Thus, as the Court

explained in its summary judgment opinion, the only way to effectuate the contract’s

terms and achieve specific performance was to impress a constructive trust over the

assets subject to Dude’s contractual obligation:

“A constructive trust is imposed where a person holding title to property is

subject to an equitable duty to convey it to another on the ground that

[she] would be unjustly enriched if [she] were permitted to retain it.” Cox

v. Miller, 210 S.W.3d 842, 848 (Ark. 2005). “The duty to convey the

property may arise because it was acquired through . . . wrongful

disposition of another’s property.” Id. at 849. A constructive trust has the

effect of converting the person with the duty to convey “‘into a trustee for

the parties who in equity are entitled to the beneficial enjoyment.’”

Davidson v. Sanders, 357 S.W.2d 510, 517 (Ark. 1962) (quoting Black’s

Law Dictionary, 4th Edition). Therefore, the Court will impress a

constructive trust on half the property Dude owned and controlled up to

the moment of his death, (as well as any post-death interest, earnings, or

proceeds), with the value of such to be determined at trial.

Id. at pp. 16–17.

During a three-day bench trial in July of 2021, the Court heard evidence

regarding the nature and character of the assets subject to the constructive trust. The

trial was also Shirley’s opportunity to put on proof in support of her affirmative claim to a

beneficial and/or equitable interest in the disputed assets. Following post-trial briefing,

the Court entered its Judgment (Doc. 204) on January 18, 2022, impressing a

constructive trust on the assets set forth in the Court’s Findings of Fact and Conclusions

of Law (Doc. 203).

There were two broad categories of assets at issue: those Dude owned

individually and those Dude held jointly with Shirley. In impressing the constructive

trust, the Court first identified the property that Dude owned and controlled individually

at the time of his death. See id. at pp. 10–15, 50–51. Then, citing Marshall v. Marshall,

547 U.S. 293, 310 (2006), the Court explained why it had jurisdiction to adjudicate

Plaintiffs’ rights and interests in these assets, while at the same time recognizing that

the Sebastian County Probate Court had exclusive authority to possess, administer, and

transfer these assets through the probate process. See Doc. 203, pp. 37, 50–51. The

Court’s Judgment ordered Shirley to deliver these assets to Ray Fulmer, the

Administrator of Dude’s estate, who is a named defendant in this action, too.

Next, the Court identified and impressed a constructive trust over property Dude

owned jointly with Shirley, as husband and wife, at the time of his death. See id. at pp.

17–32, 52–59. These assets were not subject to probate. Shirley, as trustee of the

constructive trust, was ordered to deliver Plaintiffs’ interest in these assets (or their

dollar-value equivalent) directly to Plaintiffs.

On February 3, 2022, Shirley filed a Motion to Stay Pending Post-Judgment

Motion and Appeal (Doc. 218). On February 11, Plaintiffs filed a Response (Doc. 221)

opposing the stay as to all assets subject to the constructive trust. On February 15,

Administrator Fulmer, on behalf of Dude’s probate estate, filed a Response (Doc. 230)

opposing the stay with respect to Dude’s individually owned assets. The parties then

filed replies and sur-replies (Docs. 223, 226, 227 & 238), and the Motion to Stay is now

ripe for resolution.

On February 15, 2022, Shirley timely filed a Motion to Alter Judgment (Doc. 231).

The incorporated brief in support was more than twice the length permitted by the

Court’s scheduling order. The Court directed Shirley’s counsel to cut 30 pages and

refile it.1 Shirley refiled a shorter version of the brief on March 1. See Doc. 242.

1 Two days after Shirley filed her Motion to Alter Judgment, Plaintiffs moved to strike the

overly long supporting brief. See Doc. 232. Plaintiffs correctly pointed to the Court’s

scheduling order (Doc. 73), which required briefs in support of motions to be no more

than 25 pages. Shirley’s filing was a 55-page combined motion with incorporated brief in

support. The motion portion of the document was a single paragraph that consumed

less than one page. See Doc. 231.

