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ARKANSAS COURT OF APPEALS

DIVISION III 

No. CV-15-23

 

SCOTT DAVIS

APPELLANT

V.

LAVONNA JOY DAVIS, Individually, In 

Her Capacity as Trustee of the Lavonna Joy 

Davis Revocable Living Trust and In Her 

Capacity as President and Sole Board Member 

of Families, Inc. of Arkansas;

FAMILIES, INC. OF ARKANSAS; and

JOHN DOES 1-10

APPELLEES 

Opinion Delivered January 20, 2016

APPEAL FROM THE CRAIGHEAD 

COUNTY CIRCUIT COURT, 

WESTERN DISTRICT 

[NO. CV-2014-114] 

HONORABLE DAVID N. LASER, 

JUDGE

AFFIRMED

LARRY D. VAUGHT, Judge

Appellant Scott Davis appeals the order and judgment entered by the Circuit Court 

of Craighead County, dismissing his complaint against appellees Families, Inc. of Arkansas 

(Families); Lavonna Joy Davis (Joy), individually and in her capacity as trustee of the 

Lavonna Joy Davis Revocable Living Trust and in her capacity as president and sole board 

member of Families; and John Does 1–10.1 Scott argues that the trial court erred as a matter 

of law and/or abused its discretion in dismissing his claims for violation of the Arkansas 

 

1 There is no evidence in the record that any John Doe defendants were served with 

the complaint. Therefore, the trial court’s order and judgment granting the motions to 

dismiss of Joy and Families dismissed the claims against the John Doe defendants. See Ark. 

R. Civ. P. 54(b)(5) (2015). The John Doe defendants are not parties to this appeal. 
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2 

Securities Act (Act), unjust enrichment, and the tort of deceit, along with his request for 

rescission. We affirm. 

Families is a closely held corporation that provides mental-health services. In 2009, 

Families had 100 shares of stock. Joy owned seventy-five shares, and her husband, Tom, 

owned twenty-five shares. Tom passed away on May 26, 2009, and as part of the settlement 

of his estate, Scott received ten shares of Families stock. In May 2011, Joy and Scott entered 

into a Stock Purchase and Sale Agreement (Agreement), whereby Scott agreed to sell Joy his 

ten shares of Families stock for $185,000. 

On March 19, 2014, Scott filed a complaint against Joy and Families alleging that they 

fraudulently induced him to sell his shares of stock for a fraction of the stock’s true value. 

Scott alleged that Joy and Families systematically and intentionally failed to provide him with 

mandatory financial disclosures, committed acts of corporate oppression to intimidate and 

otherwise pressure him to relinquish his shares of stock, and committed widespread 

corporate waste in order to artificially diminish the market value of his shares of the stock. 

The complaint alleged three causes of action: violation of the Arkansas Securities Act, deceit, 

and unjust enrichment. He sought a judgment against Joy and Families, an order rescinding 

the sale of his ten shares of stock, interest, attorney’s fees, and punitive damages. 

Joy and Families filed separate motions to dismiss Scott’s complaint pursuant to Rule 

12(b)(6), contending that the complaint failed to state facts upon which relief could be 

granted. They also argued that Scott’s claim under the Act was barred by the statute of 

limitations; he lacked standing to pursue a claim for unjust enrichment; and his request for 

rescission was untimely. 
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3 

After a hearing, the trial court entered an order and judgment on September 24, 2014, 

granting the motions. This appeal followed. 

I. Violation of the Arkansas Securities Act

The trial court’s order and judgment dismissing Scott’s securities-fraud claim under 

the Act was based on three reasons: (1) the Act was primarily intended to apply to buyers of 

stock and not sellers; (2) the claim was barred by the Act’s three-year statute of limitations 

set forth in Arkansas Code Annotated section 23-42-106(g); and (3) Scott failed to state facts 

upon which relief could be granted because the Agreement acknowledged full compliance 

with the Act and did not constitute a waiver of the requirements of the Act. On appeal, Scott 

argues that all three findings were erroneous. It is unnecessary, however, to address Scott’s 

first two arguments because if the Act applied and Scott’s complaint was timely filed, he 

failed to state facts upon which relief could be granted. 

