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In re Arbitration of: Earls

Court of Appeals of Missouri, Southern District, First Division

November 13, 2015

In Re the Arbitration of: CHARLES SCOTT EARLS and LISA MARIE EARLS, Petitioners-Appellants,
v.
NORTHPOINTE DEVELOPMENT COMPANY, LLC, Respondent-Respondent

          APPEAL FROM THE CIRCUIT COURT OF TANEY COUNTY. Honorable Carr L. Woods, Senior Judge.

         For Appellants: Eric A. Farris of Branson, MO.

         For Respondent: Matthew F. Trokey and Russell Schenewerk of Branson, MO.

         JEFFREY W. BATES, J., OPINION AUTHOR, DANIEL E. SCOTT, P.J., CONCUR, MARY W. SHEFFIELD, C.J., CONCUR.

          OPINION

Page 364

         JEFFREY W. BATES, J.

         Charles and Lisa Earls (hereinafter referred to individually by their first names and collectively as the Earls) appeal from a judgment confirming an arbitration award in their favor against Northpointe Development Company, LLC (Northpointe). The trial court registered the judgment with limiting language that purported to prevent the judgment from acting as a lien on real estate. Presenting two points on appeal, the Earls contend the trial court erred by registering the judgment with the limiting language because: (1) the arbitration award did not contain the limitation, and Northpointe did not file a motion to modify the award as required by § 435.410; and (2) § 511.350 mandates that a circuit court judgment shall be a lien on real estate, located within that county, of the person against whom the judgment was entered.[1] Both points have merit. The judgment is reversed, and the cause is remanded with instructions to register the judgment without the limiting language.

         Factual and Procedural Background

         The Earls and Northpointe were parties to an arbitration agreement. A dispute arose between the parties concerning the operating agreement of Northpointe. Pursuant to the arbitration agreement, an arbitrator from the American Arbitration Association (AAA) was designated to arbitrate the dispute.

         After conducting a hearing on the matter, the arbitrator found in the Earls' favor and awarded them $176,655. Insofar as relevant here, the arbitrator determined that Charles was no longer a member of Northpointe, and " hereafter neither entitled to the benefits nor burdens of membership[.]" The arbitrator ordered that no

Page 365

distributions be made by Northpointe to its members without first securing a waiver or release of the Earls' prior personal obligations and guarantees from Northpointe's lenders. The arbitration award stated that Charles did not have " any status other than as an unsecured creditor" of Northpointe.

         At some point not disclosed by the record, the Earls filed a lis pendens against real estate owned by Northpointe, but neither party raised the issue during arbitration. Following entry of the award, Northpointe filed a motion to clarify the legal effect of the pending lis pendens. In an order on the motion to clarify, the arbitrator stated that " by providing the monetary obligation to have the status it did, the arbitrator would presume any lis pendens would be withdrawn without prejudice or immediately limited to the terms of the award[.]" The arbitrator explained:

The arbitrator presumed that one or the other or both parties would quickly proceed to judicial action under [RSMo] sections 435.400 and 435.415, or 435.405 or 435.410 as contemplated by AAA Rule 52. A judgment envisioned by Rule 52 and by Missouri statute, if confirmed, would likely give far better notice to any title company and prospective purchaser of land owned by [Northpointe]. ...The award was clear that it affected only [Northpointe] and that it was not designed to affect title to any particular real estate. So the arbitrator did not require any monies from sales to be paid ... or be used in a way as to protect [the Earls], albeit ...

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