Question 1

Part I

Twenty years ago, Vista Development Co. (VD) purchased 60 acres of land on a bluff overlooking the Big Muddy River Valley. The parcel included not only the land on the top of the bluff, but the face of the bluff as well. At the time, the area was undeveloped. Aside from agricultural uses, the only development was the BMRV Electric Co.’s (BMRVE) high power transmission lines that ran along the base of the bluff. VD warehoused the land, anticipating future demand for second homesites.

Ten years ago, VD, facing financial reverses, sold half of its land on the top of the bluff to Ridge Townhomes Development Co. (RTD) for $500,000. After the sale, RTD contacted BMRVE to establish electrical service. BMRVE informed RTD that for $20,000 it could place a transformer just off the high power lines at the foot of the bluff and run wires up its face to RTD's property. Establishing service from the next most convenient point would cost $60,000.

RTD had not purchased the face of the bluff. When VD demanded $10,000 for the right of way, RTD sued, claiming it had an implied easement for its electrical lines.

a. Was there a sufficiently "apparent, continuous and permanent" prior use of the bluff for the benefit of the parcel sold to RTD to support the implication of an easement from prior use?

Part 2

Four years later, VD filed a plat subdividing its remaining land on the top of the bluff into 15 spacious lots, each with a gorgeous vista overlooking the valley. Over the succeeding five years, VD sold nine of the lots. The lot purchasers were able to establish electrical service at minimum cost because VD allowed BMRVE to run wires up the face of the bluff to them.

Last year, the nine lot owners became concerned that VD planned to subdivide and sell the bluff face.

Demand for homesites had increased to the point where the extra cost of cantilevered construction was justified. As development of the bluff face would detract from their view, the lot owners purchased it for themselves.

This year, VD sold another of the bluff top lots to Alice Andrews. The purchase price was $50,000. After closing, Alice contacted BMRVE to establish electrical service. BMRVE said that given existing facilities, service from the transmission lines at the foot of the bluff could be established for $100; service from another point would cost $2,000. At about that time, the neighboring lot owners informed Alice that they would not allow her to run a line up the face of the bluff, unless she agreed to pay a share of the property's cost.

Alice refused their demand, and sued to established an implied right of way for her electrical lines.

b. Was there a sufficiently "apparent, continuous and permanent" prior use of the bluff face for the benefit of the parcel sold, to Alice to support the implication of an easement from prior use?

ANALYSIS

a. No. Prior to the sale to RTD, VD did not make use of face of the bluff for the benefit of the land that RTD purchased on the top. BMRVE's high power transmission line is apparent. It is temptingly close. RTD may have wished or hoped, or even expected to connect to it. But the mere existence BMRVE's high power transmission line does not mean that the land that separates it from RTD's parcel was used as a quasi-servient estate for the benefit of the parcel that RTD purchased. Clearly, the bluff face was not so used.

b. Yes. The additional facts are sufficient to support a finding that prior to Alice's purchase there was an "apparent, continuous and permanent" use of the face of the bluff for the benefit of the lot she purchased. It is true that the face of the bluff has not been used for the benefit of the very parcel that Alice bought. It is also true that VD never used the bluff for the benefit of land at the top of the bluff as long as the land was in VD's ownership. Each prior use of the bluff face was initiated after VD sold the land benefiting from the use.

But this is too narrow a focus. The requirement of apparent prior use serves the function of indicating the understanding and intent of the burdened and benefited parties to create an easement when the land is severed. Authorities say that the requirement of continuous and permanent prior use serves the function of supporting the specific understanding and intent that the prior use should continue after severance.

Before the neighbors purchased the face of the bluff, VD, on nine occasions-every occasion it had-had allowed the bluff face to be used for the benefit of the lot it sold. VD's actions support an inference that should the occasion arise, it intended to establish a similar burden on the bluff for the benefit of all the land it owned at the top of the bluff. The neighbors clearly knew of VD's course of conduct; they had clear notice that VD intended to reserve easements in favor of the land it retained (after the sale of the bluff face) to be asserted when the occasion arose.

In other words, when VD sold the bluff face to the neighbors, it impliedly reserved an easement down the bluff face for the benefit of its retained land. Part of that land passed to Alice; she has all VD's appurtenant rights.

Question 2

The parties, Mr. and Mrs. McDermott, in this divorce proceeding were married in 1975 and separated in January 1998. Mr. McDermott attended Hamline Law School from 1978-1981, receiving his J.D. in May of 1981. During that time, Mrs. McDermott worked full time, and provided all of the income for the couple while Mr. McDermott attended school. Since 1982, Mrs. McDermott has not worked outside the home - spending her time raising their 3 children (all of whom are now college graduates, and no longer in school, and over 21) and writing novels and short stories, none of which has she tried to sell, as yet. In 1981 Mr. McDermott began practiceing law in Capital City, Dokasota. In 1985, he bagan teaching at State U. Law School, and is now tenured there. He has also maintained an active, though small practice of law, with his practice primarily sustained through contingency-fee agreements. Mr. McDermott has approximately twelve contingency-fee cases pending at this time.

