Commercial Credit Group Inc v. Allianz Global Corporate & Specialty et al

Filing 91

OPINION AND ORDER granting 45 summary judgment to defendant Swett as to all of CCG's claims; and dismissing with prejudice all claims against Swett. Signed by Judge Kristine G. Baker on 3/30/2018. (cmn)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
NORTHERN DIVISION
COMMERCIAL CREDIT GROUP INC.
v.

PLAINTIFF

Case No. 1:15-cv-00093 KGB

ALLIANZ GLOBAL CORPORATE & SPECIALTY
NORTH AMERICA a/k/a AGCS MARINE INSURANCE
COMPANY; BATESVILLE INSURANCE AGENCY, INC. d/b/a
COMMUNITY INSURANCE PROFESSIONALS, INC.;
and SWETT & CRAWFORD

DEFENDANTS

OPINION AND ORDER
Before the Court is defendant Swett & Crawford’s (“Swett”) motion for summary
judgment (Dkt. No. 61). Plaintiff Commercial Credit Group, Inc. (“CCG”), has responded to the
motion (Dkt. No. 65), and Swett has replied (Dkt. No. 76). For the following reasons, the Court
grants Swett’s motion for summary judgment and enters judgment in favor of Swett on CCG’s
claims.
I.

Factual Background

Unless otherwise noted, the following facts are taken from Swett’s statement of material
facts as to which there is no genuine dispute to be tried and CCG’s counter-statement of disputed
material facts (Dkt. Nos. 63; 67).
Uniserve, LLC, (“Uniserve”), a scrap metal dealer located in Newport, Arkansas,
maintained various pieces of large construction equipment as part of its job activities (Dkt. No. 63,
¶ 1). The sole partner and managing member of Uniserve was Kevin Statler (Id., ¶ 2). Uniserve
maintained a property interest in a 2004 Caterpillar Material Handler, Serial Number CDY00316
(“CDY316”) (Id., ¶ 3). CCG maintained a perfected security interest in CDY316 (Dkt. Nos. 63, ¶
4; 67, ¶ 1). On October 27, 2009, Mr. Statler, on behalf of Uniserve, signed a security agreement

related to the financing of CDY316 and other pieces of equipment, including a 2004 Caterpillar
Material Handler with serial number CDY00308 (“CDY308”) (Dkt. Nos. 63, ¶ 5; 67, ¶ 3). The
security agreements between CCG and Uniserve required Uniserve to obtain insurance on CCG’s
collateral and additionally required that the insurance policy contain a standard or union mortgage
clause designating CCG as an additional insured or lender loss payee (Dkt. No. 67, ¶ 2). The
security agreements further required Uniserve to provide CCG with a copy of the insurance policy
naming CCG as an additional insured (Dkt. No. 63, ¶ 6). Swett contends that Uniserve never
provided CCG with a copy of an all risks insurance policy naming CCG as an additional insured
(Id., ¶ 7).
In order to obtain the insurance policy, defendant Batesville Insurance Agency, Inc. d/b/a
Community Insurance Professionals, Inc. (“Community”) used the wholesale insurance brokering
services of Swett (Id., ¶ 8). Community is a retail insurance broker/agent and Swett is a wholesale
insurance broker (Id., ¶¶ 9, 10). As a wholesale insurance broker, Swett worked as a middleman
between the retail agent and potential insurers to provide Uniserve with an insurance policy fitting
its needs (Id., ¶ 11). In its capacity as a wholesale insurance broker, Swett arranged for the issuance
by AGCS Marine Insurance Company (“AGCS”) of AGCS Policy #MXI93017792 (“the Policy”),
naming Uniserve and its various entities as the insured (Dkt. Nos. 63, ¶ 14; 67, ¶ 4). The Policy
term was April 28, 2010, through April 28, 2011 (Dkt. No. 63, ¶ 18). The Policy covered both
CDY316 and CDY308 (Dkt. No. 67, ¶ 7). CDY316 was covered by $474,409.00 in insurance,
and CDY308 was covered by $441,946.00 in insurance (Id., ¶¶ 12, 13). The application for the
insurance Policy included an additional interest schedule which identified CCG as loss payee on
the policy (Id., ¶ 5).

