{ "id": 1754969, "name": "MFA MUTUAL INSURANCE COMPANY v. R. C. KELLER and Jessie Lynette KELLER, His Wife", "name_abbreviation": "MFA Mutual Insurance v. Keller", "decision_date": "1981-11-16", "docket_number": "81-88", "first_page": "281", "last_page": "286", "citations": [ { "type": "official", "cite": "274 Ark. 281" }, { "type": "parallel", "cite": "623 S.W.2d 841" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "257 Ark. 904", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8724597 ], "weight": 2, "year": 1975, "opinion_index": 0, "case_paths": [ "/ark/257/0904-01" ] }, { "cite": "8 Va. L. Rev. 749", "category": "journals:journal", "reporter": "Va. L. Rev.", "year": 1930, "opinion_index": 0 }, { "cite": "259 Ark. 253", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1619223 ], "weight": 2, "year": 1976, "pin_cites": [ { "page": "264" } ], "opinion_index": 0, "case_paths": [ "/ark/259/0253-01" ] }, { "cite": "589 S.W. 2d 207", "category": "reporters:state_regional", "reporter": "S.W.2d", "year": 1979, "opinion_index": 0 }, { "cite": "266 Ark. 1040", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8724694 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/ark/266/1040-01" ] }, { "cite": "251 Ark. 1036", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1633285 ], "weight": 2, "year": 1972, "opinion_index": 0, "case_paths": [ "/ark/251/1036-01" ] }, { "cite": "264 Ark. 647", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1668715 ], "weight": 2, "year": 1978, "opinion_index": 0, "case_paths": [ "/ark/264/0647-01" ] }, { "cite": "263 Ark. 435", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1672624 ], "weight": 2, "year": 1978, "opinion_index": 0, "case_paths": [ "/ark/263/0435-01" ] } ], "analysis": { "cardinality": 491, "char_count": 7441, "ocr_confidence": 0.806, "pagerank": { "raw": 5.433331816642642e-07, "percentile": 0.9449572156523411 }, "sha256": "66a8353fbbaa05be9429f18b19a577a9ce2d85bd9f7480d74bfad576a4d952b0", "simhash": "1:e9b10dd6aea30c22", "word_count": 1248 }, "last_updated": "2023-07-14T21:01:13.587143+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "MFA MUTUAL INSURANCE COMPANY v. R. C. KELLER and Jessie Lynette KELLER, His Wife" ], "opinions": [ { "text": "Robert H. Dudley, Justice.\nAppellant MFA Insurance Company issued a builder\u2019s risk insurance policy in the amount of $62,000 on a house owned by appellees, R. C. and Lynette Keller. The house was partially destroyed by fire. Appellees submitted a proof of loss claim for $44,000 but appellant refused to pay that amount because its adjuster\u2019s appraisal was only $20,455. Appellant subsequently offered the sum of $22,750 which was the amount of an appraisal by an independent home builder. Appellees filed suit and, after all amendments to the pleading, sought $44,000 under the terms of the policy, 12 percent statutory penalty, interest and attorney\u2019s fees as well as compensatory and punitive damages as a result of appellant\u2019s bad faith, fraud and deceit. After the trial had commenced appellees took a voluntary nonsuit on that part of their tort claim alleging bad faith.\nAt trial there was substantial evidence that appellant\u2019s adjuster had made two deceitful statements. The first was when he wrote appellees\u2019 attorney that he had attempted to obtain bids from local contractors but they would not bid. The second was when he denied that one of his appraisers, Steve Duncan, told him that it would take between $40,000 and $50,000 to repair the house.\nThe jury reached a verdict in favor of appellees and the court entered judgment for $44,000 on the contract of insurance, $5,280 as 12 percent penalty, $15,000 for attorney\u2019s fees, $75,000 for compensatory damages and $ 124,000 for punitive damages with interest on each of these amounts at the rate of 10 percent per annum until paid.\nWe affirm, without discussion, the award based on the insurance contract, penalty, interest and attorney\u2019s fees. Ark. Stat. Ann. \u00a7 66-3238 (Repl. 1980) applies whenever an insured prevails in a controversy with his insurance company and actually obtains a money judgment for the amount prayed. Southern Farm Bureau Casualty Insurance Co. v. Gooding, 263 Ark. 435, 565 S.W. 2d 421 (1978).\nWe reverse the awards for compensatory damages and punitive damages which were based upon the theory of fraud and deceit. We have held that an insurance company might face tort liability for bad faith in addition to its contractual liabilities. Findley v. Time Insurance Co., 264 Ark. 647, 573 S.W. 2d 908 (1978). We do not consider the tort of bad faith, for appellees dismissed their claim on this allegation and obtained this judgment on the tort of fraud and deceit. The action for deceit is of very ancient origin, with one form of the action known to exist as early as 1201. Prosser, Law of Torts, p. 685 (4th Ed. 1971). We have long recognized the common law tort of deceit. See Ray Dodge, Inc. v. Moore, 251 Ark. 1036, 479 S.W. 2d 518 (1972). We uphold the Court of Appeals\u2019 ruling in Sturgeon v. American Family Life Assurance Co., 266 Ark. 1040, 589 S.W. 2d 207 (Ark. App. 1979), that deceit is a recognized cause of action against an insurer. We are not academically concerned with the vagueness of the word \u201cfraud.