{ "id": 6142899, "name": "David BRISTOW and Cliff Ferren v. Randy MOUROT", "name_abbreviation": "Bristow v. Mourot", "decision_date": "2007-08-29", "docket_number": "CA 06-1419", "first_page": "386", "last_page": "392", "citations": [ { "type": "official", "cite": "99 Ark. App. 386" }, { "type": "parallel", "cite": "260 S.W.3d 733" } ], "court": { "name_abbreviation": "Ark. Ct. App.", "id": 13370, "name": "Arkansas Court of Appeals" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "759 N.E.2d 789", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2001, "opinion_index": 0 }, { "cite": "144 Ohio App. 3d 89", "category": "reporters:state", "reporter": "Ohio App. 3d", "case_ids": [ 362484 ], "year": 2001, "opinion_index": 0, "case_paths": [ "/ohio-app-3d/144/0089-01" ] }, { "cite": "115 N.M. 349", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 725407 ], "weight": 2, "year": 1993, "opinion_index": 0, "case_paths": [ "/nm/115/0349-01" ] }, { "cite": "295 Ark. 168", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1893784 ], "weight": 2, "year": 1988, "opinion_index": 0, "case_paths": [ "/ark/295/0168-01" ] }, { "cite": "69 Ark. App. 337", "category": "reporters:state", "reporter": "Ark. App.", "case_ids": [ 6141851 ], "weight": 2, "year": 2000, "opinion_index": 0, "case_paths": [ "/ark-app/69/0337-01" ] }, { "cite": "257 Ark. 278", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8719617 ], "weight": 2, "year": 1974, "pin_cites": [ { "parenthetical": "affirming the trial court's finding that a person who provided an investor with a prospectus and attended an investors' meeting but did not participate was not liable as an agent for the issuer" }, { "parenthetical": "affirming the trial court's finding that a person who provided an investor with a prospectus and attended an investors' meeting but did not participate was not liable as an agent for the issuer" } ], "opinion_index": 0, "case_paths": [ "/ark/257/0278-01" ] }, { "cite": "299 Ark. 283", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1888376 ], "weight": 3, "year": 1989, "opinion_index": 0, "case_paths": [ "/ark/299/0283-01" ] }, { "cite": "Ark. Code Ann. \u00a7 23-42-102", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "year": 2005, "pin_cites": [ { "page": "(1)(A)" } ], "opinion_index": 0 }, { "cite": "Ark. Code Ann. \u00a7 23-42-106", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "year": 2000, "pin_cites": [ { "page": "(c)" } ], "opinion_index": 0 }, { "cite": "167 S.W.3d 664", "category": "reporters:state_regional", "reporter": "S.W.3d", "case_ids": [ 6138954, 5401155, 5405244 ], "weight": 2, "year": 2004, "opinion_index": 0, "case_paths": [ "/ark-app/86/0213-01", "/ark/357/0381-01", "/ark/357/0213-01" ] }, { "cite": "86 Ark. App. 213", "category": "reporters:state", "reporter": "Ark. App.", "case_ids": [ 6138954, 5405244 ], "year": 2004, "opinion_index": 0, "case_paths": [ "/ark-app/86/0213-01", "/ark/357/0213-01" ] } ], "analysis": { "cardinality": 642, "char_count": 11812, "ocr_confidence": 0.768, "pagerank": { "raw": 6.770845263994211e-08, "percentile": 0.41259664173471117 }, "sha256": "cc93e5084abfbb903b842ab6217598ee65b71751c279b75a9780cdd7096a0969", "simhash": "1:9d6e8ea545e355cc", "word_count": 1941 }, "last_updated": "2023-07-14T20:09:21.655097+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Robbins and Baker, JJ., agree." ], "parties": [ "David BRISTOW and Cliff Ferren v. Randy MOUROT" ], "opinions": [ { "text": "David M. Glover, Judge.\nThe trial court, sitting as fact-finder, ruled that appellee Randy Mourot did not violate the Arkansas Securities Act and therefore owed no damages to appellants. We affirm.\nIn 1997, Mourot decided to sell his company, Mail Contractors of America. He asked several members of his management team, including appellants, to assist him with presentations for prospective buyers. In return, he promised them a \u201ctransaction bonus\u201d equivalent to a year\u2019s salary when the company sold.\nAfter several presentations were made, Mourot decided to sell to Code, Hennessey, & Simmons, a Chicago company. He told his managers that Code Hennessey wanted to maintain continuity of management and that key management personnel would have the opportunity to invest in the company. In early 1998, representatives from Code Hennessey came to Arkansas to discuss the investment opportunity. Attendees, including appellants, were informed that they could invest in a holding company, Contract Mail Holding, Inc. (CMH) and that they could obtain personal loans from CMH. Code Hennessey representatives answered questions about the investment and, although Mourot attended the meeting, he did not say much, according to appellant Ferren.\nAfter the meeting, Mourot wrote a memo to his managers and addressed them as \u201cPotential Equity Investors.