844 F.3d 1011
8th Cir.2017Background
- Star City School District contracted for a new high school; SBC was general contractor and contracted with ACI to supply metal roofing materials; ACI did not install the roof.
- The roof leaked from installation; architect and ACI inspectors documented installation defects; SBC issued a 10-year warranty in Feb. 2006 promising ACI would repair or replace materials and SBC would repair workmanship.
- District took possession after a certificate of substantial completion (Mar. 28, 2005) and used the building; leaks persisted despite repeated repairs by SBC and later by a local contractor (authorized and paid by ACI as a goodwill gesture).
- SBC ceased repairs, later went bankrupt; District delayed claiming on the performance bond until 2012 (denied) and sued ACI in 2013 alleging fraud, constructive fraud, breach of warranty, breach of contract, and negligence.
- District court dismissed fraud claims for failure to plead with particularity and granted summary judgment for ACI on remaining claims as barred by Arkansas’s five-year statute of repose; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether District pleaded actionable fraud/constructive fraud | ACI repeatedly promised to repair/replace the roof and concealed deficiencies; those assurances induced reliance | Promissory statements about future repairs are not actionable as fraud absent allegation ACI knew promise was false when made; plaintiff failed to plead particularized facts or actual reliance | Affirmed dismissal: promises about future acts are not fraud absent factual allegation of intent to deceive; no pleaded actual reliance |
| Whether plaintiff alleged actual reliance | District says it refrained from filing bond claim or suit because of ACI’s assurances | ACI says complaint lacks allegations of acts/omissions taken in reliance on alleged misrepresentations | Affirmed: complaint failed to allege that District acted or refrained from acting by reason of ACI’s statements |
| Whether Arkansas five-year statute of repose bars warranty/contract/negligence claims | District contends building was never substantially completed and/or warranty claims avoid the repose period | ACI argues building was substantially complete in 2005 and statute of repose applies to claims arising from defective construction or repair, including warranty claims tied to installation | Affirmed summary judgment: substantial completion occurred in 2005; claims filed in 2013 are time-barred under § 16-56-112(a) |
| Whether statute of repose was tolled while repairs were attempted or by warranty | District invokes repair doctrine/tolling while ACI attempted repairs and cites older case law | ACI relies on Arkansas precedent treating § 16-56-112 as a statute of repose that extinguishes causes after five years absent fraudulent concealment; parties cannot toll repose by agreement | Affirmed: no evidence of fraudulent concealment; repair attempts do not toll statute of repose |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state plausible claim)
- Farm Credit Servs. of Am. v. Haun, 734 F.3d 800 (9th Cir.?) (standard of review on motion to dismiss)
- Drobnak v. Andersen Corp., 561 F.3d 778 (fraud pleading requirements under Rule 9(b))
- Country Corner Food & Drug, Inc. v. First State Bank & Trust Co. of Conway, Ark., 966 S.W.2d 894 (Ark. 1998) (elements of actual fraud under Arkansas law)
- SEECO, Inc. v. Hales, 22 S.W.3d 157 (Ark. 2000) (definition of actual reliance under Arkansas law)
- Morrison v. Back Yard Burgers, Inc., 91 F.3d 1184 (8th Cir. 1996) (future promises actionable only if made with knowledge of falsity)
- Okla Homer Smith Furniture Mfg. Co. v. Larson & Wear, Inc., 646 S.W.2d 696 (Ark. 1983) (purpose and reach of Arkansas statute of repose)
- Curry v. Thornsberry, 128 S.W.3d 438 (Ark. 2003) (statute of repose extinguishes right of action after prescribed period)