Fidelity Life Association, a Legal Reserve Life Insurance Company v. Dienice L. Nelson

Cite as 2024 Ark. App. 595
ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-23-371

Opinion Delivered: December 4, 2024

FIDELITY LIFE ASSOCIATION, A
APPEAL FROM THE PHILLIPS
LEGAL RESERVE LIFE INSURANCE
COUNTY CIRCUIT COURT
COMPANY
[NO. 54CV-21-21]
APPELLANT

HONORABLE DANNY GLOVER,
V.
JUDGE

DIENICE L. NELSON DISMISSED WITHOUT PREJUDICE
APPELLEE

CINDY GRACE THYER, Judge

Fidelity Life Association (Fidelity Life), a legal reserve life insurance company, appeals

a Phillips County Circuit Court order denying its motion to dismiss on res judicata grounds.

Because a denial of a motion to dismiss is not a final, appealable order, we must dismiss for

lack of jurisdiction.

Dennis Lee Nelson, Sr. was killed in a one-car rollover accident in Arkansas in August

2014. At the time of his death, he had in place a $500,000 accidental death policy issued by

Fidelity Life with his daughter, Dienice L. Nelson, named as the designated beneficiary.

Upon Dennis’s death, Dienice, in compliance with the provisions of the policy, filed a claim

for benefits under the policy.
During Fidelity Life’s investigation of the claim, it discovered that Dennis had a

blood-alcohol level of .179, which was more than twice the legal limit. In light of this

information, Fidelity Life denied the claim under the intoxication exclusion 1 of the policy.

As a result of the denial, Dienice brought suit against Fidelity Life in Illinois, where

she resided and where Fidelity Life is organized and maintains its principal place of business.

She asserted that there was insufficient proof that Dennis’s blood-alcohol level directly or

indirectly caused his death; thus, the intoxication exclusion relied on by Fidelity Life did not

apply. Instead, she claimed a partial tread separation on the left rear tire caused Dennis to

lose control of the vehicle. In addition to demanding payment under the policy, Dienice

sought penalties, interest, and attorney’s fees from Fidelity Life for acting in bad faith in

denying her claim.

After a trial on the merits, the Illinois court concluded that Dennis’s death was an

accidental death covered under the policy and that Fidelity Life had failed to prove that his

death fell within the exclusion. It found, however, that there was a conflict between Arkansas

and Illinois law as to when attorney’s fees and penalties were recoverable in an action alleging

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The policy stated:

No Accidental Death Benefit or Travel Benefit will be payable if the Insured’s
death results directly or indirectly from any of these causes.

....

g. Blood Alcohol: Death while the Insured is operating a motor vehicle and is
determined to have a blood alcohol level exceeding the legal limit as defined by
state law.

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bad faith. Finding that the Arkansas statutes were procedural rather than substantive, the

court applied Illinois law and rejected Dienice’s bad-faith claims. Accordingly, on March 5,

2020, the Illinois circuit court entered an order awarding Dienice the policy limits of

$500,000 plus postjudgment interest and the costs of the suit. Thereafter, Dienice filed a

motion to modify the Illinois judgment, claiming she was entitled to prejudgment interest.

The Illinois court denied her motion on May 26, 2020.

On July 31, 2020, Fidelity Life issued a check to Dienice in the amount of

$518,616.39 in satisfaction of the judgment, and on August 11, 2020, Dienice filed a full

satisfaction and release of judgment, bringing the Illinois lawsuit to a close.2 Dienice did

not appeal either the March 5 judgment or the May 26 order denying her posttrial motion.

Instead, on February 9, 2021, Dienice filed the instant action in the Phillips County

Circuit Court, seeking contractual damages for prejudgment interest, penalties, and

attorney’s fees under Arkansas law because of Fidelity Life’s failure to timely pay on the

policy. She claimed she was entitled to $222,246.58 in prejudgment interest; $60,000 in

penalties; and $153,535.39 in attorney’s fees, of which $147,205.98 was paid on a

contingency basis from her recovery.

Fidelity Life moved to dismiss Dienice’s complaint on res judicata grounds,

contending that Dienice’s entitlement to prejudgment interest and contractual damages had

been decided by the court in the Illinois action. Fidelity asserted that Dienice had chosen

2
The release is not contained in our record.

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not to appeal the Illinois court ruling; that it had paid the judgment; and that Dienice had

vigorously litigated her entitlement (1) to benefits under the contract; (2) to prejudgment

interest under Arkansas and Illinois law; and (3) to attorney’s fees and the 12 percent penalty

under section 23-79-208(a)(1) (Repl. 2014). Thus, res judicata should apply.

Dienice responded, denying that res judicata applied to bar her claim and arguing

that the Illinois court had never ruled on the issue of whether Fidelity Life was liable for

attorney’s fees, penalties, or interest under Arkansas law or under the policy language

promising conformity with Arkansas law. As such, the court’s decision did not relieve Fidelity

Life of its contractual obligations under Arkansas law.

The circuit court held a hearing on the motion to dismiss the Arkansas litigation on

August 31, 2022. After hearing the arguments of counsel, the court ordered the parties to

mediation. When mediation failed, the court issued its ruling denying the motion to dismiss.

In the letter opinion incorporated therein, the court stated that it was uncomfortable

summarily dismissing the case outright at that juncture but that it might reconsider Fidelity

Life’s res judicata defense at the conclusion of the proof offered at trial.