\u201d The memo stated that he had asked attorney Paul Bishop, who was representing him in the sale of the company, to review the investment and loan documents on the managers\u2019 behalf, although the managers were free to have their personal attorneys review the documents. The memo also addressed a tax question and a loan question regarding the managers\u2019 investments; answered two questions about the managers\u2019 transaction bonuses; and stated the following:\nI need to know your plans for investing by the end of this week or sooner if you can. I need to know:\n\u2014 Dollar amount of investment\n\u2014 Loan Amount (max of 50% of investment amount)\n\u2014 Actual name investment to be held in (for example mine: Randall G. Mourot)\n\u2014 Whether to withhold 401 (k) percentage from transaction bonus or not\n\u2014 Amount to be withheld for Federal and State taxes\nAppellants provided this information to Mourot, who said he passed it along to Bishop.\nAfter the memo was written, appellants and other members of the management team met with attorney Bishop. There is no indication that Mourot was present at this meeting. Bishop informed the managers of the minimum terms they could expect, to receive for their investments, and he promised to try to negotiate better terms from Code Hennessey. As a result of those negotiations, appellant Bristow agreed to invest $75,000 in CMH, and appellant Ferren agreed to invest $40,000. They planned to use their transaction bonuses from Mourot. to pay for most if not all of their investments. However, because they would not obtain those bonuses until the sale closed, Mourot agreed to provide them with short-term loans. Therefore, appellants made their investment checks out to Mourot, who purchased the CMH stock for them.\nAfter the sale closed on March 20, 1998, appellants were employed by CMH and apparently made additional investments in the company. However, they were fired in 2000. When they inquired about the return of their investments, CMH sent a check for $18,567.29 to Bristow and $955 to Ferren, despite the fact that Bristow had invested $123,756 and Ferren $93,643.24. As a result, appellants sued CMH for violating the Arkansas Securities Act. They also sued Mourot, claiming that he acted as CMH\u2019s agent in selling the investments. CMH consented to judgment in the above amounts, but the case against Mourot went to trial. The sole issue was whether he was liable under the Arkansas Securities Act as an agent who materially aided in the sale of the investments. The circuit judge, after hearing testimony and receiving trial briefs, entered judgment in favor of Mourot. Appellants now appeal from that ruling.\nOur standard of review is well established. In an appeal from a bench trial, we do not reverse unless the trial court\u2019s finding is clearly erroneous. First Natl Bank v. Garner, 86 Ark. App. 213, 167 S.W.3d 664 (2004). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Id.\nGenerally, with exceptions not applicable here, an agent who materially aids in the sale of a security is jointly and severally liable with, and to the same extent as, the seller. Ark. Code Ann. \u00a7 23-42-106(c) (Repl. 2000). An \u201cagent,\u201d for our purposes, is any individual who represents a securities issuer in effecting or attempting to effect the sale of securities. Ark. Code Ann. \u00a7 23-42-102(1)(A) (Supp. 2005). The question of whether a representative materially aids in the sale of a security is one of fact, the resolution of which depends, to some extent, on inferences drawn from the testimony. See Hogg v. Jerry, 299 Ark. 283, 773 S.W.2d 84 (1989).\nAppellants contend that several aspects ofMourot\u2019s behavior constitute \u201coverwhelming evidence\u201d that he acted as an agent for CMH and materially aided in the sale of CMH securities. Some of the activities that they attribute to Mourot include: 1) aiding in arranging a meeting of potential investors and selecting potential investors; 2) answering questions about the investments and asking potential investors to inform him about their decision to invest; 3) providing the potential investors with an attorney; 4) facilitating the investments by use of the transaction bonus; 5) having a strong incentive to facilitate the investments in order to close his sale of the company.\nUnder the facts of this case, we are not left with a definite and firm conviction that the trial court erred. While Mourot undisputedly passed along information to appellants and answered questions about their investments, he denied that he was acting on behalf of CMH, and he testified that his actions were taken because appellants and the other investors were his friends and employees. Further, while Mourot informed his managers that they would have the opportunity to invest in CMH and that Code Hennessey was \u201ccoming down\u201d for the investment meeting, there is no proof that Mourot actively participated in the meeting. See Titan Oil & Gas Co. v. Shipley, 257 Ark. 278, 517 S.W.2d 210 (1974) (affirming the trial court\u2019s finding that a person who provided an investor with a prospectus and attended an investors\u2019 meeting but did not participate was not liable as an agent for the issuer). Likewise, Mourot\u2019s answering questions about the investments, gathering information, and offering the services of his attorney can be attributed, as he testified, to his close business and personal relationship with his managers rather than an agency relationship with CMH. Moreover, there is no direct evidence that Code Hennessey or CMH had asked Mourot to act on their behalf or that Mourot received any direct compensation from CMH for acquiring or encouraging the investors. In fact, Mourot testified that he and his managers were friends and \u201ca close-knit group\u201d and that he was engaged in \u201ccontentious negotiations\u201d with CMH up to the time of closing, lending credence to the idea that he was not acting on CMH\u2019s behalf.