Bomar v. Moser

• Decision Date: 28 February 2007
• Docket Number: No. 06-895.,06-895.
• Court: Arkansas Supreme Court
• Parties: Bob BOMAR, Appellant, v. Keith MOSER and Barry Jewell, Appellees.

251 S.W.3d 234

369 Ark. 123

Bob BOMAR, Appellant, v. Keith MOSER and Barry Jewell, Appellees.

No. 06-895.

Supreme Court of Arkansas.

February 28, 2007.

Timothy O. Dudley, Little Rock, AR, for appellant.

Barber, McCaskill, Jones & Hale, P.A., by Robert L. Henry, III, and R. Kenny McCulloch, Little Rock, AR, for appellee Barry Jewell.

ANNABELLE CLINTON IMBER, Justice.

Appellant Bob Bomar filed a legal malpractice suit against Appellees Barry Jewell and Keith Moser, of the law firm of Jewell, Moser, Fletcher & Holleman, P.A. After protracted discovery, the circuit court granted summary judgment in favor of Appellees on the grounds that Bomar's claims were barred by the applicable statute of limitations and Bomar lacked standing to bring the suit. Bomar brings the instant appeal, arguing that the circuit court erred in granting summary judgment because (1) Appellees' fraudulent concealment of their wrongful acts tolled the statute of limitations; (2) Bomar had standing to pursue his claims; (3) Appellees' affirmative defenses should have been stricken on account of their assertion of the Fifth Amendment privilege against self-incrimination; and (4) an adverse inference should have been drawn against Appellees due to their assertion of the Fifth Amendment privilege. We affirm on the last two points, but we conclude that genuine issues of material fact remain concerning Bomar's standing and the tolling of the statute of limitations as a result of fraudulent concealment. Thus, we reverse and remand on the standing and fraudulent concealment issues.

In 1986, Bob Bomar and three other investors started Scanning Technologies Incorporated (STI), a software company. Jewell eventually became legal counsel for both STI and Bob Bomar. By 1993, STI was experiencing financial difficulties, and Bomar's fellow shareholders were seeking buyers for their shares. Jewell allegedly told Bomar that his partner, Moser, had two interested clients, FBN Investments, Inc., (FBN) and EAB Enterprises (EAB). FBN loaned STI an initial amount of $400,000 and took a security interest in the company. EAB acquired 51% of STI's stock, leaving Bomar as a minority shareholder. Later, Bomar was elected both president and secretary of STI, and Jewell was elected treasurer.

After the buy out, Jewell and Moser told Bomar that EAB and FBN wanted their law firm to take over the management of STI's accounting and financial records. Shortly thereafter, Bomar was taken off the signature card for STI's bank accounts. Also, at Appellees' behest, Bomar signed several documents on behalf of STI without receiving copies and without having knowledge of the documents' contents.

In 1997, STI and Boeing North American Services, Inc., (Boeing) were working together on a contract with Coca Cola Enterprises in Charlotte, North Carolina. During that time, Boeing became interested in licensing STI's MLMS software. Boeing sent Ken Sweet to Arkansas to initiate negotiations with STI. Sweet came prepared with business plans that included several variations on two basic options: (1) Boeing would license the software and royalties would be distributed periodically to STI and Bomar individually, or (2) Boeing would completely buy out the software without making any royalty distributions.

Sweet met with Bomar and Jewell to discuss the possibility for a licensing agreement, and he also met Moser, who played a small role in the negotiations as counsel for FBN and EAB. In the negotiation meetings, Sweet viewed Bomar as the lead negotiator, but Jewell seemed to be the primary decision maker. After extensive discussion, the negotiations broke down because Jewell asked for more "upfront cash" than Boeing was willing to offer. Sweet returned home, and the negotiations continued through correspondence. According to Bomar, Jewell and Moser acted arrogantly toward Sweet during the one-on-one negotiations. In fact, Bomar thought Jewell and Moser had handled the deal in such an unprofessional manner that he considered suing them for malpractice.

In June 1997, Jewell sent two letters to Sweet on behalf of his purported clients STI, Bomar, and EAB. The letters proposed an amended business plan in which Boeing could either purchase the MLMS software or purchase the common stock of STI. Then, on October 28, 1997, Jewell sent another letter offering Boeing a deal to license the software with a fixed term and renewable options to purchase. On November 6, 1997, Sweet replied to Jewell's letters by rejecting his offers and submitting a final proposal. The final proposal was not accepted.

