Case Name: Tana Rachelle DOWNUM v. Brad Don DOWNUM
Court: Arkansas Court of Appeals
Jurisdiction: Arkansas
Decision Date: 2008-02-06
Citations: 101 Ark. App. 243
Docket Number: CA 07-533
Parties: Tana Rachelle DOWNUM v. Brad Don DOWNUM
Judges: Pittman, C.J., Gladwin, and Baker, JJ., agree.
Reporter: Arkansas Appellate Reports
Volume: 101
Pages: 243–260

Head Matter:
Tana Rachelle DOWNUM v. Brad Don DOWNUM
CA 07-533
274 S.W.3d 349
Court of Appeals of Arkansas
Opinion delivered February 6, 2008
Cullen & Co., PLLC, by: Tim Cullen and Kami S. Wentz, for appellant.
Woodard Law Firm, PLC, by: Ernie Woodard, for appellee.

Opinion:
D.p. Marshall Jr., Judge.
This divorce case is about custody and relocation. The dispositive question presented is whether the circuit court erred in concluding that Ms. Downum committed a constructive fraud — an innocent misrepresentation by silence that justified the court vacating the custody provision of the Downums' agreed divorce decree. Convinced that the record contains insufficient evidence of a constructive fraud, we reverse and remand.
I.
This is a case where the calendar is important. The Downums were married for almost four years. Their son, K.D., was born in 2002. They separated in May 2005. Ms. Downum hired counsel and filed for divorce; Mr. Downum filed an answer pro se. In early November 2005, Ms. Downum came to Mr. Downum with a proposed divorce decree. The proposal gave Ms. Downum custody of K.D. and included the circuit court's standard visitation for Mr. Downum: every other weekend, one day midweek from after school to bedtime, alternating holidays, and time during the summer. Mr. Downum also had a right of first refusal to be K.D.'s babysitter whenever Ms. Downum needed one.
When Ms. Downum proposed the decree, which was a settlement of all the parties' disputes in the divorce, Mr. Downum knew that his estranged wife wanted to find a new job. Her boss at Tyson Foods was Mr. Downum's long-time friend, and this circumstance created an uncomfortable situation. Mr. Downum did not ask Ms. Downum whether she was considering looking for a job outside northwest Arkansas, where the parties lived. Ms. Downun did not tell Mr. Downum that she might consider potential jobs outside northwest Arkansas. Based on the proposed visitation schedule, Mr. Downum believed that relocation was not a possibility. In early November, Mr. Downum signed and approved the terms of the decree. He also waived the right to appear at the hearing on the decree.
Ms. Downum worked in accounting. About ten days after Mr. Downum approved the decree, Ms. Downum was actively looking for a new job. She looked for jobs in northwest Arkansas, including at Coca-Cola, Frito Lay, and other Wal-Mart vendors, as well as with various hospitals. She also used careerbuilder.com to investigate other job prospects. She sent out e-mails to employers who had open accounting positions. These potential employers included some in northwest Arkansas, Louisiana, and Tennessee. Ms. Downum did not tell Mr. Downum about the details of her job search. On December 1st, Ms. Downum and her counsel appeared before the circuit court, which approved and entered the decree. We have no record of what was said at the hearing. Mr. Downum did not appear.
The next day, December 2nd, Fresenius Medical Care in Belle Chase, Louisiana, responded to one of Ms. Downum's November e-mails. During the next few weeks, Ms. Downum and Fresenius exchanged information about the position and her qualifications. She interviewed with the company. In late December, Ms. Downum accepted the job. It paid $6000 a year more than her former job and required less hours at work. She moved with K.D. to Louisiana in January 2006.
Mr. Downum hired counsel and immediately moved the circuit court to vacate the custody provision of the parties' divorce decree based on Ms. Downum's alleged fraud about her job plans. Mr. Downum also asked the court to consider what was in K.D.'s best interest and then award custody of their son to him. Ms. Downum responded, denying any legal basis to vacate the decree or change custody. K.D. was not yet in school, and so while the parties waited several months for a hearing, by agreement the child spent time with his mother in Louisiana and father in Arkansas.
The circuit court heard Mr. Downum's Rule 60(c)(4) motion first. The following additional important facts emerged at the hearing. Ms. Downum acknowledged that, had the parties' positions been reversed, she would have wanted to know that Mr. Downum was contemplating possible new jobs that would require relocation. Mr. Downum testified that, if he had known Ms. Downum was considering any jobs outside northwest Arkansas, then he never would have agreed for her to have custody of K.D.
After receiving all the evidence, the circuit court ruled from the bench and vacated the custody provision of the decree. The court stated:
In considering the defendant's motion to vacate the Court's decree as to custody of the parties' minor child, I considered the undisputed, uncontroverted facts that the defendant signed a waiver on November 9th, 2005, which the plaintiff submitted to him, and that on that date he also signed the parties' divorce decree; on November 19th, 2005, the plaintiff sent an e-mail to what became her current employer, Defendant's 3; this Court entered its decree, approved by the parties, on December 1st, 2005; and on December 2nd, 2005, the plaintiff had telephone contact with her current employer, which resulted in an interview with that employer on December 9th, 2005; given that the plaintiff and defendant both acknowledge that the defendant signed the waiver, admitted as Defendant's Exhibit 1, based on their conversations and the proposed arrangement regarding custody and visitation.
