Blankenship v. USA Truck, Inc.
| Decision Date | 15 April 2010 |
| Docket Number | No. 09-1605.,09-1605. |
| Citation | 601 F.3d 852 |
| Parties | William BLANKENSHIP, Jr., Appellant, v. USA TRUCK, INC., Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Kenneth Hixson, argued, Fayetteville, AR, for Appellant.
Barndon James Harrison, argued, (Barry Deacon, Jonesboro, AR, Joseph Barrett Deacon, Jr., Fayetteville, AR, on the brief), for Appellee.
Before RILEY,1 Chief Judge, WOLLMAN and MELLOY, Circuit Judges.
William Blankenship, Jr. (Blankenship) alleges USA Truck, Inc. (USA Truck) owes him more than $1 million in unpaid sales commissions. Blankenship admits he agreed, in 2006, to settle his dispute with USA Truck over the commissions for $85,000. Blankenship brought this lawsuit to void the parties' settlement agreement and to obtain punitive damages for fraud. Blankenship alleges USA Truck deceived him about the amount of commissions owed and thereby fraudulently induced him to sign the settlement agreement. The district court dismissed Blankenship's lawsuit because the settlement agreement contained a no-reliance clause in which Blankenship affirmatively stated he had not relied upon any "statement or representation by USA Truck concerning the nature and extent of any ... commissions." We reverse.
"We review `de novo the grant of a Rule 12(b)(6) motion to dismiss for failure to state a claim.'" Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir.2009) (quoting Stufflebeam v. Harris, 521 F.3d 884, 886 (8th Cir.2008)). We accept the allegations in Blankenship's complaint as true and afford Blankenship all reasonable inferences from those allegations. Id. We also consider the four exhibits Blankenship attached to his complaint. See Fed.R.Civ.P. 10(c) ().
Blankenship is a salesman and a resident of Texas. USA Truck is a trucking firm. USA Truck is an Arkansas corporation with its principal place of business in Crawford County, Arkansas.
In June 2001, Blankenship and USA Truck entered into an Agent Agreement. The Agent Agreement granted Blankenship exclusive responsibility for a portfolio of protected customer accounts (protected customers). The protected customers included Tuesday Morning Company (Tuesday Morning) and International Truck Company a/k/a SST Truck (SST).
USA Truck agreed to pay Blankenship a 5% commission on all revenue derived from the protected customers. USA Truck retained the right to terminate the Agent Agreement with ninety days notice. In the event of termination, USA Truck promised to refrain from hauling loads of freight for the protected customers for eighteen months after the ninety days passed. If USA Truck failed to refrain from hauling loads of freight for the protected customers during this eighteen-month cease period, USA Truck agreed to pay Blankenship "$200.00 for every load hauled ... until another 18 month cease period has passed."
Blankenship worked for USA Truck under the terms of the Agent Agreement for approximately two years. On July 1, 2003, USA Truck notified Blankenship it wished to terminate the Agent Agreement on October 1, 2003. On October 1, 2003, USA Truck terminated the Agent Agreement.
In 2006, USA Truck's Director of Sales, Pat Campbell (Campbell), informed Blankenship that USA Truck had violated the Agent Agreement. Campbell admitted USA Truck had hauled loads of freight for Tuesday Morning since October 1, 2003. When Blankenship asked Campbell how many loads USA Truck hauled for SST, Campbell falsely "represented ... USA Truck had been hauling an average of two loads a week." USA Truck's president and general counsel later ratified Campbell's false representations. USA Truck misled Blankenship to induce Blankenship into accepting a relatively low settlement offer.
Based upon Campbell's representations about the number of loads USA Truck had hauled for the protected customers, including but not limited to SST, Blankenship agreed to release USA Truck from liability for breaching the Agent Agreement in exchange for $85,000. On March 6, 2006, Blankenship and USA Truck executed the Release and Settlement Agreement (Settlement Agreement). The Settlement Agreement contained the following no-reliance clause:
Several months later, "an independent source" told Blankenship the truth: USA Truck "had been hauling ten to fifteen loads a day for SST, instead of the two loads a week as represented by Campbell." Blankenship alleges he would not have settled with USA Truck for only $85,000 if he had known of Campbell's false representations. Blankenship estimates USA Truck's deceit cost Blankenship over $1 million.
