Court Opinion

ID: 9673361
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:10:39.362574+00
Date Added: 2024-06-11T18:16:21.749059
License: Public Domain

Tom Glaze, Justice.  Appellant Mark Nicholson is an Arkansas licensed real estate broker who brought this suit, alleging fraud, intentional interference with a contractual relationship and breach of contract on the part of Simmons First National Bank (Bank) in Pine Bluff. Nicholson’s suit is premised upon a non-exclusive listing contract he entered into with Public Enterprises Corporation (PEC) whereby he agreed to procure buyers for the purchase of a thirty-seven hundred acre farm named Yellow Bayou Plantation in Chicot County. Nicholson subsequently learned the Bank had the major or real interest in the farm, and asserted that, because of numerous misrepresentations made by the Bank’s officers, Howell Davis and Craig Hunt, Nicholson eventually lost his fee under the aforementioned listing contract. After Nicholson had presented his evidence at trial, the Bank moved for a directed verdict on the three counts, at which time Nicholson voluntarily withdrew his breach of contract claim. The circuit judge directed a verdict in favor of the Bank on the remaining claims of fraud and intentional interference, from which Nicholson brings this appeal. Our review entails determining whether Nicholson’s proof was so insubstantial as to require a jury verdict, if entered in his behalf, to be set aside. See Williams v. Smart Chevrolet Co., 292 Ark. 376, 730 S.W.2d 479 (1987). In reviewing a directed verdict that has been granted, we view the evidence that is most favorable to the party against whom the verdict was granted and give it its highest probative value, taking into account all reasonable inferences deducible from it. Id. We first describe the title and mortgage history of the farm which is the focus of the transaction involved in this litigation. Before and at the time the parties in this case became interested in Yellow Bayou Plantation, the property had been owned by a Jerry Winemiller under his corporation, Yellow Bayou Plantation, Inc. Winemiller had one mortgage on the plantation in the amount of $2.7 million. The Federal Land Bank held that mortgage. Winemiller later obtained a second loan in the amount of $2 million from the Bank, and the Bank took a second mortgage on the farm to secure its loan. In 1985, Winemiller contacted the Bank through its officer, Hunt, and informed the Bank that Yellow Bayou Plantation, Inc. was about to go bankrupt. In an effort to avoid the property becoming entangled in bankruptcy proceedings, the Bank suggested that Winemiller transfer title of the farm out of Winemiller’s corporation; however, because the farm was ladened with the two mortgages, the Band was unable to take title to the property because the indebtedness was in excess of the Bank’s legal landing limits. Thus, in an effort to place title to the farm in a reliable third party, the Bank got one of its attorneys, Harley Cox, to agree to take title in the name of his corporation, PEC, and in October of 1985, title was so transferred. At this time, Federal Land Bank was about to foreclose on its first mortgage, and the Bank successfully induced FirstSouth F. A. to acquire the federal loan to avoid the foreclosure. This was the state of the title and mortgage history when this farm went on the market for sale and Nicholson first became involved. We now review the evidence necessary to determine whether it is sufficient to support Nicholson’s fraud and intentional interference tort claims against the Bank. Through a friend, Joey Hill, Nicholson and his father learned that two investors, David Stokes and Paul Piper, might be interested in buying the Yellow Bayou Plantation, and this led Nicholson to contact Bill Bridgforth, a Pine Bluff attorney, who prepared a listing contract naming PEC by E. Harley Cox, Jr., President, as the owner of the farm. Bridgforth and Cox were partners in the same law firm, and Cox was also attorney for the Bank. The contract initially provided a listing price of $4.5 million and an agent’s fee of ten percent if the farm was “sold or otherwise disposed of’ by Nicholson or any other person, including the owner, during the listing period. After the listing contract was signed on November 22,1985, Bridgforth introduced Nicholson to Bank officers Davis and Hunt, who informed Nicholson that PEC was “a friendly corporation that the Bank owned” and that the Bank held its acquired properties in that corporation. Davis and Hunt told Nicholson to work only with them concerning the sale of the plantation and that he would receive his commission from the Bank. Davis, Hunt and Nicholson then negotiated an amended listing contract reducing the sale price to $4 million and a fee of five, rather than ten, percent. Bridgforth prepared the amended contract, and it was signed by Chris Coker, who was authorized to sign for PEC in Cox’s stead. Stokes and Piper later submitted an offer dated December 17,1985, naming the Bank as seller; they offered to buy the farm for “$4 million contingent upon Yellow Bayou Corporation having a $1.2 million tax loss available and assumable.” Stokes and Piper paid $200,000 earnest money to the Bank on December 19, 1985, which Hunt accepted in the Bank’s behalf. Nicholson testified that, when these transactions took place, Hunt said, “We have a deal.” Nevertheless, both Bridgforth and Hunt told Nicholson that the offer and