South County, Inc. v. First Western Loan Co.

• Decision Date: 07 February 1994
• Docket Number: No. 93-553,93-553
• Parties: SOUTH COUNTY, INC., Appellant, v. FIRST WESTERN LOAN CO. and John Taylor Hampton, Appellees.
• Court: Arkansas Supreme Court

Page 325

871 S.W.2d 325

315 Ark. 722

SOUTH COUNTY, INC., Appellant, v. FIRST WESTERN LOAN CO. and John Taylor Hampton, Appellees.

No. 93-553.

Supreme Court of Arkansas.

Feb. 7, 1994.

Stephen M. Sharum, Fort Smith, Mark Ford, Lincoln, NE, for appellant.

Michael Stubblefield, William H. Sutton, Fort Smith, William A. Waddell, Jr., Little Rock, for appellees.

CORBIN, Justice.

This is the second time this case has been appealed to this court. Previously, we dismissed the appeal for lack of an appealable order. South County, Inc. v. First Western Loan Co., 311 Ark. 501, 845 S.W.2d 3 (1993). The facts are reported in that decision and are repeated here for convenience:

Appellant, South County Inc., was formed in July 1985, to develop the South County Project. The South County Project was to be a mixed-use development in Greenwood, Arkansas. Appellant alleges that the appellees, First Western Loan Company and John Hampton, an officer of First Western, represented in January 1986, that they would provide the financing for the development. Appellant argues that relying on this representation, it expended a lot of time and money to further the development of the project. In July of 1986, the appellees advised the appellant that they would not fund the development of the project. Appellant was unable to obtain other financing, and the project failed. The appellees contend that they never issued a loan commitment and contend that First Western's role was to help assemble the loan package and take the package to potential investors.

In July of 1988, appellant filed suit against the appellees alleging a tort action for negligent misrepresentation and constructive fraud. Appellant also alleged a cause of action for breach of contract against First Western. Appellant sought recovery for its damages as well as punitive damages. Uerling & Associates, a creditor of the appellant, filed a motion to intervene and a complaint in intervention on November 4, 1988. In this motion, Uerling contended that the appellant was indebted to it for engineering and surveying services conducted on the project in the amount of $46,210.69. On November 8, 1988, Uerling's motion was granted without objection.

The appellees subsequently filed a motion for summary judgment. The trial court granted a partial summary judgment on October 9, 1991, on the tort causes of action and claim for punitive damages against appellees First Western and John Hampton. This completely eliminated appellee John Hampton from the lawsuit but left alive the appellant's contract cause of action against First Western. In the order granting partial summary judgment, the trial judge stated that under ARCP Rule 54(b) there was no just reason for delay of the appeal of this decision. However, no mention was made of Uerling's complaint in intervention. Appellant took a voluntary dismissal without prejudice of the breach of contract action against First Western, which was filed on October 31, 1991. Again, there was no dismissal of Uerling's complaint in intervention.

We dismissed the first appeal because the trial court had not considered the intervenor's claim when granting the partial summary judgment. Subsequent to our dismissal, the trial court entered an order dismissing with prejudice the intervenor's complaint and reaffirming the previous summary judgment on the issues of negligent misrepresentation, constructive fraud and punitive damages. The parties had stipulated that the breach of contract claim which was non-suited by appellants on October 31, 1991, was now statute barred. Thus, the trial court's order dismissed with prejudice the breach of contract claim. The order is now final and appealable. Appellant makes three assignments of error in the proceedings below. We find no error and affirm.

As its first point of error, appellant contends the trial court should not have granted summary judgment on the claim for negligent misrepresentation. Appellant correctly points out that Arkansas has never expressly recognized a cause of action for negligent misrepresentation. However, appellant argues that imposition of liability for negligent misrepresentation in a commercial setting currently represents the mainstream of American law, and asks this court to expressly recognize such a cause of action citing The Restatement (Second) of Torts § 552 (1976) and cases from other states that have adopted section 552.

We decline to recognize the tort of negligent misrepresentation. Misrepresentation, also commonly referred to as deceit or fraud, has been an intentional tort in Arkansas for well over a century. See e.g. Hanger v. Evins, 38 Ark. 334 (1881). In Gregory v. Consolidated Utilities, Inc. 186 Ark. 406, 53 S.W.2d 854 (1932), this court observed that:

"Fraud involves the idea of intentional deception, and exists where there is misrepresentation made with intent to deceive, or with actual knowledge of its falsity.... Proof of a mere naked falsehood or representation is not enough even though the complaining party relied on it and sustained damages, but, in addition thereto, the false statement must have been knowingly or intentionally made."

Id., 186 Ark. at 411, 53 S.W.2d at 856. The foregoing observations hold true today. We see no need to recognize a new cause of action for negligent misrepresentation.

We conclude the trial court did not err in granting summary judgment on the claim for negligent misrepresentation. No such cause of action exists in this state. Where no cause of action is alleged upon which relief can be granted, we need not consider whether issues of material fact existed. Brandt v. St. Vincent Infirmary, 287 Ark. 431, 701 S.W.2d 103 (1985).

Next, appellant contends the trial court should not have granted summary judgment on the claim for constructive fraud. Appellant contends that appellees had a duty to appellant arising out of a confidential relationship or a situational fiduciary relationship that existed between them. Appellant further argues this duty was breached by failing to give sound financial advice and by failing to provide or place development financing.

The burden in a summary judgment proceeding is on the moving party and all proof submitted must be viewed in the light most favorable to the respondent. Pinkston v. Lovell, 296 Ark. 543, 759 S.W.2d 20 (1988). Once the movant makes a prima facie showing of entitlement to judgment as a matter of law, the respondent...