As to the law applied in this case, I reviewed the decision of the Arkansas Supreme Court in the case of Dickson v. [Fletcher]. Counsel, that citation is 206 S.W3d 229. In that opinion the court said that 'This court has held that constructive fraud for the breach of a legal or equitable duty to another warrants setting aside or modifying a judgment.'
It is the ruling of this Court that given the facts outlined the plaintiff had an equitable duty to notify the defendant of any material change regarding the custody of their child prior to the entry of this Court's decree and that that was not done. Therefore, the defendant's petition to set aside the decree as to custody is granted.
After a break, the court heard testimony about what custody arrangement would be in K.D.'s best interest. The court concluded that, in light of its Rule 60 decision, it had to make an initial custody decision. The court then ruled that it was in K.D.'s best interest to be in his father's custody. The court filed orders on all these points in due course. Ms. Downum's timely appeal brings the matter before us.
II.
Our standard of appellate review has several layers. We review the circuit court's Rule 60 decision to vacate part of the decree for an abuse of discretion. Grubbs v. Hall, 67 Ark. App. 329, 332, 999 S.W.2d 693, 694 (1999). A circuit court abuses its discretion when it makes an error of law. Ford Motor Co. v. Nuckolls, 320 Ark. 15, 20-21, 894 S.W.2d 897, 900 (1995). We evaluate the circuit court's factual findings about the elements of constructive fraud for clear error. Ark. R. Civ. P. 52; Knight v. Day, 343 Ark. 402, 405, 36 S.W.3d 300, 302 (2001). If the circuit court clearly erred about Ms. Downum's alleged pre-decree intention to move, then no constructive fraud occurred, and the court's grant of relief under Rule 60 was an abuse of discretion.
III.
To establish fraud in Arkansas, a plaintiff must prove that the defendant intentionally misrepresented a material fact and that the plaintiff was damaged by justifiably relying on that misrepresentation. Roach v. Concord Boat Corp., 317 Ark. 474, 476, 880 S.W.2d 305, 306-07 (1994). In some fraud cases, however, the plaintiff need not prove the defendant's intent to deceive — constructive fraud, sometimes called fraud in the law, may exist in the complete absence of dishonesty of purpose, evil intent, or moral guilt. Ibid. Unlike actual fraud, constructive fraud is based on a breach of a legal or equitable duty that the law declares to be fraudulent because of its tendency to deceive others. Ibid. Mr. Downum had to prove each factual element of fraud except intent by a preponderance of the evidence. Ibid.
Here, the circuit court concluded that Ms. Downum committed constructive fraud by misrepresenting her intention to continue living in northwest Arkansas. In its order vacating the divorce decree, the circuit court found that she "had an equitable duty to notify [Mr. Downum] of any material change regarding the custody of the parties' minor child (her intent to move to Belle Chase, Louisiana) prior to the entry of this Court's decree, and she failed to do so." Considering the entire record we hold that the circuit court clearly erred by concluding that Ms. Downum intended to move to Louisiana before the decree was entered. Considering the governing law, this factual error undermines the circuit court's legal conclusion that constructive fraud occurred. Roach, 317 Ark. at 477, 880 S.W.2d at 307.
The circuit court relied on Dickson v. Fletcher, 361 Ark. 244, 250-51, 206 S.W.3d 229, 333 (2005). In that divorce case, the husband failed to disclose that he owned Exxon stock in his sworn answers to discovery or in his affidavit of financial means. He also omitted any reference to the stock in his trial testimony. The circuit court found that the husband had committed a constructive fraud and modified the parties' divorce decree. Dr. Dickson had a legal duty to answer discovery requests, and testify, truthfully and completely.
As in Dickson, Ms. Downum's alleged constructive fraud was based on a nondisclosure, rather than an affirmative misrepresentation. Silence can be the basis of a constructive fraud. Ward v. Worthen Bank & Trust Co., N.A., 284 Ark. 355, 359-60, 681 S.W.2d 365, 368 (1984). Generally, however, liability for a nondisclosure may be found only in special circumstances. Ibid. Thus Mr. Downum had to prove more than Ms. Downum's silence. He had to prove that she concealed a material fact known to her and that she had a duty to communicate that fact to him. Ibid.
Unlike the husband in Dickson, Ms. Downum did not give incomplete answers to discovery requests before the decree. She did not omit facts from any pre-decree pleading or court document. She did not lie under oath before the court entered the divorce decree. Ms. Downum did not tell Mr. Downum that she had applied for in-state and out-of-state jobs in mid-November. Nor did she tell him that she might move out of the area if she was offered a better job in a different state. The possibility she might relocate, however, was not a "fact" that Ms. Downum had a duty to disclose to Mr. Downum before the divorce decree was entered.