Fidelity Life filed a timely notice of appeal from the order denying its motion to

dismiss. In response, Dienice moved to dismiss the appeal with this court, asserting that the

circuit court’s order denying the motion to dismiss on res judicata grounds was not a final,

appealable order for purposes of Arkansas Rule of Appellate–Civil 2. She further argues that

this is not one of the categories of interlocutory appeals recognized and allowed by Rule 2

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and that, even if it were, the order in this case was not final because the circuit court left

open the issue for reconsideration once the facts were more fully developed below.

Fidelity Life responded, denying that appellate jurisdiction is lacking. Fidelity Life

claims that its appeal is based on Rule 2(a)(2) of the Arkansas Rules of Appellate Procedure–

Civil, which permits an appeal to be taken from an interlocutory order determining an action

and preventing a judgment from which an appeal might be taken. Fidelity Life further argues

that Rule 2(a)(2) does not provide an exhaustive list of appealable orders, and it claims that

the purpose of res judicata is to prevent the possibility that a defendant will twice have to

defend against the same claim by the same plaintiff, and a denial of a motion to dismiss on

res judicata grounds frustrates that purpose by forcing the defendant to defend the action

once again. It analogizes this appeal to interlocutory appeals where motions to dismiss are

denied on double-jeopardy or immunity grounds.

We disagree. Rule 2 of the Arkansas Rules of Appellate Procedure–Civil (2023) lists

the orders from which an appeal may be taken. An appeal from a motion to dismiss on res

judicata grounds is not one of the enumerated orders from which an appeal may be taken.

Generally, a party may appeal an order that dismisses the parties from the court,

discharges them from the action, or concludes their rights to the subject matter in

controversy. See Plunk v. State, 2012 Ark. 362 (per curiam); Evins v. Carvin, 2013 Ark. App.

185, 426 S.W.3d 549. Our supreme court has held that when a circuit court denies a

defendant’s motion to dismiss, the denial is not a final judgment from which an appeal may

be taken because the only matter disposed of by the order is that the case should proceed to

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trial, and those matters put in issue are not lost by continuing to a trial of the matter. See

Plunk, supra; Evins, supra; see also C.P. v. State, 2011 Ark. App. 415, at 2 (“We have long held

that the denial of a motion to dismiss is not an appealable order.”). Even though an issue on

which a court renders a decision might be an important one, an appeal will be premature if

the decision does not, from a practical standpoint, conclude the merits of the case. See Plunk,

supra; Doe v. Union Pac. R.R., 323 Ark. 237, 914 S.W.2d 312 (1996).

Our supreme court could have included an immediate appeal from a dismissal on res

judicata grounds, but it has not seen fit to do so. In fact, our supreme court seemingly

addressed this issue in United American Insurance Co. v. Smith, 2010 Ark. 468, 371 S.W.3d

685. In that case, the supreme court was dealing with an appeal from class certification. The

appellant argued that an application of res judicata would have defeated the numerosity

necessary to certify the class. The supreme court first noted that a determination of whether

res judicata applied to the claims asserted against the appellant would require the court to

evaluate the merits of the affirmative defense, which it does not do on an appeal from class

certification. It then stated that whether the claims asserted by appellees against appellant

Heartland were barred by the doctrine of res judicata had been ruled on by the circuit court

when it denied Heartland’s motion for summary judgment and noted that our law did not

permit Heartland to file an interlocutory appeal from that denial. Rather, our supreme court

held that such an argument must be taken up on direct appeal after a final order has been

entered. United Am. Ins. Co., 2010 Ark. 468, 371 S.W.3d 685. Thus, it appears our supreme

court has already spoken on this issue.

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Fidelity Life also claims that this case fits within the “Gipson” exception articulated

in Gipson v. Brown, 288 Ark. 422, 706 S.W.2d 369 (1986). Again, we disagree.

Gipson involved a lawsuit filed by several church members seeking disclosure of

financial data and other business information related to their church and that involved

constitutional religious protections. In prosecuting the lawsuit, the members sought

discovery of the financial data and business information that was the subject of the lawsuit.

The court ordered the materials disclosed as part of discovery. An interlocutory appeal from

that order was taken. Our supreme court found that since the discovery sought disclosure of

the very records and financial information that was the object of the lawsuit, the discovery

order was the equivalent of a decision on the merits.

That is not the case here. The court’s order in this case denying the motion to dismiss

is not the equivalent of a decision on the merits. In fact, the court specifically reserved the

right to revisit the issue after a trial on the merits. Because the circuit court’s denial of Fidelity

Life’s motion to dismiss did not conclude the matters between the parties or discharge

anyone from the litigation, its claim in this regard is not currently appealable, thereby

depriving us of the jurisdiction to entertain their arguments at this time.

Even if our court permitted an appeal from the denial of a motion to dismiss on res

judicata grounds, it is apparent that the order before us is not a final order. In its order, the

circuit court expressed its concern that the prior Illinois order did not clearly state whether

the issues of attorney’s fees, penalties, and prejudgment interest had been fully adjudicated

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there. As a result, it expressly reserved the right to reconsider the merits of Fidelity Life’s res

judicata defense at the conclusion of the proof offered at trial.

Therefore, for the reasons set forth above, we dismiss the appeal without prejudice

on jurisdictional grounds.

Dismissed without prejudice.

KLAPPENBACH and WOOD, JJ., agree.

Cullen & Co., PLLC, by: Tim Cullen; and Faegre Drinker Biddle & Reath LLP, by: Jason

P. Gosselin and John Bloor, for appellant.

Daggett & Perry, PLLC, by: Joe R. Perry and Jesse B. Daggett; and Pollack Law Firm, by:

Steven B. Pollack, for appellee.

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