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The Policy contains a loss payee provision that states AGCS will pay both the insured and
a loss payee, “[i]f a loss payee is named in the Declarations.” (Id., ¶ 17). The Policy did not list
CCG as a loss payee (Id., ¶ 19). On April 29, 2010, Swett issued a confirmation of coverage
bound, noting the blanket loss payee endorsement on the Policy (Dkt. No. 67, ¶ 8). Swett contends
that, at no time during the process of obtaining a policy of insurance for Uniserve, did any
representative of Swett communicate with Kevin Statler, any other representative of Uniserve, or
any representative of CCG (Dkt. No. 63, ¶¶ 12, 13). Swett submits that neither Community nor
Uniserve ever provided any information to AGCS or Swett which indicated that CCG was to be a
loss payee on the Policy (Id., ¶¶ 15, 16).
Community provided Uniserve with an Evidence of Property Insurance form which states
that the “policies of insurance listed below have been issued to the insured name above [Uniserve]
for the policy period indicated [04/20/2010-04/28/2011].” (Dkt. No. 67, ¶ 9). The Evidence of
Property Insurance form lists CCG as an additional interest and the box for loss payee is marked
(Dkt. No. 1, Ex. 2). CCG submits that the Evidence of Property Insurance form provided
confirmation that Uniserve obtained insurance covering both CDY316 and CDY308 and naming
CCG as loss payee (Dkt. No. 67, ¶¶ 10, 11). CCG further submits that Endorsement 001 included
in the Policy notes that loss payees were added under the Policy (Id., ¶ 14). CCG submits that it
was the sole loss payee under the Policy during the initial term (Id., ¶ 15).
On August 29, 2010, during the Policy term, CDY316 was completely destroyed by fire
(Dkt. No. 63, ¶ 20). Community prepared a property loss notice and provided notice of the loss to
Swett on August 30, 2010 (Dkt. Nos. 63, ¶ 21; 67, ¶ 26). Swett then forwarded the notice of loss
to AGCS (Dkt. No. 63, ¶ 22). Swett contends that after forwarding the notice of loss to AGCS, it
played no further role in the handling of the claim (Id.).

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On November 5, 2010, Claire Fox, claims professional for AGCS, emailed Christian
Michaels, attorney for Mr. Statler of Uniserve, inquiring about the name of Uniserve’s loss payee
for CDY316 (Dkt. No. 63, ¶ 23). On December 9, 2010, Mr. Michaels responded to Ms. Fox and
stated that CDY316 did not have a loss payee (Id., ¶ 24). Also on December 9, 2010, Mr. Michaels
forwarded to Ms. Fox a sworn statement in proof of loss which was signed by Mr. Statler (Id., ¶
25). One of the representations contained within the sworn statement was: “No other person or
persons had any interest therein [as to material handler 316] or encumbrance thereon, except:”
(Id.). The response given to this question was “n/a.” (Id.). On December 13, 2010, AGCS issued
check #000010:651 in the amount of $212,365.45 to Mr. Statler and to “Uniserve, LLC, UIMG,
et al.” (Id., ¶ 26). The proceeds were not made jointly payable to CCG (Dkt. No. 67, ¶ 23). CCG
submits that Cari Ellenberger, a Legal Specialist for AGCS, later questioned the payment to the
insured rather than the loss payee, asking: “Did we have the Acord? It seems to me we should
have known?” (Id., ¶ 24).
On February 16, 2011, CDY308 was destroyed in a fire (Id., ¶ 25). Community prepared
a property loss notice and provided notice of the loss to Swett (Id., ¶ 26). AGCS issued payment
in the amount of $431,946.00 on July 18, 2011 (Id., ¶ 29). The payment was made to both Uniserve
and CCG (Id.). CCG received insurance proceeds for the loss of CDY308 but did not receive
insurance proceeds for the loss of CDY316 even though both machines were covered by the initial
Policy (Id., ¶ 30). CCG contends that it knew generally that Mr. Statler had experienced a fire on
another piece of equipment and received insurance proceeds, but CCG submits that it did not know
that the loss was related to its collateral (Dkt. No. 67, ¶ 31). CCG contends that it did not know
that its loans to Uniserve were no longer secured by the CDY316 and continued to extend financing
to Uniserve based on the value of the collateral (Id., ¶ 33).

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II.

