{ "id": 1155524, "name": "BANK of AMERICA, N.A. v. C.D. SMITH MOTOR COMPANY, INC.", "name_abbreviation": "Bank of America, N.A. v. C.D. Smith Motor Co.", "decision_date": "2003-05-22", "docket_number": "02-632", "first_page": "228", "last_page": "250", "citations": [ { "type": "official", "cite": "353 Ark. 228" }, { "type": "parallel", "cite": "106 S.W.3d 425" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "315 Ark. 369", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1910521 ], "weight": 3, "year": 1993, "pin_cites": [ { "page": "377-78" } ], "opinion_index": 0, "case_paths": [ "/ark/315/0369-01" ] }, { "cite": "306 Ark. 4", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1900926 ], "weight": 2, "year": 1991, "opinion_index": 0, "case_paths": [ "/ark/306/0004-01" ] }, { "cite": "319 Ark. 555", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1453675 ], "weight": 2, "year": 1995, "opinion_index": 0, "case_paths": [ "/ark/319/0555-01" ] }, { "cite": "Ark. Code Ann. \u00a7 16-65-114", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "year": 1987, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "326 Ark. 1046", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 12025801 ], "weight": 2, "year": 1996, "opinion_index": 0, "case_paths": [ "/ark/326/1046-01" ] }, { "cite": "Ark. Code Ann. \u00a7 4-1-203", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "year": 2001, "opinion_index": 0 }, { "cite": "315 Ark. 400", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1910465 ], "weight": 2, "year": 1993, "opinion_index": 0, "case_paths": [ "/ark/315/0400-01" ] }, { "cite": "211 Ark. 214", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1473173 ], "weight": 2, "year": 1947, "opinion_index": 0, "case_paths": [ "/ark/211/0214-01" ] }, { "cite": "775 S.W.2d 90", "category": "reporters:state_regional", "reporter": "S.W.2d", "year": 1969, "opinion_index": 0 }, { "cite": "247 Ark. 314", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1600532 ], "year": 1969, "opinion_index": 0, "case_paths": [ "/ark/247/0314-01" ] }, { "cite": "321 Ark. 303", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1449613 ], "weight": 3, "year": 1995, "pin_cites": [ { "page": "312" } ], "opinion_index": 0, "case_paths": [ "/ark/321/0303-01" ] }, { "cite": "311 Ark. 136", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1896944 ], "weight": 2, "year": 1992, "opinion_index": 0, "case_paths": [ "/ark/311/0136-01" ] }, { "cite": "284 Ark. 461", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1878692 ], "weight": 4, "year": 1985, "pin_cites": [ { "page": "468" } ], "opinion_index": 0, "case_paths": [ "/ark/284/0461-01" ] }, { "cite": "270 Ark. 340", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1709293 ], "weight": 2, "year": 1980, "opinion_index": 0, "case_paths": [ "/ark/270/0340-01" ] }, { "cite": "299 Ark. 365", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1888336 ], "weight": 2, "year": 1989, "opinion_index": 0, "case_paths": [ "/ark/299/0365-01" ] }, { "cite": "282 Ark. 545", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1740832 ], "weight": 8, "year": 1984, "pin_cites": [ { "page": "546" }, { "page": "546" }, { "page": "799" }, { "page": "547" } ], "opinion_index": 0, "case_paths": [ "/ark/282/0545-01" ] }, { "cite": "347 Ark. 963", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 683375 ], "weight": 2, "year": 2002, "opinion_index": 0, "case_paths": [ "/ark/347/0963-01" ] }, { "cite": "143 Ark. 506", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1589365 ], "year": 1920, "opinion_index": 0, "case_paths": [ "/ark/143/0506-01" ] }, { "cite": "190 U.S. 540", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 8297439 ], "year": 1903, "opinion_index": 0, "case_paths": [ "/us/190/0540-01" ] }, { "cite": "79 S.W. 1052", "category": "reporters:state_regional", "reporter": "S.W.", "weight": 2, "year": 1904, "opinion_index": 0 }, { "cite": "72 Ark. 275", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1505643 ], "weight": 4, "year": 1904, "pin_cites": [ { "page": "287-88" }, { "page": "288" }, { "page": "287" } ], "opinion_index": 0, "case_paths": [ "/ark/72/0275-01" ] }, { "cite": "261 Ark. 568", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1678899 ], "weight": 4, "year": 1977, "pin_cites": [ { "page": "572" } ], "opinion_index": 0, "case_paths": [ "/ark/261/0568-01" ] }, { "cite": "314 Ark. 591", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1912758 ], "weight": 3, "year": 1993, "pin_cites": [ { "parenthetical": "holding that lost profits are well recognized as a type of consequential damages" }, { "parenthetical": "holding that lost profits are well recognized as a type of consequential damages" } ], "opinion_index": 0, "case_paths": [ "/ark/314/0591-01" ] }, { "cite": "337 Ark. 247", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1240937 ], "weight": 3, "year": 1999, "opinion_index": 0, "case_paths": [ "/ark/337/0247-01" ] }, { "cite": "343 Ark. 224", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 226535 ], "weight": 3, "year": 2000, "opinion_index": 0, "case_paths": [ "/ark/343/0224-01" ] }, { "cite": "313 Ark. 258", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1914678 ], "weight": 3, "year": 1993, "opinion_index": 0, "case_paths": [ "/ark/313/0258-01" ] }, { "cite": "64 Ark. App. 158", "category": "reporters:state", "reporter": "Ark. App.", "case_ids": [ 6138749 ], "weight": 5, "year": 1998, "pin_cites": [ { "page": "163-64" }, { "page": "164" }, { "page": "163" } ], "opinion_index": 0, "case_paths": [ "/ark-app/64/0158-01" ] }, { "cite": "Ark. Code Ann. \u00a7 16-64-130", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "weight": 2, "year": 2001, "opinion_index": 0 }, { "cite": "Ark. Code Ann. \u00a7\u00a7 4-1-205", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "weight": 2, "opinion_index": 0 } ], "analysis": { "cardinality": 1479, "char_count": 40202, "ocr_confidence": 0.72, "pagerank": { "raw": 2.2095776663429875e-07, "percentile": 0.7763462271352499 }, "sha256": "bac6fbd48d44126123d323e8c6e8787094a6351bb6cf849cd2f6b0e938411e39", "simhash": "1:2daf13147d1d8552", "word_count": 6636 }, "last_updated": "2023-07-14T16:12:52.629354+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "BANK of AMERICA, N.A. v. C.D. SMITH MOTOR COMPANY, INC." ], "opinions": [ { "text": "Tom Glaze, Justice.