The granting of a Rule 12(b)(6) dismissal is reviewed under the abuse-of-discretion 

standard. Ballard Group, Inc. v. BP Lubricants USA, Inc., 2014 Ark. 276, at 5, 436 S.W.3d 445, 

449. In determining whether the trial court abused its discretion in dismissing a plaintiff’s 

complaint pursuant to Rule 12(b)(6), we treat the facts alleged in the complaint as true and 

view them in the light most favorable to the plaintiff. Id. at 6, 436 S.W.3d at 449. We 

construe the pleadings liberally and resolve all reasonable inferences in favor of the 

complaint. Id., 436 S.W.3d at 449. The rules require fact pleading, and a complaint must 

state facts, not mere conclusions, in order to entitle the pleader to relief. Id., 436 S.W.3d at 

449 (citing Ark. R. Civ. P. 8(a) (2013)). The court will look to the underlying facts supporting 

an alleged cause of action to determine whether the matter has been sufficiently pled. Id., 436 
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4 

S.W.3d at 449. Where the complaint states only conclusions without facts, we will affirm the 

trial court’s decision to dismiss the complaint pursuant to Rule 12(b)(6). Id., 436 S.W.3d at 

449. 

The Act provided that 

[a]ny person who purchases a security . . . by means of any untrue statement of a 

material fact or any omission to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they are made, not 

misleading, the seller not knowing of the untruth or omission, and who shall not 

sustain the burden of proof that he or she did not know, and in the exercise of 

reasonable care could not have known, of the untruth or omission, shall be liable to 

the person selling the security to him or her, who may sue either at law or in equity . . 

. . 

Ark. Code Ann. § 23-42-106(b)(1) (Repl. 2012).2 In his complaint, Scott alleged that Joy 

violated section 23-42-106(b)(1) by pressuring him to sell his Families stock and threatening 

to use her power and personal advantage as the director of Families to cause financial harm 

to him.3 Scott claimed that after months of intimidation by Joy and his belief that the value 

of his stock had been diminished, he agreed to sell his stock for the “nominal consideration” 

of $185,000. He asserted that he was not provided any financial disclosures or other financial 

 2 Section 23-42-106 was amended in 2013, but the amended version is not applicable 

in this case. 

3 More specifically, he alleged that Joy 

implied that she would cause Scott to incur an unfunded tax liability by 

suspending payment of dividends. In order to get her point across, she told 

him that she was a minority shareholder in another company that had 

previously made a profit (which was passed through to the shareholders) but 

that the company did not distribute any dividends to allow the shareholders to 

pay taxes on the profits generated. Since Joy Davis had exclusive control over 

the company, Scott Davis was fearful that Joy Davis would refuse to declare a 

dividend, resulting in him incurring a significant tax liability.
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5 

information regarding the operations of Families at or before the Agreement was signed or 

before he transferred his stock. He contended that the only information he had was a twoyear-old estate-tax appraisal and yearly tax forms for the company. He alleged that this 

information was stale, misleading, inaccurate, and contained profit figures that were 

artificially deflated. He claimed that he would have never entered into the Agreement with 

Joy had he had access to complete and accurate financial information. 

Arkansas Rule of Civil Procedure 9(b) provides that “[i]n all averments of fraud, 

mistake, duress or undue influence, the circumstances constituting fraud, mistake, duress or 

undue influence shall be stated with particularity. Malice, intent, knowledge and other 

conditions of the mind of a person may be averred generally.” Ark. R. Civ. P. 9(b) (2015). In 

the case before us, the complaint failed to provide specific and particular factual allegations 

that Joy made “untrue statements of material fact” or that she failed to state a material fact in 

order to make statements she allegedly made not misleading. Scott does not identify any 

specific events or conversations with Joy, with or without dates, that support his claim. 