Standard Of Review

Summary judgment is proper if the evidence, when viewed in the light most favorable to
the nonmoving party, shows that there is no genuine issue of material fact in dispute and that the
defendant is entitled to entry of judgment as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). A factual dispute is genuine if the evidence could cause a
reasonable jury to return a verdict for either party. Miner v. Local 373, 513 F.3d 854, 860 (8th
Cir. 2008). “The mere existence of a factual dispute is insufficient alone to bar summary judgment;
rather, the dispute must be outcome determinative under prevailing law.” Holloway v. Pigman,
884 F.2d 365, 366 (8th Cir. 1989). However, parties opposing a summary judgment motion may
not rest merely upon the allegations in their pleadings. Buford v. Tremayne, 747 F.2d 445, 447
(8th Cir. 1984). The initial burden is on the moving party to demonstrate the absence of a genuine
issue of material fact. Celotex Corp., 477 U.S. at 323. The burden then shifts to the nonmoving
party to establish that there is a genuine issue to be determined at trial. Prudential Ins. Co. v.
Hinkel, 121 F.3d 364, 366 (8th Cir. 2008). “The evidence of the non-movant is to be believed,
and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986).
III.

Discussion

CCG alleges five causes of action: (1) breach of contract; (2) specific performance; (3)
promissory estoppel; (4) conversion; and (5) negligence (Dkt. No. 1, at 7-10). Swett argues that
CCG lacks the capacity to bring claims against Swett as the wholesale broker of the insurance
policy (Dkt. No. 62, at 4). Swett further argues that, should the Court find that CCG has standing
to bring its claims against Swett, those claims are barred by the statute of limitations. Swett filed
its motion for summary judgment and, pursuant to Federal Rule of Civil Procedure 10,

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incorporated into its brief in support of its motion for summary judgment the motion for summary
judgment and brief in support submitted by AGCS. For the following reasons, the Court grants
the motion.
A.

Standing

As a preliminary matter, the Court finds that CCG, as an alleged loss payee on the Policy,
generally has the capacity to bring claims. A loss payee is an “insured” in the sense that it can sue
to enforce a policy under which it would ultimately be paid. See Newcourt Financial Insurance v.
Canal Insurance Co., 15 S.W.3d 328, 333 (Ark. 2000) (citing Huddleston v. Home Life Ins. Co. of
New York, 34 S.W.2d 221, 222 (Ark. 1931)). When a policy contains a standard or union mortgage
clause, such as is the case here, it is considered that the insurer has entered into a separate contract
with the mortgagee just as if the latter had applied for insurance entirely independent of the
mortgagor.

Fireman’s Fund Insurance Co. v. Rogers, 712 S.W.2d 311, 314 (Ark. 1986);

Dalrymple v. Royal-Globe Insurance Co., 659 S.W.2d 938, 940 (Ark. 1983); Lucas County Bank
of Toledo v. Am. Cas. Co., 256 S.W.2d 557 (Ark. 1953) (discussing the difference between open
and standard loss payee clause language and emphasizing that standard clauses could not be
invalidated by any act of the mortgagor/insured). In general, while a loss payee is not afforded all
the rights afforded an insured under a policy of insurance, a loss payee is able to bring an action
to enforce its claim to insurance proceeds independent of the actions of the insured. Newcourt
Financial Insurance, 15 S.W.3d at 334. The Court will consider CCG’s claims as they relate to
Swett and address below the question of whether Swett is a proper party to CCG’s claims.
B.

Statute Of Limitations

Swett contends that, under Arkansas’ “gist test,” CCG’s claims sound entirely in tort and
that the applicable three year statute of limitations bars all of CCG’s claims. Swett contends that