The Court declined Plaintiffs’ invitation to strike the entire document. Instead, the Court

ordered Shirley’s counsel to cut 30 pages of briefing and refile it. See Doc. 241. Shirley

filed the amended version on March 1. See Doc. 242. The original brief and the shorter

brief contain identical substantive arguments; the difference is that the shorter brief is

more concise and helpful. On March 7, Plaintiffs filed a response (Doc. 244) to Shirley’s

pared-down brief. That same day, Plaintiffs separately objected to the Court’s remedy,

see Doc. 243, arguing that the shorter version of Shirley’s motion was untimely as a

matter of law under Rule 52(b) or 59(e) because it was filed more than 28 days after the

Judgment was entered.

Plaintiffs’ frivolous objection is not well received. The Court did not strike Shirley’s timely

filed motion. Rather, the Court struck Shirley’s “brief in support” and granted her leave

Plaintiffs filed a Response in Opposition (Doc. 244) on March 7, making the Motion ripe.

Below, the Court will first take up the Motion to Alter Judgment and then address the

Motion to Stay.

II. DISCUSSION

A. Motion to Alter Judgment

Shirley’s Motion to Alter Judgment is based on Rules 52 and 59. Rule 52(b)

states that on a party’s motion, “the court may amend its findings—or make additional

findings—and may amend the judgment accordingly.” Such a motion “may accompany

a motion for a new trial under Rule 59.” Fed. R. Civ. P. 52(b). Rule 59(e) contemplates

the filing of a “motion to alter or amend a judgment.”

A Rule 52 motion “cannot be used to raise arguments that could have been

raised prior to the issuance of judgment.” Diocese of Winona v. Interstate Fire & Cas.

Co., 89 F.3d 1386, 1397 (8th Cir. 1996). Similarly, “Rule 59(e) motions cannot be used

to introduce new evidence, tender new legal theories, or raise arguments which could

have been offered or raised prior to the entry of judgment.” United States v. Metro. St.

Louis Sewer Dist., 440 F.3d 930, 934 (8th Cir. 2006) (internal citations and quotations

omitted).

Shirley’s Motion to Alter Judgment raises legal arguments that Shirley’s trial

counsel either: (1) presented to the Court before judgment, but were rejected (for

to “refile” a 30-page-shorter “brief.” (Doc. 241, p. 2) (emphasis added). Moreover, the

Court’s order required the refiled brief to contain the same content, just less of it. See id.

Plaintiffs’ Objection (Doc. 243) is therefore OVERRULED.

reasons stated in the Court’s written orders) or (2) could have been presented before

judgment by Shirley’s trial counsel—but were not.2

1. Standing

Shirley’s first argument is that Plaintiffs lacked standing to bring this lawsuit

against her because she was not a party to Dude and Marillyn’s contract and did not

cause Plaintiffs any injury. This argument is raised for the very first time on motion for

post-judgment relief, which the Court finds odd and disingenuous. Nevertheless, the

Court must consider issues going to its subject matter jurisdiction regardless of their

timeliness.

“In a diversity case, a court will not address a plaintiff’s claims unless the plaintiff

meets the ‘case or controversy’ requirements of article III of the Constitution and also

has standing to sue under the relevant state law.” Wolfe v. Gilmour Mfg. Co., 143 F.3d

1122, 1126 (8th Cir. 1998) (quoting Metropolitan Express Servs., Inc. v. City of Kansas

City, 23 F.3d 1367, 1369–70 (8th Cir. 1994)). To establish Article III standing to sue

Shirley, Plaintiffs must demonstrate:

(a) the invasion of a legally protected interest which is both concrete, and actual

or imminent;

(b) a causal connection between the injury and the conduct complained of; and

(c) the likelihood that the injury will be redressed by a favorable judicial decision.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

2 Shirley added new lawyers to her legal team after the Court filed its Findings of Fact

and Conclusions of Law. The new lawyers are the ones who filed the Motion to Alter

Judgment. For the most part, Shirley’s new lawyers have merely reframed the

previously rejected legal arguments that were made by her trial counsel.

