D. W. Lainhart v. Diamante, L.L.C. and Cooper Communities, Inc.

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JUDGE JOSEPHINE LINKER HART

DIVISION I

D.W. LAINHART

APPELLANT

V.

DIAMANTE, L.L.C. and COOPER COMMUNITIES, INC.

APPELLEES

CA02-538

March 5, 2003

APPEAL FROM THE SALINE COUNTY CIRCUIT COURT

[NO. E99-1272-1]

HONORABLE ROBERT GARRETT,

CIRCUIT JUDGE

AFFIRMED

Appellant, D.W. Lainhart, appeals from the circuit court's granting of summary judgment in favor of Diamante and Cooper Communities in Diamante's foreclosure action on certain real property owned by appellant, in appellant's counterclaim against Diamante, and in appellant's third-party complaint against Cooper Communities. The circuit court concluded that summary judgment was appropriate because there were no genuine issues of material fact. Appellant argues that the granting of summary judgment was erroneous because there remain genuine issues of material fact on his claim of fraud and his contention that the statute of limitations had not expired. We affirm.

Diamante filed a complaint and sought foreclosure on certain real property owned by appellant that was located in the Diamante Subdivision of Hot Springs Village in Saline County, Arkansas. The complaint alleged that the basis for the foreclosure action was

appellant's failure to pay monthly dues and that the real property was subject to a lien for the monthly dues. Appellant answered, counterclaimed, and filed a third-party complaint against Cooper Communities. Appellant alleged in his counterclaim that Diamante's "successors" told him he was not obligated to pay any "club membership dues," that to induce him to purchase the lot a sales representative made "a material misrepresentation" that Cooper Communities would pay any club dues, and that Diamante knew of and encouraged the practice of Cooper Communities making such promises. He alleged that such actions constituted fraud and that Diamante's lien should be declared void. In his third-party complaint, appellant alleged that he was induced to purchase the property from Cooper Communities as a result of a representation by Cooper Communities that it would be responsible for the payment of the dues. He further alleged that, after partial performance, Cooper Communities "breached the agreement" by failing to pay the dues.

Diamante and Cooper Communites replied and answered, and both moved for summary judgment, arguing that the statute of limitations had run on appellant's claims and that appellant had failed to show that there was a genuine issue of material fact. The circuit court concluded that there were no genuine issue of material fact, granted summary judgment against appellant, and entered a judgment and decree of foreclosure.

In his brief, appellant sets out the five elements of fraud and argues that there remain genuine issues of material fact because Cooper Communities misrepresented that it would "pay" appellant's dues to Diamante on behalf of appellant and that this "promise" induced appellant to purchase the property. He states that Cooper Communities "had made thepromise to lease out the dues and did so for a number of years." He also notes that several other persons continue to have their dues leased out, and he argues that there is a "material issue of fact then about whether Cooper could have continued to lease out the property." Next, he argues that "there was a material issue of fact as to whether doing so for a number of years and then ceasing to do so concealed the fraud at the time of the sale, tolling any statute of limitations."

Our standard of review of summary-judgment cases is as follows:

The remedy of summary judgment should only be granted if there exists no genuine issue of material fact and the party moving for summary judgment is entitled to judgment as a matter of law. We view the issue in the light most favorable to the party opposing the judgment, and the court resolves all inferences and doubts against the moving party. If the party moving for summary judgment makes a prima facie showing that no issues of fact exist, and the non-moving party fails to show that such issues do exist, then the court must affirm the trial court's grant of a summary judgment.

The response and supporting material must set forth specific facts showing that there is a genuine issue of fact for trial. Our rules of civil procedure clearly provide that the trial court may only consider "pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any" for purposes of summary judgment.

Golden Tee, Inc. v. Venture Golf Schools, Inc., 333 Ark. 253, 259, 969 S.W.2d 625, 628 (1998).

The elements of a cause of action for fraud are (1) a false representation of a material fact; (2) knowledge or belief that the representation is false or that there is insufficient evidence upon which to make the representation; (3) an intent to induce the other party to act or refrain from acting in reliance on the representation; (4) a justifiable reliance by the other party; and (5) resulting damages. Id. at 266, 969 S.W.2d at 632. Representations areconsidered fraudulent when the one making them either knows them to be false or, not knowing, asserts them to be true. O'Mara v. Dykema, 328 Ark. 310, 317, 942 S.W.2d 854, 858 (1997). Further, projections of future events or a promise of future conduct may not form the basis of a fraud claim. Golden Tee, 333 Ark. at 267, 969 S.W.2d at 632. This rule, however, is inapplicable if the person making the representation or prediction knows it to be false at the time it is made. Goforth v. Smith, 338 Ark. 65, 77, 991 S.W.2d 579, 586 (1999). A grant of summary judgment on a claim of misrepresentation is appropriate when a plaintiff does not produce specific facts that the defendant knew his representations were false. O'Mara, 328 Ark. at 317, 942 S.W.2d at 858.

In appellant's affidavit, he averred that prior to his purchase of the lot on August 20, 1994, he was shown the Diamante property by Myron Hall, who appellant asserted was a sales representative for Cooper Communities. Hall told him that $250 in monthly dues had to be paid by all property owners. Appellant told Hall that he was not interested in purchasing the property. Sometime later, Hall contacted him about the Diamante property and told him that "club dues could be assigned to someone on a yearly basis" if he purchased the property. On the day he purchased the property, he again questioned Hall and was reassured that Cooper Communities "could get someone to lease the club dues." However, on January 24, 1997, appellant received a letter from Cooper Communities advising him that on January 1, 1998, they "would no longer be responsible for payment of my membership dues...." Myron Hall, in his own affidavit, acknowledged that when he sold the lot to appellant, he "informed him as an inducement for purchasing the lot that his dues would beleased out to someone else" and that appellant told him that "he would only buy the lot if he could lease out the dues."

In appellant's deposition, he stated that at the time he purchased the property, Chuck Sharp, a sales manager at Cooper Communities, told him that "they would take care of the leasing of dues, that I didn't have any problems - I didn't have to worry about that." He further stated that he did not know if Sharp may have lied to him or was just wrong about future demand for the leasing of dues.

Hall stated in his deposition that Chuck Sharp told appellant he could lease his dues and that he would be the seventh person on a list to lease his dues. Sharp assured him that his dues would be leased. Hall stated that Sharp said, "We had a lot of people that are calling, wanting to lease dues for golf, don't want to buy the property, and we'll lease your dues for you." Sharp assured him that "they had a lot of folks wanting to lease the dues, and his dues would be leased." Hall stated that it was his assumption that the dues would be leased "as long as he wanted to lease them - as long as they had people to lease, they would have first privilege" because he was one of the first purchasers.

Without addressing the court's finding that the statute of limitations had run on appellant's claims, we conclude that summary judgment was appropriate. Here, appellant asserts that appellees made a promise to lease out his dues in the future and that their failure to do so constituted fraud. As we previously noted, projections of future events or a promise of future conduct may not form the basis of a fraud claim. Further, while this rule is inapplicable if the person making the representation or prediction knows it to be false at thetime it is made, appellant did not present any facts establishing that the representation was known to be false at the time it was made. And as previously stated, a grant of summary judgment on a claim of misrepresentation is appropriate when a plaintiff does not produce specific facts that the defendant knew his representations were false. Thus, we affirm the circuit court's grant of summary judgment.1

Affirmed.

Pittman and Gladwin, JJ., agree.

1 Because we affirm the granting of summary judgment, we do not reach appellant's argument that, on remand, he is entitled to a jury trial.