Court Opinion

ID: 6317071
Source: CourtListenerOpinion
Date Created: 2022-02-24 16:02:17.365584+00
Date Added: 2024-06-11T09:00:33.438837
License: Public Domain

Cite as 2022 Ark. 42
               SUPREME COURT OF ARKANSAS
                                No.   CV-20-728

KBX, INC.; STEVEN MICHAEL KEITH, SR.,     Opinion Delivered: February 24, 2022
INDIVIDUALLY; STEVEN MICHAEL
KEITH, JR., INDIVIDUALLY; JEFFREY         APPEAL FROM THE LONOKE
SHAY SEBREE, INDIVIDUALLY                 COUNTY CIRCUIT COURT
                                          [NO. 43CV-14-410]
                          APPELLANTS
                                          HONORABLE SANDY HUCKABEE,
V.                                        JUDGE

ZERO GRADE FARMS, A PARTNERSHIP,
ALSO D/B/A ISBELL FARMS; MARK
ISBELL, INDIVIDUALLY; CHRIS ISBELL,
INDIVIDUALLY; SHANE ISBELL,
INDIVIDUALLY; JUDY ISBELL,
INDIVIDUALLY; JEREMY JONES,
INDIVIDUALLY; K&K FARM SERVICE,
INC., ALSO D/B/A K&K FARM SERVICES;
EDWARD SCHAFER & SONS, A
PARTNERSHIP; RONALD SCHAFER AND
ROGER SCHAFER, AS TRUSTEES OF THE
EDWARD BURNARD SCHAFER Q-TIP
TRUST; RONALD SCHAFER,
INDIVIDUALLY; DEE ANNE SCHAFER,
INDIVIDUALLY; CLIFFORD SCHAFER,
INDIVIDUALLY; RACHEL SCHAFER,
INDIVIDUALLY; ROGER SCHAFER,
INDIVIDUALLY; PAMELA SCHAFER,
INDIVIDUALLY; DONALD SCHAFER,
INDIVIDUALLY; DONNA SCHAFER,
INDIVIDUALLY; GARY HARDKE FARMS,
A PARTNERSHIP; GARY HARDKE,
INDIVIDUALLY; MELODIE HARDKE,             REVERSED AND DISMISSED IN PART;
INDIVIDUALLY, AND BIGFOOT AG, INC.        AFFIRMED IN PART; REVERSED AND
                                          REMANDED IN PART.
                           APPELLEES
                                JOHN DAN KEMP, Chief Justice

       Appellants KBX, Inc. (“KBX”); Steven Michael Keith, Sr., individually (“Steven”);

Steven Michael Keith, Jr., individually (“Michael”); Jeffrey Shay Sebree, individually (“Shay”)

(collectively “appellants”) (Steven, Michael, and Shay collectively as “the KBX Individuals”)

appeal a Lonoke County Circuit Court order reflecting a jury verdict awarding

$5,954,198.57 in compensatory damages, jointly and severally, against KBX, the KBX

Individuals, Turner Grain, Inc. (“TGI”), and the estate of Jason Coleman (“Coleman” and

“Coleman’s estate”), and $6,074,196.00 in punitive damages, jointly and severally, against

Steven, TGI, and Coleman to appellees Zero Grade Farms, a partnership, also d/b/a Isbell

Farms (“Zero Grade”); Mark Isbell, individually; Chris Isbell, individually; Shane Isbell,

individually; Judy Isbell, individually; Jeremy Jones, individually; K&K Farm Service, Inc.,

also d/b/a K&K Farm Services (“K&K”); Edward Schafer & Sons, a partnership (“Schafer”);

Ronald Schafer and Roger Schafer, as trustees of the Edward Burnard Schafer Q-Tip Trust;

Ronald Schafer, individually; Dee Anne Schafer, individually; Clifford Schafer, individually;

Rachel Schafer, individually; Roger Schafer, individually; Pamela Schafer, individually;

Donald Schafer, individually; Donna Schafer, individually; Gary Hardke Farms, a

partnership (“Hardke”); Gary Hardke, individually; Melodie Hardke, individually; and

Bigfoot Ag, Inc. (collectively “the farmers”).1 For reversal, appellants raise four arguments,

       1
         KBX and the KBX Individuals are the only appellants in this case. TGI, Coleman’s
estate, and the other named defendants did not appeal. Coleman died during the course of
the litigation on January 7, 2019.

                                              2
but only two are necessary to dispose of this case. We reverse and dismiss the judgment as to

KBX and the KBX Individuals. We affirm the circuit court’s dismissal of KBX’s

counterclaims. We also reverse the circuit court’s award of attorney’s fees and remand for

recalculation of an award consistent with this opinion.

                                        I. Background

                                      A. Factual History

       This case involves the farmers’ dispute with KBX, a grain exporter and merchandiser,

and the KBX Individuals over a series of written contracts (“Farmers Grain Contracts”) for

the purchase of rice.

       By 2014, TGI, a grain merchandiser,2 had established a business practice of quoting

rice prices that were well above the market value in order to procure business. TGI had

engaged in the practice of offering its customers above-market prices and then would use the

profits from its corn and freight contracts to cover the losses from its rice transactions.

Certain individuals in the rice industry had alerted KBX of TGI’s business practice. In 2014,

TGI arranged to purchase the farmers’ rice.

