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AR Supreme Court Decides Complex Dispute Brought by Rice Farmers

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Arkansas Supreme Court Decides Rice Contractual Dispute and Re-affirms Elements of Various Causes of Action

In KBX v. Zero Grade Farms, the Arkansas Supreme Court was presented with a messy dispute among various entities and individuals related to the purchase/sale of rice from a group of farmers who alleged conversion, fraud, constructive fraud, civil conspiracy, unjust enrichment, and claims for attorneys fees as a sanction for  spoliation of evidence. The Court reversed in part, affirmed in part and reversed and remanded in part.

The KBX Court, reviewed the elements of the various causes of action involved in the case, stating as follows:

“Conversion is a common-law tort action for the wrongful possession or disposition of another’s property. Hartness v. Nuckles, 2015 Ark. 444, at 9, 475 S.W.3d 558, 565. To establish liability for the tort of conversion, a plaintiff must prove the defendant wrongfully committed a distinct act of dominion over the property of another, which is a denial of, or is inconsistent with, the owner’s rights. Id., 475 S.W.3d at 565. If the defendant exercises control over the goods in exclusion or defiance of the owner’s rights, it is a conversion, whether it is for defendant’s own use or another’s use. Id., 475 S.W.3d at 565.

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“Under Arkansas law, the tort of deceit, fraud, or misrepresentation consists of the following five elements: (1) that the defendant made a false representation of material fact; (2) that the defendant knew that the representation was false or that there was insufficient evidence upon which to make the representation; (3) that the defendant intended to induce action or inaction by the plaintiff in reliance upon the representation; (4) that the plaintiff justifiably relied on the representation; and (5) that the plaintiff suffered damage as a result of the false representation. Muccio v. Hunt, 2016 Ark. 178, at 4–5, 490 S.W.3d 310, 312–13.

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“Constructive fraud, as opposed to actual fraud, does not include the elements of actual dishonesty or intent to deceive. Born v. Hosto & Buchan, PLLC, 2010 Ark. 292, at 10, 372 S.W.3d 324, 332. It is defined as a breach of a legal or equitable duty which, irrespective of moral guilt, the law declares fraudulent because of its tendency to deceive others. Id., 372 S.W.3d at 332.

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“A civil conspiracy is an intentional tort that requires a specific intent to accomplish the contemplated wrong. Chambers v. Stern, 347 Ark. 395, 404, 64 S.W.3d 737, 743 (2002). To prove a civil conspiracy, a plaintiff must show that two or more persons have combined to accomplish a purpose that is unlawful or oppressive or to accomplish some purpose, not in itself unlawful, oppressive, or immoral, but by unlawful, oppressive, or immoral means, to the injury of another. Dodson v. Allstate Ins. Co., 345 Ark. 430, 445, 47 S.W.3d 866, 876 (2001).

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“Unjust enrichment is an equitable doctrine. First Nat’l Bank of DeWitt v. Cruthis, 360 Ark. 528, 535, 203 S.W.3d 88, 93 (2005). It is the principle that one person should not be permitted unjustly to enrich himself at the expense of another but should be required to make restitution of or for property or benefits received, retained, or appropriated, where it is just and equitable that such restitution be made, and where such action involves no violation or frustration of law or opposition to public policy, either directly or indirectly. Campbell v. Asbury Auto., Inc., 2011 Ark. 157, at 21, 381 S.W.3d 21, 36. The existence of a contractual relationship between the parties that addresses the subject in dispute generally precludes recovery on a theory of unjust enrichment. Id. at 22, 381 S.W.3d at 36–39. Quantum meruit is a claim for unjust enrichment that does not involve the enforcement of a contract. Sisson v. Ragland, 294 Ark. 629, 632, 745 S.W.2d 620, 622 (1988).

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“We have explained that factors to consider in a motion for attorney’s fees include (1) the experience and ability of the attorney, (2) the time and labor required to perform the legal service properly, (3) the amount involved in the case and the results obtained, (4) the novelty and difficulty of the issues involved, (5) the fee customarily charged in the locality for similar legal services, (6) whether the fee is fixed or contingent, (7) the time limitations imposed upon the client or by the circumstances, and (8) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer. Chrisco v. Sun Indus., Inc., 304 Ark. 227, 229, 800 S.W.2d 717, 718–19 (1990). Because of the circuit court’s intimate acquaintance with the record and the quality of service rendered, we recognize the superior perspective of the circuit court in assessing the applicable factors. Walther v. Wilson, 2020 Ark. 194, at 8, 600 S.W.3d 554, 559. Accordingly, the amount of the award will be reversed only if the appellant can demonstrate that the circuit court abused its discretion. Id. at 9, 600 S.W.3d at 559. An award of attorney’s fees will not be set aside absent an abuse of discretion. Id., 600 S.W.3d at 560.

Read the KBX v Zero Grade Farms case by clicking here.

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