In 1990, Mrs. McDermott was in a car accident which caused her significant personal injuries. Mr. McDermott has represented her in her law suit against the other party, which has not yet either gone to trial nor settled.

Dokasota Code Annotated § 9-12-315 (1998) defines "marital property" as "all property acquired by either spouse subsequent to the marriage," Rule 5.4(a) of the Model Rules of Professional Conduct provides that "A lawyer or law firm shall not share legal fees with a non-lawyer."

Which, if any, of the following are marital property of the parties? Discuss why you conclude they are, or are not, marital property.

a. Mr. McDermott’s Law Degree

b. Mr. McDermott’s Tenure rights.

c. Mr. McDermott’s Law Practice

d. The twelve contingency-fee cases’ ultimate value to Mr. McDermott

e. Mrs. McDermott’s novels and short stories

f. Mrs. McDermott’s law suit proceeds

Analysis:

986 S.W.2d 843

Harry McDERMOTT v. Rhonda McDERMOTT

Supreme Court of Arkansas.

March 11, 1998

336 Ark. 557

986 S.W.2d 843

Action for divorce was brought. The Washington Chancery Court, David B. Switzer, J., entered divorce degree. Husband appealed. The Supreme Court, Imber, J., held that: (1) as a matter of first impression, husband's contingency-fee contracts entered into during marriage were marital property, and (2) the sharing of contingency fees with a former spouse does not violate Model Rules of Professional Conduct.

Affirmed as modified. Glaze, J., concurred in separate opinion.

*843 Lee Linzay, Fayetteville, for appellant.

*844 Thomas J. Olmstead, Thomas B. Burke, Fayetteville, for appellee.

IMBER, Justice.

In this divorce case the central issue is whether an attorney's contingency-fee agreements entered into during marriage are marital property under Ark.Code Ann. s 9-12-315 (Repl.1998). The appellant, Mr. Harry McDermott, contends the trial court erred when it declared that certain contingency-fee agreements secured in conjunction with his law practice were marital property. We affirm the trial court's decision as modified.

The parties were married in 1993 and separated in January 1998. At all relevant times, Mr. McDermott has been an attorney actively engaged in the practice of law, with his practice primarily sustained through contingency-fee agreements. Mrs. McDermott has been a professor at the University of Arkansas at Fayetteville. Mr. McDermott testified that he had approximately twelve contingency-fee cases pending at the time of the divorce. Two of those cases had been reduced to judgment, but there had been no recovery on those judgments at the time of the divorce. [FN1] All twelve of the contingency fee agreements were in writing, and each agreement specified the percentage of any recovery Mr. McDermott was to receive as his fee should the case be resolved in favor of his client. Mr. McDermott's percentage was to be one-third of any recovery in nine of the cases; one-half of any recovery in two of the cases; and one- fourth of any recovery in the remaining case. Finally, Mr. McDermott testified that he was obligated to pay all expenses in the two cases where his percentage was one-half of any recovery. However, he was uncertain whether any of the other contracts obligated him to pay all expenses.

FN1. One judgment has since been overturned on appeal by the Arkansas Court of Appeals. See Unicare Homes, Inc. v. Gribble, 63 Ark.App. 241, 977 S.W.2d 490 (1998).

The trial court held that the contingency-fee agreements constituted marital property under Ark.Code Ann. s 9-12-315, and that Mrs. McDermott was therefore entitled to a marital share of any compensation received by Mr. McDermott under the contingency-fee agreements. [FN2] The trial court further held that it would retain jurisdiction of the cause for the purpose of assigning the marital share to each party as fees earned under the contingency agreements are received. The trial court directed Mr. McDermott to deposit fifty percent of any fees earned in an interest-bearing account where the funds were to be held in trust pending a final determination of the marital share by the court. Mr. McDermott appeals the trial court's decision and contends that the contingency-fee contracts are not marital property.

FN2. According to its opinion letter dated June 26, 1998, which was incorporated by reference into the divorce decree, the trial court reserved jurisdiction to determine the value of Mrs. McDermott's interest in the contingency fee contracts "based on the reasonable value of services during the marriage." This language is somewhat different from the language contained in the divorce decree.