       In July 2014, the farmers entered into the Farmers Grain Contracts with TGI to sell

their rice at a specified price per bushel. Pursuant to the Farmers Grain Contracts, the

farmers were designated as the “Seller,” TGI was designated as the “Broker,” and an

undisclosed third party was designated as the “Purchaser.” The Farmers Grain Contracts

       2
           Coleman, Dale Bartlett, and Christopher Taylor worked for TGI.

                                              3
stated that “[t]his agreement is entered into between Turner Grain, Inc. (Broker) and Seller

of rice (Seller).” The farmers executed their contracts “F.O.B. farm,” “F.O.B. Delivered West

Memphis,” or “F.O.B. Bins Carlisle.” The farmers agreed to deliver specified quantities of

rice, and in exchange, TGI agreed to pay the farmers a collective amount totaling

$5,954,198.57. The majority of the farmers’ rice was delivered to Consolidated Grain and

Barge Company (“CBG”) in West Memphis where the rice was placed on barges. KBX was

not a party to the Farmers Grain Contracts.

        While TGI was listed as a broker in the Farmers Grain Contracts, TGI was also

known in the industry as a “simultaneous” or “back-to-back” dealer or merchandiser. Once

TGI took possession of the rice, it then sold the farmers’ rice to KBX. The record reveals, in

a spreadsheet trial exhibit, that at least 39 separate contracts existed between KBX and TGI

concerning the farmers’ rice. During the summer of 2014, KBX paid TGI in excess of $28

million in the form of wire transfers and checks, and $5,954,198.57 of that $28 million was

allocated as payment in full for the farmers’ rice. Ultimately, TGI collapsed on August 12,

2014. While KBX had paid TGI for the rice, TGI in turn had failed to pay the farmers in

full.

        On August 18, 2014, after TGI’s collapse and prior to filing the lawsuit, the farmers

served preservation letters on KBX and Steven and instructed appellants to preserve all

written and electronic documentation about the rice-sales transactions for purposes of

discovery. The preservation letters covered all documentation and communications from

May 15, 2014, through August 18, 2014.

                                              4
                                   B. Procedural History

       On August 22, 2014, the farmers filed suit in Lonoke County Circuit Court seeking

payment for the delivery of their respective rice in July and August 2014. In their sixth

amended complaint (“operative complaint”), dated November 26, 2019, the farmers named

the following parties as defendants: Agri-Petroleum Sales, LLC; Agribusiness Properties,

LLC; Brinkley Truck Brokerage, LLC; Christopher Taylor, individually; Coleman Duck

Club, LLC; Coleman Transportation, LLC; Dale Bartlett, individually, Gerald W. Loyd;

Ivory Rice, LLC; Anna Hurst, special administrator of the estate of Jason Coleman, deceased;

Jeffrey Shay Sebree, individually; KBX, Inc.; LJTC, LLC; NEA Truck Brokers, LLC;

Neauman Coleman, individually; Neauman Coleman & Co. LLC; Rice America, Inc.; Rice

Arkansas, Inc.; Steven Michael Keith, Jr., individually; Steven Michael Keith, Sr.,

individually; Turner Commodities, Inc.; Turner North, LLC; and Turner Grain, Inc., d/b/a

Turner Grain.3

       In their operative complaint, the farmers alleged that TGI had acted as a broker

between the farmers and KBX. According to the farmers, TGI and KBX created a business

       3
          On May 10, 2017, the circuit court entered an order dismissing without prejudice
the following defendants: Agri-Petroleum Sales, Coleman Duck Club, Coleman
Transportation, NEA Truck Brokers, Neauman Coleman, Neauman Coleman & Co., Rice
America, and Rice Arkansas. Subsequently, on May 17, 2017, the circuit court entered a
corrected order stating that Agri-Petroleum Sales, LLC had been dismissed in error and
remained a defendant in the action. Defendant Gerald Loyd filed for Chapter 7 bankruptcy
in bankruptcy court and was dismissed without prejudice by the circuit court in an order
dated February 12, 2018. At trial in 2020, these defendants were not named as defendants
in Jury Instruction No. 9. On February 20, 2020, the circuit court also dismissed Don Kittler
Jr. as a plaintiff.

                                             5
practice wherein KBX used TGI to act as its broker and its payment agent in negotiated

contracts. Specifically, the farmers asserted eleven causes of action: (1) breach of contract by

KBX in failing to fulfill its obligations under the contracts with the farmers for rice it agreed

to purchase through its broker, TGI; (2) alternatively, breach of contract by all other

defendants under the alter-ego theory for failure to fulfill their obligations under the

contracts with the farmers; (3) conversion by KBX in that KBX had refused and failed to pay

what was owed to the farmers, and that KBX exercised dominion and control over the

farmers’ property inconsistent with their rights; (4) conversion of rejected rice by KBX; (5)

in the alternative, conversion by all other defendants; (6) fraud (deceit) through false

representation made to induce the farmers to enter the contracts; (7) in the alternative,

constructive fraud; (8) theft by deception in their dealing with the farmers; (9) violation of

the Arkansas Deceptive Trade Practices Act; (10) civil conspiracy; and (11) unjust

enrichment. In their prayer for relief, the farmers sought, inter alia, monetary damages,

including punitive damages, against all defendants. The farmers also demanded a trial by

jury. KBX counterclaimed against the farmers for abuse of process, interference with a

contractual relationship or business expectancy, defamation, perjury under the civil-action-

by-crime-victim statute, and conspiracy.

       The parties filed numerous motions throughout the litigation. During discovery, the

farmers sent interrogatories to appellants to confirm that appellants had preserved the

documents set forth in the preservation letters. According to Alvey Matlock, an employee of

Guardian Forensics and Data Recovery, the KBX Individuals, between August 1, 2013, and

                                               6
January 1, 2015, sent and received a total of 46,219 text messages. Out of those 46,219

messages, 32,316 were attributed to Shay, 11,927 to Michael, and 1,976 to Steven. But Shay

produced only 333 of the messages while Michael produced 56, and Steven produced zero.