acceptance could not be signed at that time because such an action would jeopardize the tax credits. Because no one knew whether the tax advantages sought by Stokes and Piper were available, the Bank contacted its tax attorney, Patrick Burrows, for guidance. On January 9, 1986, Burrows wrote Piper the following: Dear Mr. Piper: Our client, Simmons First National Bank, and the present and proposed stockholders of Yellow Bayou Plantation, Inc. offer for sale to you 100 % of the outstanding stock of Yellow Bayou Corporation for the sum of $4,000,000 cash ... it appears that the net operating loss carry-forward of the corporation at its fiscal year end, March 31,1986, will approximate $1,200,000. On January 20, 1986, Piper’s attorney rejected the proposal set forth in Burrows’ January 9 letter. The Bank then refunded Stokes and Piper their earnest money. Nicholson said that he learned the offer had gone sour, and that Davis and Hunt directed both Nicholson and Hill not to talk to Stokes or Piper thereafter. Davis and Hunt purportedly said that they would not sell the farm to Piper. Nicholson’s listing contract expired on January 22, 1986. Between January 28 and February 6,1986, Hunt contacted Mr. Piper concerning whether any of the several foundations controlled by Piper would be interested in investing in the first mortgage held by FirstSouth on the farm in order to give the Bank more time to liquidate the property. Hunt further stated that it was the Bank’s hope that the property could sell for enough money to pay off the first mortgage and still realize something on the Bank’s second mortgage. Hunt explained that the Bank was attempting to get the most money it could out of the deal and to cut its losses. Hunt’s contact resulted in the Bank and Piper, on February 6, 1986, closing a transaction whereby (1) Piper purchased the first mortgage held by FirstSouth for $2.7 million, for which Piper would receive 12% interest, and (2) Piper granted a one-year option to the Bank to purchase the $2.7 million first mortgage. The option also included an agreement for the Bank to release its second mortgage if it failed to purchase Piper’s first mortgage. Mr. Piper testified that the transaction was conceived by Harley Cox, who prepared the documents for the Bank and Piper. Subsequently, the Bank entered into other listing contracts to sell the property, but no sale occurred and no potential purchaser was located. The Bank failed to make any payments on Piper’s note, and on February 16, 1987, Pipe called the note. On February 24, 1987, in an attempt to bypass lengthy and costly foreclosure proceedings, Cox as president of PEC, conveyed title to the farm to Piper by executing a “Deed in Lieu of Foreclosure.” Pursuant to their agreement, the Bank then released its second mortgage to Piper. Nicholson never received any contractual “Agent’s Fee.”  We now address Nicholson’s fraud claim against the Bank, and in doing so, are mindful that fraud is never presumed but must be affirmatively proven by one alleging it by testimony which is clear and convincing. Interstate Freeway Serv., Inc. v. Houser, 310 Ark. 302, 835 S.W.2d 872 (1992). To prove fraud or the tort of deceit, Nicholson was required to show (1) a false representation of a material fact, (2) knowledge or belief on the part of the person making the representation that the representation is false, (3) an intent to induce the other party to act or refrain from acting in reliance on the misrepresentation, (4) a justifiable reliance on the misrepresentation, and (5) resulting damage. Morris v. Valley Forge Insurance, 305 Ark. 25, 805 S.W.2d 948 (1991).  The trial court found that Nicholson failed to show any of the misrepresentations made by the Bank were material. Nicholson claims that Bank officers Davis and Hunt misrepresented that (1) the Bank owned PEC and its acquired property, (2) the Bank was “the boss” and Nicholson would be working for the Bank, (3) Nicholson would receive his commission or fee from the Bank and (4) although Hunt knew better, Hunt never informed Nicholson that the Bank was not the seller. The trial court held that, assuming these claimed misrepresentations were true, none of them affected Nicholson’s decision to procure a buyer under the terms of the parties’ listing contract. Indisputably, Nicholson already had Stokes and Piper as potential purchasers and had executed a listing contract on the thirty-seven hundred acre farm with PEC before Hunt and Davis made any of the aforementioned misrepresentations. Nicholson failed to show how the officers’ misrepresentations prevented him from finding a buyer for the farm or how such statements may have affected the only offer made, which was the $4 million plus $1.2 million tax credit contingency offer from Piper. Mr. Piper, who was called as a witness for Nicholson, testified that he simply was not willing to pay “a straight four million dollars for that property.” The trial court also discounted the materiality of any of the Bank’s misrepresentations by pointing out that the Bank made every effort to meet Piper’s contingency offer by their attorney’s January 9 letter proposing an alternative whereby Piper would purchase Yellow Bayou Plantation Corporation. The trial court noted that it was the Bank’s benefit for the deal with Stokes and Piper to be consummated because the $2.7 million first mortgage on the farm was never in jeopardy of being satisfied; however, the second mortgage, held by the Bank, would not be fully satisfied, but the Bank could at least cut some of its losses if the deal with Piper was consummated. Again, Nicholson offered no proof on how Hunt’s and Davis’s false statements in any way impaired his contract rights or decisions in this matter.  