[1][2][3] Arkansas Code Annotated s 9-12-315 (Repl.1998) defines "marital property"as "all property acquired by either spouse subsequent to the marriage," subject to certain exceptions which are inapplicable here. There is a presumption that all property acquired during a marriage is marital property. Layman v. Layman, 292 Ark. 539, 731 S.W.2d 771 (1987); Boggs v. Boggs, 26 Ark.App. 188, 761 S.W.2d 956 (1988). Whether or not property is marital does not depend upon when the property is received, but rather depends upon when the right to the property is acquired. Bunt v. Bunt, 294 Ark. 507, 744 S.W.2d 718 (1988); Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986); Dunn v. Dunn, 35 Ark.App. 89, 811 S.W.2d 336 (1991). To the extent that any party to the marriage acquires an enforceable right during the marriage, they acquire marital property. See, e.g., Bunt, supra.

In 1984, we realized that we had inadvertently failed to recognize the new concept of "marital property" created by Act 705 of 1979, which defined marital property as all property acquired by either spouse subsequent to the marriage, subject to certain exceptions. See Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984). In Day, we held that pension plan benefits were marital property *845 to the extent that a spouse had a vested interest in those benefits. Id. This decision represented a shift away from our previous case law, which had held that such benefits, even if vested, were not marital property until they became due and payable. See Sweeney v. Sweeney, 267 Ark. 595, 593 S.W.2d 21 (1980) (decided under prior statute); Knopf v. Knopf, 264 Ark. 946, 576 S.W.2d 193 (1979). In Day, Mr. Day had used family funds to purchase pension plan benefits. Day, supra. Mrs. Day had contributed to those funds by service as a homemaker and by bearing and raising the couple's children. Id. We held that Mr. Day's vested pension benefits were marital property under the new statutory concept of marital property. Id. We reasoned that benefits should be considered "vested," or more than a mere expectancy, once they cannot be unilaterally terminated by the employer without also terminating the employment relationship. Id. In support of this conclusion, we quoted with approval the Supreme Court of California in In Re Marriage of Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 (1976):

The term expectancy describes the interest of a person who merely foresees that he might receive a future beneficence, such as the interest of an heir apparent ... or a beneficiary designated by a living insured who has a right to change the beneficiary.... As these examples demonstrate, the defining characteristic of an expectancy is that its holder has no enforceable right to his beneficence. Day, supra. We concluded that the enforceable right to pension benefits constituted marital property. Id. In doing so, we held that earnings or other property acquired by a spouse subsequent to a marriage must be included as marital property unless it fell within certain statutory exceptions, and that neither party could deprive the other of any interest in such property by putting it temporarily beyond his or her control through some device for postponing full enjoyment of the property. Id.

Our cases since Day have continued to focus on enforceable rights acquired subsequent to marriage. In Gentry v. Gentry, 282 Ark. 413, 668 S.W.2d 947 (1984), we held that a husband's civil service retirement benefits were marital property subject to distribution. In Morrison v. Morrison, 286 Ark. 353, 692 S.W.2d 601 (1985), we held that disability retirement benefits were marital property even though such benefits are awarded for personal injury to one's own body. Our rationale was that such benefits come from an annuity purchased during the marriage and, thus, there was no discernable distinction between an annuity payable upon disability and one payable upon longevity. Id.

In 1985 we held for the first time that a workers' compensation claim for an injury suffered during the marriage was marital property subject to distribution. Goode v. Goode, 286 Ark. 463, 692 S.W.2d 757 (1985). At the time of the divorce, Mr. Goode's claim had not yet been adjudicated, though he had received and refused an offer of settlement. Id. We noted that although Mr. Goode's claim was unliquidated at the time of the divorce, he still possessed an enforceable right to workers' compensation benefits. Id. Because that right accrued to him subsequent to his marriage and prior to his divorce, it was marital property. Id.

In Goode we acknowledged our previous decision in Lowrey v. Lowrey, 260 Ark. 128, 538 S.W.2d 36 (1976), in which we held that an unliquidated personal injury claim was not personal property for the purpose of property division. However, we declined to follow Lowrey because it was decided under the former marital property statute. Goode, supra. We reasoned that a rule which invites workers' compensation claimants to protract arbitration so as to shield an award from equitable division should not be condoned. Id. Furthermore, the fact that such claims do not involve contributions is not relevant, because Ark.Code Ann. s 9-12-315 makes no general distinction as to the manner in which the item of property is acquired. Id. As workers' compensation claims were not among the exceptions enumerated in the statute at that time, we held that such claims were marital property. Id.

In 1986 we applied the reasoning of Goode to a Jones Act personal injury claim. Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986). *846 In Liles, the claim was liquidated, although part of the judgment was to be received in the future pursuant to a structured settlement. Id. We held that the personal injury claim was marital property insofar as it was acquired by one spouse subsequent to the marriage and was not specifically excepted by Ark.Code Ann. s 9-12-315. Id. The appellant in Liles had also received a remittitur of attorney's fees from his Jones Act judgment after the divorce. Id. The appellant claimed that the returned fees belonged solely to him, as they were no more than a "contingent claim during the marriage and not to be considered marital property." Id. In support of this proposition, the appellant cited Potter v. Potter, 280 Ark. 38, 655 S.W.2d 382 (1983), in which we held that fees earned by an attorney during marriage but not collected until after the divorce were not marital property. We responded to appellant's argument by noting that the Potter decision preceded Day, supra, and that, given the same situation, we might reach a different conclusion. Liles, supra. We concluded that the fees were a part of the judgment and thus were marital property. Id.

