Lloyd K. Ball v. Jeffrey D. Langley and P. C. Systems

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

KAREN R. BAKER, JUDGE

DIVISION III

LLOYD K. BALL

APPELLANT

V.

JEFFREY D. LANGLEY and P. C. SYSTEMS

APPELLEES

CA01-332

FEBRUARY 6, 2002

APPEAL FROM THE SALINE COUNTY CIRCUIT COURT

[NO. CIV 99-720-3]

HONORABLE GRISHAM A. PHILLIPS, JR, CIRCUIT JUDGE

AFFIRMED

This appeal arises from a dispute over an alleged oral agreement requiring appellee, Jeffrey Langley, to incorporate his existing computer business and simultaneously to delegate a twenty-five percent (25%) ownership interest in the corporation to appellant, Lloyd Ken Ball, who gave Mr. Langley twenty thousand dollars ($20,000) in exchange for the ownership interest. Appellant sued in circuit court for restitution based upon claims of rescission, and for restitution and damages relating to misrepresentation, fraud and deceit. Appellee counterclaimed for declaratory judgment to establish the existence of a de facto partnership and to determine the resulting rights and liabilities of the parties. We find no error and affirm.

After a bench trial, the trial court found that it had jurisdiction and that venue was proper over the fraud claims as well as the question of whether a de facto partnership existed; however, it also found that it was without jurisdiction to adjudicate the counterclaim for a declaratory judgment to the extent that it sought to declare the rights and liabilities of the partners. The court directed the

parties to bring such claims in chancery court should either party desire to pursue such clarification. The court dismissed appellant's claims relating to fraud, finding that he had failed to prove that appellee defrauded, misrepresented himself to, or otherwise deceived appellant with respect to any material elements of the parties' agreement concerning appellee's purchase of a 25% share in appellee's business. Specifically, the court found that appellee did not intentionally or constructively deceive or defraud appellant regarding the financial health or condition of the business. Further, the court found that appellee did not intentionally or constructively defraud appellant with respect to inducing his purchase via misrepresentations that a corporation would be immediately formed, and to the extent that any such discussions were had prior to the payment of the purchase price, their materiality was waived.

With respect to appellee's counterclaims, the trial court found that the parties agreed that appellant would purchase a one-quarter share of appellee's business and that, as a result, a confidential relationship arose between the parties. The court further found that the legal effect of the purchase was the creation of a de facto partnership in which appellant was a 25% partner and appellee was a 75% partner. In its finding, the court specifically referred to appellant's holding himself out to disinterested third-parties as a "partner" with appellee.

In reviewing the trial judge's findings, we determine whether the findings were clearly erroneous or clearly against the preponderance of the evidence. Dugal Logging, Inc. v. Ark. Pulpwood Co., 66 Ark. App. 22, 988 S.W.2d 25 (1999). All inferences are resolved in favor of the appellee. Stuttgart Reg'l Med. Ctr. v. Cox, 343 Ark. 209, 33 S.W.3d 142 (2000). Disputed facts and determinations of credibility of witnesses are within the province of the fact-finder. Id.

Appellant asserts four points on appeal. The four "points" are set forth as subheadings (a) through (d) under a point 1, which begins, "[t]he ruling of the Circuit Court was clearly both erroneous and against the established law in the State of Arkansas and against the preponderanceof the evidence because:". No separate points or arguments are set forth in the brief. The first three subheadings appear to challenge the evidence supporting the judge's findings. The fourth subheading complains that the court misapplied the Statute of Frauds in this case.

As to this fourth contention, there is neither discussion nor convincing argument set forth in the brief. Appellate review of these points is controlled by the rule that an assignment of error unsupported by convincing argument or authority will not be considered on appeal unless it is apparent, without further research, that the assignment of error is well taken. Smith v. Smith, 41 Ark. App. 29, 848 S.W.2d 428 (1993).

As for the first three subheadings challenging the evidentiary support of the judge's findings, we cannot say that the trial court's findings were clearly erroneous nor clearly against the preponderance of the evidence. Appellant basically challenges two findings of the trial court. First, that the court erroneously found that appellant failed to prove fraud. Second, that the court erred in finding a de facto partnership existed between the parties.

To sustain his rescission and restitution claim based upon fraud, the appellant was required to prove five elements of deceit: that appellee made a false representation; that appellee knew that the representation was false or that he did not have sufficient basis of information to make it; that appellee intended to induce appellant to act or to refrain from acting in reliance upon the misrepresentation; that appellant justifiably relied upon the representation; and that appellant suffered damages as result of reliance. Fidelity Mtg. Co. of Texas v. Cook, 307 Ark. 496, 821 S.W.2d 39 (1991). Appellant was required to prove each element by a preponderance of the evidence. Id.

Regarding the issue of partnership, the parties' sharing of the net profits of an undertaking is prima facie evidence that they were partners, unless the money received was paid as wages. Bicev. Green, 64 Ark. App. 203, 981 S.W.2d 105 (1998) (citing Ark. Code Ann. § 4-42-202(4)(b) (Repl. 1996).

We cannot say from the record and briefs before us that the judge's findings were clearly erroneous or against the preponderance of the evidence. Appellees' supplemental abstract contained accounting exhibits presented to appellant showing operating losses and personal withdrawals by appellees. It also contained a letter and summary of advantages and disadvantages of various forms of business and a comparison of business entities, which suggested that the two parties review the information based on the criteria they had established for operating the business to find the entity best suited for their business needs. Appellant paid installments of money to appellee for the purchase of a business interest knowing that the business was not currently incorporated. Written receipts of money received from appellant, one which was drafted by the appellant, identify payment as "toward purchase of 25% of business. Total purchase price for 25% of business being $20,000." Appellant held himself out to disinterested third-parties as being appellee's partner. Appellant's testimony referred to the parties' agreement to split the profits of the business, while appellee's testimony denied that incorporation was even discussed in the initial negotiations.

Nothing in the record supports a finding of error. Accordingly, we affirm.

Bird and Crabtree, JJ., agree.