Although the trial court’s decision was premised on the materiality issue discussed above, we also believe Nicholson failed to show the claimed misrepresentations caused his damage. The parties’ listing contract provided that Nicholson would be paid a fee if the property was sold or “otherwise disposed of by the owner,” after the expiration or termination of the listing period when such a disposition of the property resulted from information obtained from Nicholson. While the property was never sold, the farm was clearly “otherwise disposed of” when PEC eventually deeded the property to Piper. Under the terms of the listing contract, Nicholson was entitled to a fee. While he initially filed suit against Cox, PEC, Hunt and Davis alleging breach of contract and fraud, Nicholson dismissed those claims and limited his actions to the torts of fraud and intentional interference against the Bank. While Nicholson now claims it dismissed the breach of contract claim because PEC and Cox were “turnips,” the record simply fails to support such an assertion. In sum, Nicholson had contractual claims for his fee and failed to pursue them, but, most important here, he again has failed to show that any of the Bank’s misrepresentations caused him to lose either his commission or his cause of action to obtain it from the parties responsible under the listing contract.  In his second argument, Nicholson argues the Bank intentionally interfered with his contractual relationship. The elements necessary to prove such an action are as follows: (1) existence of a valid contractual relationship; (2) knowledge of that relationship or business expectancy on the part of the interferer; (3) intentional interference causing breach or termination of the relationship or expectancy; and (4) resulting damage to the party whose relationship or expectancy was disrupted. Stebbins and Roberts, Inc. v. Halsey, 265 Ark. 903, 582 S.W.2d 266 (1979); Navorro-Monzo v. Hughes, 297 Ark. 444, 763 S.W.2d 635 (1989). In Navorro-Monzo this court stated: ... a successful claim for interference with a contractual relation must allege and prove that a third party either did not enter into or failed to continue with claimant as a result of the unauthorized conduct of the defendant . . . 297 Ark. at 447, 763 S.W.2d at 636. Nicholson contends the Bank interfered with his contractual relationship in the following two respects: (1) when the Bank’s attorney, Burrows, wrote Piper on January 9, 1986, without informing Nicholson, that the “tax loss contingency” part of Piper’s offer could not be met solely through the conveyance of the farm property, but could only be realized by Piper’s purchasing the stock of Yellow Bayou Plantation Corporation; and (2) when the Bank contacted Piper after the listing agreement expired to request that Piper purchase FirstSouth’s first mortgage and in obtaining a one-year option to buy the first mortgage.  The answer to Nicholson’s first contention under this point is found in our earlier discussion pertaining to the clear purpose of Burrow’s January 9 letter to Piper. The evidence is uncontradicted that the Bank’s tax attorneys were attempting to meet Piper’s contingency offer by proposing Piper buy the stock of Yellow Bayou Plantation Corporation. The Bank’s action in this respect was made “in furtherance” of the terms of the parties’ listing contract, not “in interference” with them. If Piper had accepted the proposal, the farm would have been reconveyed by PEC to the corporation and such a sale and disposition of the property would have entitled Nicholson to his fee under the listing contract.  Nicholson’s second contention focuses on the Bank’s contact of Piper after the listing contract expired and its officers’ directive that Nicholson and Hill should not talk to Piper or Stokes. Once again, we mention that, irrespective of Hunt’s or Davis’s false statements, Nicholson’s agreement with PEC was still in effect even after the listing period expired. As we discussed in Nicholson’s fraud claim, Nicholson was entitled to a commission even after the listing period expired if the property was “otherwise disposed of’ by the owner when such disposition resulted from information obtained through Nicholson. The Bank gained knowledge of Piper through Nicholson, and while no sale was ever made to Piper and Stokes, PEC eventually transferred title of the farm to Piper when the Bank’s efforts to sell the property fell through. The disposition of the property to Piper triggered Nicholson’s rights under the contract, making Nicholson entitled to a fee. Obviously, if Nicholson was entitled to his contractual commission then it follows that no intentional interference with his contract rights existed. Put simply, Nicholson failed to show PEC breached their contract by refusing to pay any fee or commission, much less that the Bank’s interference caused Nicholson to lose such fee expectancy under the PEC/Nicholson contract. As a consequence, Nicholson failed to meet both the elements (3) and (4) in his attempt to prove tortious interference with a contractual relation. The trial judge did not err in granting the Bank’s motion for directed verdict and we affirm. Holt, C.J., Newbern and Brown, JJ., dissent.