Stine v. Sanders

• Citation: 987 S.W.2d 289,66 Ark.App. 49
• Decision Date: 24 March 1999
• Docket Number: No. CA,CA
• Parties: Vera L. STINE (Davis) et al., Appellants, v. Bucky SANDERS et al., Appellees. 98-110.
• Court: Arkansas Court of Appeals

Page 289

987 S.W.2d 289

66 Ark.App. 49

Vera L. STINE (Davis) et al., Appellants, v. Bucky SANDERS et al., Appellees.

No. CA 98-110.

Court of Appeals of Arkansas Divisions II and III.

March 24, 1999.

John P. Lewis, Hot Springs, for appellants.

Michael H. Crawford, Hot Springs, for appellees.

JOHN MAUZY PITTMAN, Judge.

The appellees brought an action against the appellants alleging that appellants committed the torts of deceit and interference with a business expectancy during the purported purchase of appellees' business by the appellant, Don Davis. After a jury trial, a verdict was returned in favor of appellees on the issue of deceit, and a judgment was entered assessing damages in the amount of $60,000 against appellant Don Davis and in the amount of $65,000 against appellant Vera Stine. The $65,000 assessed against appellant Vera Stine included $5,000 in punitive damages. From that decision, comes this appeal.

For reversal, appellants contend that the evidence is insufficient to support the jury's finding of deceit; that the evidence is insufficient to support the punitive damage award against appellant Vera Stine; and that the trial court erred in denying appellants' motion for a new trial. We affirm.

We first address appellants' contention that the evidence is insufficient to support the jury's finding of deceit. The tort of deceit consists of five elements that must be proven by a preponderance of the evidence: (1) a false representation of material fact; (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation; (3) intent to induce action or inaction in reliance upon the representation; (4) justifiable reliance on the representation; and (5) damage suffered as a result of the reliance. Roach v. Concord Boat Corp., 317 Ark. 474, 880 S.W.2d 305 (1994). Our standard in reviewing the sufficiency of the evidence is well settled: (1) the evidence is viewed in a light most favorable to the appellee; (2) the jury's finding will be upheld if there is any substantial evidence to support it; and (3) substantial evidence is that of sufficient force and character to induce the mind of the fact-finder past speculation and conjecture. Medlock v. Burden, 321 Ark. 269, 900 S.W.2d 552 (1995). In cases of deceit, the credibility of the witnesses is vital in determining liability, and the trier of fact is the sole judge of the weight and credibility of the evidence. Id. ¹

Viewing the evidence, as we must, in the light most favorable to the appellees, the record shows that appellees are the owners of a security business, Sanders Security and Detective Corporation. They sought to sell their business in October 1994, and advertised the business for sale for an asking price of $200,000 in newspapers in Little Rock and Dallas. Appellant Don Davis saw one of the advertisements and contacted appellees regarding purchase of the business. Mr. Davis met with Mr. Sanders and discussed various aspects of the business. Appellant Vera Stine, who was employed by appellees as manager of their business, provided Mr. Davis with an informational packet listing some of the clients of the business and the income derived from those clients. She also, in furtherance of the prospective sale of the business, took Mr. Davis to several business clients of Sanders Security. Mr. Davis met with appellees' attorney and was provided with information regarding the tax debt of the business, tax returns, and additional financial documents. Mr. Davis then met with Mr. Sanders at the offices of Sanders Security on November 4, 1994. Mr. Davis and Mr. Sanders reached an oral agreement for the sale of the business for $120,000, and Mr. Davis agreed to provide a check for the purchase price from his accountant the next week. However, although Mr. Davis never canceled the agreement, no check was ever provided. At about this same time, Ms. Stine quit her job as manager of Sanders Security following an argument with Mrs. Sanders. Her last day of work for Sanders Security was November 7, 1994. Although Ms. Stine told appellees that she was going to work for University Mall, she did not do so. Unbeknownst to appellees, she began a romantic involvement with Mr. Davis that culminated in their engagement to be married. Ms. Stine obtained her own security license on November 9, 1994, and, together with Mr. Davis, formed a rival security business, Interstate Security and Investigations.

