United States District Court, E.D. Arkansas, Western Division
OPINION AND ORDER
LEON HOLMES UNITED STATES DISTRICT JUDGE
Finley and Chris Garner bring this action against their
former employer-Gregory Lawn & Garden, Inc.-and its
corporate officers-Bart Gregory and Robert Gregory-alleging
violations of the Fair Labor Standards Act, the Arkansas
Civil Rights Act, and the Arkansas Minimum Wage Act; common
law claims for outrage and battery; and a claim pursuant to
Ark. Code Ann. § 16-118-107(a)(1), which permits a
person injured by the felonious conduct of another to recover
damages. Gregory Lawn & Garden, Inc., and Bart Gregory
then filed a counterclaim against Finley alleging common law
claims for breach of fiduciary duty and conversion; and Bart
Gregory alleges common law claims for assault and battery.
Finley has filed a motion to dismiss the claims for breach of
fiduciary duty and conversion. For the following reasons, the
motion is granted in part and denied in part.
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a complaint must contain “a short
and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although
detailed factual allegations are not required, the complaint
must set forth “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167
L.Ed.2d 929 (2007). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173
L.Ed.2d 868 (2009). The Court accepts as true all of the
factual allegations contained in the complaint and draws all
reasonable inferences in favor of the nonmoving party.
Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792 (8th
Cir. 2014). The complaint must contain more than labels,
conclusions, or a formulaic recitation of the elements of a
cause of action, which means that the court is “not
bound to accept as true a legal conclusion couched as a
factual allegation.” Twombly, 550 U.S. at 555,
127 S.Ct. at 1965.
following facts are alleged in the counterclaim. Finley
worked for Gregory Lawn & Garden, mostly in the repair
facility at the Bryant store, from about August 12, 2014,
until December 6, 2016. Finley was a technician and worked in
assembly. The counterclaim arises out of two separate
incidents: First, Finley threw fireworks at Bart Gregory and
shot bottlerockets into the ceiling of the repair facility.
Second, Finley used the company credit card to put gas into
his own vehicle on multiple occasions.
argues that the counterclaim fails to state a claim for
breach of fiduciary duty. “A person standing in a
fiduciary relationship with another is subject to liability
to the other for harm resulting from a breach of the duty
imposed by the relationship.” Campbell v. Asbury
Auto., Inc., 2011 Ark. 157, 33, 381 S.W.3d 21, 43.
“A fiduciary relationship exists between two persons,
one of whom has a duty to act for the benefit of another and
owes the other duties of good faith, trust, confidence, and
candor.” 1 Howard W. Brill & Christian H. Brill,
Ark. Law of Damages § 15:3 (6th ed. 2015). Certain
relationships give rise to a fiduciary duty as a matter of
law, such as the attorney-client relationship and the
trustee-beneficiary relationship. See Cole v. Laws,
349 Ark. 177, 186, 76 S.W.3d 878, 883 (2002); Hosey v.
Burgess, 319 Ark. 183, 189, 890 S.W.2d 262, 265 (1995).
The nature of these relationships involves a variety of
duties performed for the benefit of only one of the parties
in the relationship. Id. A fiduciary's
obligations include a duty of loyalty, a duty to deal
impartially with the beneficiary, and a duty to exercise
reasonable care. See Sexton Law Firm, P.A. v.
Milligan, 329 Ark. 285, 298, 948 S.W.2d 388, 395 (1997).
Whether a fiduciary relationship exists is a question of law.
Long v. Lampton, 324 Ark. 511, 520, 922 S.W.2d 692,
Brill has explained:
Fiduciary obligations traditionally arise in three
situations. First, the relationship is created when one
person entrusts his money or property to another with the
understanding that the other will use the funds for the
benefit of the entrustor or at least in a manner consistent
with the entrustor's wishes. Second, the relationship
exists because of the attributes inherent in certain
relationships, including attorney-client, guardian-ward,
trustee-beneficiary, executor-heir, principal-agent, and
insurer-insured. Third, the facts and circumstances of a
particular relationship may give rise to a fiduciary
relationship. The party claiming the existence of a fiduciary
or confidential relationship has the burden of establishing
the facts supporting such a relationship. The superior
position may arise from intellectual, physical, financial,
governmental, moral, or other factors.
Howard W. Brill & Christian H. Brill, Ark. Law of Damages
§ 15:3 (6th ed. 2015) (footnotes omitted).
employment context, the Arkansas Supreme Court has held that
an employee owes a fiduciary duty to the employer when the
employee is in a position of some authority. Id.
(citing Pennington v. Harvest Foods, Inc., 326 Ark.
704, 934 S.W.2d 485, 495 (1996) (“[A] manager owes a
fiduciary duty to his business.”)). In Tandy Corp.
v. Bone, the court held that it was not error for the
trial court to instruct the jury that the manager of a Radio
Shack owed his employer, the business, a fiduciary duty. 283
Ark. 399, 410, 678 S.W.2d 312, 318 (1984). See also
Stuart C. Irby Co. v. Tipton, 796 F.3d 918, 922
(8th Cir. 2015) (holding that as the branch manager, the
plaintiff employee owed a fiduciary duty under Arkansas law
precluding him from recruiting other employees to join a
competing company); Vigoro Indus., Inc. v. Crisp, 82
F.3d 785, 788-89 (8th Cir. 1996) (holding that district court
did not err in holding that Arkansas law imposed a duty of
loyalty on the manager of a business, which precluded him
from soliciting other employees or customers to leave the
business with him); Stine v. Sanders, 987 S.W.2d
289, 297 (1999) (holding that there was evidence to show that
manager “stood in a relation of trust and
confidence” to her employers and therefore could be
liable for punitive damages based on her fraudulent
representations in connection with forming a competing
business). But the Arkansas Court of Appeals held in
Infinity Headwear & Apparel v. Coughlin
that the circumstances of the case-sales manager e-mailed to
himself files from employer's database before leaving the
company-did not support “an independent, free-standing
breach-of-loyalty claim.” 2014 Ark.App. 609, 4, 447
S.W.3d 138, 141.
Lawn & Garden and Bart Gregory's breach of fiduciary
duty claim is based on the fireworks incident:
20. Finley's conduct, as hereinabove described, including
but not limited to, damaging the ceiling of the Company's
premises and throwing fireworks at employees on company time,
constitutes a breach of Finley's duty of loyalty as an
employee of Gregory Lawn & Garden.
#13 at 3, ¶5. The counterclaim does not allege that
Finley was in a position of authority; rather it alleges that
Finley worked in assembly and in the repair shop as a
technician. Nor does the counterclaim allege Finley was
entrusted with money or property or that he had a superior
position due to intellectual, physical, financial,
governmental, moral or other factors. Nothing in the
counterclaim alleges facts that would give rise to a
fiduciary duty. Finley's actions of throwing fireworks at
Gregory and shooting fireworks into the ceiling may
constitute another tort, but those actions did not breach a
also argues that the counterclaim fails to state a claim for
conversion. Arkansas law defines conversion as “the
exercise of dominion over property in violation of the rights
of the owner or person entitled to possession.”
City of Nat'l Bank v. Goodwin, 301 Ark. 182,
187, 783 S.W.2d 335, 337 (1990) (internal quotations
omitted). Finley says that the counterclaim does not state a
claim for conversion because the allegations are conclusory
and unsupported by specific facts, “which should
include when Finley used the card and what amount he
allegedly spent.” Document #19 at 5. The counterclaim
23. Finley, intentionally and without authority, wrongfully
converted and misappropriated Gregory Lawn & Garden's
property by putting gas in his own vehicle on the Company
credit card ...