Ballard Grp., Inc., 2014 Ark. 276, at 14, 436 S.W.3d at 453–54 (holding that the trial court 

abused its discretion in dismissing the complaint under Rule 12(b)(6), where the complaint 

alleged specific events and conversations occurring on at least three different occasions in 

2007, 2009, and 2010 to support the allegation of misappropriation of trade secrets). The 

implication that Joy might suspend the payment of dividends on which the shareholders 

would be required to pay taxes is not an “untrue statement of material fact.”

Moreover, Scott’s complaint fails to state specific and particular facts to support his 

claim that appellees’ actions prevented him from knowing the true value of his stock. He 
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6 

stated in his complaint that he had possession of an appraisal that valued his stock at 

$400,000. With this knowledge, he could not have reasonably believed that the value of the 

stock had been diminished. Further, he cannot demonstrate that he, in the exercise of 

reasonable care, could not have known of the true value of his stock. Paragraph 3.2 of the 

Agreement,4 entitled “Disclosure,” provided that the “[s]eller has been provided with or 

permitted access to all information which Seller deems material to formulating his decision 

with respect to the sale of the Stock and that such information has been sufficient to make 

an informed decision.” This provision establishes that Scott agreed that Joy complied with 

the disclosure requirements of the Act by providing all the information he needed to make 

an informed decision. Significantly, his complaint did not allege that he requested documents 

from Joy and that she either failed or refused to provide them or that she provided false 

information. Again, the lack of specific allegations, his possession of the appraisal that 

valued his stock substantially higher than the amount for which he agreed to sell it, and the 

disclosure paragraph in the Agreement, negate Scott’s conclusory claim that Joy failed to 

comply with all the requirements imposed by section 23-42-106(b)(1). Because Scott’s 

complaint makes only conclusory statements and fails to comply with Rule 9(b)’s 

requirement that it state the circumstances constituting fraud with particularity, we hold that 

the trial court did not abuse its discretion in dismissing the complaint for failure to state facts 

upon which relief can be granted. 

 4 The Agreement was attached to Scott’s complaint; therefore, it was a part of that 

pleading for all purposes. Ark. R. Civ. P. 10(c) (2015). 
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7 

We acknowledge Scott’s argument that paragraph 3.2 of the Agreement is void 

because the Act prohibits any waiver of compliance with its provisions. Section 23-42-109 

provides that “[a]ny condition, stipulation, or provision binding any person acquiring any 

security to waive compliance with any provision of this chapter or any rule or order under 

this chapter is void.” Ark. Code Ann. § 23-42-109 (Repl. 2012). This section of the Act 

forbids the waiver of compliance with its provisions. Tanenbaum v. Agri-Capital, Inc., 885 F.2d 

464 (8th Cir. 1989).5 

The language in paragraph 3.2 does not express Scott’s agreement to waive appellees’ 

compliance with the Act. To the contrary, it affirms that Scott agreed that he had been 

provided with or permitted access to all information that he deemed material to making an 

informed decision about selling his stock. Therefore, we hold that the trial court did not 

abuse its discretion in finding that the waiver provision in section 23-42-109 did not void 

paragraph 3.2 of the Agreement. 

II. Deceit

The trial court dismissed Scott’s cause of action for deceit for failure to state a cause 

of action because, per the Agreement, he agreed that he had been provided with, or 

permitted access to, all material information necessary to make an informed decision 

regarding the sale of his shares. The trial court also found that Arkansas Code Annotated 

section 23-42-109 did not void paragraph 3.2 of the Agreement because the paragraph was 

 

5 The Eighth Circuit in Tanenbaum interpreted the language of section 23-42-109 to 

mean that a potential buyer of securities does not have the legal power to give the seller 

permission to sell any security to the buyer without first undertaking to comply with all the 

requirements imposed by the Act. Tanenbaum, 885 F.2d at 469.
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not a waiver of rights under the Act but rather an acknowledgment of factual compliance 

with the Act. 