Subsequent to our decisions in Goode and Liles, the General Assembly added an exception to the definition of "marital property" as follows: "Benefits received or to he received from a Workers Compensation claim or personal injury claim when such benefits are for any degree of permanent disability or future medical expenses." Ark.Code Ann. s 9-12- 315(b)(6)(Supp.1987). By limiting the exception to portions of personal injury and workers' compensation claims for permanent disability or future medical expenses, the General Assembly otherwise left intact our Goode and Liles decisions interpreting the definition of "marital property," as set forth in Ark.Code Ann. s 9-12-315, to include workers' compensation and personal injury awards. See Bunt v. Bunt, 294 Ark. 507, 744 S.W.2d 718 (1988).

Finally, in 1988, we held that any personal injury claim acquired during the marriage, whether liquidated or unliquidated, was marital property. Bunt, supra. Mr. Bunt had been injured in an automobile accident. Id. At the time of the divorce, he had not filed suit on the claim, and had been offered no settlement by the insurance company. Id. Mr. Bunt contended that the rule announced in Goode applied only when some appreciable steps had been taken toward liquidation of the claim. Id. We rejected Mr. Bunt's contention, noting that " the argument that no definite value can be assigned to the claim until an award is made ... is no more persuasive here than in Goode." Id. We also pointed out that to hold that personal injury claims are marital property only to the extent that they are "liquidated" would place claimants in the position of being able to manipulate the claim so as to "liquidate" it after divorce, thereby having the ability to determine whether or not it is included in marital property. Id. We had previously held in Goode that such a result was unacceptable. Goode, supra. We, therefore, held that to the extent Mr. Bunt acquired an enforceable right during the marriage to recover for personal injury, he acquired marital property. Bunt, supra. We have since applied the Bunt holding to an unliquidated FELA claim for personal injury. See Clayton v. Clayton, 297 Ark. 342, 760 S.W.2d 875 (1988). [FN3]

FN3. A majority of jurisdictions that have considered this issue have held that a personal injury claim constitutes property even if there has not yet been a verdict or settlement, consistent with our holding in Bunt. See Raccio v. Raccio, 41 Conn.Supp. 115, 556 A.2d 639 (1987); In re Fields, 779 P.2d 1371 (Colo.Ct.App.1989); Boyce v. Boyce, 541 A.2d 614 (D.C.1988); In re Burt, 144 Ill.App.3d 177, 98 Ill.Dec. 746, 494 N.E.2d 868 (1986); Hanify v. Hanify, 403 Mass. 184, 526 N.E.2d 1056 (1988); Heilman v. Heilman, 95 Mich.App. 728, 291 N.W.2d 183 (1980); Covington v. Covington, 306 S.C. 473, 412 S.E.2d 455 (1991); Richardson v. Richardson, 139 Wis.2d 778, 407 N.W.2d 231 (1987).

With regard to whether attorney's fees should be deemed marital property subject to division in a divorce action, we have specifically addressed the issue of accounts receivable and "work in progress" in Potter, supra, and Meeks v. Meeks, 290 Ark. 563, 721 S.W.2d 653 (1986). Potter involved fees earned before the marriage, but received during the marriage, and fees earned during *847 the marriage, but not collected during the marriage. Potter, supra. We held that the property, or fees, must actually be received before it can be characterized as marital property. Potter, supra. Mr. McDermott relies on the Potter holding as support for his contention that the contingency-fee contracts are not marital property because they have no definite present value and remain uncollected. However, we noted in Day that Potter was one of several decisions which failed to give full effect to Act 705 since its enactment in 1979 (now codified as Ark.Code Ann. s 9-12-315). Day, supra. Finally, we relied upon our decision in Day when we overruled the Potter holding in Meeks, supra, and held that accounts receivables and "work in progress" were marital property under section 9-12-315. According to Meeks, the pivotal question is not when the property is collected or received, but rather when an enforceable right to the property is acquired. Meeks, supra.

[4][5] This appeal presents an issue of first impression concerning whether or not contingency-fee contracts entered into during marriage are marital property under section 9-12-315. The resolution of this issue is governed by the above-cited cases that have interpreted section 9-12-315, beginning with Day, supra, and culminating in Bunt, supra. If an enforceable right is acquired during marriage by virtue of a contingency agreement, then the agreement is marital property. Bunt, supra; Goode, supra.