\nThis is a contract case which, among other things, involves the interpretation of our Uniform Commercial Code, particularly Ark. Code Ann. \u00a7\u00a7 4-1-205 and 4-2-202 (Repl. 2001), the Code\u2019s course-of-dealing provisions. We also take jurisdiction of this appeal because it requires the court\u2019s interpretation of Ark. Code Ann. \u00a7 16-64-130 (Supp. 2001), as to when punitive damages can be awarded in a contract case involving a financial institution.\nAppellee C.D. Smith Motor Co., Inc. (C.D. Smith), was a used-car dealer in Pine Bluff, and had established a recourse-financing relationship over the years with Bank of America, N. A., and its predecessor banks. In the years 1996-1997, C.D. Smith sold approximately seventy percent of its cars through recourse financing, whereby it would guarantee the car purchaser\u2019s financing. About thirty to thirty-five percent of C.D. Smith\u2019s recourse financing was done through Bank of America. C.D. Smith sold a small percentage of its cars through non-recourse financing when a purchaser\u2019s credit was sufficient and C.D. Smith was not required to sign the note.\nOn November 12, 1996, C.D. Smith and the Bank signed a Recourse Chattel Paper and Security Agreement, which included a $2.3 million recourse-financing limit, which reduced an earlier limit set at $4 million. Over the years, C.D. Smith and the Bank had developed various procedures by which they carried out these recourse-financing agreements. Under one such practice, the Bank would attempt to collect on accounts that were less than sixty days delinquent, and it provided a list of those accounts to C.D. Smith, so that C.D. Smith could assist in the efforts to collect the delinquencies. The Bank also notified C.D. Smith of any bankruptcy filings by delinquent loan-account holders, so that C.D. Smith could file a claim with the bankruptcy court.\nAfter having signed the November 12, 1996, one-year agreement, the Bank sent a letter on February 13, 1997, advising C.D. Smith that, effective April 1, 1997, it would no longer offer recourse financing. The Bank also notified C.D. Smith that it would cease the practice of providing weekly delinquency lists, as had been done in the past. By letter dated March 7, 1997, the Bank informed C.D. Smith that the collection operations of the Bank were being moved to St. Louis, and the delinquency list accompanying the Bank\u2019s letter would be the last.\nAfter the Bank discontinued recourse financing to C.D. Smith, C.D. Smith sized down its business and made some unsuccessful efforts to obtain recourse financing with other banks. C.D. Smith\u2019s business failed and closed in September 1997. On October 22, 1997, C.D. Smith filed suit against the Bank, asserting the Bank had breached the parties\u2019 November 12, 1996, agreement. The Bank answered, admitting liability, for breach of contract, but it denied having caused any damages arising from its breach. Prior to trial, on December 3, 2001, the Bank filed a motion in limine requesting the trial court to exclude all evidence pertaining to any alleged custom and usage or course of dealing between C.D. Smith and the Bank. At a hearing on December 5, 2001, the trial court ruled that the course-of-dealing evidence was relevant to determine C.D. Smith\u2019s damages and denied the Bank\u2019s pretrial motion.\nThe parties tried their case on December 5, 6, 7, and 8, 2001, and the jury found in C. D. Smith\u2019s favor, awarding it $1,066,000 in damages. The court fixed post-judgment interest at 6.25%, denying C.D. Smith\u2019s request that 10% interest be imposed. The trial court had earlier denied C.D. Smith\u2019s request that it be awarded punitive damages. The court concluded the matter by awarding C.D. Smith attorneys\u2019 fees in the amount of $252,605.29.\nThe Bank filed two postjudgment motions requesting relief from the jury award, but the court denied them. The Bank then filed a timely direct appeal raising three principal points for reversal:\n(1) The trial court erred in allowing C.D. Smith to introduce parol evidence pertaining to the parties\u2019 course of dealing when considering their November 12, 1996, agreement.\n(2) C.D. Smith failed to show the \u201ctacit agreement\u201d required for an award of consequential damages.\n(3) C.D. Smith failed to show any damages were caused by the Bank\u2019s breach.\nC.D. Smith filed a cross-appeal, contending the trial court erred (1) in ruling the Bank was not subject to punitive damages, and (2) in fixing postjudgment interest at 6.25% instead of 10%.\nThe Bank\u2019s initial argument submits several reasons why the trial court should have excluded evidence of the parties\u2019 prior course of dealings. First, the Bank contends course-of-dealing evidence was inadmissible because the parties\u2019 written agreement included an explicit merger provision. That merger clause provided as follows:\nThis Agreement contains all the terms of the Chattel Paper purchase agreement between the parties, and no other statement or agreement shall have any force or effect. Borrower [Smith] agrees that he is not relying on any representation or agreement regarding the purchase of Chattel Paper except those contained in this Agreement.