In July 2008, Blankenship invoked the district court's diversity jurisdiction, 28 U.S.C. § 1332(a)(1), and filed a three-count2 complaint against USA Truck under the Arkansas common law. Count I alleges breach of contract. Blankenship asserts USA Truck breached the Agent Agreement when USA Truck hauled loads of freight for protected customers, after October 1, 2003, without paying Blankenship $200 per load. Count II alleges fraud. Blankenship maintains Campbell's false representations about the number of loads USA Truck hauled induced Blankenship to execute the Settlement Agreement. Blankenship concludes the Settlement Agreement "is void and invalid and should be set aside in that it is a product of intentional false, misleading and fraudulent information disseminated by USA Truck to Blankenship designed to deceive Blankenship."
In August 2008, USA Truck moved to dismiss Blankenship's complaint, pursuant to Fed.R.Civ.P. 12(b)(6). USA Truck argued the plain and unambiguous terms of the Settlement Agreement barred the complaint under the doctrines of release, accord and satisfaction, and waiver. USA Truck characterized Blankenship's lawsuit as an impermissible post hoc attempt to undo an unfavorable settlement.
USA Truck conceded the Arkansas Supreme Court's jurisprudence regarding the effect of a no-reliance clause was "not well developed" but suggested "courts all over America have recognized" a no-reliance clause "neutralizes" a plaintiff's attempt to use allegations of fraud to void a settlement agreement. USA Truck asked the district court to follow the lead of those other courts and hold, as a matter of law, that Blankenship was unable to prove the justifiable reliance element of his fraud claim. USA Truck contended a reasonable jury could not find Blankenship justifiably relied on Campbell's false statements, because Blankenship admitted in the Settlement Agreement that he did not rely on anything USA Truck's agents had said when he decided to settle.
Blankenship resisted USA Truck's motion to dismiss. Blankenship reiterated the allegations in his complaint and argued the Settlement Agreement was unenforceable because USA Truck "fraudulently induced" Blankenship to enter into the Settlement Agreement. Blankenship pointed out that, under Arkansas law, fraud voids a contract ab initio—because fraud in the inducement precludes mutual assent—and affords the defrauded party the right to reject the contract.
Blankenship agreed a "slew" of cases from other jurisdictions lent support to USA Truck's argument that a no-reliance clause barred a subsequent fraudulent inducement claim. Blankenship maintained, however, that the Arkansas Supreme Court's steadfast refusal to enforce contracts procured through fraud foreclosed USA Truck's reliance upon those other cases. Blankenship asked the court to allow a jury to decide whether he justifiably relied on Campbell's false representations when deciding whether to execute the Settlement Agreement.
In March 2009, the district court granted USA Truck's motion and dismissed Blankenship's complaint with prejudice. The court focused on the merits of Blankenship's fraud claim, because Blankenship's breach-of-contract claim depended entirely upon the validity of the Settlement Agreement.
After reciting the five elements of Blankenship's fraud claim, see, e.g., DePriest v. AstraZeneca Pharms., L.P., 2009 Ark. 547, ___ S.W.3d ___, 2009 WL 3681868 (Ark. Nov. 5, 2009), the district court held as a matter of law that Blankenship could not prove the fourth element, justifiable reliance. At the outset of its analysis, the court observed Blankenship "faced a difficult proposition" because his complaint contradicted the terms of the no-reliance clause in the Settlement Agreement. The district court recognized fraud generally voids a contract, but opined Blankenship "missed the important point that, without proof of justifiable reliance, there is no actionable fraud."
The district court appeared to accept USA Truck's representation "that there is no case law in Arkansas directly on point on this issue." Without making any prediction as to how the Arkansas Supreme Court might rule, the district court found the cases USA Truck cited from other jurisdictions to be "persuasive" and granted USA Truck's motion to dismiss. Blankenship appealed.
On appeal, the parties focus their arguments on a single question: whether, under Arkansas law, the...
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