[6][7] It is axiomatic that the right to perform a contract and to receive its profits, and the right to performance by the other party, are property rights entitling each party to the fulfillment of the contract by performance. Mason v. Funderburk, 247 Ark. 521, 446 S.W.2d 543 (1969). In other words, enforceable contract rights are deemed to be property rights.

[8] The General Assembly has expressly protected the contractual rights of attorneys in their fee agreements with clients by the enactment of the attorney's lien statute, now codified at Ark.Code Ann. s 16-22-302 to 304 (1989). The legislature's intent is set forth in section 16-22-301: Therefore, it is the intent of ss 16-22-302--- 16-22-304 to allow an attorney to obtain a lien for services based on his or her agreement with his or her client and to provide for compensation in the case of a settlement or compromise without the consent of the attorney.

We have interpreted these provisions to allow recovery based upon the fee agreement when the termination was without cause. See Crockett & Brown, P.A. v. Courson, 312 Ark. 363, 849 S.W.2d 938 (Supp.Op.1993). However, when an attorney is terminated with cause, the attorney only has a right to quantum meruit recovery for the reasonable value of his or her services. See Henry, Walden, & Davis v. Goodman, 294 Ark. 25, 741 S.W.2d 233 (1987); Ark.Code Ann. s 16-22-304 (1989).

Based upon our case law and statutory law, there are enforceable contract rights in contingency-fee agreements and those rights are property rights. The rationale for this conclusion is derived from the approach taken by Bunt to the effect that any enforceable right to future benefits, whether subject to a contingency or not, is not a mere expectancy, but a form of property that is subject to division if acquired subsequent to marriage. Bunt, supra; see also B.H. Goldberg, Valuation of Divorce Assets, s 7.5 (1984). Therefore, to the extent a spouse acquires an enforceable right during the marriage to recover fees under a contingency-fee contract, we hold that the spouse acquired marital property under Ark.Code Ann. s 9-12-315. See Bunt, supra; Liles, supra; Goode, supra.

We note that this same conclusion has been reached by a majority of jurisdictions considering this issue. See Garrett v. Garrett, 140 Ariz. 564, 683 P.2d 1166 (App.1984); In re Marriage of Kilbourne, 232 Cal.App.3d 1518, 284 Cal.Rptr. 201 (1991); In re Marriage of Vogt, 773 P.2d 631 (Colo.Ct.App.1989); Due v. Due, 342 So.2d 161 (La.1977); Quinn v. Quinn, 83 Md.App. 460, 575 A.2d 764 (1990); Lyons v. Lyons, 403 Mass. 1003, 526 N.E.2d 1063 (1988); In re Marriage of Estes, 84 Wash.App. 586, 929 P.2d 500 (1997); Metzner v. Metzner, 191 W.Va. 378, 446 S.E.2d 165 (1994); Weiss v. Weiss, 122 *848 Wis.2d 688, 365 N.W.2d 608 (App.1985); see also Charles W. Davis, Annotation, Divorce and Separation: Attorney's Contingent Fee Contracts As Marital Property Subject To Distribution, 44 A.L.R.5th 671 (1996). We recognize that a minority of jurisdictions oppose construing such contracts as marital property on the basis that such fees are speculative in nature. See, e.g., Roberts v. Roberts, 689 So.2d 378 (Fla.Dist.Ct.App.1997); Goldstein v. Goldstein, 262 Ga. 136, 414 S.E.2d 474 (1992); In re Marriage of Zells, 143 Ill.2d 251, 157 Ill.Dec. 480, 572 N.E.2d 944 (1991); Musser v. Musser, 909 P.2d 37 (Okla.1995).

[9] In contrast to those jurisdictions that have declined to construe contingency-fee contracts as marital property because ascertaining their value may be difficult, we specifically stated in Bunt that any argument relating to an inability to place a definite value on an asset is unpersuasive. See Bunt, supra. Thus, the difficulty of valuation, without more, should not preclude Arkansas courts from considering contingency-fee contracts as marital property if they were acquired during the marriage. See Layman v. Layman, 300 Ark. 583, 780 S.W.2d 560 (1989).

[10][11] Any difficulty in valuing contingency-fee contracts may be solved by reserving jurisdiction in the trial court in order to await the outcome of the underlying actions. When the proceeds of contingency-fee agreements are actually received, the determination of the marital share in the ultimate recovery should be based upon that portion of the time devoted to the case during the marriage, as compared to the full amount of time devoted to earning the fee. This approach has been utilized by a number of courts in valuing contingent fee contracts for purposes of equitable division. See Garrett, supra; Metzner, supra; Weiss, supra; Vogt, supra; Estes, supra.