As a result, the farmers filed a motion for contempt and sanctions against KBX. During a

subsequent hearing, the circuit court orally granted the farmers’ motion for a finding of

spoliation against KBX for the intentional deletion of cell-phone data that was within the

scope of permissible discovery. On June 2, 2017, the circuit court entered an order granting

the farmers’ motion for a finding of spoliation against KBX. Two years later, on May 30,

2019, the circuit court entered an order granting the farmers’ motion for a finding of

spoliation against the KBX Individuals.

       The case proceeded to trial. The farmers nonsuited their claims of breach of contract,

theft by deception, and deceptive trade practices. On February 20, 2020, the circuit court

entered an order granting the farmers’ motion to nonsuit Count 1 (breach of contract by

KBX) and Count II (breach of contract by other defendants). On February 21, the circuit

court entered an order granting the farmers’ motion to nonsuit Count VIII (theft by

deception) and Count IX (violation of the Arkansas Deceptive Trade Practices Act). The

farmers proceeded to trial only on the remaining tort claims and a claim of unjust

enrichment.

       From January 31 through February 24, 2020, the circuit court conducted a jury trial

during which thirty-three witnesses testified and hundreds of exhibits were introduced into

evidence. Of those thirty-three witnesses, the following farmers testified. First, Gary Hardke

                                              7
of Hardke Farms testified that Coleman approached him about purchasing his rice. Hardke

stated that he had never had any dealings with Coleman before July 2014. He testified that

he entered into a contract on July 7, 2014, for 90,000 bushels of rice at $7.15 per bushel

F.O.B. (Free on Board) farm. He stated that once the rice left his farm, it went to CBG in

West Memphis. Hardke’s contract with TGI listed Hardke as the seller, TGI as the broker,

and the purchaser was unidentified. According to Hardke, Coleman stated that KBX was

buying his rice. Hardke further testified that he was to receive $691,478.07 for his 96,710.22

bushels of rice, but he never received payment. Under cross-examination, when counsel

asked, “[Y]ou never had any contact with these people, right, . . . no phone calls, no meetings,

no emails, no texts, no contact whatsoever,” Hardke replied, “No.” KBX counsel asked, “Did

Jason Coleman ever tell you that KBX paid him for your rice?” Hardke replied, “No.”

       Mark Isbell of Zero Grade Farms testified that Coleman called his father, and they

had a meeting with Coleman at their shop on the farm on or about June 27, 2014. He

testified that Zero Grade Farms had no prior dealings with either TGI or KBX. When asked

if he knew about TGI and Coleman, Isbell responded, “Prior to that meeting, I think we’d

cross paths, maybe, briefly at a—at like a rice conference or something, but I didn’t know

really anything about [Coleman] prior to that.” Isbell testified that he executed a series of

contracts with Coleman for 310,836.86 bushels, and Zero Grade started shipping rice on

July 8, 2014. He testified that he expected $2,330,337.98 for the rice pursuant to his

contracts. He testified that “ten, 12 days into the . . . first set of contracts, Jason became a

little more difficult to get a hold of.” Isbell testified that he personally went to KBX’s office

                                               8
on August 12 or 13 and showed Shay a spreadsheet that he had created indicating the loads

that Zero Grade had shipped to the KBX barges at CGB, asked that KBX pay the farmers

directly, and requested that KBX give back the rice that was on the barges. However, on cross-

examination, Isbell acknowledged that no one from KBX had been present at the farm

meeting, no one had gotten KBX on a phone call for that meeting, no one had written a

letter to KBX about that meeting, and there had been no communication with KBX “at that

time [of the execution of the contracts].” Isbell further stated that, with respect to the

negotiation of the contract, no one at Zero Grade was communicating with anyone “other

than or outside TGI.” When asked whether he had communicated with KBX during the

contracting, he stated that “[o]ther than crossing paths potentially at conferences, personally,

no.”

       Ronald Schafer testified that his family’s business, Edward Schafer & Sons, was

contacted by Coleman in July 2014 about purchasing rice. Schafer stated that Coleman “sent

a guy over there to—to me to sign the contract, and I signed the contract, and we immediately

started shipping rice.” Schafer testified that “[the contract] was from Turner Grain, Inc., and

it had a 7.25 price on there.” According to Schafer, his farm was to ship 182,283.02 bushels

at $7.25 for a total of $1,321,554.07. Schafer testified that the only contact he had with KBX

was when he “called up Shay Sebree [after the collapse of TGI] and asked him for some of

my tickets ’cause I . . . couldn’t get any tickets from anybody.” On cross-examination, when

asked whether, during the process of negotiating with Coleman, he had talked to anyone at

KBX, Schafer replied, “Not—not at that time.”

                                               9
       Jon Trickey of K&K testified that Chris Taylor of TGI approached him in July 2014

about purchasing his rice. Trickey stated that his contract reflected a purchase of 250,000

bushels at $7.25 per bushel. Trickey testified that ultimately 242,872.89 bushels were

removed from the K&K storage facilities and that he expected to receive $1,760,828.45 for

the rice pursuant to the contract. During cross-examination, Trickey confirmed that payment

was made from TGI—not KBX. Trickey further acknowledged that he had no contact with

“the three [KBX] individuals” about the contract. Additionally, Don Kittler of K&K testified

that K&K was in the business of buying and selling grain. Kittler stated that he had not been

paid in full for the rice that he delivered to the barges in July 2014. On cross-examination,

he admitted that he had received partial payment from TGI, but the check had bounced.