\nIn support of its argument that the course-of-dealing evidence should not have been admitted, the Bank cites a court of appeals case, Hagans v. Haines, 64 Ark. App. 158, 984 S.W.2d 41 (1998), wherein that court reversed a trial court\u2019s decision to permit parol evidence regarding an oral rental agreement, even though the parties\u2019 written rental agreement contained a merger clause. That clause provided that the written agreement contained the entire understanding and agreement between the parties, and the written agreement superceded all prior or contemporaneous agreements, representations, and understanding, and no oral representation or statement shall be considered a part of the written agreement.\nDespite the Bank\u2019s reliance on Hagans, that case offers little help in the instant case because that decision did not involve the Uniform Commercial Code. Here, C.D. Smith and the Bank executed the November 12, 1996, agreement captioned \u201cRecourse Chattel Paper and Security Agreement,\u201d whereby the Bank retained security interests governed by the Code. Under the Code, a writing intended to be the parties\u2019 final expression of their agreement may not be contradicted by evidence of any prior agreement or contemporaneous oral agreement, but \u201cmay be explained or supplemented by course of dealing.\u201d See \u00a7 4-2-202(a) (emphasis added). Ark. Code Ann. \u00a7 4-1-205 (Repl. 2001), in relevant part, defines course of dealing as follows:\n(1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.\n(3) A course of dealing between parties . . . give[s) particular meaning to and supplement [ s] or qualif[ ies] terms of an agreement.\n(4) The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable, express terms control both course of dealing and usage of trade [.]\n(Emphasis added.)\nCiting Precision Steel Warehouse, Inc. v. Anderson-Martin Machine Co., 313 Ark. 258, 854 S.W.2d 321 (1993), the Bank urges that, as long as the parties\u2019 November 12, 1996, agreement was unambiguous, any evidence related to course of dealing is irrelevant and, therefore, inadmissible. The Bank further submits that the rule precluding course-of-dealing evidence to interpret an unambiguous contract is one aspect of the parol-evidence rule, which provides that \u201ca written contract merges, and thereby extinguishes, all prior and contemporaneous negotiations, understandings, and verbal agreements on the same subject.\u201d See Ultracuts, Ltd. v. Wal-Mart Stores, Inc., 343 Ark. 224, 33 S.W.3d 128 (2000). Additionally, the Bank argues that C.D. Smith admitted by stipulation that the course-of-dealing evidence was not intended to interpret unambiguous terms contained in their agreement, and since such parol evidence does not interpret an existing word or term in the agreement, it fails to qualify as a \u201ccourse of dealing.\u201d On this point, however, we quickly note that, although C.D. Smith stipulated that the parties\u2019 collection practices were not contained in their contract, it did not concede the Bank did not have the obligation to provide the delinquency lists under a \u201ccourse of dealing.\u201d Finally on this point, the Bank, relying on \u00a7 4-2-202 (a) and (b), submits that, while the parties\u2019 agreement may be explained or supplemented by course of dealing and evidence of consistent additional terms, such evidence is inadmissible if the court finds the parties intended the writing to be a complete and exclusive statement of the terms of their agreement. The Bank concludes that the merger clause clearly reflects the parties\u2019 intention at that time to have the written agreement serve as the complete and exclusive statement. We must disagree.\nWe first point out that, in arguing that course-of-dealing evidence may not be used to interpret an unambiguous agreement which has a merger clause, the Bank relies on the Ultracuts and Hagans cases. However, both cases are non-Uniform Commercial Code cases and did not involve or discuss parol and course-of-dealing evidence, which may be allowed under circumstances described by the Code in \u00a7\u00a7 4-1-205 and 4-2-202.\nIn their treatise on the Uniform Commercial Code, Professors James J. White and Robert S. Summers considered merger clauses and the parol-evidence rule by reviewing the Code language contained in \u00a7 2-202, and concluded such statutory language does not bar all evidence extrinsic to a writing already in evidence. 1 White & Summers, Uniform Commercial Code \u00a7 2-12, at 104 (4th ed. 1995). For example, a court may decide that the writing is a final written expression of some terms, but not a \u201ccomplete and exclusive\u201d statement of all terms, and admit evidence of \u201cconsistent additional terms.\u201d Id. Similarly, our court has stated that a course of dealing that explains or supplements a contract is competent evidence of the parties\u2019 intent and can become a part of a contract. Precision Steel Warehouse, 313 Ark. at 266 (citing \u00a7 4-2-202(a)).\nIn the instant case, we conclude that the trial court did not err in finding that the parties\u2019 November 12, 1996, agreement and its merger clause did not preclude course-of-dealing evidence, because the collection practices they adopted did not contradict the terms of the parties\u2019 agreement; rather, their collection practice merely supplemented their agreement. In other words, the Bank\u2019s provision of the delinquency lists to C.D. Smith was such a well-established \u201csequence of previous conduct between the parties\u201d that it could \u201cfairly be regarded as establishing a common base of understanding for interpreting their expressions and other conduct.\u201d See \u00a7 4-1-205(1).\nThe record reflects that Richard Wilson, C.D. Smith\u2019s son-in-law, testified that he was C.D. Smith\u2019s collection agent, and that he had been working with the Bank on collections since 1977. Wilson further testified that he had received a letter from Dwayne Johnson, the Bank\u2019s vice-president of commercial lending, saying that the Bank would not provide any more delinquency lists as of April 1997.