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CCG’s complaint is actually a tort action against defendants for not conducting a sufficiently
diligent investigation into the identity of the loss payee for CDY316. In response, CCG maintains
that, because its claims arise under a policy of insurance, Arkansas Code Annotated § 23-79-202
with its corresponding five-year limitations period governs all of its claims.
”To determine the cause of action, we look to the facts alleged in the complaint to ascertain
the area of law in which they sound.” Farris v. Conger, 512 S.W.3d 631, 634 (Ark. 2017) (quoting
Sturgis v. Skokos, 977 S.W.2d 217, 220 (Ark. 1998)). The Court then looks to the “gist” of the
action to determine which statute of limitations applies. Farris, 512 S.W.3d at 634 (citing McQuay
v. Guntharp, 963 S.W.2d 583, 585 (Ark. 1998)). In order to state a cause of action for breach of
contract, the complaint need only assert the existence of a valid and enforceable contract between
plaintiff and defendant, the obligation of defendant thereunder, a violation by defendant, and
damages resulting to plaintiff from the breach. Rabalaias v. Barnett, 683 S.W.2d 919, 921 (Ark.
1985) (citation omitted). For a contract statute of limitations to apply, there must be a breach of a
specific promise. See Farris, 512 S.W.3d at 634 (“When the complaint contains a claim for breach
of contract, the question is whether there is a specific promise that transforms the gist of the action
from one for negligence into one for breach of the written agreement.”); Sturgis, 977 S.W.2d at
220. CCG submits that defendants breached the insurance Policy by not giving CCG notice of the
claim on CDY316, and by failing to pay the amounts due to CCG as the sole loss payee under the
Policy (Dkt. No. 1, ¶ 34). The Court determines that CCG’s complaint alleges breach of a specific
promise sufficient to state a claim for breach of contract.
In general, Arkansas applies a three-year statute of limitations to tort actions and a fiveyear statute of limitations to actions based upon written contracts. See Ark. Code. Ann. § 16-56-

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105; Ark. Code. Ann. § 16-56-11. Additionally, and specific to suits against insurers, Arkansas
Code Annotated § 23-79-202 provides that:
(a) An action may be maintained in the courts of this state by an insured or any
other person on his or her behalf to recover on any claim or loss arising under a
policy of insurance on property or life against the insurer issuing the policy or
against the sureties on any bond filed by the insurer as a condition precedent to its
right to do business in this state, at any time within the period prescribed by law for
bringing actions on promises in writing.
(b) Any stipulation or provision in the policy or contract requiring the action to be
brought within any shorter time or be barred is void.
Ark. Code Ann. § 23-79-202.
CCG submits that all of its claims in this action arise under a policy of insurance; thus,
Arkansas Code Annotated § 23-79-202 and the corresponding five year statute of limitations apply
to all of its claims. The Court rejects CCG’s assertion regarding the reach of this statute. The
Court finds that Arkansas Code Annotated § 23-79-202 does not apply to Swett as the wholesale
insurance broker.
Section 23-79-202 provides for a five-year statute of limitations by an insured, or any other
person on his or her behalf, arising under a policy of insurance against the insurer issuing the
policy. See Ark. Code Ann. § 23-79-202. Swett is not the insurer in this action. See e.g. Shelter
Mut. Ins. Co. v. Nash, 184 S.W. 3d 425, 428 (Ark. 2004) (addressing the question of when an
insured may bring a claim against his or her insurer and explaining that, “[b]ecause Nash’s suit
against Shelter is clearly an action by an insured against the insurer to recover a claim arising under
a policy of insurance, we hold that the five-year statute of limitations applies.”); see also Simmons
Foods, Inc. v. Indus. Risk Insurers, 863 F.3d 792 (8th Cir. 2017) (applying five-year statute of
limitations pursuant to § 23-79-202 in an action by an insured against the insurance company);
Graham v Hartford Life & Accident Ins. Co., 677 F.3d 801, 804 (8th Cir. 2012) (same); Dodge v.

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Hartford Life & Accident Ins. Co, 4:16-CV-00719-BRW, 2017 U.S. LEXIS 11928 (E.D. Ark. Jan.
30, 2017) (same); Riggs v. Valley Forge, Ins., Co., No. 08-03058, 2009 U.S. Dist. LEXIS 89378
(W.D. Ark. Sept. 28, 2009) (same). The Court construes § 23-79-202 so that no word is left void,
superfluous, or insignificant, and gives meaning and effect to every word in the statute, if possible.
See Ward v. Doss, 205 S.W. 3d 767, 770 (Ark. 2005). Because Swett is not an insurer as required
by the statute, the Court finds that Arkansas Code Annotated § 23-79-202 does not govern CCG’s
claims against Swett. Having rejected this argument, the Court will address each of CCG’s claims
and the appropriate statute of limitations in turn.
1.

