Case Title: Calandro v. Parkerson

Citation: 

Docket Number: 

State: arkansas

Court: Arkansas Supreme Court

Date: 1997-02-03T00:00:00Z

Document:
Janet CALANDRO and Dale Suezaki v. John W.
Parkerson

95-825                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 3, 1997


1.   Judgment -- review of grant of summary judgment -- factors on
     appeal. -- On review of a grant of summary judgment, the
     appellate court need only decide if the granting of summary
     judgment was appropriate based on whether the evidentiary
     items presented by the moving party in support of the motion
     left a material question of fact unanswered; the burden of
     sustaining a motion for summary judgment is always the
     responsibility of the moving party; all proof submitted must
     be viewed in a light most favorable to the party resisting the
     motion, and any doubts and inferences must be resolved against
     the moving party; summary judgment is proper when a claiming
     party fails to show that there is a genuine issue as to a
     material fact and when the moving party is entitled to summary
     judgment as a matter of law. 

2.   Judgment -- prima facie entitlement to summary judgment
     established -- opposing party must meet proof with proof. --
     Once the moving party establishes a prima facie entitlement to
     summary judgment by affidavits or other supporting documents
     or depositions, the opposing party must meet proof with proof
     and demonstrate the existence of a material issue of fact; if
     a moving party supports its motion for summary judgment by
     making a prima facie showing of an absence of factual issues
     and entitlement to judgment as a matter of law, and the
     adverse party fails to set forth specific facts showing a
     genuine issue of material fact, then the appellate court will
     not hold that the trial judge erred in granting summary
     judgment.

3.   Corporations -- corporation separate entity from its
     stockholders -- corporation loses ability to sue upon
     revocation of its charter. -- It is axiomatic that a
     corporation is an entity separate from its stockholders; a
     corporation, once formed, owns the corporate property and owes
     the corporate debts, is the creditor to sue or debtor to be
     sued, has perpetual existence, and can act only through its
     duly constituted organs, primarily its board of directors; one
     effect of charter revocation is that a corporation loses its
     ability to sue.

4.   Corporations -- malpractice and contract claims -- individual
     appellants could not bring corporate cause of action. --
     Summary judgment was affirmed where the contract and
     malpractice causes of action alleged in appellants' complaint
     were those of the corporation; because the corporation lost
     its capacity to sue when it lost its charter, appellants could
     not, as individuals, do for the corporation what it could not
     do for itself; appellants' charges that appellee failed to
     conduct a title search of the real property listed in the
     lease agreement and to verify the purported lessor's status,
     could not be brought by them as individuals where the lease
     agreement demonstrated that the lease was entered into by the
     corporation, not the individual appellants; appellants did not
     delineate any specific services that appellee had provided
     them as individuals; they failed to meet proof with proof to
     show that an issue of fact remained as to whether the services
     were rendered to the corporation, or to them as
     individuals.   

5.   Fraud -- five elements of -- proof required by preponderance
     of evidence. -- The tort of fraud or misrepresentation
     consists of five elements that must be proved by a
     preponderance of the evidence: (1) a false representation,
     usually of a material fact; (2) knowledge or belief by the
     defendant that the representation is false; (3) intent to
     induce reliance on the part of the plaintiff; (4) justifiable
     reliance by the plaintiff; and (5) resulting damage to the
     plaintiff.  

6.   Fraud -- privity of contract not required to have cause of
     action against attorney for fraud -- individual appellants
     could bring claim. -- Appellants' separate claim for deceit
     could stand because, in Arkansas, privity of contract is not
     required in order to have a cause of action against an
     attorney for intentional misrepresentations or fraud; the fact
     that the deceit claim was brought by the individual
     appellants, and not the corporation, was of no consequence.  

7.   Judgment -- summary judgment on claim of deceit reversed --
     disputed facts remained to be solved. -- Where a question of
     fact remained as to whether appellee made the false
     representation alleged and both appellants stated that their
     actions or inactions were based on appellee's agreement to
     assist them in obtaining a new lease for both the real
     property and the equipment and on appellee's repeated promises
     that he would "get back to them," the issue of whether
     appellants were damaged by the appellee's alleged
     misrepresentation was one of disputed fact that remained to be
     resolved; the entry of summary judgment on appellants' claim
     for deceit was reversed and remanded.    