[12] Mr. McDermott also suggests that sharing contingent fees with a former spouse would violate Rule 5.4 of the Model Rules of Professional Conduct. Rule 5.4(a) provides that "A lawyer or law firm shall not share legal fees with a non-lawyer." Fees earned during marriage are necessarily shared with a non-attorney spouse. This has never been viewed as a violation of the Rules of Professional Conduct. Nor does an obligation to share a portion of fees with a former spouse violate the Rules of Professional Conduct, so long as it is limited to that portion of the fee earned by the attorney's efforts during the marriage. See In re Marriage of Estes, supra. The sharing of such fees with a former spouse does not implicate any of the evils contemplated by Rule 5.4. Id.

We therefore affirm the trial court's decision that the contingency-fee contracts acquired during the marriage were marital property under Ark.Code Ann. s 9-12-315. We also affirm its decision to retain jurisdiction over the matter pending the outcome of the underlying actions. However, the trial court's decision should be modified to provide that the marital share of proceeds received under the contingency-fee contracts is limited to the portion of the fee attributable to work done during the marriage. See Vogt, supra. Thus, the marital share should be based upon the percentage of the number of hours worked during the marriage as compared to the total number of hours worked earning the fee. See In re Marriage of Estes, supra. We note that the trial court is not required to divide any asset equally between the parties if equity demands a different division, and the reasons for such division are stated. See Ark.Code Ann. s 9-12-315(a)(1)(B).

Affirmed as modified.

GLAZE and SMITH, JJ., concur.

BROWN, J., not participating.

CONCURRING OPINION

TOM GLAZE, Justice, concurring.

I concur, but do so only because Goode v. Goode, 286 Ark. 463, 692 S.W.2d 757 (1985), and Bunt v. Bunt, 294 Ark. 507, 744 S.W.2d 718 (1988)--both 4-3 decisions--support the result reached by the majority opinion. My actual view is that the rationale upon which Goode and Bunt are premised is erroneous. However, eleven years have passed and the General Assembly has failed to fully address and correct the problems raised and discussed*849 in the dissents in those cases, so it appears time for me to join precedent. [FN1]

FN1. In fairness to the General Assembly, I do note that, after the Goode decision, the General Assembly corrected the Goode holding to the extent it excluded benefits received or to be received from a workers' compensation claim, personal injury claim, or social security claim, when those benefits are for any degree of permanent disability or future medical expenses. See Acts 676 of 1987 and 1167 of 1991, codified at Ark.Code Ann. s 9-12-315 (Repl.1998). In other words, the General Assembly provided that unliquidated or expectancy claims or benefits representing permanent disability or future medical expenses are excepted from the "acquired" marital property provision.

My main disagreement with the majority opinion and the cases it cites has to do with the consistent failure of those cases to mention, much less follow, the plain language of Arkansas's marital-property statute. In this respect, Ark.Code Ann. s 9-12-315(a)(1)(A) (Repl.1998), reads: [A]t the time a divorce decree is entered, all marital property shall be distributed one-half to each party unless the court finds such a division to be inequitable. (Emphasis added.) Ark.Code Ann. s 9-12-315(b) then provides that "marital property" means all property acquired by either spouse subsequent to the marriage. In construing this 1979 marital-property law, our court established the rule in 1983 that all marital property must be distributed when the parties' divorce decree is entered. Forrest v. Forrest, 279 Ark. 115, 649 S.W.2d 173 (1983).

The majority opinion cites Mason v. Funderburk, 247 Ark. 521, 446 S.W.2d 543 (1969), to support the proposition that appellant Harry McDermott's contingent-fee contracts contained enforceable property rights in which appellee Rhonda McDermott has divisible and distributable marital property interests. In reality, appellee has nothing more than an inchoate interest in the contingent-fee contracts the appellant entered into with third parties, and unless those contracts actually produced benefits of some determinable value during the marriage, no property rights can be vested or distributed as marital property at the time of divorce. In short, under the language of our statute, s 9-12-315, and all the relevant cases interpreting it, appellee is only entitled to marital property that has vested and is distributable when the parties' divorce decree is entered. See Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984) (court held husband's vested pension benefits were marital property); Gentry v. Gentry, 282 Ark. 413, 668 S.W.2d 947 (1984) (court held husband's pension distributable as marital property subject to distribution where all requirements for receiving benefits occurred during marriage, husband was fully vested and he was receiving benefits at the time of divorce); Morrison v. Morrison, 286 Ark. 353, 692 S.W.2d 601 (1985) (court held where, during marriage, husband with marital earnings purchased an annuity policy that paid monthly disability payments and he was receiving $1,165.00 per month at the time of the parties' divorce, such monthly benefits actually being paid were distributable as marital property); Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986) (court held a liquidated Jones Act claim reduced to settlement was distributable as marital property at the time of divorce). (Emphasis added.)

