Farris v. Conger
490 S.W.3d 684
Ark. Ct. App.2016Background
- Farris hired Conger Wealth Management (CWM) under a written wealth-management agreement; CWM had control over her Fidelity account for brokerage transactions.
- In November 2008 Farris requested funds for a foreclosure purchase; CWM initiated transfers after the FRWN cutoff and used an ACH rather than a same-day wire, causing her to miss the sale and later incur substantially higher purchase costs.
- Farris filed a breach-of-contract complaint on October 10, 2013, seeking restitution, lost profits, fees, interest, and punitive damages.
- CWM moved to dismiss and later for summary judgment, arguing the complaint actually sounded in negligence and therefore was time-barred by the three-year statute of limitations.
- The circuit court and the majority held paragraph 5 of the contract only promises to "endeavor" to process transactions (a diligence-type promise or disclaimer), so the claim’s gist is negligence and barred; the court granted summary judgment.
- A dissent argued the complaint pleaded the existence of a contract, a specific breach, and damages, so the five-year contract limitations period should apply and the matter should not have been dismissed on the pleadings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Farris’s claim is characterized as contract or tort for statute-of-limitations purposes | Farris alleged CWM breached the written wealth-management agreement (paragraph 5) by failing to timely execute transfers | CWM argued the contract language at most promised to "endeavor" to act (a diligence promise/disclaimer), so the claim is negligence | Court held the gist is negligence; the contract language is non-specific/diligence-based and does not create a specific promise |
| Whether the complaint relies solely on facts in the pleading (fact-pleading standard) | Farris contended she pleaded facts showing a contractual breach and attached the agreement | CWM urged characterization by reference to the contract language to show no specific promise was made | Court analyzed only the complaint and attached contract language and concluded the alleged promise was not specific enough to invoke the contract limitations period |
| Whether a promise to "endeavor" or to perform diligently can support a breach-of-contract claim | Farris argued the quoted clause created an actionable contractual obligation to process transactions timely | CWM argued a promise to "endeavor" is a disclaimer/effort-only obligation and legal authorities treat failures of diligence as negligence | Held that promises to "endeavor" or to "proceed diligently" are not specific contractual promises and thus amount to negligence, not breach |
| Whether dismissal on statute-of-limitations grounds was proper at summary judgment given the pleadings | Farris (dissent) argued courts must accept complaint allegations and apply the longer limitations period when ambiguity exists | CWM argued the complaint’s factual allegations and attached contract show the claim’s gist is tort and time-barred | Majority affirmed summary judgment; dissent would have applied the five-year contract period and reversed |
Key Cases Cited
- McQuay v. Guntharp, 331 Ark. 466, 963 S.W.2d 583 (1998) (when statute-of-limitations depends on claim characterization, courts look to the complaint itself)
- O’Bryant v. Horn, 297 Ark. 617, 764 S.W.2d 445 (1989) (same rule requiring focus on the complaint for limitations analysis)
- Sturgis v. Skokos, 335 Ark. 41, 977 S.W.2d 217 (1998) (failure to "proceed diligently" is negligence, not breach of a specific contractual promise)
- Tony Smith Trucking v. Woods & Woods, Ltd., 75 Ark. App. 134, 55 S.W.3d 327 (2001) (broad contractual diligence language amounts at most to negligence; gist-of-complaint analysis)
- Morrow v. First Nat’l Bank of Hot Springs, 261 Ark. 568, 550 S.W.2d 429 (1977) (distinguishing nonfeasance breaches of contract from misfeasance torts)
- Zufari v. Architecture Plus, 328 Ark. 411, 914 S.W.2d 756 (1996) (pleading requirements for breach-of-contract to invoke contract limitations)