Opinion ID: 1728723
Heading Depth: 1
Heading Rank: 2

Heading: The deceit verdict

Text: PAM introduced testimony of its employees and some BCBS employees to the effect that, during negotiation of the agreement, BCBS personnel had stated that PAM's liability in any given contract year could decrease below the maximum liability stated in the contract if the number of PAM employees decreased. PAM contended that was a misrepresentation made to induce it to enter the agreement, and it suffered damages accordingly. In its first two points of appeal, PAM argues the jury's award of damages for deceit was not inconsistent with its recovery on the contract as it was injured in excess of its contract recovery, and thus it was improper to have set the verdict aside. In each of the breach of contract verdicts favoring PAM, the jury awarded damages to PAM calculating the liability cap for each contract based on PAM's interpretation of the maximum liability clause. The Trial Court set aside the deceit verdict, holding that, as the jury had determined that the contract was as PAM had interpreted it to be, there was no misrepresentation. Although it is somewhat inverted, we find no fault with the Trial Court's logic, but in addition we choose to state a different rationale for our agreement with the result reached. One of the elements of deceit is that the misrepresentation alleged must typically be a misrepresentation of fact. Delta School of Commerce, Inc. v. Wood, 298 Ark. 195, 766 S.W.2d 424 (1989). In the context of negotiating a contract, a misrepresentation sufficient to form the basis of a deceit action may be made by one prospective party to another and must relate to a past event, or a present circumstance, but not a future event. An assertion limited to a future event may be a promise that imposes liability for breach of contract or a mere prediction that does not, but it is not a misrepresentation as to that event. 1 E. ALLEN FARNSWORTH, FARNSWORTH ON CONTRACTS § 4.11 (1990); see also, Delta School of Commerce, supra (citing Anthony v. First National Bank of Magnolia, 244 Ark. 1015, 431 S.W.2d 267 (1968); Lawrence v. Mahoney, 145 Ark. 310, 225 S.W. 340 (1920); Harriage v. Daley, 121 Ark. 23, 180 S.W. 333 (1915); and Conoway v. Newman, 91 Ark. 324, 121 S.W. 353 (1909)). The representations in question illustrated BCBS's interpretation of the liability cap. Since these representations were made before any contract was signed, they could not have represented a past event or present circumstance. These representations could only have alluded to BCBS's future performance of contracts to be executed in the future. In these circumstances, the Trial Court was correct to set aside the deceit verdict.