From my research, the Goodeand Bunt decisions are the only ones that fail to require marital property to be, at the minimum, liquidated or vested so the property can be distributed at the time of the parties' divorce. In my opinion, those two decisions are simply inconsistent with the plain terms of s 9-12-315 and other cases interpreting marital property. Hopefully, the General Assembly may still act to give clarity to this statute where our court has failed. Until that happens or until this court realizes its errors in Goode and Bunt, I will concur in this and future cases where the rationale and holdings in Goode and Bunt appear controlling.

SMITH, J., joins this concurring opinion

Question 3

After the artwork sold at his drugstore sustained water damage, Donald Soltis sued his landlords, Brian and Jane Hovey, for negligently failing to inspect, maintain, and repair the roof. The parties have made cross-motions for summary judgment.

The record shows that before this damage, Soltis had been an occupant of the building for 9 years. For most of that time, he had used the building for selling the normal items sold at a drug store, as well as selling artwork. The water damage was caused by a leaky roof, which failed after a particulalry heavy rainstorm. At sometime in the last two years, the landlord had inspected and made some repairs to the roof. Soltis occupies the entire building.

You are the trial court judge - write the summary judgment decision. If you decide against a summary judgment. discuss what additional facts, if any, would have allowed you to grant a summary judgment.

(Cite as: 1998 WL 727759 (Minn.App.))

NOTICE: THIS OPINION IS DESIGNATED AS UNPUBLISHED AND MAY NOT BE CITED EXCEPT AS PROVIDED BY MINN. ST. SEC. 480A.08(3).

Donald G. SOLTIS, d/b/a Atwater Drug, Appellant,

v.

Brian HOVEY, et al., Respondents.

No. C9-98-985.

Court of Appeals of Minnesota.

Oct. 20, 1998.

Review Denied Dec. 22, 1998.

Kandiyohi County District Court File No. C796797

John A. Nelson, Mark R. Azman, Quinlivan & Hughes, P.A., P.O. Box 1008, St. Cloud, MN 56302, for appellant.

Paul Wocken, Willenbring, Dahl, Wocken & Zimmerman, Red River at Main, P.O. Box 417, Cold Spring, MN 56320, for respondent.

Considered and decided by DAVIES, P.J., and SCHUMACHER and SHORT, JJ.

UNPUBLISHED OPINION

SHORT, Judge

*1 After the artwork sold at his drugstore sustained water damage, Donald Soltis sued his landlords, Brian and Jane Hovey, for negligently failing to inspect, maintain, and/or repair the roof. On cross-motions for summary judgment, the trial court concluded the landlords did not owe a duty of care to Soltis and granted summary judgment in favor of the landlords. On appeal, Soltis argues the trial court erred in ruling: (1) the landlords had no obligation to inform Soltis that the premises were undesirable for Soltis's particular use; and (2) there is no implied covenant of suitability or repair in the parties' oral lease. We affirm.

DECISION

On appeal from summary judgment, this court examines whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990); see Minn.R.Civ.P. 56.03 (setting forth trial court standard for summary judgment). Although this court views the evidence in the light most favorable to the party against whom judgment was granted, summary judgment is appropriate against a party who fails to establish the existence of an element essential to its case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Fabio v. Bellomo, 504 N.W.2d, 758, 761 (Minn.1993).

To maintain a claim for negligence, a plaintiff must show: (1) a duty; (2) a breach of that duty; (3) a causal connection between breach of duty and injury; and (4) injury in fact. Hudson v. Snyder Body, Inc., 326 N.W.2d 149, 157 (Minn.1982) (quoting Schmanski v. Church of St. Casimir, 243 Minn. 289, 292, 67 N.W.2d 644, 646 (1954)). The existence of a legal duty is a question of law that this court reviews de novo. Larson v. Larson, 373 N.W.2d 287, 289 (Minn.1985); Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn.1984).

I.

Soltis argues the trial court erred in granting summary judgment because the landlords had a duty to inform him of the premises' defects. See Vermes v. American Dist. Tel. Co., 312 Minn. 33, 40-41, 251 N.W.2d 101, 105 (1977) (holding, in tort suit for damages from burglary, lessor of commercial space had duty to point out facts about premises that would tend to make them insecure for operation of jewelry store).

A landlord has a duty to inform prospective tenants who intend to make special or eccentric use of commercial premises of nonobvious defects that affect a specific business need so the prospective tenant can assess the suitability of the premises. Id. at 40-41, 251 N.W.2d at 105 (holding when suitability factors might not be obvious, landlord's duty, prior to signing of lease, is to point out any facts about premises that would tend to make them undesirable to a commercial tenant with specific needs peculiar to his business so the prospective tenant may assess the suitability of the facility); Goodchild v. Jaks Partners, No. C7-95-968, 1995 WL 687660, at *4 (Minn.App. Nov.21, 1995) (concluding Vermes provides landlord with "narrow duty" to warn tenant of nonobvious physical defects that make premises unsuitable for tenant's "eccentric" use), review denied (Minn. Jan. 12, 1996).