Also on cross-examination, Kittler testified that he had heard the farmers’ expert state that

KBX had paid for all the grain it had purchased from TGI. When counsel asked Kittler if he

wanted KBX to pay again, he responded, “I hadn’t been paid for my grain.”

       Dr. Gail Cramer, the farmers’ expert in agricultural economics, testified that he had

reviewed all the settlement and payment information. Dr. Cramer stated in the affirmative

that after reviewing the payment information, he knew “that KBX had paid on all of those

contracts.” Dottie Morrison, KBX’s bookkeeper, testified that her accounting records had

been made available to the farmers. She testified that she had reviewed the transactions,

payments, and settlement sheets. She testified that KBX had paid TGI for “every bit of [the

farmers’ rice.]” Appellants’ expert Cheryl Shuffield, a certified public accountant, testified

that she and her accounting team verified that KBX had paid TGI the money that it owed

                                             10
pursuant to its contracts with TGI. When asked, “Is there any doubt in your testimony . . .

that KBX paid Turner Grain for the rice that it purchased[,]” Shuffield responded, “There is

no doubt in my mind that they did.”

       After the farmers rested and again at the close of the testimony, appellants moved for

a directed verdict on all claims against them. They asserted that substantial evidence did not

support the farmers’ claims for deceit, constructive fraud, conversion, conspiracy, and unjust

enrichment. The circuit court denied both motions. On the issue of spoliation, the jury was

instructed that it could draw an adverse inference against appellants if it found that

appellants had, in fact, destroyed text messages or other data.

       On February 25, 2020, the jury completed its interrogatories and found that the

farmers had proved at least one of their claims of deceit, constructive fraud, conversion,

conspiracy, and unjust enrichment against KBX, the KBX Individuals, TGI, and Coleman’s

estate. The jury awarded $5,954,198.57 in compensatory damages, the value of the rice

according to the terms of the Farmers Grain Contracts, and allocated the following

percentages of fault for the damages to Zero Grade, Hardke, K&K, and Schafer: 1% to KBX,

3% to Steven, 3% to Michael, 1% to Shay, 46% to TGI, 46% to Coleman’s estate, 0% to

Bartlett, 0% to Taylor, 0% to Gavilon Grain LLC as a nonparty, and 0% to TGMI as a

                                             11
nonparty.4 The jury also returned a punitive-damages verdict against Steven, Coleman’s

estate, and TGI in the amount of $6,074,196.00. KBX and the other KBX Individuals were

not found liable for punitive damages.

       On March 19, 2020, the circuit court entered a judgment reflecting the jury’s award

of compensatory damages, jointly and severally, against KBX, the KBX Individuals, TGI,

Coleman’s estate, Agri-Business Properties LLC, Agri-Petroleum Sales LLC, Brinkley Truck

Brokerage LLC, Ivory Rice LLC, LJTC LLC, Turner Commodities Inc., and Turner North

LLC, in favor of the farmers in the total amount of $5,954,198.57, plus prejudgment and

postjudgment interest. The circuit court also entered a judgment for punitive damages,

jointly and severally, against Steven, TGI, Coleman’s estate, Agri-Business Properties LLC,

Agri-Petroleum Sales LLC, Brinkley Truck Brokerage LLC, Ivory Rice LLC, LJTC LLC,

Turner Commodities Inc., and Turner North LLC, in favor of the farmers in the total

amount of $6,074,196.00, plus postjudgment interest.

       4
        The jury found that Agri-Business Properties LLC, Ivory Rice LLC, Brinkley Truck
Brokerage LLC, Turner North LLC, Turner Commodities, Inc., LJTC LLC, and Agri-
Petroleum Sales, LLC, were liable for TGI’s acts under a piercing-the-veil theory.

         One of the original defendants, Turner Grain Merchandising, Inc. (“TGMI”), later
filed for Chapter 11 bankruptcy protection. After the circuit court dismissed TGMI without
prejudice, the case was removed to United States Bankruptcy Court. Following a hearing,
the bankruptcy court entered an order on September 4, 2015, ruling that “state law issues
predominate over bankruptcy issues” and concluding that it “should abstain from hearing
the State Court Lawsuit [pursuant to 28 U.S.C. section 1334(c)(1)], and remand the State
Court Lawsuit to the Circuit Court of Lonoke County, Arkansas.” Subsequently, in
December 2015, the circuit court dismissed TGMI without prejudice from the lawsuit. At
trial, the jury was given an instruction on TGMI as a nonparty.

                                            12
       Appellants filed a motion for judgment notwithstanding the verdict on April 2, 2020.

The circuit court did not rule on the JNOV motion, and it was deemed denied on May 4,

2020. On May 20, the circuit court entered a judgment that included a certificate pursuant

to Rule 54(b) of the Arkansas Rules of Civil Procedure. KBX and the KBX Individuals timely

filed their notices of appeal.

       The circuit court also entered a fee judgment and assessed attorney’s fees and costs,

jointly and severally, against KBX and the KBX Individuals in the amount of $526,818.93,

as a sanction for alleged spoliation of evidence. KBX and the KBX Individuals timely

appealed the fee judgment.

                                         II. Jury Verdict

       While appellants raise four arguments on appeal, we begin our analysis with their

second argument concerning whether substantial evidence supports the jury’s verdict on the

farmers’ five claims of conversion, deceit, constructive fraud, conspiracy, and unjust

enrichment.

