Wal-Mart Stores, Inc. v. Londagin
2001 Ark. LEXIS 116, 344 Ark. 26, 37 S.W.3d 620 (2001)
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Rule of Law:
Under Arkansas Rule of Evidence 408, evidence of furnishing valuable consideration to a claimant is not excluded as an offer to compromise if the claim was never disputed as to either validity or amount. Such actions may be admissible to prove liability in a subsequent claim by a third party arising from the same incident.
Facts:
- On October 4, 1996, Laura Perkins took her truck to a Wal-Mart Tire and Lube Express for an oil change and tire rotation.
- After picking up the truck, Perkins noticed the tires had not been rotated, so Wal-Mart took the vehicle back and performed the rotation.
- Later that same day, while Perkins was driving on a highway, the left front wheel came off her truck.
- The detached wheel crossed the center line and struck a vehicle driven by Johnny Londagin, causing a wreck that resulted in injuries to Londagin.
- Immediately after the wreck, Perkins called Wal-Mart to report the incident.
- Wal-Mart sent representatives to the scene, provided Perkins with a rental car, and towed and repaired her truck at no cost to her.
Procedural Posture:
- Johnny Londagin and his wife, Sue Londagin, filed a negligence complaint against Wal-Mart in trial court.
- The Londagins later amended their complaint to add Laura Perkins as an additional defendant.
- Perkins filed an answer and a cross-complaint against Wal-Mart.
- Wal-Mart filed a motion in limine to exclude evidence regarding its actions to assist Perkins after the accident, arguing it was a settlement offer under Rule 408.
- The trial court denied Wal-Mart's motion in limine.
- During the jury trial, the court granted a directed verdict in favor of Perkins, dismissing her from the case.
- The jury returned a verdict in favor of the Londagins, awarding damages against Wal-Mart.
- Wal-Mart, as appellant, appealed the judgment to the Arkansas Supreme Court.
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Issue:
Does Arkansas Rule of Evidence 408 prohibit the admission of evidence that a defendant (Wal-Mart) furnished valuable consideration to one party (Perkins) in a subsequent negligence lawsuit brought by an injured third party (Londagin), when the defendant never disputed the validity or amount of the first party's claim?
Opinions:
Majority - Ray Thornton, Justice
No. Arkansas Rule of Evidence 408 does not prohibit the admission of this evidence because a key element required for the rule's application—the existence of a dispute—was not present. The rule excludes evidence of compromising a claim that is 'disputed as to either validity or amount.' Here, the evidence showed that Wal-Mart immediately responded to Perkins's call, apologized, provided a rental car, and repaired her truck without any negotiation or disagreement. Because Wal-Mart never disputed Perkins's claim and instead voluntarily assumed responsibility for paying it in full, its actions did not constitute a 'compromise' of a disputed claim, and evidence of those actions was therefore admissible to prove liability in the Londagins' subsequent lawsuit.
Dissenting - W.H. “Dub” Arnold, Chief Justice
Yes. The evidence should have been excluded because a disputed claim arose the moment the 'really upset' Perkins called Wal-Mart demanding action from the scene of the accident. Common sense dictates that Wal-Mart's actions—providing a rental car and paying for towing and repairs—were an effort to compromise that disputed claim to maintain customer goodwill. The public policy of Rule 408 is to encourage such settlements, and admitting this evidence thwarts that purpose. Any ambiguity as to whether an action is an admission of liability or an offer to compromise should be resolved in favor of exclusion to promote the settlement of disputes.
Analysis:
This decision significantly narrows the protection of Rule 408 by strictly defining the 'disputed claim' requirement. It establishes that a party's immediate and unconditional satisfaction of a complaint, without any negotiation or argument, is not a 'compromise' and thus may be used as an admission of liability in related third-party litigation. The ruling creates a potential conflict for businesses between providing prompt, no-questions-asked customer service and avoiding the creation of admissible evidence of fault. Future defendants in similar situations may be incentivized to formally dispute a claim, even if they intend to pay it, simply to gain the evidentiary protection of Rule 408.
