392 S.W.3d 892
Ark. Ct. App.2012Background
- Lisa Sutton agreed to sell Treece property (33 acres, house, two barns) to Danny Victory, his wife Sandra, and son Joshua for $60,000 in March 2008.
- Danny recorded a special warranty deed in April 2008 without signing the accompanying promissory note and mortgage.
- An lis pendens filed March 14, 2008, against the property created a title cloud.
- Lisa sued in April 2010 to rescind the deed based on alleged fraud; the Victorys counterclaimed for specific performance or damages.
- Trial court (June 17, 2011) rescinded the deed, dismissed the counterclaim, and awarded Lisa attorney fees under Ark. Code Ann. § 16-22-308.
- On appeal, the court held the trial court erred as a matter of law in supporting rescission for fraud; reversed and remanded with directions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there clear and convincing fraud to support rescission? | Sutton | Victorys | No clear and convincing fraud; judgment reversed |
| Did the trial court properly dismiss the counterclaim for specific performance/damages? | Sutton | Victorys | Error; counterclaim properly remanded |
| Was the attorney-fee award proper given rescission was reversed? | Sutton | Victorys | Attorney-fee award reversed with rescission |
Key Cases Cited
- Hearne v. Banks, 2009 Ark. App. 590, 376 S.W.3d 444 (Ark. App. 2009) (fraud elements; standard of review for setting aside a deed)
- Se. Distrib. Co. v. Miller Brewing Co., 366 Ark. 560, 237 S.W.3d 63 (Ark. 2006) (fraud claims require misrepresentation of past/present facts; cannot rely on projections)
- S. Cnty., Inc. v. First W. Loan Co., 315 Ark. 722, 871 S.W.2d 325 (Ark. 1994) (fraud elements and proof standards)
- Tyson Foods, Inc. v. Davis, 347 Ark. 566, 66 S.W.3d 568 (Ark. 2002) (fraud proof standards and reliance)