\nC.D. Smith clearly showed that it and the Bank had been engaging in these collection practices for twenty years, and C.D. Smith relied on these collection practices as the basis for keeping its accounts and collections current. This practice was not inconsistent with the contract. Indeed, the parties\u2019 engaging in this practice furthered the purpose of the parties\u2019 agreement. Under the terms of the agreement, C.D. Smith \u201cunconditionally guarantee[d] the payment in full and performance of all obligations of each of the Account Debtors under the Chattel Paper.\u201d The Agreement further provided the following:\nUpon any event of default under the Chattel Paper by the Account Debtor which is not cured within ninety (90) days or if the Account Debtor shall fail to make on the scheduled due date the installment payments due under the Chattel Paper on three consecutive months even if such default is cured within ninety (90) days, Borrower [C.D. Smith] shall, within five (5) days of demand by Bank, pay to Bank the unpaid balance owing on the Chattel Paper as of the date Borrower repurchases it from Bank (the \u201cRepurchase Price\u201d).\nThe Bank\u2019s practice of providing its delinquency reports to C.D. Smith enabled Smith to \u201cget on top of\u2019 its collections more efficiently, which in turn facilitated Smith\u2019s ability to perform its duties under the contract. We hold the trial court did not err in determining that this twenty-year-long \u201csequence of previous conduct\u201d could \u201cfairly ... be regarded as establishing a common basis of understanding\u201d between Smith and the Bank, and therefore the court did not err in admitting evidence of this course of dealing. Although the Bank also argues that such evidence was highly prejudicial and confusing to the jury, we note the obvious, that any competent evidence tending to prove the Bank\u2019s actions had breached the parties\u2019 agreement and caused C.D. Smith damages, would be prejudicial. However, we cannot agree that the trial court abused its discretion in determining such course-of-dealing evidence was more probative than prejudicial.\nThe Bank\u2019s next point for reversal is that C.D. Smith\u2019s damages were all consequential, but Smith failed to offer proof supporting such damages. The Bank claims \u2014 and C.D. Smith does not dispute \u2014 that all damages awarded in this case were consequential. Consequential damages are those damages that do not flow directly and immediately from the breach, but only from some of the consequences or results of the breach. See Dawson v. Temps Plus, Inc., 337 Ark. 247, 987 S.W.2d 722 (1999). Here, the damages received by C. D. Smith consist of $1,066 million for its lost profits or for the loss of its business. The parties agree that both forms of damages are consequential in nature, and any such damages would have been an indirect consequence of the Bank\u2019s termination of the parties\u2019 agreement and C.D. Smith\u2019s loss of a source of financing. See Smith v. Walt Bennett Ford, Inc., 314 Ark. 591, 864 S.W.2d 817 (1993) (holding that lost profits are well recognized as a type of consequential damages).\nThe Bank first cites Morrow v. First National Bank, 261 Ark. 568, 550 S.W.2d 429 (1977), where this court, relying on Hooks Smelting Co. v. Planters Compress Co., 72 Ark. 275, 79 S.W. 1052 (1904), noted it had adopted what is known as the \u201ctacit-agreement test\u201d for the recovery of consequential damages for a breach of contract. By that two-prong test, the plaintiff must prove more than the defendant\u2019s mere knowledge that a breach of contract will entail special damages to the plaintiff; it must also appear that the defendant at least tacitly agreed to assume responsibility. Id. In discussing the rationale of the tacit-agreement test, the Morrow court relied heavily on the Hooks Smelting decision, which held as follows:\nIt seems then that mere notice is not always sufficient to impose on the party who breaks a contract damages arising by reason of special circumstances, and the reason why this is so was referred to in a recent decision by the supreme court of the United States. In that case Mr. Justice Holmes, who delivered the opinion of the court, after remarking that one who makes a contract usually contemplates performance, not a breach, of his contract, said: \u201cThe extent of liability in such cases is likely to be within his contemplation, and whether it is or not, should be worked out on terms which it fairly may be presumed he would have assented to if they had been presented to his mind.\u201d Globe Refining Co. v. Landa Oil Co., 190 U.S. 540 (1903).\nNow, where the damages arise from special circumstances, and are so large as to be out of proportion to the consideration agreed to be paid for the services to be rendered under the contract, it raises a doubt at once as to whether the party would have assented to such a liability had it been called to his attention at the making of the contract unless the consideration to be paid was also raised so as to correspond in some respect to the liability assumed. To make him liable for the special damages in such a case, there must not only be knowledge of the special circumstances, but such knowledge \u201cmust be brought home to the party sought to be charged under such circumstances that he must know that the person he contracts with reasonably believes that he accepts the contract with the special condition attached to it.\u201d In other words, where there is no express contract to pay such special damages, the facts and circumstances in proof must be such as to make it reasonable for the judge or jury trying the case to believe that the party at the time of the contract tacitly consented to be bound to more than ordinary damages in case of default on his part. [Citations omitted.]\nHooks Smelting, 11 Ark. at 286-87 (emphasis added).