\nAs for appellants\u2019 claim that Mourot \u201cchose\u201d the investors, the evidence is in conflict on that point. The investors\u2019 booklet stated that CMH would offer securities to members of senior management \u201cselected by Randall Mourot . . . and [Code Hennessey].\u201d However, Mourot said his task was merely to identify his managers to Code Hennessey. Conflicts in testimony are to be resolved by the trier of fact. McNamara v. Bohn, 69 Ark. App. 337, 13 S.W.3d 185 (2000).\nFinally, even though Mourot facilitated appellants\u2019 investment by use of the transaction bonuses, it is undisputed that he did not earmark the transaction bonuses for use as an investment in CMH. The bonuses were promised before Code Hennessey was selected as a buyer, and Mourot testified that the bonuses could be used as the recipient wished. Later, when the investors decided to use their bonuses to invest in CMH, a timing problem arose because they would not receive their bonus until the sale closed. There was evidence that Mourot and attorney Bishop came up with the idea to make a short-term \u201chandshake\u201d loan to the investors to allow them to make their investments. As before, it could reasonably be inferred that Mourot was acting in his own interest and in the interest of his managers but not necessarily as a representative of CMH.\nAppellants rely on Quick v. Woody, 295 Ark. 168, 747 S.W.2d 108 (1988), and Hogg v. Jerry, supra, for their claim that Mourot was an agent of CMH. In Quick, Gary Quick began offering securities for sale. His mother, Hazel Quick, participated in a promotional meeting by making comments about what to expect from the investment, and she asked potential investors at the meeting to let her and Gary know of others that might be interested. Hazel also made a similar comment while handing out a business card with her name on it. Further, Hazel encouraged another person to invest and provided her with a prospectus containing the statement \u201cremit to Hazel Quick.\u201d Hazel accepted a check from another investor and indicated to him that she was handling Gary\u2019s interests in Arkansas. The trial court found that Hazel was an agent who materially aided in the sale of securities and, on appeal, our supreme court affirmed, ruling that the trial court\u2019s finding was not clearly erroneous.\nIn Hogg, the trial court ruled that Nolan Haines was an agent who materially aided in a securities sale. The supreme court affirmed, stating that Haines \u201cadmitted\u201d in his deposition that he materially aided in the sale and that he \u201chelped to get\u201d one investor. There was also evidence that Haines provided the investor with a prospectus and promoted the investor\u2019s participation in the venture.\nThe outcomes in Quick and Hogg do not require reversal here. First of all, in those cases, our supreme court affirmed the trial courts\u2019 findings. The supreme court did not state that, as a matter of law, the activities in those cases amounted to materially aiding in the sale of securities but held that the trial court\u2019s ruling, based on those activities, could not be said to be clearly erroneous. Moreover, we do not believe that Mourot\u2019s conduct in this case rose to the level of overt promotion engaged in by Hazel Quick and Nolan Haines. Unlike the defendants in those cases, Mourot\u2019s actions could be viewed as an attempt to help his employees and investors rather than \u201crepresenting\u201d CMH.\nFor these reasons, we affirm the trial court\u2019s ruling.\nAffirmed.\nRobbins and Baker, JJ., agree.\nThis case was previously dismissed for lack of an appealable order. Bristow v. Mourot, CA06-153 (Oct. 4,2006) (not designated for publication). Appellants have now obtained a final order, giving us jurisdiction to address the merits.\nOther causes of action were pled but dismissed.\nWe have cited to the most recent versions of these statutes, but they are the same in all relevant respects as they were in 1997-98 when the sales in this case were taking place.\nThis distinguishes the present case from Segal v. Goodman, 115 N.M. 349, 851 P.2d 471 (1993), and Boland v. Hammond, 144 Ohio App. 3d 89, 759 N.E.2d 789 (2001), cited by appellants.", "type": "majority", "author": "David M. Glover, Judge." } ], "attorneys": [ "Dover Dixon Horne, PLLC, by: Thomas S. Stone and Nona M. Robinson, for appellants.", "Friday, Eldredge & Clark, LLP, by: Kevin A. Crass and Jamie Huffman Jones, for appellee Randall Mourot." ], "corrections": "", "head_matter": "David BRISTOW and Cliff Ferren v. Randy MOUROT\nCA 06-1419\n260 S.W.3d 733\nCourt of Appeals of Arkansas\nOpinion delivered August 29, 2007\nDover Dixon Horne, PLLC, by: Thomas S. Stone and Nona M. Robinson, for appellants.\nFriday, Eldredge & Clark, LLP, by: Kevin A. Crass and Jamie Huffman Jones, for appellee Randall Mourot." }, "file_name": "0386-01", "first_page_order": 422, "last_page_order": 428 }