For the purposes of this Motion, Shirley does not dispute that Plaintiffs suffered

an injury in fact. Instead, she argues that Plaintiffs cannot fairly trace their injury to

anything Shirley did or did not do, so they have no standing to sue her. The Court

disagrees. Shirley was named a defendant in this lawsuit based on allegations that she

held and claimed legal title to assets that Plaintiffs were seeking to impress with a

constructive trust. See Plaintiffs’ Second Amended Complaint, Doc. 38. In other words,

Plaintiffs were seeking to establish and then foreclose upon an alleged equitable

interest to real and personal property in Shirley’s possession and control.

Plaintiffs’ contended they are third party beneficiaries and had “a legally

protected interest” in assets that were subject to the PSA’s will provision, and that

Shirley invaded that interest and deprived them of the use and enjoyment of the

assets—albeit perhaps unknowingly3—when she took possession of them upon Dude’s

death. Because Dude died in 2017 and could no longer perform under the contract,

Plaintiffs alleged that a constructive trust was necessary to avoid Shirley’s unjust

enrichment at their expense and to prevent further injury caused by Shirley’s continued,

unlawful possession of the assets. See Doc. 38, pp. 9–10.

The equitable relief sought by Plaintiffs against the property and proceeds in

Shirley’s possession is well grounded in Arkansas law. The Court found that Dude (not

Shirley) had breached the PSA, but even so, under Arkansas law, Shirley was in

wrongful possession of Dude’s property. The Court further found that Shirley owed

3 The Court accepted “at face value” Shirley’s assertion at trial that she was “unaware of

Dude’s contractual obligations under the PSA until Plaintiffs filed this lawsuit against her

and Dude’s estate on March 27, 2020.” (Doc. 203, p. 34).

Plaintiffs “[t]he duty to convey the property” as “trustee for the [Plaintiffs] who in equity

are entitled to the beneficial enjoyment.” (Doc. 147, p. 17) (citations omitted).

The Court therefore now concludes that Plaintiffs had standing under federal law

to sue Shirley. Plaintiffs suffered a concrete, actionable injury—the deprivation of their

property rights and loss of the use and enjoyment of their property—which was causally

linked to Shirley’s action and/or inaction and was directly traceable to Shirley. Plaintiffs

filed suit against Shirley to redress the injury and prevent Shirley’s unjust enrichment.

Plaintiffs also had standing to sue Shirley under state law. “Arkansas law on

‘standing’ states that a person or party who has a pecuniary interest in the outcome of

the action has standing to assert a claim on his or its behalf.” First United Bank v.

Phase II, 347 Ark. 879, 893 (2002). Plaintiffs had a pecuniary interest in the outcome of

this action, and Shirley was a necessary party to this suit.4 “[T]he sweep of unjust

enrichment is broad enough so that a constructive trust may also be imposed against an

innocent party, provided that the innocent party would be unjustly enriched vis-a-vis the

plaintiff.” Howard W. Brill & Christian H. Brill, 1 Ark. Law of Damages § 20.5 (6th ed.).

2. Subject Matter Jurisdiction

Next, Shirley revisits a previously rejected argument about subject matter

jurisdiction. She contends the state probate court is the only court that may adjudicate

this breach of contract dispute. The Court disagrees and has already explained its

reasoning. See Doc. 167, pp. 11–12; Doc. 203, pp. 37 & 50 n.12. In the alternative,

Shirley argues that the only tribunal with subject matter jurisdiction over the dispute is

4 Shirley never challenged the Court’s personal jurisdiction over her as a necessary

party to this lawsuit, and it is too late to raise that challenge now. See Ins. Corp. of

Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982) (finding

personal jurisdiction is waived by either express or implied consent).

the state domestic relations court that ratified Plaintiffs’ parents’ divorce decree and

PSA. The will provision of the PSA does contemplate the domestic relations court

retaining jurisdiction of the case “for the purpose of adjudicating and awarding to the

parties their interest and rights to and in the property and property rights.” (Doc. 38-2,

pp. 2–3) (emphasis added). But, obviously, the Plaintiffs were not parties to the

contract. The parties were Plaintiffs’ parents, who were dead by the time Plaintiffs filed

suit for breach of contract.