\nIn Hooks Smelting, the court reversed an award of damages to a cotton compress company alleged to have arisen out of the smelting company\u2019s failure to properly manufacture an engine part; the compress company had successfully argued that the smelting company\u2019s mistakes had caused the compress company to have to pay wages during a time when the compressing machine was not in working order, among other consequential damages. The court held that there had been no facts presented that would have demonstrated that the smelting company was aware of the special circumstances posed by the compress company, and there was nothing to prove that the smelter knew or should have known that, in the event it failed to carry out the contract, the compress company would reasonably expect it to make good on the special loss sustained.\nLikewise, in Morrow, supra, this court affirmed a summary judgment in favor of a bank. Appellant Morrow had contacted the bank about renting a safety deposit box in order to securely house his extensive and valuable coin collection. Morrow testified that when he agreed to rent the boxes in June of 1971, he had explicitly informed the bank that he needed the boxes by September 1, when his teenage son would leave for college. One or two bank employees promised to notify Morrow when the boxes became available. On September 4, someone broke into Morrow\u2019s house and stole a portion of his coin collection valuing $32,155.17. Morrow subsequently found out that the boxes had become available on August 30, but the bank employees \u201cjust didn\u2019t have time\u201d to notify him.\nMorrow sued the bank to recover the value of the stolen coins, alleging that the bank had failed to notify him when the boxes were ready. The trial court granted the bank\u2019s motion for summary judgment, and this court affirmed, concluding that there had been no proof to support a finding that the bank, in return for box rentals totaling $75, had effectively agreed to issue a burglary insurance pok icy to Morrow. \u201cThe bank\u2019s bare promise to notify the plaintiffs as soon as the boxes were available did not amount to a tacit agreement that the bank, for no consideration in addition to its regular rental for the boxes, would be liable for as much as $32,000 if the promised notice was not given.\u201d Morrow, 261 Ark. at 572.\nBank of America raises the same argument here, asserting that there was no testimony or evidence that it was made aware of any special damages \u2014 such as going out of business \u2014 that would have resulted from a breach of the Agreement, nor was there any evidence that the Bank tacitly agreed to be liable for such consequential damages.\nC.D. Smith counters the Bank\u2019s position and submits that Smith did present evidence that, under the facts and circumstances of this case, made it reasonable for the jury trying this dispute to believe that the Bank, at the time of their contract, tacitly consented to be bound to more than ordinary damages in case of a default on the Bank\u2019s part. C.D. Smith testified that, prior to the new November 12, 1996, agreement, Smith\u2019s recourse-financing limit was reduced by the Bank from $4 million to $2.3 million. In that agreement, the Bank also requested that C.D. Smith pay a 15% down payment, which Smith negotiated down to 10%. These new requirements gave Smith some serious concerns.\nAt trial, C.D. Smith was asked if he recalled what occurred on the day the Bank\u2019s vice president of commercial lending, Dwayne Johnson, brought the Bank\u2019s agreement for Smith\u2019s signature. Smith said that he signed the November 12, 1996, contract, and told Johnson, \u201cIf you don\u2019t honor that contract, I am going to hold the Bank responsible.\u201d Moreover, the Bank\u2019s president, David Moore, testified that he \u201cbelieved Smith may have told Dwayne Johnson, upon signing the November 12, 1996, agreement, that [ Smith] would look to the Bank for compensation if his business was destroyed.\u201d (Emphasis added.) Cf. Sager v. Jung & Sons Co., 143 Ark. 506, 220 S.W.801 (1920) (holding that evidence was sufficient to show that, at the time the parties entered into the contract, they contemplated that, unless a car load of coal was delivered by Jung & Sons, Sager would lose his rice crop for the season and thereby sustain large damages; therefore, this court concluded that Jung & Sons had consented to be bound for the special damages that would result to Sager as a result of Jung & Sons\u2019 failure to comply with the terms of the contract).\nAs was made clear in Hooks Smelting, because the Bank had knowledge or notice of special circumstances which may cause special damages to follow if the contract was broken, the fact that the Bank accepted the contract under such circumstances constituted sufficient evidence to support a finding by the jury that the Bank did so knowing that, in the event of its failure to perform its contract, C.D. Smith would reasonably expect that the Bank should make good the loss incurred by reason of the special circumstances when such loss flowed naturally from the breach of contract. See Hooks Smelting, 72 Ark. at 287-88. \u201cEach case of this kind must rest on its own merits, and the findings of the jury upon the facts may be reviewed as in other cases, and will be set aside when justice requires that it be done.\u201d Id. at 288. In other words, the question of whether notice of the special circumstances was given to the breaching party is not a question of law, but of fact. Id. at 287.