Breach Of Contract

The Court finds that Swett is not a party to the contract that forms the basis of CCG’s
breach of contract claim and, thus, not liable for the alleged breach of contract. To prevail on a
breach of contract claim under Arkansas law, a plaintiff must show that: (1) the plaintiff and
defendant had a contract; (2) the contract required the defendant to perform a certain act; (3) the
plaintiff did what the contract required; (4) the defendant did not do what the contract required;
and (5) the plaintiff was damaged by the breach. See Foreman Sch. Dist. No. 25 v. Steele, 61
S.W.3d 801, 807 (Ark. 2001). In its complaint, CCG contends that defendants breached the
contract of insurance with CCG by failing to notify CCG of the claim, by failing to endorse the
claim proceeds to CCG as loss payee, and by failing to pay promptly the amounts due to CCG
under the Policy (Dkt. No. 1, ¶ 34). As such, CCG submits that defendants are in material default
of the Policy of insurance and seeks to recover damages in the amount of $212,365.45, or the
amount paid on the claim paid to Uniserve on the claim under the Policy (Id., ¶ 37).
Swett is not a party to the contract CCG alleges was breached. Arkansas recognizes the
general rule that, where an agent names its principal and does not exceed his authority when

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contracting on the principal’s behalf, the agent is not personally liable upon the contract unless the
agent agrees to be. McCullough v. Johnson, 816 S.W.2d 886, 887 (Ark. 1991). Insurance agents
are not treated any differently with respect to this rule. Vandiver Food Stores v. Insurance Co. of
N. Am., 909 F. Supp. 618, 625 (E.D. Ark. 1995). Based on the allegations in CCG’s complaint,
Swett, as the wholesale insurance broker, is not liable for breach of the Policy of insurance because
Swett was not a party to the contract. See id. at 625 (citing Leather's Best, Inc. v. S.S. Mormaclynx,
451 F.2d 800, 808 (2nd Cir. 1971) (finding an agent, acting within the scope of its authority, is not
liable ex contractu for the breach of the contract between its disclosed principal and a third party,
even when the breach was the result of its own wrongful act)). CCG points to no record evidence
from which a reasonable juror could conclude that Swett intended to be bound. Despite the fact
that Swett served as the wholesale broker and worked to procure the Policy, the Court finds Swett
is not a party to the Policy alleged to be breached as set forth in the complaint.
The only written contract cited in CCG’s complaint is the insurance Policy between
Uniserve and AGCS (Dkt. No. 1). CCG’s breach of contract claim concerns an alleged breach of
that Policy (Id.). Despite that, CCG argues that it is entitled to bring a claim for breach of contract
against Swett as an intended third-party beneficiary to the Policy. CCG is correct that, in Arkansas,
a party may recover damages for breach of contract when that party is a third-party beneficiary to
the contract. Stilley v. James, 60 S.W.3d 410, 415 (Ark. 2001); Little Rock Wastewater Util. v.
Larry Moyer Trucking, 902 S.W. 2d 760, 763 (Ark. 1995) (“A contract is actionable by a third
party when there is substantial evidence of a clear intention to benefit that third party.”). Swett is
not a party to the contract alleged to have been breached, and thus not a proper party against which
to bring a claim for breach of contract regardless if CCG is or is not a third party beneficiary under

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the contract. CCG’s argument pertaining to its alleged status as a third party beneficiary is
misplaced.
There is no evidence in the record of a contract between Swett and Uniserve with CCG as
a loss payee, much less a written contract subject to a five-year statute of limitations. CCG’s
complaint claims breach of the insurance Policy between AGCS and Uniserve (Dkt. No. 1, ¶ 34
(“The Defendants are in material default of the Policy. The Defendants breached the contract of
insurance with CCG by failing to notify CCG of the Claim, by failing to endorse the Claim
proceeds to CCG as loss payee, and by failing to promptly pay the amounts due to CCG under the
Policy. In addition, Allianz breached the contract of insurance by failing to properly supervise its
agents/brokers. . . .”)).
While the Court finds that the five-year statute of limitations set forth in Ark. Code Ann. §
16-56-111 and made applicable to policies of insurance between insureds and insurers applies to
the claimed breach of the insurance Policy between AGCS and Uniserve, the Court finds that Swett
is not a party to that contract and thus not liable for breach of that contract. The Court grants
summary judgment in favor of Swett on CCG’s breach of contract claim.
2.