                                    A. Standard of Review

       We will reverse the denial of a motion for directed verdict or a motion for JNOV if

there is no substantial evidence to support the jury’s verdict, and the moving party is entitled

to judgment as a matter of law. Ark. Realtors Ass’n v. Real Forms, LLC, 2014 Ark. 385, at 9,

442 S.W.3d 845, 851. Substantial evidence is that which goes beyond suspicion or conjecture

and is sufficient to compel a conclusion one way or the other. Id., 442 S.W.3d at 851. It is

not our place to try issues of fact; rather, we simply review the record for substantial evidence

                                               13
to support the jury’s verdict. Id., 442 S.W.3d at 851. In determining whether there is

substantial evidence, we view the evidence and all reasonable inferences arising therefrom in

the light most favorable to the party on whose behalf judgment was entered. Id., 442 S.W.3d

at 851. A motion for directed verdict should be denied when there is a conflict in the

evidence, or when the evidence is such that fair-minded people might reach different

conclusions. Id., 442 S.W.3d at 851. Stated another way, a motion for a directed verdict

should be granted only when the evidence viewed is so insubstantial as to require the jury’s

verdict for the party to be set aside. Conagra, Inc. v. Strother, 340 Ark. 672, 675, 13 S.W.3d

150, 152 (2000).

       The same standard holds true for a motion for judgment notwithstanding the verdict.

Carter v. Cline, 2011 Ark. 474, at 10, 385 S.W.3d 745, 752. A circuit court may enter a

judgment notwithstanding the verdict only if there is no substantial evidence to support the

verdict and the moving party is entitled to judgment as a matter of law. Id., 385 S.W.3d at

752.

                                       B. Conversion

       KBX argues that substantial evidence does not support the jury’s verdict because it

never wrongfully possessed or controlled any of the farmers’ property. The KBX Individuals

contend that the farmers’ claims for conversion of rice are based solely on the allegations

that KBX had purchased rice from TGI with the knowledge that TGI had offered the farmers

an above-market price for their rice and that TGI never paid them. They assert that the

farmers failed to present evidence that the KBX Individuals “personally exercised dominion

                                             14
and control over Plaintiffs’ property.” The farmers respond that substantial evidence

supported the jury’s verdict.

       Conversion is a common-law tort action for the wrongful possession or disposition

of another’s property. Hartness v. Nuckles, 2015 Ark. 444, at 9, 475 S.W.3d 558, 565. To

establish liability for the tort of conversion, a plaintiff must prove the defendant wrongfully

committed a distinct act of dominion over the property of another, which is a denial of, or

is inconsistent with, the owner’s rights. Id., 475 S.W.3d at 565. If the defendant exercises

control over the goods in exclusion or defiance of the owner’s rights, it is a conversion,

whether it is for defendant’s own use or another’s use. Id., 475 S.W.3d at 565.

       In the case at bar, the evidence at trial revealed back-to-back transactions—that the

farmers contracted with TGI for the purchase of their rice, and TGI in turn contracted with

KBX for the purchase of the same rice. The record is devoid of proof that either KBX or the

KBX Individuals wrongfully committed a distinct act of dominion over the rice, particularly

when the farmers themselves delivered the rice “FOB [Plaintiffs’ farms or West Memphis]”

under the terms of their contracts.

       Moreover, the record reveals that neither KBX nor the KBX Individuals converted

money. The record shows that KBX purchased the rice from TGI for $5,954,198.57 but that

TGI failed to pay the farmers. Cramer, Morrison, and Shuffield all testified that KBX had

paid TGI for the farmers’ rice. Ultimately, KBX’s payments to TGI for the farmers’ rice did

not reach the hands of the farmers, pursuant to the Farmers Grain Contracts. Any possible

adverse inference made by the jury from deleted text messages does not negate this fact.

                                              15
Further, there was no evidence that the KBX Individuals personally received payment for the

farmers’ rice. We therefore hold that substantial evidence does not support the jury’s verdict

on the farmers’ conversion claim.

                                           C. Deceit

       Next, KBX challenges the jury’s verdict on the farmers’ claim of deceit. KBX argues

that the farmers failed to present evidence at trial of any representation by KBX to the

farmers, “much less a false representation of material fact.” The KBX Individuals contend

that the farmers failed to present any evidence of deceit because they never had any

communications with the farmers. The farmers respond that “[t]here was substantial

evidence [KBX and the KBX Individuals] made false representations of material fact or failed

to disclose material facts they had a duty to disclose and that the [farmers] relied on the

representations or nondisclosures.” In their argument, the farmers emphasize that TGI and

KBX had “worked in tandem.”

       Under Arkansas law, the tort of deceit, fraud, or misrepresentation consists of the

following five elements: (1) that the defendant made a false representation of material fact;

(2) that the defendant knew that the representation was false or that there was insufficient

evidence upon which to make the representation; (3) that the defendant intended to induce

action or inaction by the plaintiff in reliance upon the representation; (4) that the plaintiff

justifiably relied on the representation; and (5) that the plaintiff suffered damage as a result

of the false representation. Muccio v. Hunt, 2016 Ark. 178, at 4–5, 490 S.W.3d 310, 312–13.

                                              16
       Here, the farmers have failed to prove the first element of deceit that KBX or the KBX

Individuals have made a false representation of a material fact. In their own testimony, the

farmers revealed that they had no contact with the KBX Individuals prior to entering into

their Farmers Grain Contracts. Hardke testified that he had “no phone calls, no meetings,

no emails, no texts, no contact whatsoever” with the KBX Individuals. Isbell testified that

“other than crossing paths potentially at conferences,” he had no contact with the KBX

Individuals prior to entering the contract. Trickey of K&K testified that his only contact

with KBX was in 2008 on a different business matter. Both Schafer and Isbell testified that

they had talked to Shay after TGI’s collapse, but those communications had no bearing on

the farmers’ claim of deceit. While the farmers testified that they primarily communicated

with Coleman, any adverse inferences made by the jury do not satisfy the elements of deceit

in this instance. Thus, without any evidence of the first element of deceit in the form of a

false representation by KBX or the KBX Individuals to the farmers, we hold that substantial

evidence does not support the jury’s verdict on deceit.