\nHere, at the time of the signing of the parties\u2019 agreement, the Bank\u2019s vice president of commercial lending, Mr. Johnson, accepted the agreement upon C.D. Smith\u2019s signing it, knowing full well that Smith had expressly stated that he intended to hold the Bank liable if the Bank did not honor the November 12, 1996, agreement. Additionally, as previously discussed, the Bank\u2019s president, Mr. Moore, testified regarding his knowledge that Smith may have told Johnson at the time of signing the agreement, that Smith would look to the Bank for compensation if his business were destroyed. Of course, the Bank argues that no one from the Bank agreed to C.D. Smith\u2019s special damages; it also contends the Bank did not agree to pay for loss of business damages in the event it terminated the parties\u2019 agreement. However, as to conflicting evidence presented in this case, it was up to the jury to resolve the conflicts in the testimony and judge the weight and credibility of the evidence. Cadillac Cowboy, Inc. v. Jackson, 347 Ark. 963, 69 S.W.3d 383 (2002). In viewing the evidence in the light most favorable to appellee C.D. Smith, we hold there was sufficient evidence for the jury to have determined that the Bank tacidy agreed to pay special damages to C.D. Smith when it accepted the contract under the facts described in this case.\nBefore leaving this point, we note the Bank\u2019s final argument regarding the \u201ctacit-agreement issue.\u201d It argues that, even setting aside any failure of the evidence on this point, any alleged agreement by the Bank to assume responsibility for consequential damages would be barred by the agreement\u2019s merger clause. The Bank again cites Hagans, 64 Ark. App. at 163-64, for its statement that the trial court should not have admitted testimony concerning a previous agreement because it was an abrogation of the terms of the written contract, including the comprehensive merger clause. Of course, as we already have discussed, Hagans is a non-commercial code case and renders us little assistance. However, as C.D. Smith points out, even in Hagans, merger clauses only preclude evidence of matters referred to within the contract. Hagans, 64 Ark. App. at 164. The Hagans court relied on the rule that parol testimony is inadmissible if it tends to alter, vary, or contradict the written contract, but is admissible if it tends to prove a part of the contract about which the written contract is silent. Id. at 163. Also, as previously stated, a merger clause does not necessarily bar all evidence extrinsic to a writing already in evidence. Once again, here, the parties\u2019 November 12, 1996, agreement is silent as to what remedies C.D. Smith had in the event the Bank defaulted on the agreement. While the Bank seems to suggest that C.D. Smith was somehow limited to compensatory damages by the parties\u2019 execution of the 1996 agreement, the Bank fails to direct our attention to such a requirement in that agreement. To the contrary, it was shown that, if C.D. Smith was able to present sufficient proof to support an award of consequential damages, Smith was entitled to such damages in these circumstances.\nThe Bank\u2019s final point on direct appeal is that the damage award was against the clear preponderance of the evidence, because the damages were not caused by the Bank\u2019s breach, and because the evidence was speculative. Further, the Bank contends that the damages were not reasonably certain.\nFirst, the Bank argues that Smith failed to establish that its damages were caused by the Bank\u2019s breach. Damages must arise from the wrongful acts of the breaching party. Dawson v. Temps Plus, supra. On appeal, this court views the evidence in the light most favorable to the appellee and affirms if there is substantial evidence to support the jury\u2019s verdict. American Fidelity Fire Ins. Co. v. Kennedy Bros. Const., 282 Ark. 545, 670 S.W.2d 798 (1984). Our cases give the factfinder, jury, or trial court some latitude in its decision in awarding damages when arriving at a figure and have not required exactness on the proof of damages. See Lancaster v. Schilling Motors, Inc., 299 Ark. 365, 772 S.W.2d 349 (1989); Moore Ford Co. v. Smith, 270 Ark. 340, 604 S.W.2d 943 (1980); see also Jim Halsey Co. v. Bonar, 284 Ark. 461, 683 S.W.2d 898 (1985). Ifit is reasonably certain that some loss has occurred, it is enough that they can be stated only proximately. Dr. Pepper Bottling Co. v. Frantz, 311 Ark. 136, 842 S.W.2d 37 (1992).\nThe Bank asserts that C.D. Smith\u2019s expert, David Ray, testified that he did not know why Smith lost profits beginning in 1997. The Bank emphasizes Ray\u2019s testimony wherein he replied \u201cyes\u201d to the question, \u201cNow, going back with the flow, by looking at the chart itself, you can tell what happened, but you can\u2019t tell why it happened. Is that a true statement?\u201d\nHowever, Ray, a CPA for twenty years, also testified that Smith showed a loss for the first time in 1997, when the Bank terminated its financing to C.D. Smith; Ray also stated that a loss of financing would make it \u201cmore difficult to obtain financing through other banks\u201d because \u201cbankers tend to want to lend money to people who aren\u2019t in desperate situations.\u201d He further stated that, although the chart he had prepared did not indicate why the business was sustaining a loss beginning in 1997, he \u201cbelieved that there is a strong correlation [between the breach and the beginning of the losses] inasmuch as the breach of contract happened in 1997 and, after years of profitability, suddenly the business began to lose money.\u201d\nSmith\u2019s brief reflects a table that summarizes Ray\u2019s testimony regarding C.D. Smith\u2019s loss during the 1990s. Ray examined Smith\u2019s sales figures, gross profit, and net income for the years 1990 through 1999, and those sales and net profit figures are as follows:\nYear Sales Net Profit/Loss\n1990 $2,900,000 $195,000\n1991 $2,500,000 $145,000\n1992 $3,200,000 $251,000\n1993 $2,700,000 $276,000\n1994 $3,200,000 $300,000\n1995 $3,400,000 $236,000\n1996 $3,600,000 $209,000\n1997 $2,765,000 ($51,000)\n1998 $678,000 ($233,000)\n1999 $133,000 ($75,000)\nRay testified that, for the five years before 1997, the average net income of the business was approximately $255,000 per year. Based on mathematical models, and based on past data and future trends, Ray calculated that lost profits from 1997 forward to the date of trial would be $1,124,000. He arrived at that figure by taking the average profits for the preceding five years and adding to that the amount of the loss that was sustained. Although he conceded on cross-examination that projecting averages necessarily depended on a number of variables, he nevertheless con-eluded that \u201csomething dramatic impacted that business in 1997,\u201d and it was \u201cmost likely that the loss of financing is what caused the profits to drop so.