The rival business was staffed with former employees of Sanders Security who were induced to defect by appellants. Where Sanders Security had sixty-five employees when Mr. Davis agreed to purchase the business, one month later Sanders Security had only five remaining employees, the rest having gone to work for appellants at Interstate Security. Such defections would normally have been impossible, because it was standard practice for Sanders Security to have its employees execute an agreement not to work for competing firms. ² However, the records of these agreements were missing. The office secretary for Sanders Security, Cora Maglero, continued to work for Sanders until November 14, 1994. She gave appellees no notice of her intent to quit her job. On Ms. Maglero's last day of work, a housekeeping employee saw her printing a great many documents from the office computer, although she had not been asked to print out anything. She told the housekeeping employee that she had to get the documents off the computer before she left, and was seen taking the documents out and placing them in the back seat of her red convertible. Ms. Maglero then returned to the office and continued to work on the computer. Later that day, the housekeeping employee saw Ms. Maglero's auto parked at Ms. Stine's house, and she continued to see Ms. Maglero's car parked there every day, morning and night. Ms. Maglero admitted that she went to work for Ms. Stine. Following Ms. Maglero's departure from Sanders Security, it was discovered that the business data on the company computer had been completely deleted. Diagnostic tests showed that an enormous amount of printing had been done on the days immediately preceding Ms. Maglero's departure, and that the business information had been deleted on Ms. Maglero's last day of work. ³

Staffed with appellees' employees, appellants' rival company soon obtained appellees' clients as well. Anthony Timberlands, Turf Catering, Oaklawn Jockey Club, Nickle Molding, and Lauray's Jewelers canceled their contracts with appellees shortly after the date of the sale agreement and obtained security service from the rival company. Several of these firms had been clients of the appellees for twenty years. Several of the firms canceled their contracts with appellees upon learning that appellees' workers' compensation insurance coverage had lapsed. Ms. Stine was responsible for maintaining workers' compensation insurance for appellees' business, and had been contacted by the insurance agent regarding the problem, yet Ms. Stine neither reinstated the coverage nor informed appellees about the problem. ⁴ After Ms. Stine's departure, appellees learned about the problem from clients calling to cancel their contracts with Sanders on the grounds that Sanders was in breach for failure to maintain workers' compensation insurance. Telephone records showed that Ms. Stine telephoned many of these clients from her home within one week of the date of the agreement.

In arguing that the evidence is insufficient to support a finding of deceit, appellants list the actions of Mr. Davis and Ms. Stine separately and urge us to reverse because the evidence does not show that either appellant committed all the acts that would satisfy all five elements of deceit. We do not agree. It is not necessary for a single person to perform all the acts constituting fraud where two persons participate in a fraudulent scheme. Each party to a fraudulent transaction is responsible for the acts of others in furtherance of the fraudulent scheme, and all who participate are liable for the fraud. 37 C.J.S. Fraud § 83 (1997); see, e.g., Medlock v. Burden, 321 Ark. 269, 900 S.W.2d 552 (1995); Malakul v. Altech Arkansas, Inc., 298 Ark. 246, 766 S.W.2d 433 (1989).

Appellants also contend that there is no substantial evidence to show that Mr. Davis agreed to purchase the business. However, Mr. Sanders clearly testified that, after investigation and negotiation, Mr. Davis agreed to purchase the business for $120,000. Mr. Sanders's credibility was a question within the sole province of the jury, see Medlock v. Burden, supra, and, having been found to be credible, his testimony constitutes substantial evidence that an agreement was reached.

Appellants further contend that an agreement to purchase the business was not the sort of misrepresentation for which deceit will lie because it was not a misrepresentation of a present fact, but was instead merely a promise to do something in the future. Although it is true that, as a general rule, a promise of future conduct may not form the basis for a claim of fraud or deceit, Golden Tee, Inc. v. Venture Golf Schools, Inc., 333 Ark. 253, 969 S.W.2d 625 (1998), this rule will not apply if the party making the false promise knew at the time it was made that it would not be kept. Undem v. First National Bank, 46 Ark.App. 158, 879 S.W.2d 451 (1994). The intent of the promisor in this regard is a question of fact. Id. We think that the evidence in this case, including the evidence that Mr. Davis agreed to purchase the business on November 4; that, without notifying the appellees, he formed a rival business with appellees' employees and clients on November 9; that appellees' business records were wrongfully taken to further the formation of the rival business and wrongfully destroyed to hinder appellees from taking timely corrective measures; and that Mr. Davis subsequently denied making the agreement -- a denial that...