Opinion ID: 1491482
Heading Depth: 1
Heading Rank: 1

Heading: The Stanleys

Text: In his second amended complaint, Mr. McAdams alleged that the Stanleys were liable for fraud pursuant to Title 18, Ark.Code Ann., and the Arkansas Fraudulent Conveyance Act, Ark.Code Ann. §§ 4-59-201 through 4-59-207 because they purchased three diamonds from Ms. McAdams for less than their appraised value, without asking for proof of ownership, and replaced the diamonds with cubic zirconia. Mr. McAdams also alleged that he wrote the Stanleys seeking restitution, and they refused. Mr. McAdams asked for $40,000, referred to as restitution at one point and as damages at another, and $80,000 in punitive damages on the ground that the fraud was willful. Mr. McAdams argues that the Chancellor erred in dismissing his claim for fraud and fraudulent conveyance against the Stanleys. We affirm on this point. The Stanleys moved to dismiss the complaint on the ground that it did not meet the requirements of Ark. R. Civ. P. 9(b) which requires statement of the circumstances constituting fraud with particularity. The Stanleys also argued that the Chancellor lacked jurisdiction to hear a claim for monetary damages, citing Ark. R. Civ. P. 12(h)(3). After hearing oral arguments regarding the Stanleys' motion, the Chancellor granted the motion and dismissed the complaint without stating the basis for the ruling. Mr. McAdams argues that his complaint against the Stanleys alleges specific facts constituting fraud. We disagree and hold that even if jurisdiction in chancery court was proper, the Chancellor properly dismissed the second amended complaint because Mr. McAdams failed to allege the circumstances constituting the fraud claim with particularity. See Ark. R. Civ. P. 9(b). To establish 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 upon the representation; and (5) damage suffered as a result of the reliance. Scollard v. Scollard, 329 Ark. 83, 947 S.W.2d 345 (1997). Mr. McAdams did not allege facts sufficient to satisfy those elements. As to Mr. McAdams's allegation that the conveyance was fraudulent pursuant to the Arkansas Fraudulent Conveyance Act, Ms. McAdams's sale of diamonds to the Stanleys clearly does not constitute a fraudulent conveyance as described in Ark.Code Ann. § 4-59-204 because Mr. McAdams is not a creditor of Ms. McAdams.