United States District Court, E.D. Arkansas, Western Division
OPINION AND ORDER
LEON HOLMES UNITED STATES DISTRICT JUDGE.
the second lawsuit filed as a result of a construction
dispute. CKG, Inc., is an Arkansas contractor that was
performing work in Maumelle, Arkansas, in 2015. Kimberly
Carrol is President of CKG. Budget Maintenance Concrete
Services, Inc., is a Pennsylvania corporation that agreed to
do subcontract work for CKG on the Maumelle project. In
August of 2016, Budget filed suit in Pennsylvania to recover
amounts that it contended were owed by CKG and Carrol for
work on the Maumelle project. Budget obtained a judgment that
has now been registered in Pulaski County Circuit Court as a
Carrol commenced this action in Pulaski County Circuit Court
on December 20, 2016, alleging a fraud scheme with two parts:
first, Budget assured CKG and Carrol that it was licensed in
the State of Arkansas, which was false; second, Budget never
intended to perform the work but, rather, intended to perform
partially, then leave the project incomplete and file a
fraudulent lawsuit to collect for the work that was never
performed. CKG and Carrol seek relief for common law fraud
and for deceptive trade practices under Ark. Code Ann. §
4-88-107(10). Budget removed this action to this Court based
on diversity of citizenship jurisdiction.
Carrol have filed a motion for declaratory judgment, asking
the Court to declare that the contract between CKG and Budget
is void because it violates Ark. Code Ann. § 17-25-103
inasmuch as Budget did not have a valid Arkansas
contractor's license. Budget has filed a motion for
summary judgment arguing that CKG and Carrol's claims
fail as a matter of law . More recently, the lawyer
representing CKG and Carrol has moved to withdraw on the
grounds that he is not being paid. The Court will first take
up the motion for summary judgment.
should grant summary judgment if the evidence demonstrates
that there is no genuine dispute as to any material fact and
the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). The moving party bears the initial burden
of demonstrating the absence of a genuine dispute for trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106
S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the moving party
meets that burden, the nonmoving party must come forward with
specific facts that establish a genuine dispute of material
fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89
L.Ed.2d 538 (1986); Torgerson v. City of Rochester,
643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). A genuine
dispute of material fact exists only if the evidence is
sufficient to allow a reasonable jury to return a verdict in
favor of the nonmoving party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91
L.Ed.2d 202 (1986). The Court must view the evidence in the
light most favorable to the nonmoving party and must give
that party the benefit of all reasonable inferences that can
be drawn from the record. Pedersen v. Bio-Med.
Applications of Minn., 775 F.3d 1049, 1053 (8th Cir.
2015). If the nonmoving party fails to present evidence
sufficient to establish an essential element of a claim on
which that party bears the burden of proof, then the moving
party is entitled to judgment as a matter of law.
claim in Arkansas requires proof of five essential elements:
(1) a false representation of material fact; (2) knowledge
that the representation is false or that there is
insufficient evidence to make it; (3) intent to induce action
or inaction in reliance upon the representation; (4)
justifiable reliance on the representation; and (5) damage as
a result of the reliance. Golden Tee, Inc. v. Venture
Golf Schools, Inc., 333 Ark. 253, 266, 969 S.W.2d 625,
respect to the first part of the alleged fraud-that Budget
represented that it was licensed in Arkansas whereas in fact
it was not-Budget says that it never represented that it was
licensed in Arkansas, whereas CKG and Carrol points to a
portion of an advertisement for a list of services sent by
Budget to Carrol in which Budget says that it is
“Licensed, Fully Insured and Bonded.” Document
#28 at 10. Assuming, without deciding, that that statement on
the advertisement constituted a representation by Budget that
it was licensed in Arkansas, CKG and Carrol's fraud claim
still must fail because CKG and Carrol cannot establish that
they justifiably relied upon that representation. Whether
Budget was licensed in Arkansas was a matter of public record
which could have been ascertained easily by checking with the
contractors' licensing board. Indeed, after the fact,
Carrol contacted the contractors licensing board and learned
that Budget was not listed as a licensed contractor in
Arkansas. Document #2 at 12. The Arkansas courts have held
that claims for fraud or constructive fraud could not survive
where the claims were predicated on false representations by
contractors that they were bonded because the persons who
relied on those representations could have consulted the
public record and learned to the contrary. Beebe Sch.
Dist. v. Nat'l Supply Co., 280 Ark. 340, 343-44, 658
S.W.2d 372, 374 (1983); Alliance Steel, Inc. v. TNT
Const., Inc., 2009 Ark.App. 405 at 4, 322 S.W.3d 501,
503-04. Based on those decisions by the Arkansas courts, CKG
and Carrol cannot establish that they justifiably relied on
Budget's representation that it was licensed in Arkansas.
The same result obtains under the Deceptive Trade Practices
Act. Moore v. Mack's Sport Shop, LLLP, No.
4:16CV00540-KGB, 2017 WL 4350980 at *9 (E.D. Ark. Sept. 27,
the second part of the alleged fraud, projections of future
events or promises of future conduct ordinarily will not
support a claim of fraud. Golden Tee, 333 Ark. at
267, 969 S.W.2d at 632. Promises as to future conduct may,
however, support a fraud claim if the person making the
promise never intended to fulfill it. Robertson Oil Co.
v. Phillips Petroleum Co., 871 F.2d 1368, 1371 (8th Cir.
1989). Budget has included with its motion for summary
judgment a copy of the contract at issue and pointed out that
it agreed that it would not be paid until after the work was
completed, which is logically inconsistent with the
allegation that it never intended to perform. Document #28 at
6-9. CKG and Carrol have presented no proof that Budget never
intended to fulfill its contractual obligations.
Carrol have failed to present facts sufficient to show a
genuine dispute of material fact on the claims asserted in
their complaint. Therefore, Budget's motion for summary
judgment must be granted.
reaching the conclusion that Budget's motion for summary
judgment must be granted, the Court has not addressed
Budget's argument that CKG and Carrol's claims are
barred by res judicata based on the judgment entered by the
court in Pennsylvania, nor has the Court addressed CKG and
Carrol's motion for a declaratory judgment holding that
the contract at issue was void. Budget's res judicata
argument assumes that the Pennsylvania court gained personal
jurisdiction over CKG and Carrol, but the record here is
insufficient to enable the Court to determine whether the
Pennsylvania court had personal jurisdiction. Because Budget
is entitled to summary judgment on other grounds, this Court
need not decide that issue. As to CKG and Carrol's motion
for a declaratory judgment, it is unnecessary to reach the
issue of whether the contract was void because the fraud
claims asserted by CKG and Carrol in their complaint do not
depend on resolution of that issue.
reasons stated, the motion for summary judgment filed by
Budget Maintenance Concrete Services, Inc., is GRANTED.
Document #28. The claims of the plaintiffs are dismissed with
prejudice. The motion filed by the lawyer for the plaintiffs
asking to be relieved as counsel is DENIED as moot. Document
#36. The ...