                                   D. Constructive Fraud

       KBX also argues that substantial evidence does not support the jury’s verdict for

constructive fraud. Specifically, KBX contends that the farmers failed to introduce evidence

that (1) they had a relationship with KBX and (2) KBX made a misrepresentation to the

farmers or failed to disclose any information to them. The KBX Individuals contend that

there was no evidence of a special knowledge or relationship between the farmers and the

KBX Individuals that would have given rise to a duty to warn. The farmers respond that the

                                             17
jury’s verdict on constructive fraud is supported by substantial evidence. The farmers claim

that, given KBX’s knowledge and coordination with TGI, substantial evidence supported the

farmers’ constructive-fraud claim.

       Constructive fraud, as opposed to actual fraud, does not include the elements of

actual dishonesty or intent to deceive. Born v. Hosto & Buchan, PLLC, 2010 Ark. 292, at 10,

372 S.W.3d 324, 332. It is defined as a breach of a legal or equitable duty which, irrespective

of moral guilt, the law declares fraudulent because of its tendency to deceive others. Id., 372

S.W.3d at 332.

       With regard to the duty element of constructive fraud, the farmers testified that they

did not have a relationship with anyone at KBX. They did not contract with KBX, and as

previously noted, the farmers themselves testified that they did not have a relationship with

anyone at KBX. Again, any adverse inferences made by the jury cannot support the farmers’

claim. Thus, in the absence of a legal or equitable duty between the farmers and KBX and

the KBX Individuals, we hold that the evidence presented at trial does not constitute

substantial evidence to support the jury’s verdict on constructive fraud.

                                        E. Conspiracy

       Next, KBX argues that substantial evidence does not support the jury’s verdict on

conspiracy because the farmers failed to prove that KBX conspired with another party or

acted with specific intent to harm the farmers. The KBX Individuals assert that they were

not involved in a conspiracy to commit tortious acts. The farmers respond that there was

substantial evidence of an agreement or understanding to commit intentional torts because

                                              18
appellants “knew of and supported TGI’s pricing scheme by silence and the propping up of

TGI through, for example, large payments without adequate documentation.”

       A civil conspiracy is an intentional tort that requires a specific intent to accomplish

the contemplated wrong. Chambers v. Stern, 347 Ark. 395, 404, 64 S.W.3d 737, 743 (2002).

To prove a civil conspiracy, a plaintiff must show that two or more persons have combined

to accomplish a purpose that is unlawful or oppressive or to accomplish some purpose, not

in itself unlawful, oppressive, or immoral, but by unlawful, oppressive, or immoral means,

to the injury of another. Dodson v. Allstate Ins. Co., 345 Ark. 430, 445, 47 S.W.3d 866, 876

(2001).

       Here, the farmers failed to prove that KBX and the KBX Individuals conspired to

commit an underlying tort to which civil conspiracy attached. As previously stated, we hold

that substantial evidence does not support the jury’s verdict on the farmers’ claims of deceit,

constructive fraud, and conversion. Thus, in the absence of an agreement to commit an

underlying intentional tort, we hold that substantial evidence did not support the jury’s

verdict on the farmers’ conspiracy claim.

                                   F. Unjust Enrichment

       Last, KBX challenges the jury’s verdict on the farmers’ unjust-enrichment claim on

two grounds. First, KBX argues that the circuit court erred as a matter of law in denying its

motion for directed verdict and allowing the farmers’ claim of unjust enrichment to be

submitted to the jury. Specifically, KBX claims that the farmers’ claim for unjust enrichment

was governed by valid and enforceable written contracts between the farmers and TGI, and

                                              19
as a result, the farmers were not, as a matter of law, entitled to pursue an unjust-enrichment

claim against KBX. Second, KBX asserts that even if the farmers were entitled to pursue a

claim of unjust enrichment, then the jury’s verdict was not supported by substantial evidence.

The KBX Individuals similarly contend that the claim for unjust enrichment fails. The

farmers respond that the circuit court did not err in denying a directed verdict or JNOV

because the Farmers Grain Contracts with TGI did not preclude a claim of unjust

enrichment.

       Unjust enrichment is an equitable doctrine. First Nat’l Bank of DeWitt v. Cruthis, 360

Ark. 528, 535, 203 S.W.3d 88, 93 (2005). It is the principle that one person should not be

permitted unjustly to enrich himself at the expense of another but should be required to

make restitution of or for property or benefits received, retained, or appropriated, where it

is just and equitable that such restitution be made, and where such action involves no

violation or frustration of law or opposition to public policy, either directly or indirectly.

Campbell v. Asbury Auto., Inc., 2011 Ark. 157, at 21, 381 S.W.3d 21, 36. The existence of a

contractual relationship between the parties that addresses the subject in dispute generally

precludes recovery on a theory of unjust enrichment. Id. at 22, 381 S.W.3d at 36–39.

Quantum meruit is a claim for unjust enrichment that does not involve the enforcement of

a contract. Sisson v. Ragland, 294 Ark. 629, 632, 745 S.W.2d 620, 622 (1988).