Regardless, at no point did the domestic relations court have exclusive

jurisdiction over this dispute. The Supreme Court has held that the domestic relations

exception to federal jurisdiction is not intended “to strip the federal courts of authority to

hear cases arising from the domestic relations of persons unless they seek the granting

or modification of a divorce or an alimony decree.” Ankenbrandt v. Richards, 504 U.S.

689, 701 (1992). The case at bar involves a breach of contract claim and has nothing to

do with divorce, alimony, child support, or child custody. It follows that this Court

properly exerted subject matter jurisdiction over the suit pursuant to 28 U.S.C. §1332(a),

as the parties are fully diverse and the amount in controversy exceeds the jurisdictional

minimum for federal court.

3. Appropriateness of Remedy

Third, Shirley repeats an argument her trial counsel made—more than once—

prior to judgment: that a constructive trust is an inappropriate remedy for Dude’s breach

of contract. The Court refers Shirley’s counsel to its prior reasoning on the subject.

See Doc. 147, pp. 16–17; Doc. 167, pp. 4–6. Shirley also repeats her claim that she is

under no duty to convey any property to Dude’s estate Administrator or to Plaintiffs

because she is “innocent” of any malfeasance. The Court addressed this argument in its

Findings of Fact and Conclusions of Law. (Doc. 203, pp. 33–37 & 45–49).

4. Summary Judgment Rulings on Liability

Fourth, Shirley seeks to relitigate the issues raised on summary judgment

concerning Dude’s liability for breach of contract. The Court remains unpersuaded.

See Doc. 147.

5. Fairness of the Court’s Findings

Fifth, Shirley protests she “is left with a larger liability in restitution than that which

the Restatement deems appropriate.” (Doc. 242, p. 14). The Court disagrees and

refers Shirley’s counsel to the Findings of Fact and Conclusions of Law for the Court’s

explanation. See Doc. 203, pp. 45–49.

6. Arguments in Favor of Setoff

Sixth, Shirley disagrees with how the Court resolved the contentious issue of the

2012 Christmas gifts. At trial, Shirley presented no evidence that Dude intended the

2012 Christmas gifts to satisfy his contractual obligations to Plaintiffs. The Court’s

Findings of Fact and Conclusions of Law explain that Plaintiffs understood these gifts

were advances on their inheritance; however, there was no proof—even indirect or

circumstantial proof—linking Dude’s contractual obligation under the PSA to the 2012

Christmas gifts. Plaintiffs are correct that their father could have left them more than

half of what he owned and controlled at the time of his death (more than the contract

required) if he so chose, and the Court is not prepared to simply assume, absent any

evidence, that his true intention was to credit the Christmas gifts against his contractual

obligation. See Doc. 203, p. 49.

Finally, Shirley presents new evidence, not raised at trial, that she is entitled to

further credits and setoffs. The Court declines to consider this evidence as it is not

actually “new” but was well known to Shirley prior to trial and could have been raised

then, or in post-trial briefing prior to judgment.5 As for Shirley’s complaints concerning

the Court’s methodology for tracing, apportioning, and valuing the disputed assets, the

Court declines to reconsider its ruling or else finds that Shirley waived these objections

prior to the entry of the Judgment.6

_________________________

The Court issued findings of fact and conclusions of law that took into account

the credibility of the witnesses who testified at trial and considered all facts in the trial

record, the legal issues presented by the parties, and the voluminous post-trial briefing.

The Court even offered the parties an opportunity to identify clerical and mathematical

errors in its findings before entering the Judgment. See Doc. 203, p. 1 n.1. At this

point, the Court’s work is finished, and Shirley’s next step is to appeal. For all these

reasons, the Motion to Alter Judgment under Rules 52 and 59 is DENIED.

