Court Opinion

ID: 3032943
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:48:45.407266+00
Date Added: 2024-06-11T09:49:49.100162
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 03-1465
                                    ___________

Unleashed Innovations, Inc.,             *
                                         *
             Appellant,                  *
                                         * Appeal from the United States
      v.                                 * District Court for the
                                         * Eastern District of Arkansas.
Deltic Timber Corporation,               *    [UNPUBLISHED]
                                         *
             Appellee.                   *
                                    ___________

                               Submitted: September 12, 2003

                                   Filed: November 12, 2003
                                    ___________

Before WOLLMAN, HEANEY, and RILEY, Circuit Judges.
                         ___________

PER CURIAM.

       Unleashed Innovations, Inc. (ULI) appeals from the district court’s1 order
granting summary judgment to Deltic Timber Corporation (Deltic). ULI asserts that
the district court improperly weighed the evidence and that it failed to properly apply
Arkansas law regarding constructive fraud. We affirm.

      1
       The Honorable George Howard, Jr., United States District Judge for the
Eastern District of Arkansas.
                                         I.
       ULI initiated negotiations with Deltic in November 1999 for the purchase of
166 acres of land in West Pulaski County, Arkansas. Both parties knew that it was
important to ULI that the property have access to city water. Prior to the December
13, 1999, closing date, Deltic promised that ULI could tie on to its water lines free
of charge and granted the easements necessary to install water lines across Deltic’s
property. ULI knew that it also needed city approval to guarantee access to city
water. Because the property was in an established water district, ULI believed that
Little Rock would quickly approve its tie-on application. In the summer of 2000,
however, Little Rock unexpectedly imposed restrictions on tie-ons because of water
shortages and thus denied ULI’s application, with the result that ULI could not
develop the property as planned.

      ULI then filed this action in district court, asserting that it had relied on
Deltic’s promise that water would be available. Deltic filed a motion for summary
judgment, stating that it made no misrepresentations in negotiations and could not be
held liable for actions by the water district subsequent to the formation of the
contract.

                                          II.
        We review de novo a grant of summary judgment. Evergreen Invs., LLC v.
FCL Graphics, Inc., 334 F.3d 750, 753 (8th Cir. 2003). Summary judgment is proper
if, after viewing the evidence and construing it in a light most favorable to the
nonmoving party, there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. Id.; Fed. R. Civ. P. 56(a). After the moving
party carries its burden of showing there is no genuine issue of material fact, the
nonmoving party has the burden of providing specific facts to demonstrate that there
are genuine issues of fact such that a rational trier of fact could find for the
nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586-87 (1986). Because this is a diversity case, we also review de novo the district

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court’s application of state law. Evergreen, 334 F.3d at 753. Construing the facts in
a light most favorable to ULI, we conclude that the district court properly found that
ULI could not reasonably establish that Deltic committed constructive fraud under
Arkansas law.

        The Arkansas Supreme court has defined the elements of constructive fraud as:
“(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.”
Farm Bureau Policy Holders & Members v. Farm Bureau Mut. Ins. Co., 984 S.W.2d
6, 14 (Ark. 1998). A claim for constructive fraud, unlike actual fraud, may lie even
if the misrepresentation was not intentionally false. See Yarborough v. DeVilbiss Air
Power, Inc., 321 F.3d 728, 730 (8th Cir. 2003) (constructive fraud does not require
proof of scienter). The tort recognizes a duty in certain situations not to make
comments or promises that have a tendency to deceive others, regardless of motive.
South County, Inc. v. First W. Loan Co., 871 S.W.2d 325, 327 (Ark. 1994). A charge
of constructive fraud “must be sustained by clear, strong and satisfactory proof.”
Knight v. Day, 36 S.W.3d 300, 303 (Ark. 2001).

       ULI submitted no evidence to support the first element of a constructive fraud
claim. Deltic promised to do everything in its power to facilitate ULI’s water access,
including free tie-ons and easements, and it did not renege on those promises. ULI
and Deltic both knew, and Deltic never misrepresented, that the city ultimately
controlled the water flow and distribution throughout the city. ULI failed to provide
counter-evidence establishing a material issue of fact whether Deltic guaranteed water
availability or knew that a water shortage would likely prevent access.

      The judgment is affirmed.
                     ______________________________

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