Arloe Designs, LLC v. Arkansas Capital Corp.
2014 Ark. 21
| Ark. | 2014Background
- Arloe Designs (Jacobs) sought financing to build a 4,900 sq. ft. hangar to expand into exterior aircraft paint and servicing; Jacobs offered cash equity and a $100,000 bond as collateral.
- Arkansas Capital Corporation (ACC) prepared a loan-proposal letter expressly disclaiming any contractual commitment to make a loan.
- National Bank of Arkansas (NBA) sent an August 20, 2007 letter approving financing subject to conditions, including that Arloe’s airport lease be assignable; Arloe’s executed lease was nonassignable.
- Jacobs learned NBA would not close the loan without the $100,000 bond; Arloe did not provide the bond and the loan did not close.
- Arloe sued ACC and NBA for breach of contract, ADTPA violation, negligence, promissory estoppel, and claimed lost profits; the circuit court granted summary judgment for defendants on all claims except a narrowed promissory‑estoppel claim, and the jury later found no promise was made.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — was there an enforceable loan contract? | ACC and NBA promised financing; material facts exist about assent. | ACC’s proposal disclaimed any contractual obligation; NBA’s approval was expressly conditional on an assignable lease which was not met. | No contract. Summary judgment for defendants affirmed. |
| Negligence — did defendants owe a duty of care? | A duty arose from the parties’ relationship; defendants’ conduct created reliance and harm. | No special or fiduciary relationship—only arms-length loan negotiations; no duty exists as a matter of law. | No duty; summary judgment for defendants affirmed. |
| ADTPA — does the statute apply? | Defendants’ conduct falls within ADTPA proscribed practices. | ACC and NBA are regulated by state/federal banking authorities; ADTPA exemptions apply absent Attorney General request. | ADTPA does not apply; summary judgment for defendants affirmed. |
| Promissory estoppel / lost profits — were reliance damages recoverable? | Arloe relied to its detriment; lost-profits for the expansion are recoverable (new-business rule should be abandoned). | No promise was established; lost-profit damages are speculative and barred by the new-business rule. | Jury found no promise; promissory‑estoppel damages moot. Lost-profit claim fails (no underlying wrongful act); issue moot/affirmed. |
Key Cases Cited
- Williamson v. Sanofi Winthrop Pharmaceuticals, Inc., 60 S.W.3d 428 (Ark. 2001) (objective test for mutual assent and meeting of the minds)
- Ward v. Williams, 118 S.W.3d 513 (Ark. 2003) (use of objective indicators to determine mutual assent)
- D.B. Griffin Warehouse, Inc. v. Sanders, 76 S.W.3d 254 (Ark. 2002) (duty element in negligence is a question of law)
- Milam v. Bank of Cabot, 937 S.W.2d 653 (Ark. 1997) (bank owes duty only in fiduciary or special relationships beyond ordinary debtor–creditor)
- Carter v. Cline, 385 S.W.3d 745 (Ark. 2011) (failure of a condition precedent prevents formation of contract)
- Optical Partners, Inc. v. Dang, 381 S.W.3d 46 (Ark. 2011) (consequential damages and requirement to avoid speculation in lost-profit awards)
- Marvell Light & Co. v. Gen. Elec. Co., 259 S.W. 741 (Ark. 1924) (new-business rule prohibiting recovery for anticipated profits by a business never before operational)