5 Shirley argues for the first time that the Court should have assumed a different

valuation for certain assets—one that took into account her estimated payment of

brokerage fees, management fees, personal property taxes, and capital gains taxes.

Shirley did not present any specific testimony at trial about how much she paid in fees

and taxes to offset the value of any personal or real property, nor did she focus the

Court in post-trial briefing on how to calculate these figures. What Shirley did do was file

a joint stipulation, along with Plaintiffs, as to the value of most of the assets, including all

the real property, and the Court relied on these figures. See Doc. 165. It is not the

Court’s burden to comb through notebooks full of tax returns, stock spreadsheets, and

bank statements to figure out if Shirley was entitled to any offset or credit she failed to

raise. “Judges are not like pigs, hunting for truffles buried in [the record].” United States

v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991)

6 The Court explained in its Findings of Fact and Conclusions of Law, (Doc. 203, p. 8),

that “[b]efore the bench trial, the parties stipulated to the identity and value of nearly all

the assets Dude owned and controlled at his death, either individually or jointly with

Shirley.” See also Doc. 165, Parties’ Joint Stipulation.

B. Motion to Stay Judgment Pending Appeal

Shirley has separately moved for a stay of judgment pending the outcome of her

forthcoming appeal (Doc. 218). It is not entirely clear whether a stay is sought with

respect to Dude’s separate assets (that Shirley was ordered to deliver to the

Administrator of Dude’s probate estate), or whether the stay is focused on the assets

that Dude held jointly with Shirley at the time of his death.7 Regardless, Plaintiffs and

Separate Defendant Ray Fulmer object. The Court will therefore address both

categories of assets below, after first addressing the legal considerations.

In ruling on a motion to stay, the Court must consider the following four factors:

(1) the likelihood of the movant’s success on the merits; (2) whether the movant will be

irreparably harmed absent a stay; (3) whether issuance of the stay will substantially

injure the non-moving party; and (4) the public interest. Hilton v. Braunskill, 481 U.S.

770, 776 (1987); Shrink Mo. Gov’t PAC v. Adams, 151 F.3d 763, 764 (8th Cir. 1998).

The Eighth Circuit directs the Court to “consider the relative strength” of these

factors. Brady v. Nat’l Football League, 640 F.3d 785, 789 (8th Cir. 2011). While the

“most important factor is the [movant’s] likelihood of success on the merits,” the Court is

tasked with balancing all the factors, which means that “[c]lear evidence of irreparable

injury should result in a less stringent requirement of certainty of victory,” and vice

versa. Id. (quotation marks and citation omitted). “The party requesting a stay bears the

7 Shirley’s Motion to Stay discusses the irreparable harm she will suffer if presently

forced to deliver to Plaintiffs the constructive trust portion of Dude’s jointly held assets,

i.e., those assets listed in Tables 2–5 of the Court’s Findings of Fact and Conclusions of

Law, Doc. 203, pp. 52–59. Shirley does not, however, substantively explain how or why

she would be harmed by the delivery of Dude’s separate assets to the Administrator of

his probate estate. She merely quantifies that portion of the proposed supersedeas

bond that would be pledged to secure Dude’s separate property, i.e., those assets listed

in Table 1 of the Court’s Opinion, id. at pp. 50–51.

burden of showing that the circumstances justify an exercise of [the court’s] discretion.”

Nken v. Holder, 556 U.S. 418, 433–34 (2009).

1. Dude’s Separate Assets

As to the first category of assets, the Judgment ordered Shirley “to deliver the

assets in Table 1 of the Order to the Administrator of the Estate of H.C. ‘Dude’ Crain,

Jr.” (Doc. 204). Shirley has not offered any explanation as to how or why she would be

harmed by this aspect of the Judgment. Nor is the Court aware of any potential harm.

As Shirley has correctly recognized, Dude’s separate property must pass through

probate. This is true regardless of whether Dude breached the PSA. In other words, if

Shirley fully prevails on appeal, Dude’s separate property must still pass through

probate.