In January 1998, Boeing sued STI and FBN for money STI owed under the joint contract with Coca Cola. The complaint specifically alleged that representatives of STI made fraudulent misrepresentations to Boeing with regard to the proposed licensing agreement and FBN aided and abetted STI in making those representations. The parties reached a pretrial settlement whereby STI agreed to pay Boeing the sum of $640,000.

On March 21, 2000, an STI stockholder's meeting was held at the offices of Jewell, Moser, Fletcher & Holleman, P.A. During the meeting, Jewell informed the stockholders that three of STI's creditors were threatening litigation. Namely, STI owed in excess of $ 2,000,000 to FBN and $500,000 to Jewell, Moser, Fletcher & Holleman, P.A. As a result, Bomar resigned from the board during that meeting. He later sent a letter to Jewell and Moser, stating his intention to start a new company and license the MLMS software from STI.

In the spring of 2002, representatives from the FBI and the Department of Justice approached Bomar concerning a pending criminal investigation of Moser. They informed Bomar that he had been listed as president of two corporations other than STI and his signature appeared on pro se pleadings for those corporations in federal court. Bomar also discovered that FBN still held an insurance policy on his life two years after his resignation, and the policy was for five million dollars, rather than the one million dollars he had been lead to believe it was worth. Bomar then commenced his own investigation. He learned from Dan Elliot, an IRS investigator, that EAB and FBN were shell corporations set up by Jewell and Moser for the purpose of siphoning money from their client trust accounts into STI. Bomar also discovered that Fran Post, who had been represented to him as FBN and EAB's president, was merely FBN's agent for service of process. This information lead Bomar to conclude that it was Jewell and Moser, and not the shell corporations, who thwarted the Boeing deal.

In January 2004, Bomar filed a legal malpractice suit against Jewell and Moser, claiming breach of fiduciary duty, negligence, and fraud. He specifically asserted that Jewell and Moser breached their fiduciary duty to him because they falsely represented that FBN and EAB, their alleged clients, invested in STI and stopped the Boeing deal. During discovery, Jewell and Moser both asserted their Fifth-Amendment privilege against self-incrimination and thereby avoided giving depositions and answering some of Bomar's interrogatories. Both Appellees filed motions for summary judgment against Bomar, contending that he had no standing to sue, and his claims were barred by the applicable statute of limitations. Moser also argued in his motion that he was not liable because he did not have privity of contract with Bomar. Bomar replied by arguing that he had standing and the Appellees' acts of fraudulent concealment tolled the statute of limitations. He also filed a motion to strike the Appellees' affirmative defense of the statute of limitations because they had asserted their Fifth-Amendment privilege and thereby thwarted any meaningful discovery.

After hearings on the motions, the circuit court entered an order, releasing Moser from liability on the claims of negligence and breach of fiduciary duty. The circuit court later entered another order denying Bomar's motion to strike and granting Appellees' summary-judgment motions on the basis that Bomar lacked standing and his claims were barred by the statute of limitations. Bomar now appeals from that order.

Standard of Review for Summary Judgment

A motion for summary judgment should be granted when, in light of the pleading, and other documents before the circuit court, there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Ark. R. Civ. P. 56(c) (2006). When reviewing whether a motion for summary judgment should have been granted this court determines whether the evidentiary items presented by the moving party in support of the motion left a material question of fact unanswered. Flentje v. First National Bank of Wynne, 340 Ark. 563, 11 S.W.3d 531 (2000). The burden of sustaining a motion for summary judgment is always the responsibility of the moving party. Id. All proof submitted must be viewed in a light most favorable to the party resisting the motion, and any doubts and inferences must be resolved against the moving party. Id.

We recognize a "shifting burden" in summary-judgment motions, in that while the moving party has the burden of proving that it is entitled to summary judgment, once it has done so, the burden then shifts to the nonmoving party to show that material questions of fact remain. Id. However, summary judgment is not proper where evidence, although in no material dispute as to actuality, reveals aspects from which inconsistent hypotheses might reasonably be drawn and reasonable minds might differ. Id. The object of summary-judgment proceedings is not to try the issues, but to determine if there are any issues to be tried, and if there is any doubt whatsoever, the motion should be denied. Id.

Standing

Although Bomar does not argue standing as his first point on appeal, the question of standing is a threshold issue that must be addressed first. See Farm Bureau Ins. Co. of Ark., Inc. v. Running M...