In general, fraud actions must be based on misrepresentations related to a past event or a present circumstance, not on an intention or a prediction about a future event. P.A.M. Transport, Inc. v. Arkansas Blue Cross and Blue Shield, 315 Ark. 234, 240, 868 S.W.2d 33, 36 (1993). If Ms. Downum had decided to move away from northwest Arkansas in November, then her silence about that decision in the face of the proposed visitation schedule could be a basis for fraud. Ibid. If, however, Ms. Downum honestly represented her then-existing intention to remain in northwest Arkansas when she presented the proposed decree to Mr. Downum and when she presented it to the circuit court, then her nondisclosure cannot be the basis of fraud simply because she later decided to move. Undem v. First Nat'l Bank, 46 Ark. App. 158, 165, 879 S.W.2d 451, 454 (1994); Starling v. Valmac Industries, Inc., 589 F.2d 382, 386-87 (8th Cir. 1979). Put another way, this would be a different case if Ms. Downum had decided to relocate before the circuit court entered the decree.
Contrary to the circuit court's ruling, Mr. Downum did not prove by a preponderance of the evidence that Ms. Downum intended to move to Louisiana at any point before the decree was entered. Ms. Downum testified that, as of December 1st, her only contact with Fresenius or any other potential employer — including several in northwest Arkansas — was a bunch of e-mail job applications. There was no evidence that any potential employer had responded to her e-mail inquiries before December 2nd. She did not quit her former job at Tyson until late December 2005. And there was no evidence that she had any definite plan to move to Louisiana until about three weeks after the divorce was final. At most, Mr. Downum proved that Ms. Downum had not foreclosed the possibility of moving somewhere out of state if offered a better job there. Such an uncertain notion cannot be the basis of fraud. Delta School of Commerce, Inc. v. Wood, 298 Ark. 195, 199-200, 766 S.W.2d 424, 426-27 (1989). A possibility is not a material fact.
Divorce proceedings usually mean that the status quo is undesirable to one or both spouses. Each divorcing party is contemplating changes in their lives at the time of the decree. Requiring each party to disclose sua sponte every possibility that might lead to a change of circumstances in the future would impose a burden both too heavy and unworkable. Granted, Ms. Downum acknowledged at the hearing that, if the tables were turned, she would have liked for Mr. Downum to have told her that he had sent an e-mail to a potential out-of-state employer. A litigant's preference for complete information, however, does not create a legal or equitable duty.
Mr. Downum did not prove constructive fraud, moreover, because he did not show that he justifiably relied on Ms. Downum's nondisclosure. In cases of nondisclosure, especially when the parties are in an adversarial position, each has a duty to investigate the circumstances and protect his own interests. Kinkead v. Union Nat'l Bank, 51 Ark. App. 4, 14-15, 907 S.W.2d 154, 160 (1995). Here, Mr. Downum knew that Ms. Downum was looking for a new job because she worked for his long-time friend at Tyson. Visitation, babysitting, and the normal considerations of custody were certainly issues in the divorce proceeding. Yet Mr. Downum did not ask Ms. Downum informally if she planned to move. Unlike in the Dickson case, he propounded no pre-decree discovery. The law does not allow Mr. Downum to omit all inquiry and then complain that Ms. Downum did not volunteer information. Kinkead, supra.
Finally, in considering whether Ms. Downum violated any legal or equitable duty, we are mindful that the issue here is relocation. Our supreme court has made it clear that Arkansas law now presumes that a custodial parent's decision to move is in the minor's best interest and that a move is not a material change in circumstances. Hollandsworth v. Knyzewski, 353 Ark. 470, 476-85, 109 S.W.3d 653, 657-63 (2003). Ms. Downum urges us to reverse because, she argues, the circuit court's decision circumvents Hollandsworth. Ms. Downum had no duty to advise Mr. Downum that Arkansas law presumes that she could relocate after the divorce without affecting custody. We decline to hold, however, that Hollandsworth means that a parent's pre-divorce plans about relocation are beyond the reach of our general law of fraud. The circuit court clearly erred in finding that Ms. Downum had a pre-decree intention to move. Mr. Downum, moreover, made no inquiry about relocation. In these circumstances, Ms. Downum had neither a legal nor an equitable duty to' disclose mere possibilities about her future. We therefore need not decide this case on the broader ground urged.
IV.
The confluence of important dates made it appear in hindsight that Ms. Downum planned to relocate before the circuit court approved the decree. But the record did not sustain that appearance. The preponderance of the evidence does not demonstrate a pre-decree plan to move. It demonstrates a possibility of relocation. Ms. Downum's nondisclosure of a possibility that Mr. Downum never inquired about was not constructive fraud. The circuit court erred in concluding otherwise, and therefore abused its discretion by granting Rule 60(b) relief. We reverse and remand with instructions to return custody of K.D. to Ms. Downum and provide reasonable visitation to Mr. Downum considering all the material circumstances.
Reversed and remanded with instructions.
Pittman, C.J., Gladwin, and Baker, JJ., agree.
Hart, J., concurs without opinion.
Bird, J., concurs.
Robbins, Griffen, and Miller, JJ., dissent.