In her summary judgment motion, Shirley took the position that, as a matter of

law, Dude’s 2012 will did not violate the PSA. And since Shirley did not probate the will

nor establish the trusts as directed by the will, even she agreed that Dude’s separate

property must be admitted to probate:

Property that Dude owned at his death comprises his estate. Property that

he had given away, put into trust, or owned jointly with his spouse at the

time of his death is not in his estate. . . . It appears that on his death Dude

separately owned stock in two companies: 100% of Premier Foam, Inc.,

and 100% of Dude, Inc. This property should be probated by the Executor,

Ray Fulmer, in Sebastian County and conveyed into the Marital Deduction

Trust per the terms of the 2012 Will.

(Doc. 90, pp. 26–27).

Shirley is unlikely to prevail on appeal because, as a threshold matter, Dude’s

2012 will clearly did not comply with his obligations under the PSA. But even if Shirley

does prevail, Dude’s separate assets will necessarily pass through probate anyway—

just as Shirley contemplated at summary judgment. Thus, Shirley can demonstrate no

harm arising from the Court’s order that she presently deliver those assets to Mr.

Fulmer. The other stay factors follow suit for the same reasons and are therefore

resolved against Shirley.

To be very clear, the Court’s task here was limited to the adjudication of the

breach of contract claim against Dude’s estate and the imposition of a corresponding

judgment consistent with the resulting remedy––in this instance, specific performance

and a constructive trust. However, as this Court has acknowledged, and as Shirley has

taken great pains to argue, the state probate court has sole jurisdiction to administer

Dude’s estate, which includes the authority to take possession, liquidate, divide, and/or

retitle Dude’s separate property, as well as the responsibility to oversee the payment of

estate debts, expenses, and other legal obligations. Accordingly, by no later than

Friday, April 8, 2022, Shirley must deliver Dude’s separate assets (Doc. 203, Table

1, pp. 50–51), to Ray Fulmer, in his capacity as the Administrator of Dude’s estate,

for further disposition.8 To the extent grounds exist to question how or when these

assets, or fractional interests within assets, should be administered in probate, the

parties must seek relief from the state probate court.

8 Shirley argues the Court lacks authority to impose a constructive trust over the

personal property and household effects Dude owned at the time of his death because

such property was not adequately identified by Plaintiffs. See Doc. 242, p. 25. The

parties agreed prior to trial that the Court’s task in this case was to determine Plaintiffs’

equitable interest in Dude’s separate and jointly held property. The parties also

stipulated prior to trial that Dude owned certain, unspecified “personal property and

household effects” during his lifetime, and that such property was in Shirley’s custody

and control. See Doc. 165, p. 9, ¶ 22(b). The parties further agreed that Dude’s

personal property and household effects would be inventoried by the Administrator in

the normal course of probate proceedings after the Court determined Plaintiffs’

equitable share. Shirley cannot swap horses post judgment; she must live with the

position she took at time the factual issues were tried and submitted to the bench.

2. Dude’s Jointly Held Property

As for the second category of assets that are not subject to probate, (Doc. 203,

Tables 2–5, pp. 52–59), the Court will now consider whether to stay the execution of the

Judgment pending the outcome of the appeal.

a. Likelihood of Success on the Merits

Shirley contends that a stay pending appeal is appropriate because the appeal

will raise serious and close legal questions, and she is likely to prevail. The Court

disagrees. The issues in this breach of contract case were factually complex but legally

straightforward, and the Court finds there can be no reasonable dispute that Dude

breached the contract. As for the remedy, a constructive trust was the only possible

way to achieve specific performance of the contract’s provisions, given the unique

factual circumstances.

After a bench trial, the Court’s factual and equitable findings are entitled to

considerable deference. See Hayes v. Metro. Prop. & Cas. Ins. Co., 908 F.3d 370, 374

(8th Cir. 2018) (“We review the district court's findings of fact in the bench trial for clear

error and its legal conclusions de novo, overturning the factual findings only if they are

not supported by substantial evidence, based upon an erroneous view of the law, or we

are left with the definite and firm conviction that an error has been made.”); Kuehl v.