     Appeal from Garland Circuit Court; Tom Smitherman, Judge;
affirmed in part; reversed and remanded in part.
     T.B. Patterson, Jr. P.A., for appellants.
     Stephen M. Bingham, for appellee.

     W.H."Dub" Arnold, Chief Justice. 
     The appellants, Janet Calandro and Dale Suezaki, were the sole
shareholders in U and Me, Inc., a Hot Springs convenience store. 
As individuals, appellants filed suit for legal malpractice,
deceit, and breach of contract against appellee John W. Parkerson. 
The trial court granted summary judgment in appellee's favor on the
basis that the causes of action alleged were those of the
corporation, not the individual appellants.  We affirm summary
judgment as to the claims for malpractice and breach of contract,
but reverse and remand the trial court's ruling on appellants'
claim for deceit.   
     On April 29, 1994, appellants filed their complaint against
appellee, an attorney practicing in Hot Springs.  They alleged
that, in the spring of 1991, they had desired to open a convenience
store, had located a site for the business, and had found a
prospective landlord, Kwik Lane Management Company, which had
agreed to rent the property and necessary equipment to them. 
Appellants obtained a proposed lease agreement from Jim Davis, a
representative of the purported lessor, and took it to appellee. 
     Upon appellee's recommendation, appellants incorporated as U
and Me, Inc.  Thereafter, appellee redrafted the lease agreement,
which was executed on May 1, 1991, by Kwik Lane Management
Corporation as lessor and U and Me, Inc., as lessee.  The business
had been in operation for approximately five months when, in
September of 1991, appellants were advised that Kwik Lane was not
the owner of the business premises; rather, Southern Farm Bureau
Life Insurance Company owned the real property and Worthen Bank
owned the equipment.  It was appellants' position that appellee's
failure to inquire as to the status of the lessor and the title of
the property leased constituted professional negligence, which
proximately caused them to lose possession and use of the premises
and equipment.
     According to appellants' complaint, in October of 1991,
appellee agreed to assist them in obtaining leases for the real
property and the equipment and promised that he would "get back to
them."  On or about January 2, 1992, appellee, knowing that
appellants would rely on his statement, told appellant Calandro
that the real property had been sold, when, in fact, appellee knew
that the property had not been sold.  Relying on appellee's
statement, appellants vacated the premises and allowed Worthen to
take the equipment.  Appellants claimed that, as a result of
appellee's deceit as to the sale of the business premises, they
voluntarily surrendered their rights in the equipment and fixtures
necessary to operate their store, which closed in January of 1992. 
Two years later, on January 24, 1994, U and Me's corporate charter
was revoked for nonpayment of franchise taxes.  Appellants asserted
that appellee's negligence and malfeasance constituted a breach of
the attorney-client agreement, entitling them to a return of
attorney's fees and costs.    
     After the complaint was filed, discovery ensued with the
taking of both appellants' depositions.  Appellee moved for summary
judgment on the basis that the causes of actions alleged in
appellants' complaint were those of the corporation, not the
individual appellants.  Attached to the motion were copies of
checks written on the corporation's account to appellee covering
fees and costs, as well as portions of appellants' depositions. 
While appellants filed a written response to the motion, they
submitted no supporting affidavits, nor did they or their attorney
appear at the scheduled hearing. 
     On April 12, 1995, the trial court issued a letter opinion and
found: (1) that it was clear from the pleadings that the services
upon which the complaint was based were rendered to the
corporation, U and Me, Inc., and that appellants Calandro and
Suezaki were not the proper parties in the case and had not moved
to substitute the proper party; (2) that U and Me, Inc. lost its
capacity to sue when its charter was revoked for failure to pay
franchise fees; (3) that the acts complained of were now barred by
the statute of limitations; (4) that the complaint failed to state 
a cause of action; and (5) that there was no genuine issue of
material fact remaining to be tried in the case.  On April 17,
1995, the trial court granted summary judgment to appellee.
     We have recently summarized our standards for summary judgment
review as follows: 
     In these cases, we need only decide if the granting of
     summary judgment was appropriate based on whether the
     evidentiary items presented by the moving party in
     support of the motion left a material question of fact
     unanswered.  Nixon v. H & C Elec. Co., 307 Ark. 154,