       In Servewell Plumbing, LLC v. Summit Contractors, Inc., 362 Ark. 598, 210 S.W.3d 101

(2005), a plumbing subcontractor filed suit against Summit, a general contractor, and Gables

of Maumelle (“Gables”), a landowner, for breach of contract and unjust enrichment. Summit

                                             20
moved to dismiss, which the circuit court granted, and Servewell appealed to this court. We

affirmed the circuit court’s dismissal, stating:

               Servewell argues that the rule barring recovery in quasi-contract where
       there is an express contract “has no application to claims against third parties.”
       While there does not appear to be any Arkansas case law on this precise issue,
       the Second Circuit Court of Appeals has held that it is a “settled principle”
       that “the existence of a valid and enforceable written contract governing a
       particular subject matter ordinarily precludes recovery in quasi-contract for
       events arising out of the same subject matter.” See U.S. East Telecommunications,
       Inc. v. U.S. West Communications Services, Inc., 38 F.3d 1289, 1296 (2d Cir.
       1994). The Second Circuit also noted that a subcontractor could recover from
       a landowner, even when a separate contract exists between the subcontractor
       and general contractor, if the owner has agreed to pay the general contractor’s
       debt or if the circumstances surrounding the parties’ dealings can be found to
       have given rise to an obligation to pay. Id. at 1298. In the instant case, however,
       there is no evidence of any such agreement between Summit and the Gables;
       therefore, this exception is not applicable, and the general rule—that one
       cannot recover in quasi-contract when an express contract exists—governs the
       matter. As such, the trial court did not err in dismissing Servewell’s unjust
       enrichment claim against the Gables.

Id. at 612–13, 210 S.W.3d at 112.

       The Servewell case is analogous to the case at bar. Like Servewell and Summit, the

farmers and TGI were parties to the Farmers Grain Contracts. The farmers seeking unjust

enrichment when there is an express contract “has no application to claims against third

parties,” id. at 612, 210 S.W.3d at 112, like KBX. Simply put, the existence of the Farmers

Grain Contracts between TGI and the farmers precludes a claim for unjust enrichment

against KBX and the KBX Individuals. Based on this precedent, we conclude that a quasi-

contractual claim is barred when an express contract existed between the farmers and TGI.

                                               21
Thus, we hold that the circuit court erred as a matter of law in denying appellants’ motion

for directed verdict.

                                   G. KBX’s Counterclaims

       KBX argues that the circuit court erred in granting the farmers’ motion for summary

judgment on its counterclaims and in ruling that “the litigation privilege applied to all of

KBX’s tort causes of action against the [farmers].” KBX contends that the “litigation

privilege” applies only to claims of defamation.

       During the litigation, KBX became aware of public, negative comments, such as “KBX

is a bunch of crooks[,]” and KBX “stole their rice.” In September 2017, KBX filed a

counterclaim and third-party complaint asserting claims against the farmers for abuse of

process, interference with contractual relationship or business expectancy, defamation, civil

action by crime victim, and conspiracy. The farmers moved for summary judgment, asserting

litigation privilege and lack of evidence. The circuit court granted the motion for summary

judgment.

       We have held that we will not consider arguments without convincing argument or

citations to authority. Seth v. St. Edward Mercy Med. Ctr., 375 Ark. 413, 420, 291 S.W.3d 179,

185 (2009). Here, KBX’s four-sentence argument in its brief is not well developed, and

notably, KBX does not mention its counterclaims in its request for relief in the brief. Thus,

we hold that KBX does not present convincing argument to this court, and accordingly, we

affirm the circuit court’s dismissal of its counterclaims.

                                       III. Attorney’s Fees

                                               22
       We now turn to appellants’ challenge to the circuit court’s award of attorney’s fees.

Appellants contend that the circuit court abused its discretion in awarding attorney’s fees

because the award was unreasonable under the circuit court’s spoliation order and was

excessive.

       The following facts are relevant to appellants’ arguments. During the course of the

litigation, the farmers filed a motion for contempt, for discovery sanctions, and for a finding

of spoliation, alleging that KBX had intentionally deleted cell-phone data. On June 2, 2017,

the circuit court entered an order granting the farmers’ motion for a finding of spoliation.

The circuit court ruled that certain cell-phone data had not been recovered and entered a

finding of spoliation against KBX for its intentional deletion of cell-phone data. The court

stated that “[a]s a sanction for KBX, Inc.’s Spoliation of discoverable evidence,” the farmers

were to file “a verified and itemized statement of the [farmers’] attorney’s fees, costs, and

expenses incurred as a direct result of KBX, Inc.’s deletion of the subject cell phone data.” (Emphasis

added.)

       On May 16, 2019, the circuit court held a hearing on the motions for a finding of

spoliation against the KBX Individuals. On May 30, the circuit court entered an order

granting the farmers’ motion for finding of spoliation against each of the KBX Individuals

for the deletion of cell-phone data. Specifically, the circuit court ruled that “[a]s a sanction

for each said KBX Employees’ spoliation of discoverable evidence, the [farmers] are to file . .

. a verified and itemized statement of the [farmers’] attorney’s fees, costs, and expenses

                                                  23
incurred as a direct result of said KBX Employees’ deletion of the subject cell phone data.” (Emphasis

added.)

       Subsequently, at the conclusion of the 2020 trial, the farmers submitted their fee

motion with exhibits “directly related to the spoliation and intentional destruction of

documents by KBX and KBX [Individuals]” per the circuit court’s orders. KBX opposed the

fee motion and argued that the farmers’ request was excessive, without substantive proof,

and lacked the proper analysis of determining the reasonableness of requested attorney’s fees

and expenses. The farmers then supplemented their fee motion, increasing their request to

$526,818.93.