Sellner, 887 F.3d 845, 854 (8th Cir. 2018) (“We review the district court's grant of

equitable relief for abuse of discretion . . . .”). Therefore, the first factor does not favor a

stay.

b. Balancing the Equities

Shirley argues it will be nearly impossible to undo the complex monetary

transactions ordered in the Judgment if the Court of Appeals reverses—and she is right.

There is a strong likelihood Shirley will suffer irreparable harm if the Eighth Circuit

reverses after she sells the real property included in the Judgment (including her

primary residence and vacation home) and transfers the publicly traded securities to

Plaintiffs. The Eighth Circuit instructs that “economic loss does not, in and of itself,

constitute irreparable harm,” but “[t]he threat of unrecoverable economic loss, however,

does qualify as irreparable harm.” Iowa Util. Bd. v. F.C.C., 109 F.3d 418, 426 (8th Cir.

1996) (quotation marks and citation omitted and emphasis added).

Given the vast number of documents in the record and the financial complexity of

the assets identified in the Findings of Fact and Conclusions of Law, it is likely this

appeal could take one or two years to resolve. If the Eighth Circuit disagrees with the

Court’s order in any respect, it will be next-to-impossible to turn back time and place the

parties in the positions they are in now, particularly with respect to the real estate and

publicly traded securities.

On the flip-side, a stay will not substantially injure Plaintiffs, provided that the

status quo is maintained. This can be accomplished by requiring Shirley to post a

supersedeas bond, with special conditions, in an amount equal to the cash, proceeds,

dividends, and Plaintiffs’ interest in the real estate and closely-held companies, that the

Court impressed with the constructive trust, plus post-judgment interest. Although

Plaintiffs would prefer that a stay not be granted, the parties agree with the component

parts and line-item values to be bonded. Plaintiffs remaining concerns can be

substantially ameliorated by the special conditions noted below.

To the extent the public’s interest lies in the having the assets at issue distributed

to the rightful owner or owners, a stay is favored. Moreover, if the Court’s decision is

reversed in any respect, the daunting task of identifying, tracing, and valuing the assets

after they have been disbursed to the four Plaintiffs’ separate accounts would certainly

tax this Court’s finite judicial resources.

At bottom, the Court agrees with Shirley’s identification and valuation of the

constructive trust assets and proceeds that are most appropriately bonded pending

appeal.9 The Court also agrees with Shirley’s proposal to “freeze” the account holding

the constructive trust portion of the publicly traded securities. The Court will therefore

approve a Supersedeas Bond in the total sum of $18,800,000.00, inclusive of post-

judgment interest at a rate of 0.48% per year for a two-year period. See 28 U.S.C.A.

§ 1961(b). By no later than the close of business on Wednesday, April 6, 2022,

Shirley is directed to submit a proposed form of Supersedeas Bond in the sum of

$18,800,000.00, including the identity of the proposed corporate surety.

Additionally, the Court will require that Shirley evidence her agreement to comply

with certain special conditions while the appeal is pending. With regard to real and

9 In her reply brief (Doc. 223) and supplement thereto (Doc. 226), Shirley identifies and

values the jointly held assets and proceeds that are proposed to be bonded on appeal.

At Plaintiffs’ request, Shirley has acknowledged and accounts for certain valuation

errors. See Doc. 223, p. 19. The parties are therefore in agreement that the principal

value of the assets and proceeds “Held for Plaintiffs” in the constructive trust totals

$18,620,408.76. (Doc. 226, p. 1). The parties also agree that $178,755.92 is an

appropriate estimate of post-judgment interest to be secured by the bond. The total

value of assets, proceeds, and interest to be bonded is $18,799,164.68, which the Court

rounds to the even sum of $18,800,000.00.

personal property, Shirley must agree in writing, either within the form of the

Supersedeas Bond or as a separate addendum, to the following conditions:

1. To not encumber the real property;

2. If requested, to provide Ray Fulmer, in his capacity as the Administrator of

Dude’s probate estate, and/or his designated representatives, with reasonable

access to inspect and inventory the personal property and household effects

impressed by the constructive trust for Plaintiffs’ benefit;

3. To provide Plaintiffs (and/or a designated representative(s)) unrestricted access

to inspect the Ranch and the Warehouse10 on a semi-annual basis;

4. Provide Plaintiffs a quarterly accounting of the income produced by the Ranch

and the Warehouse, to include a report of all gross income received and

expenses paid, with lease and other supporting documentation upon request;

and

5. Place the Plaintiffs’ share of net real estate income into a separate escrow

account.11

As for the publicly traded securities subject to the constructive trust,12 the Court

agrees with Shirley that the most conservative way to preserve these assets on appeal

is to maintain them in their current management account. Shirley represents that she

10 The Ranch refers to the leased residence at 3655 Beach Way in Van Buren, and the

Warehouse refers to the commercial property on State Line Road in Fort Smith.

11 A constructive trust was imposed for Plaintiffs’ benefit on a collective 25% interest in

the Ranch and a collective 50% interest in the Warehouse. (Doc. 203, Table 2, pp. 52–

53). Net income in these same percentages must be deposited into a separate escrow

account and held for Plaintiffs’ benefit pending appeal.

12 The specific securities and corresponding quantity of shares impressed by the

constructive trust are identified in the Court’s Findings of Fact and Conclusions of Law.

(Doc. 203, Table 5, pp. 56–58).

will transfer out of the account only those positions that are not subject to the

constructive trust and leave behind all positions subject to the trust. She further

represents that the account will “not be charged any commissions or management fees

while frozen.” (Doc. 223, p. 15) (emphasis in original). Shirley must restate and agree

to abide by these representations within the form of the Supersedeas Bond or in a

separate addendum. Additionally, Shirley must represent and personally guarantee

that, if any commissions or management fees are charged on the frozen account during

the pendency of the appeal, Shirley will be solely responsible for paying them. Finally,

Shirley must timely provide (or direct that the account manager provides) Plaintiffs (or

their designated representative) a copy of each monthly statement on the frozen

account during the pendency of the appeal.

Once the form of the Bond is approved by the Court, Shirley will have ten (10)

calendar days to file the fully executed version, at which point the Court will enter a

formal stay of execution. Until then, the Court’s interim stay remains in effect (Doc. 229).

III. CONCLUSION

IT IS ORDERED that Shirley’s Motion to Alter Judgment (Docs. 231 & 242) is

DENIED.

IT IS FURTHER ORDERED that Shirley’s Motion to Stay Judgment Pending

Post-Judgment Motion and Appeal (Doc. 218) is GRANTED IN PART AND DENIED IN

PART as follows:

(1) The Motion is DENIED as to the separate assets subject to probate. By no

later than Friday, April 8, 2022, Shirley must deliver Dude’s separate assets (Doc. 203,

Table 1, pp. 50–51), to Ray Fulmer, in his capacity as the Administrator of Dude’s

estate, for further disposition. To the extent grounds exist to question how or when

these assets, or fractional interests within assets, should be administered in probate,

the parties must seek relief from the state probate court.

(2) The Motion is GRANTED as to the constructive trust portion of Dude’s jointly

held assets that are not subject to probate. See Doc. 203, pp. 52-59. By no later than

the close of business on Wednesday, April 6, 2022, Shirley is directed to submit a

proposed form of Supersedeas Bond in the sum of $18,800,000.00, including the

identity of the proposed corporate surety. She must also agree in writing, either within

the form of the Supersedeas Bond or as a separate addendum, to the conditions set

forth above with respect to the real property and publicly traded securities subject to the

constructive trust. Upon the filing of the court-approved and fully executed supersedeas

bond, the Court will order that the execution of the Judgment be stayed as to these

assets while the matter is on appeal with the Eighth Circuit.

IT IS SO ORDERED on this 31st day of March, 2022.

KA L.

UNITED STATES DISTRICT JUDGE

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