\u201d Although the Bank offered evidence contrary to Ray\u2019s analysis and opinion, we believe there was substantial evidence from which the jury could conclude that the Bank\u2019s breach of contract caused Smith\u2019s damages.\nThe Bank\u2019s next argument is that the damages were too speculative. When a party seeks to recover anticipated profits under a contract, he must present a reasonably complete set of figures to the jury and should not leave the jury to speculate as to whether there could have been any profits. Little Rock Wastewater Util. v. Larry Moyer Trucking., 321 Ark. 303, 902 S.W.2d 760 (1995); American Fidelity Fire Ins. Co. v. Kennedy Bros. Constr. Co., Inc., 282 Ark. 545, 670 S.W.2d 798 (1984). Lost profits must be proven by evidence showing that it was reasonably certain the profits would have been made had the other party carried out its contract. American Fidelity, 282 Ark. at 546; Reed v. Williams, 247 Ark. 314, 775 S.W.2d 90 (1969). Such proof is speculative when based upon such factors as projected sales when there are too many variables to make an accurate projection. Little Rock Wastewater, 321 Ark. at 312; see also Sumlin v. Woodson, 211 Ark. 214, 199 S.W.2d 936 (1947). In Kennedy Bros. Constr. Co., this court upheld an award of profits when the appellee lost a bid from the U.S. Army Corps of Engineers because of a faulty surety bond. Kennedy Bros. Const. Co., 282 Ark. at 546, 670 S.W.2d at 799. The figures presented to the jury were based upon the cost of the job if it had been completed within the contract time. The work was not done because the bid was lost; therefore, expert testimony was used to estimate the figures, and this court held the damages were reasonably accurate. Id. at 547.\nArkansas law has never required exactness of proof in determining damages, and if it is reasonably certain that some loss occurred, it is enough that damages can be stated only approximately. Morton v. Park View Apts., 315 Ark. 400, 868 S.W.2d 448 (1993); Jim Halsey Co. v. Bonar, supra. \u201cThe fact that a party can state the amount of damages he suffered only approximately is not a sufficient reason for disallowing damages if from the approximate estimates a satisfactory conclusion can be reached.\u201d Halsey, 284 Ark. at 468.\nHere, Smith -presented the jury with a set of figures showing the company\u2019s historical profit level, and the precipitous drop in those profits, which were the first losses the business had posted. These figures were arrived at by the company\u2019s CPA employing a mathematical formula to calculate the numbers based on past figures. The facts and figures Ray used provided the jury with a \u201creasonably complete set of figures from which to determine the amount of profits lost,\u201d see Smith v. Walt Bennett Ford, supra, and the foregoing evidence meets that requisite level of certainty.\nWe now turn to C.D. Smith\u2019s cross-appeal, wherein Smith first contends that the trial court was wrong in ruling that the Bank was not subject to punitive damages. The trial court in this case initially ruled that Smith could seek punitive damages under Ark. Code Ann. \u00a7 4-1-203 (Repl. 2001). That statute provides that \u201c[ejvery contract or duty within this subtitle imposes an obligation of good faith in the performance or enforcement.\u201d This court held in Gordon v. Planters & Merchants Bankshares, 326 Ark. 1046, 935 S.W.2d 544 (1996), that punitive damages are allowable under the UCC whenever a wrongdoer acts wantonly in causing the injury or with such conscious indifference to the consequences that malice may be inferred.\nHowever, the trial court subsequently ruled that Ark. Code Ann. \u00a7 16-64-130 (Supp. 2001) barred Smith from seeking punitive damages. That statute, captioned \u201cPunitive damage \u2014 Contract involving financial institutions,\u201d provides in relevant part as follows:\n(b) This section shall be applicable in civil actions in which a claim is asserted against a financial institution, whether by complaint, counterclaim, third party complaint, or other pleading. If a claim asserted against a financial institution is determined by the court to be a breach of contract claim arising out of a loan of money or other extension of credit by the financial institution to the person asserting the claim, then, unless it is found that the person asserting the claim suffered personal injury or physical damage to property as a result of the financial institution\u2019s alleged action or inaction, punitive damages shall not be awarded to the person asserting the claim.\n(Emphasis added.)\nSmith argues that its claim was not a \u201cbreach of contract claim arising out of a loan of money or other extension of credit by the financial institution,\u201d and that the statute has no application to a contract that provides for the purchase of chattel paper. However, Smith offers no substantive analysis of its assertion that \u201cthe fact that Smith guaranteed the makers\u2019 obligations is [outside] the ambit of \u00a7 16-64-103(b) [because there] is no loan of money or extension of credit[.]\u201d In fact, the parties\u2019 November 12, 1996, agreement very clearly establishes Smith as the \u201cBorrower,\u201d and the Bank had full recourse against C.D. Smith as guarantor if an account debtor defaulted on his or her debt. We conclude that the trial court did not err by finding the Bank extended credit to C.D. Smith, making \u00a7 16-64-130 applicable, and thereby preventing Smith from seeking punitive damages in this case.