Specific Performance

CCG contends that, because it seeks a money judgment against Swett and the other
defendants, specific performance is an appropriate remedy for breach of contract (Dkt. No. 53, ¶¶
39-41). Specific performance is an equitable remedy which compels performance of a contract on
the precise terms agreed upon by the parties. Dossey v. Hanover, Inc., 871 S.W.2d 67, 69 (Ark.
Ap. 1995). However, specific performance cannot be decreed where there is no duty to perform.
Because Swett was not a party to the Policy, CCG’s specific performance claim against Swett does

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not survive summary judgment. The Court grants Swett’s motion for summary judgment as to
CCG’s claim for specific performance.
3.

Promissory Estoppel

Promissory estoppel applies when: (1) defendant made a promise; (2) defendant should
have reasonably expected plaintiff to act or refrain from acting in reliance on the promise; (3)
plaintiff acted or refrained from acting in reasonable reliance on the promise to its detriment; and
(4) injustice would result from refusal to enforce the promise. Fairpark, LLC v. Healthcare
Essentials, Inc., 381 S.W.3d 852, 859 (Ark. 2011); Arkansas Model Jury Instructions—Civil 2444
(2016). Promissory estoppel only applies when the elements of a contract cannot be shown.
Skallerup v. City of Hot Springs, 309 S.W.3d 196, 201 (Ark. 2009); see also Mickens v.
Correctional Medical Services., Inc., 395 F. Supp. 2d 748, 753 (E.D. Ark. 2005) (noting that under
Arkansas law, “promissory estoppel is an alternative theory which is not available when an actual
contract exists”). CCG contends that it relied on written representations and promises to its
detriment (Dkt. No. 1, ¶ 43).

CCG specifically alleges that “[d]efendants made written

representations and promises to CCG that its interest in Uniserve’s equipment was covered as the
loss payee under the Policy.” (Id.). CCG contends that Swett should have reasonably expected
that CCG would rely on the representation that it was covered as a loss payee (Id., ¶ 45).
The statute of limitations for promissory estoppel claims is three years. See Ark. Code
Ann. § 16–56–105 (Repl. 2005); Crutchfield v. Tyson Foods, Inc., 514 S.W.3d 499, 502 (Ark.
App. 2017). The statute of limitations begins to run when the cause of action accrues. For a breach
of contract action, the cause of action accrues and the statute of limitations begins to run “when
the plaintiff could have first maintained the action to a successful conclusion.” Dupree v. Twin
City Bank, 777 S.W.2d 856, 858 (Ark. 1989) (citation omitted); Hunter v. Connelly, 446 S.W.2d

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654, 657 (Ark. 1969) (cause of action accrues moment right to commence an action comes into
existence); Oaklawn Bank v. Alford, 845 S.W.2d 22, 23 (Ark. App. 1993) (cause of action for
breach of contract accrues the moment the right to commence an action comes into existence, and
“occurs when one party has, by words or conduct, indicated to the other that the agreement is being
repudiated or breached.”). A cause of action for a tort claim accrues “the moment the right to
commence an action comes into being, and the statute of limitations commences to run from that
time.” Quality Optical of Jonesboro, Inc. v. Trusty Optical, L.L.C., 225 S.W.3d 369, 372 (Ark.
2106); Chalmers v. Toyota Motor Sales, USA, Inc., 935 S.W.2d 258, 261 (Ark. 1996) (“The
limitations period found in Ark. Code Ann. § 16-56-105(3) begins to run when there is a complete
and present cause of action, and, in the absence of concealment of the wrong, when the injury
occurs, not when it is discovered” (internal citation omitted)). Once it appears from the face of
the complaint that the action is barred by the applicable statute of limitations, the burden is on
plaintiff to prove by a preponderance of the evidence that the limitations period is tolled.
Chalmers, 935 S.W.2d at 261.
On December 31, 2009, Uniserve applied for an insurance policy through Community
(Dkt. No. 54, ¶ 4). An additional interest schedule identifying CCG as a loss payee was attached
to the application (Id.). On April 28, 2010, the Policy was issued by AGCS. Swett issued a
confirmation of coverage on April 29, 2010. On May 20, 2010, Community issued an Evidence
of Property Insurance form (Id., ¶ 9). The form lists CCG as an additional interest holder as a loss
payee (Id., ¶ 10). On August 29, 2010, CDY316 was destroyed by fire. Community issued a
property loss notice on August 30, 2010, with no mention of CCG as an interest holder. Swett
forwarded the notice to AGCS. On December 9, 2010, Ms. Fox, claims professional for AGCS,
emailed Mr. Michaels, attorney for Mr. Statler of Uniserve, asking for the name of Uniserve’s loss