\u201d See Prosser, Id. at 684. In this case we treat that word as surplusage in an action for deceit.\nIn Beam v. Monsanto Co., Inc., 259 Ark. 253, at 264, 532 S.W. 2d 175 (1976), we adopted from Prosser, Id. at 685, a statement of the elements of the tort cause of action in deceit as follows;\n1. A false representation made by the defendant. In the ordinary case, this representation must be one of fact.\n2. Knowledge or belief on the part of the defendant that the representation is false \u2014 or, what is regarded as equivalent, that he has not a sufficient basis of information to make it. This element often is given the technical name of \u2018scienter.\u2019\n3. An intention to induce the plaintiff to act or to refrain from action in reliance upon the misrepresentation.\n4. Justifiable reliance upon the representation on the part of the plaintiff, in taking action or refraining from it.\n5. Damage to the plaintiff, resulting from such reliance.\nSee also, Restatement (Second) of Torts, Chapter 22 (1977) and 8 Va. L. Rev. 749 (1930).\nThe case at bar was tried before a jury. To determine the sufficiency of evidence on appeal from a j ury trial we review the evidence in the light most favorable to the appellee and affirm if there is any substantial evidence to support the finding of the jury. Thrifty Rent-A-Car v. Jeffrey, 257 Ark. 904, 520 S.W. 2d 304 (1975).\nUsing that standard of review, we hold there is substantial evidence to support the finding that appellant made false representations of material facts. There is substantial evidence to support the finding that the misrepresentations were knowingly made and they were made with the intention of inducing the appellees to act on them, that is, they were made with the intent to deceive appellees about the true cost of repairing their house. However, there is absolutely no evidence that appellees relied on appellant\u2019s misrepresentations. In fact, they knew the statements were false. The appellees were induced neither to act or not to act by reason of appellant\u2019s misrepresentations. The maker of a fraudulent misrepresentation is not liable to one who does not rely on that misrepresentation. This is a lack of causal relation in its simplest form. No damage resulted from reliance upon appellant\u2019s misrepresentations. The fourth and fifth elements of the tort, reliance and resulting damages, are clearly absent. Hence the appellees are barred from recovery on the deceit theory.\nThe facts of the case at bar are unlike the facts in the case of Sturgeon v. American Family Life Assurance Co., supra. There Sturgeon bought a cancer insurance policy upon assurances by the insurance company that the policy would pay if he were diagnosed as having cancer. He relied on that representation and purchased a policy. He developed cancer and yet coverage was denied. There was a misrepresentation upon which Sturgeon relied and he was damaged. All of the elements of the common law tort of deceit were stated.\nThe appellees contend that they are within the limits of the deceit theory expressed in Sturgeon because appellant\u2019s policy represented that it would restore the house to its former condition and that, in fact, appellant never intended to restore the house. This argument is based upon the erroneous premise that appellant was obliged to restore the house. The policy provides that appellant will pay the \u201camount\u201d it would \u201ccost to repair or replace the property with material of like kind and quality.\u201d Appellant had no obligation to repair, rebuild, restore or replace. Its obligation was to pay the amount sufficient to restore the house.\nWe do not reject the possibility that an insurer may be liable in tort for deceit and also liable under the penalty statute. We leave that question for the future.\nAffirmed as to the amount of loss, penalty, interest and attorney\u2019s fees. Reversed as to compensatory and punitive damages as a result of the tort of deceit. Appellees are awarded a $500 attorney fee for supplemental abstracting and their motion for the taxing of costs is granted.", "type": "majority", "author": "Robert H. Dudley, Justice." } ], "attorneys": [ "Barrett, Wheatley, Smith ir Deacon, for appellant.", "John Belew of Harkey, Walmsley, Belew ir Blankenship, for appellees.", "Wright, Lindsey ir Jennings, for amicus curiae National Association of Independent Insurers." ], "corrections": "", "head_matter": "MFA MUTUAL INSURANCE COMPANY v. R. C. KELLER and Jessie Lynette KELLER, His Wife\n81-88\n623 S.W. 2d 841\nSupreme Court of Arkansas\nOpinion delivered November 16, 1981\nBarrett, Wheatley, Smith ir Deacon, for appellant.\nJohn Belew of Harkey, Walmsley, Belew ir Blankenship, for appellees.\nWright, Lindsey ir Jennings, for amicus curiae National Association of Independent Insurers." }, "file_name": "0281-01", "first_page_order": 307, "last_page_order": 312 }