Court Opinion

ID: 5115436
Source: CourtListenerOpinion
Date Created: 2021-10-02 19:47:43.895535+00
Date Added: 2024-06-11T08:21:50.375366
License: Public Domain

KAREN R. BAKER, Justice, dissenting. l12The majority holds, and First Arkansas readily concedes, that a lawsuit such as this one requires proof of a duty. The majority then correctly concludes that First Arkansas failed to show the Gill firm owed it a duty under the Arkansas Securities Act, an attorney-client relationship, a contract, a negligence theory, or a fiduciary duty. The majority concludes that the circuit court erred in entering summary judgment on the claims arising under the attorney-malpractice statute, Ark.Code Ann. § 16-22-310, which grants immunity to attorneys from lawsuits brought by persons not in privity with them. The majority relies on the exception contained in Ark.Code Ann. § 16-22-310(a)(l). However, the exception does not create a cause of action. Instead, it merely provides that Ark.Code Ann. § 16-22-310 does not provide immunity where there is a cause of action for fraud. In addition, to fit within the exception, the cause of action must be for actual, not constructive fraud. Wiseman v. Batchelor, 315 Ark. 85, 864 S.W.2d 248 (1993). Actual fraud is established by proving the existence of the following five elements: (1) a false representation, usually of a material fact; (2) knowledge or belief by the defendant that the representation is false; (3) intent to induce reliance on the part of the plaintiff; (4) justifiable reliance by the plaintiff; and (5) resulting damage to the plaintiff. Nicholson v. Century 21, 307 Ark. 161, 818 S.W.2d 254 (1991). Constructive fraud, on the other hand, is fraud based upon a breach of a legal or equitable duty which the law declares to be fraudulent because of its tendency to deceive others, regardless of the moral guilt, purpose, or intent of the perpetrator. Miskimins v. City Nat’l Bank, 248 Ark. 1194, 456 S.W.2d 673 (1970). Simply put, constructive fraud is not an intentional tort and is not an exception to Ark.Code Ann. § 16-22-310. Wiseman, 315 Ark. 85, 864 S.W.2d 248; see also Almand v. Benton Cnty., 145 B.R. 608 (W.D.Ark.1992). Here, First Arkansas asserts only an omission, not an actual false statement or affirmative act of concealment. Absent a false representation, the elements of actual fraud are not met. While concealment of a material fact may be sufficient to support a charge of fraud, “mere silence is not representation, and in the absence of a duty to speak ... silence as to a material fact does not of itself constitute fraud.” Bridges v. United Sav. Ass’n, 246 Ark. 221, 228, 438 S.W.2d 303, 306 (1969). Thus, there must be a duty to speak or some act of concealment. In Baskin v. Collins, 305 Ark. 137, 142, 806 S.W.2d 3, 5 (1991), we stated that fraudulent concealment is when “[o]ne party to a transaction who by concealment or other action intentionally prevents the other from acquiring material information.” Id., 305 Ark. 137, 142, 806 S.W.2d 3, 5 (1991). Here, there is no allegation that the Gill firm in any way prevented First Arkansas from discovering the mortgage. “[T]he general rule is ... [that] absent affirmative fraud, a party, in order to hold another liable in fraud ... must seek out the information he desires and may not omit inquiry and examination and then complain that the other did not volunteer information.” Ward v. Worthen Bank & Trust Co., 284 Ark. 355, 359 681 S.W.2d 365, 368 (1984), (quoting Berkeley Pump Co. v. Reed-Joseph Land Co., 279 Ark. 384, 653 S.W.2d 128 (1983)). Additionally, in Farm Bureau Policy Holders & Members v. Farm Bureau Mutual Insurance Co. of Arkansas, Inc., 335 Ark. 285, 984 S.W.2d 6 (1998), we explained: |14To be guilty of fraud or deceit, a false representation must be made. Fidelity Mortgage Co. v. Cook, 307 Ark. 496, 821 S.W.2d 39 (1991). In order to extend the tort of deceit to instances where the false representation is due to silence, this court has stated that the false representation must include ‘(1) concealment of material information and (2) non-disclosure of certain pertinent information.’ Id. at 500, 821 S.W.2d at 42 (quoting Baskin v. Collins, 305 Ark. 137, 806 S.W.2d 3 (1991)). Id. at 301-302, 984 S.W.2d at 14-15; see also Grayson & Grayson, P.A. v. Couch, 2012 Ark. App. 20, 388 S.W.3d 96 (“Silence can be the basis of a constructive fraud; generally, however, liability for a nondisclosure may be found only in special circumstances .... [The plaintiff], therefore, had to demonstrate that [the defendants] concealed a material fact known to it and that it had a duty to communicate that fact to [the plaintiff].”) (citing Downum v. Downum, 101 Ark.App. 243, 274 S.W.3d 349 (2008)). Again, however, there must be an affirmative duty to disclose. In this case, there is no allegation of affirmative concealment of the mortgage, which was a matter of public record, and the majority has not identified any legal theory under which the Gill firm owed First Arkansas a duty. Additionally, while silence may form the basis of a constructive fraud, constructive fraud is insufficient to bring a cause of action within the exception contained in § 16-22-310(a)(l). Thus, I cannot say the circuit court erred in granting summary judgment in favor of the Gill firm. HART, J., joins.