\nFinally, Smith argues that the trial court should have set post-judgment interest at 10%, instead of 6.25%. He cites Ark. Code Ann. \u00a7 16-65-114(a) (1987), which provides as follows:\nInterest on any judgment entered by any court or magistrate on any contract shall bear interest at the rate provided by the contract or ten percent (10%) per annum, whichever is greater, and on any other judgment at ten percent (10%) per annum, but not more than the maximum rate permitted by the Arkansas Constitution, Article 19, Section 13, as amended.\n(Emphasis added.) Smith then argues that \u201cthe constitutional provision does not apply to interest on judgments,\u201d citing Carroll Electric Cooperative Corp. v. Carlton, 319 Ark. 555, 892 S.W.2d 496 (1995).\nHowever, Carroll Electric Cooperative was a tort case and did not involve a judgment on a contract, which is the subject of \u00a7 16-65-114. Further, the language in Carroll Electric Cooperative stating that \u201cArticle 19, section 13 of the Constitution does not apply to interest on judgments,\u201d is based on obiter dicta from McElroy v. Grisham, 306 Ark. 4, 810 S.W.2d 933 (1991), wherein the court stated that \u201cArticle 19 voids only the payment of interest under [a] usurious contract and has nothing to do with the interest due on the judgment amount.\u201d\nThe language of \u00a7 16-65-114(a) prohibits a postjudgment interest in excess of the interest rate permitted by the Arkansas Constitution; Ark. Const, art. 19, \u00a7 13, prohibits the collection of interest in excess of \u201cfive percent per annum above the Federal Reserve Discount Rate at the time of the contract.\u201d Although Bank of America notes that, at the time the judgment was entered in this case, the Federal Reserve Discount Rate was 1.25%, this tells us nothing about what the rate was \u201cat the time of the contract.\u201d This issue should be remanded for the trial court to determine what the rate was as of November 12, 1996, the date the contract was signed.\nIn Chambers v. Manning, 315 Ark. 369, 868 S.W.2d 64 (1993), this court remanded a case in order to determine the appropriate interest rate consistent with the Constitution. There, the trial court had imposed a postjudgment interest rate of 6%. Citing \u00a7 16-65-114(a), this court held that it was error for the court to simply impose the 6% rate, writing as follows:\n[That section] clearly provides for imposing the greater of the contract rate, ten percent, or the maximum rate allowed by the Arkansas Constitution. As we cannot determine whether ten percent would have been a legal (non-usurious) rate in September 1992, we must remand this case to the Chancellor for entry of an order that imposes post-judgment interest in accordance with \u00a7 16-65-114.\nChambers, 315 Ark. at 377-78.\nIn accordance with Chambers, we likewise reverse and remand on this issue. It may be that Smith was entitled to ten percent; it may be that the figure was something less than that. Flowever, neither side has provided us with figures so we can ascertain what the Federal Reserve Discount Rate was in November of 1996 \u25a0 \u2014 \u2022 \u201cat the time of the contract,\u201d pursuant to \u00a7 16-65-114. Therefore, we reverse and remand on the second point of C.D. Smith\u2019s cross-appeal; the case is affirmed on direct appeal and on point one of the cross-appeal.\nHereafter, C.D. Smith is used interchangeably to refer to C.D. Smith, the company, and to C.D. Smith, the individual.\nC.D. Smith first dealt with National Bank of Commerce, which was purchased by Worthen Bank, which merged with Boatmen\u2019s, which became Nations Bank, and later was taken over by Bank of America. For writing purposes, we refer throughout the opinion to the Bank or Bank of America.\nC.D. Smith also had a $1.2 million recourse financing limit with another local bank, and additionally financed about twenty-one percent of its vehicle sales in-house.\nThe \u201caccount debtors\u201d were those persons who had purchased cars from C.D. Smith and had financed that purchase through C.D. Smith\u2019s recourse financing.\nOn this issue, we point again to White Sc Summers, who discuss the effect of merger clauses on the admissibility of extrinsic evidence as follows:\nThis , . . language [in Uniform Commercial Code \u00a7 2-202] does not bar all evidence extrinsic to a writing already in evidence. A court may decide that the writing is not a \u201cfinal written expression\u201d as to any terms and admit the evidence. A court may decide that the writing is a final written expression of some terms, but not a \u201ccomplete and exclusive\u201d statement of all terms, and admit evidence of \u201cconsistent additional terms.\u201d A court may decide that the writing is a final written expression as to terms and also that the writing is a \u201ccomplete and exclusive statement,\u201d yet admit evidence of course of dealing, usage of trade, or course of performance to \u201cexplain\u201d the meaning of terms in the writing.\n1 White Sc Summers, Uniform Commercial Code, \u00a7 2-12, at 104 (4th ed. 1995).", "type": "majority", "author": "Tom Glaze, Justice." } ], "attorneys": [ "Rose Law Firm, by; Amy Lee Stewart, Kathryn Bennett Perkins, and John D. Coulter, for appellant/cross-appellee.", "Gibson Law Office, by: Charles Sidney Gibson, for appellee/ cross-appellant." ], "corrections": "", "head_matter": "BANK of AMERICA, N.A. v. C.D. SMITH MOTOR COMPANY, INC.\n02-632\n106 S.W.3d 425\nSupreme Court of Arkansas\nOpinion delivered May 22, 2003\nRose Law Firm, by; Amy Lee Stewart, Kathryn Bennett Perkins, and John D. Coulter, for appellant/cross-appellee.\nGibson Law Office, by: Charles Sidney Gibson, for appellee/ cross-appellant." }, "file_name": "0228-01", "first_page_order": 252, "last_page_order": 274 }