Henry v. Mitchell, 428 S.W.3d 454

Mitchell sued Henrys for misrepresentation in sale of property, alleging misrepresented corners, well location, and driveway easement causing damages.
Circuit court found constructive fraud and awarded Mitchell $34,094.34 to restore property and defeated Henrys' counterclaims.
Henrys argued waiver/release negated liability, reliance was unreasonable, damages were improperly measured, and burden of proof was incorrect.
Trial evidence showed Henrys marked property corners, some of which were incorrect, and Mitchell relied on those markings.
Court concluded waiver was vitiated by constructive fraud and Mitchell’s damages were limited to cost-to-repair; burden was satisfied by clear-and-convincing standard.
Henrys appeal the judgment, preserving the question whether constructive fraud remains a recognized tort.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Waiver vitiated by fraud	Mitchell argues waiver releases liability but is vitiated by fraud.	Henrys contend waiver remains effective as contract term.	Waiver vitiated by constructive fraud; release cannot shield fraud.
Justifiable reliance on flagging	Mitchell reasonably relied on Henrys to flag true corners.	Henrys argue reliance was forfeited by accepting property as flagged.	Mitchell's reliance on flagging deemed justifiable.
Damages and mitigation	Damages measured as cost to restore to represented condition; mitigation not improperly addressed.	Damages should reflect value difference and Mitchell could have mitigated.	Court affirmed cost-to-repair damages; Henrys failed to prove mitigation amount.
Burden of proof	Clear-and-convincing standard applies to constructive fraud in this case.	Preponderance standard suffices.	Court applied clear-and-convincing standard and found sufficient proof.
Tort of constructive fraud	Constructive fraud should remain a recognized tort; does not overrule precedent.	Abandon constructive fraud; similar to negligent misrepresentation should be rejected.	Court declined to overrule constructive fraud; no merit to abandonment argument.

Malakul v. Altech Arkansas, Inc., 298 Ark. 246 (1989) (fraud can set aside a release)
Beatty v. Haggard, 87 Ark.App. 75 (2004) (clear standards for fraud in written instruments)
Barringer v. Hall, 89 Ark.App. 293 (2005) (buyer’s disclaimer of reliance analyzed for misrepresentation)
Worley v. City of Jonesboro, 2011 Ark.App. 594 (2011) (innocent misrepresentation and contract disclaimers relevance)
Clay v. Brand, 236 Ark. 236 (1963) (clarifies clear-and-convincing standard for canceling or reforming solemn writings)
S. County, Inc. v. First W. Loan Co., 315 Ark. 722 (1994) (confirms standards for clear-and-convincing fraud elements)