       On May 19, 2020, the circuit court summarily entered a fee judgment against KBX

and the KBX Individuals for $526,818.93 as a sanction for destroying evidence. Specifically,

the circuit court found:

              i. The Fee Motion and the [farmers’] Reply included verified and
       itemized statements as required by the 2017 Order and the 2019 Order.

               ii. The verified and itemized statements evidence attorney’s fees, costs,
       and expenses that were incurred as a direct result of the deletion of cell phone
       data by KBX Inc., Steven Michael Keith, Sr., Steven Michael Keith, Jr., and
       Jeffrey Shay Sebree.

               iii. The total amount set out in the Fee Motion and the [farmers’] Reply
       is reasonable, justified, adequately supported, and compensable.

The circuit court entered a fee judgment in favor of the farmers against KBX and the KBX

Individuals, jointly and severally, in the amount of $526,818.93 as a discovery sanction for

                                                 24
spoliation, as found by the 2017 and 2019 spoliation orders, with postjudgment interest of

$144.33 per diem.

                  A. Attorney’s Fees as a Sanction for Discovery Violations

       The imposition of sanctions for failure to comply with a discovery order is governed

by Rule 37 of the Arkansas Rules of Civil Procedure, which provides in relevant part:

       (4) Expenses and Sanctions.

               (A) If the motion is granted or if the requested discovery is provided
       after the motion was filed, the court shall, after affording an opportunity to be
       heard, require the party or deponent whose conduct necessitated the motion
       or the party or attorney advising such conduct or both of them, to pay to the
       moving party the reasonable expenses incurred in making the motion,
       including attorney’s fees, unless the court finds that the motion was filed
       without the movant's first making a good faith effort to obtain the discovery
       without court action, or that the opposing party's response or objection was
       substantially justified or that other circumstances make an award of expenses
       unjust.

The imposition of sanctions for failure to provide discovery rests in the circuit court’s

discretion, and this court has repeatedly upheld the circuit court’s exercise of such discretion

in fashioning severe sanctions for flagrant discovery violations. Calandro v. Parkerson, 333

Ark. 603, 608, 970 S.W.2d 796, 799 (1998).

       We agree with the circuit court’s findings articulated in its 2017, 2019, and 2020

orders. Based on our standard of review, we cannot say that the circuit court abused its

discretion by finding that a Rule 37 sanction was warranted for KBX’s and the KBX

Individuals’ spoliation. Accordingly, we affirm the circuit court’s award of attorney’s fees as

a sanction pursuant to Rule 37.

                                              25
                                 B. Amount of Attorney’s Fees

          We now turn to whether the circuit court abused its discretion in awarding the

amount of $526,818.93 in attorney’s fees. We have explained that factors to consider in a

motion for attorney’s fees include (1) the experience and ability of the attorney, (2) the time

and labor required to perform the legal service properly, (3) the amount involved in the case

and the results obtained, (4) the novelty and difficulty of the issues involved, (5) the fee

customarily charged in the locality for similar legal services, (6) whether the fee is fixed or

contingent, (7) the time limitations imposed upon the client or by the circumstances, and

(8) the likelihood, if apparent to the client, that the acceptance of the particular employment

will preclude other employment by the lawyer. Chrisco v. Sun Indus., Inc., 304 Ark. 227, 229,

800 S.W.2d 717, 718–19 (1990). Because of the circuit court’s intimate acquaintance with

the record and the quality of service rendered, we recognize the superior perspective of the

circuit court in assessing the applicable factors. Walther v. Wilson, 2020 Ark. 194, at 8, 600

S.W.3d 554, 559. Accordingly, the amount of the award will be reversed only if the appellant

can demonstrate that the circuit court abused its discretion. Id. at 9, 600 S.W.3d at 559. An

award of attorney’s fees will not be set aside absent an abuse of discretion. Id., 600 S.W.3d

at 560.

          From the record before us, it appears that the circuit court’s award does not reflect

the calculation of fees as a “direct result” of KBX’s and the KBX Individuals’ spoliation.

Instead, the award seems to include certain fees and costs unrelated to spoliation. Thus, we

hold that the circuit court abused its discretion in awarding $526,818.93 in attorney’s fees

                                               26
as a sanction. Upon remand, the circuit court must review the award of fees actually relating

to spoliation per its 2017 and 2019 spoliation orders. Accordingly, we reverse the fee

judgment and remand for a recalculation of attorney’s fees.

                                        IV. Conclusion

       We conclude that the circuit court erroneously denied the motions for directed

verdict and JNOV. We therefore reverse the judgment and dismiss as to KBX and the KBX

Individuals. We also affirm the circuit court’s dismissal of KBX’s counterclaims. We further

reverse the circuit court’s fee judgment and remand the issue of attorney’s fees for

recalculation of an award consistent with this opinion.

       Reversed and dismissed in part; affirmed in part; reversed and remanded in part.

       Hilburn & Harper, Ltd., by: Ernest H. Harper, Jr.; James M. McHaney, Jr.; Randy L. Grice;

and Kate C. Davidson, for appellant K.B.X. Inc.

       Reece Moore McNeill Pendergraft, by: Paul D. McNeill, James Bo Renner, and Lisa M.

Geary, for appellants Steven Michael Keith, Sr.; Steven Michael Keith, Jr.; and Jeffrey Shay

Sebree.

       Brett D. Watson, Attorney at Law, PLLC, by: Brett D. Watson; Kelly Law Firm, by: Jerry

Kelly; and Campbell & Grooms, PLLC, by: Kendel Grooms, Don Campbell, and Parker Spaulding,

for appellees.

                                              27