*2 The record demonstrates: (1) Soltis was not a prospective tenant evaluating the premises; (2) he was an occupant of the building for nine years prior to and five years after the landlords' purchase of the building and was thus as familiar with the facilities as the landlords; (3) Soltis's use of the rented retail premises to sell artwork and pharmaceuticals was not a special or eccentric use; and (4) his requirement of a watertight roof was a usual requirement of any business. Given these undisputed facts, the landlords had no duty to inform Soltis of the possibility of a leaky roof.

II.

Soltis also argues the trial court erred by failing to recognize an implied covenant of suitability in the parties' oral commercial lease. See Vermes, 312 Minn. at 40-41, 251 N.W.2d at 105 (holding lessor of commercial space had duty to inform prospective tenant about premises' qualities that would make them unsuitable for tenant's particular business); see also Davidow v. Inwood N. Prof'l Group--Phase I, 747 S.W.2d 373, 377 (Tex.1988) (adopting implied warranty of suitability for commercial leases that warrants no latent defects exist at inception of lease and landlord will maintain premises in suitable condition throughout lease). However, this court has been unwilling to expand the holding in Vermes beyond its facts. See Goodchild, 1995 WL 687660, at *4 (concluding Vermes provides landlord with "narrow duty" to warn tenant of nonobvious physical defects that make premises unsuitable for tenant's "eccentric" use); Pfarr v. Renneke, No. C9-89-1305, 1989 WL 141260, at *1 (Minn.App. Nov.28, 1989) (concluding Vermes provides landlord with duty "to give sufficient information so that tenant can properly assess suitability of premises for a particular use" but not an implied warranty of fitness). In addition, the majority of other states have declined to adopt an implied warranty of suitability for commercial leases. See, e.g., B.W.S. Invs. v. Mid-Am Restaurants, Inc., 459 N.W.2d 759, 763 (N.D.1990) (adopting majority view that implied warranty of habitability or fitness does not extend to commercial leases); Klatman v. Barnett, 458 So.2d 806, 807 (Fla.Dist.Ct.App.1984) (Glickstein, J., concurring) (concluding extension of implied warranty of habitability to commercial tenants was province of state legislature); Muro v. Superior Court, 184 Cal.App.3d 1089, 229 Cal.Rptr. 383, 388-89 (Cal.Ct.App.1986) (discussing public policy for limiting commercial landlord's liability); see also Thomas M. Fleming, Annotation, Implied Warranty of Fitness or Suitability in Commercial Leases--Modern Status, 76 A.L.R.4th 928, 933-34 (1990) (discussing public policy for limiting commercial landlord's liability); Fred William Bopp III, The Unwarranted Implication of a Warranty of Fitness in Commercial Leases--An Alternative Approach, 41 Vand.L.Rev. 1057, 1081-83 (1988) (discussing public policy for limiting commercial landlord's liability). For these reasons, the landlords had no duty, as a matter of law, to inform Soltis about the premises' qualities.

*3 Soltis further argues the trial court erred by failing to recognize an implied duty to inspect, maintain, and repair the premises. Although no such implied covenant generally exists in commercial leases, if a landlord retains possession or control over a common area or assumes duties related to the maintenance or repair of a common area, then a duty to repair may be implied. See Nickelsen v. Minneapolis, N. & S. Ry., 168 Minn. 118, 120, 209 N.W. 646, 647 (1926) (overruled to extent landlord is not relieved from liability on basis of lack of actual knowledge of hidden defect by Johnson v. O'Brien, 258 Minn. 502, 506-07, 105 N.W.2d 244, 247 (1960)); Krueger v. Farrant, 29 Minn. 385, 387, 13 N.W. 158, 159 (1882) (holding landlord did not have implied duty to repair roof in absence of express agreement). Liability for negligent repairs may be imposed on landlords. Drager by Gutzman v. Aluminum Indus. Corp., 495 N.W.2d 879, 885 (Minn.App.1993), review denied (Minn. Apr. 20, 1993).

Despite no written lease agreement, Soltis offered evidence that the landlords inspected and made some repairs to the roof. However, Soltis failed to offer any evidence of any negligent repair or causation, and admitted that an unusual 18-inch rainfall occurred on the night in question. Under these circumstances, Soltis failed to offer evidence of an element essential to his case and the trial court properly granted summary judgment in favor of the landlords. See Celotex, 477 U.S. at 322, 106 S.Ct. at 2552 (holding summary judgment appropriate if party fails to establish existence of an element essential to claim).

Affirmed.