We have long recognized the common-law tort of deceit. MFA Mut. Ins. Co. v. Keller, 

274 Ark. 281, 284, 623 S.W.2d 841, 842 (1981). To establish deceit or fraud, a plaintiff must 

show (1) a false representation of material fact; (2) knowledge that the representation is false 

or that there is insufficient evidence upon which to make the representation; (3) intent to 

induce action or inaction in reliance upon the representation; (4) justifiable reliance on the 

representation; and (5) damage suffered as a result of the reliance. Bomar v. Moser, 369 Ark. 

123, 131, 251 S.W.3d 234, 242 (2007). 

Scott contends that his complaint contained forty paragraphs of allegations 

supporting his deceit claim, satisfying both Arkansas Rule of Civil Procedure 12(b)(6) and 

Rule 9(b). He argues that the allegations demonstrated that Joy made false representations of 

material fact, she knew that her representations were false, her representations were made 

with the intent to induce Scott to relinquish his ownership in Families, he relied on the false 

and incomplete information in agreeing to sell his shares at a price that was inconsistent with 

the actual value of the stock, and her intentional actions caused him significant damage. 

Scott’s complaint failed to state facts sufficient to support the first element of a deceit 

claim—that Joy made a false representation of fact. While making many conclusory 

allegations that she made “deceptive, dishonest, and misleading statements,” Scott failed to 

specify what those statements were. He argues that she provided inaccurate and incomplete 

information to him, but he fails to identify that information. There are no allegations that he 

requested certain information from Joy and that she failed to provide that information. He 
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9 

identifies no financial documentation that demonstrates any false representation made by Joy 

or that supports his contention that “she deflated corporate profits by committing covert 

acts of corporate waste.” He merely makes conclusory allegations. 

Assuming arguendo that Scott did allege facts sufficient to establish that Joy made a 

false representation of fact, he failed to allege facts sufficient to support the required element 

of justifiable reliance on the false representation. While a justifiable-reliance determination 

can be a question of fact, Sunbelt Bus. Brokers of Ark., Inc., v. James, 2009 Ark. App. 659, at 6, 

where there is a lack of an allegation of justifiable reliance on false statements or no basis for 

such an allegation, a Rule 12(b)(6) dismissal is appropriate. Wiseman v. Batchelor, 315 Ark. 85, 

89, 864 S.W.2d 248, 250 (1993) (affirming trial court’s Rule 12(b)(6) dismissal of a fraud 

cause of action based on the failure to allege justifiable reliance on a misrepresentation). 

As previously stated, Scott acknowledged that one of the financial documents that he 

possessed prior to the sale was the appraisal of his ten shares of Families stock. This 

information valued his stock at $400,000, which directly conflicted with the alleged false 

information he claims to have received from Joy—that the stock had diminished in value. 

Thus, if Scott had been provided misinformation from Joy about the reduced value of 

Families stock, he cannot establish that his reliance on that alleged false representation was 

justifiable. 

Furthermore, paragraph 3.2 provided that Scott agreed that he had been provided 

with or permitted access to all information that he deemed material to formulating his 

decision with respect to the sale of his stock and that such information had been sufficient 
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to make an informed decision. Likewise, paragraph 5.3 of the Agreement included a merger 

clause that stated,

This Agreement shall embody the entire agreement between the parties hereto with 

respect to acquisition of the Stock and cancels and supersedes all other previous 

agreements and understandings relating to the subject matter of this Agreement, 

written or oral, between the parties. There are no agreements, representations or warranties 

between the parties other than those set forth or provided herein. (Emphasis added.) 

Pursuant to this merger clause, Scott agreed that the provisions of the Agreement 

represented the parties’ full understanding of the terms and representations of the sale of his 

stock to Joy. 