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payee under the Policy. Mr. Michaels responded to Ms. Fox, stating that there was no loss payee
for CDY316. On December 9, 2010, Mr. Michaels forwarded a sworn statement in proof of loss
signed by Mr. Statler of Uniserve to Ms. Fox at AGCS. The sworn statement represented that
there were no additional interests as to CDY316. On December 13, 2010, AGCS issued a check
for the loss to Uniserve.
The Court finds that CCG’s claims accrued at the latest on December 13, 2010, when the
check for CDY316 was issued by AGCS to Uniserve. This is the date upon on which a complete
and present cause of action accrued as to CCG and the date upon which CCG’s right to commence
an action came into being. CCG brought its claim on August 27, 2015, nearly five years after its
claim accrued. As such, CCG’s claim for promissory estoppel is time barred.
However, CCG alleges that Swett’s alleged concealment of material facts amounts to
fraudulent concealment, thus tolling the statute of limitations (Dkt. No. 53, at 12-13). Fraud
suspends the running of the statute of limitations, and the suspension remains in effect until the
party having the cause of action discovers the fraud or should have discovered it by the exercise
of reasonable diligence. Miles v. A.O. Smith Harvestore Prods, Inc., 992 F.2d 813, 816 (8th Cir.
1993). In Arkansas, fraudulent concealment is often described as follows:
No mere ignorance on the part of the plaintiff of his rights, nor the mere silence of one who
is under no obligation to speak, will prevent the statute bar. There must be some positive
act of fraud, something so furtively planned and secretly executed as to keep the plaintiff's
cause of action concealed or perpetrated in a way that it conceals itself. And if the plaintiff,
by reasonable diligence, might have detected the fraud he is presumed to have had
reasonable knowledge of it.
Wilson v. General Electric Capital Auto Lease, Inc., 841 S.W. 2d 619, 620-21 (Ark. 1992); see
also Shelton v. Fiser, 8 S.W.3d 557, 562 (Ark. 2000).
CCG does not allege affirmative acts of fraud by Swett. Rather, CCG alleges that Swett
committed fraudulent concealment by its alleged failure to speak. “[I]n some situations, the law
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imposes upon a party a duty to speak rather than to remain silent in respect of certain facts within
his knowledge, and the failure to speak is the equivalent of fraudulent concealment and amounts
to fraud just as much as an affirmative falsehood.” Floyd v. Koenig, 274 S.W.3d 339, 342 (Ark.
App. 2008) (citing Camp v. First Fed. Savings & Loan, 671 S.W.2d 213, 215 (Ark. App. 1984)).
This rule is limited to special circumstances, such as a confidential relationship. Floyd, 274
S.W.3d at 342; Berkeley Pump Co. v. Reed-Joseph Land Co., 653 S.W.2d 128, 134 (Ark. 1983);
see also Union Nat. Bank of Little Rock v. Farmers Bank, 786 F.2d 881, 887 (8th Cir. 1996)
(quoting Hanson Motor Co. v. Young, 265 S.W.2d 501, 504 (Ark. 1954) (“The duty of disclosure
also arises where one person is in position to have and to exercise influence over another who
reposes confidence in him whether a fiduciary relationship in the strict sense of the term exists
between them or not.”)). Failure to speak is the equivalent of fraudulent concealment only in
circumstances involving a confidential relationship when a duty to speak rises where one party
knows another is relying on misinformation to his detriment. See Ward v. Worthen Bank & Trust
Co., N.A., 681 S.W. 2d 365, 368 (Ark. 1984); Berkeley Pump Co., 653 S.W.2d at 134 (“The general
rule is to the contrary, and ordinarily, absent affirmative fraud, a party, in order to hold another
liable in fraud [ ] must seek out the information he desires and may not omit inquiry and
examination and then complain that the other did not volunteer information. . . . We find nothing
in the abstract suggesting circumstances from which that rule of law might be found applicable. If
fraud exists, whether affirmatively or by concealment, it ought not to be difficult to isolate and cite
it.”). To determine whether special circumstances exist, the Court looks to all the circumstances
of the case and compares “the facts not disclosed with the object and end sought by the contracting
parties . . . .” Camp, 671 S.W.2d at 216.