Due to the lack of particular allegations of a false representation of material fact, the 

information that Scott admittedly had prior to the sale, and his acknowledgment that he had 

everything he needed to make an informed decision about the sale of his stock and that there 

were no representations between the parties outside the Agreement, we hold that the trial 

court did not abuse its discretion in dismissing Scott’s claim for deceit. He failed to state 

facts to support his claim that appellees made a false representation of material fact or that 

he justifiably relied on any alleged false representation of material fact by appellees. We 

affirm on this point. 

III. Unjust Enrichment

Scott contends that the trial court abused its discretion in dismissing his unjustenrichment claim. His argument under this point is brief, conclusory, and lacks citation to 

authority, stating that “his claim for restitution is directly connected to his previous 

ownership interest in Families and the windfall obtained by Joy Davis when she obtained 

ownership of the shares through deception.” 
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Unjust enrichment is based on the principle that one person should not be permitted 

to unjustly enrich himself at the expense of another but should be required to make 

restitution of or for property or benefits received, retained, or appropriated, whether 

requested or not, when it is just and equitable that restitution should be made. Kapach v. 

Carroll, 2015 Ark. App. 466, at 4–5, 468 S.W.3d 801, 804. It is not necessary, in order to 

create an obligation to make restitution, that the party unjustly enriched should have been 

guilty of a wrongful act. Id. at 5, 468 S.W.3d at 804–05. The question is simply whether he 

obtained something of value under such circumstances that, in equity and good conscience, 

he ought not to retain. Id., 468 S.W.3d at 805.

We affirm the trial court’s dismissal of Scott’s unjust-enrichment claim but not for 

the reasons stated by the trial court.6 One is not unjustly enriched by receipt of that to which 

he is legally entitled. Coleman’s Serv. Ctr., Inc. v. F.D.I.C., 55 Ark. App. 275, 299, 935 S.W.2d 

289, 302 (1996). It is generally held that, where there is an express contract, the law will not 

imply a quasi- or constructive contract. Id. at 299, 935 S.W.2d at 302. It has been held that 

the quasi-contractual principle of unjust enrichment does not apply to an agreement 

deliberately entered into by the parties. Id., 935 S.W.2d at 302. “[T]he law never 

accommodates a party with an implied contract when he has made a specific one on the 

same subject matter.” Id., 935 S.W.2d at 302. We have stated that the “concept of unjust 

enrichment has no application when an express written contract exists.” Id., 935 S.W.2d at 

302 (citing Moeller v. Theis Realty, Inc., 13 Ark. App. 266, 268–69, 683 S.W.2d 239, 240 (1985)). 

 

6 The trial court dismissed the unjust-enrichment claim based on Scott’s lack of 

standing. We can affirm the trial court if the right result is reached, even if it is for a different 

reason. Shelter Mut. Ins. Co. v. Goodner, 2015 Ark. 460, at 6, ___ S.W.3d ___, ___.
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Because there is an express written contract in this case—the Agreement—the principle of 

unjust enrichment has no application.7 Therefore, we affirm the trial court’s dismissal of 

Scott’s unjust-enrichment claim. 

IV. Rescission

Scott’s final point on appeal is that the trial court abused its discretion in finding that 

he failed to allege sufficient facts supporting his request for the remedy of rescission. Based 

on our holdings herein—affirming the dismissal of all three of Scott’s causes of action—we 

affirm the denial of Scott’s request for rescission because he is not entitled to any remedy. 

Affirmed. 

VIRDEN and KINARD, JJ., agree. 

Jeff Scriber P.A., by: Jeff Scriber, for appellant.

Waddell, Cole & Jones, PLLC, by: Kevin W. Cole, Nathan A. Read, and Justin E. Parkey, 

for appellee. 

 

7 There are exceptions to the rule. “An express contract cannot be circumvented by 

unjust enrichment”; however, “when an express contract does not exist, is void, or does not 

provide an answer, these alternative theories may be asserted.” Campbell v. Asbury Automotive, 

Inc., 2011 Ark. 157, at 23, 381 S.W.3d 21, 37 (citing 1 Howard W. Brill, Arkansas Law of 

Damages § 31:2 (5th ed. 2010)). None of the exceptions apply to the instant case.