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While a fiduciary duty in the strict sense of the term is not required to find special
circumstances, when one party is in a position to have and exercise control over another who
reposes confidence in him, a confidential or similar relationship may exist to support a finding of
fraudulent concealment. Camp, 671 S.W. 2d at 216. In Camp, the appellant purchased a newly
constructed home from a builder who had borrowed construction money from appellee bank (Id.,
at 215). Unbeknownst to appellant, the house was in a flood plain (Id.). There was testimony in
the record that the appellant had recently moved to the area, signed the purchasing paperwork in
the appellee bank’s office, relied considerably on the appellee bank’s representations throughout
the negotiation process, and that the appellee bank had a pecuniary interest in the outcome of the
sale (Id., at 215-216). The court found this sufficient evidence to reverse the lower court’s directed
verdict on the issue of fraudulent concealment and held that a jury should have the opportunity to
consider whether a confidential or similar relationship existed between appellant and the bank,
thereby imposing a duty upon the bank to speak (Id., at 216). The facts here differ from the facts
in Camp.
Based on the record evidence, drawing all reasonable inferences in favor of CCG, no
reasonable juror could conclude that special circumstances existed giving rise to a duty to speak
on the part of Swett. CCG contends that, when Swett issued the confirmation of coverage with a
blanket loss payee endorsement, Swett represented that CCG was added as a loss payee under the
Policy (Dkt. No. 66, at 11). CCG further contends that Swett stayed involved in the claim when it
sent the initial property loss notice for the damage to CDY316 to AGCS and requested that AGCS
provide it with further information once the claim file was set up (Id.). CCG alleges that the
property loss notice did not identify CCG as a loss payee despite Swett’s knowledge of CCG’s
interest (Id.).

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The record does not support the conclusion that special circumstances or a confidential
relationship existed between the parties. See Floyd, 274 S.W. 3d at 342-43 (finding facts alleged
sufficient to support the application of fraudulent concealment where a patient’s long-term primary
care physician advised patient to give child up for adoption, arranged for the adoption, and then
disclosed patient’s medical records and personal information to adoptive parents). Without special
circumstances or a confidential relationship, no duty arises.
Based on the record evidence, construing all reasonable inferences in favor of CCG, no
reasonable juror could conclude that there was fraudulent concealment on the part of Swett in
handling the claim for CDY316. Further, it does not appear from the record that CCG exercised
reasonable diligence in detecting the alleged fraud. Wilson, 841 S.W.2d at 620-21. From the
record, it appears that CCG did not have a copy of the Policy as required by its security agreement
with Uniserve from which to determine its coverage as a named loss payee (Dkt. Nos. 46, at 8; 63,
¶ 7).
For these reasons, the Court determines that the three year statute of limitations bars CCG’s
promissory estoppel claim. See Ark. Code Ann. § 16-56-105. As such, the Court grants summary
judgment in favor of Swett on CCG’s promissory estoppel claim.
4.

Conversion

CCG’s claim for conversion is barred by the statute of limitations. CCG contends that, as
a loss payee under the Policy, it was entitled to proceeds from CDY316 and that issuance of the
funds solely to Uniserve amounts to conversion.

Arkansas Code Annotated § 16-56-

105(6) provides a three-year statute of limitations for “taking or injuring any goods or chattels.”
The Court finds that CCG’s claim for conversion of the insurance proceeds for CDY316 accrued
at the latest on December 13, 2010, when the check for CDY316 was issued by AGCS to Uniserve

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only. This is the date upon on which a complete and present cause of action accrued as to CCG,
and the date upon which CCG’s right to commence an action came into being. Chalmers, 935
S.W. 2d at 261. CCG brought its conversion claim on August 27, 2015, nearly five years after its
claim accrued. As noted above, and based on the record before the Court, no reasonable juror
could conclude that there was fraudulent concealment. Therefore, the Court grants summary
judgment in favor of Swett on CCG’s claim for conversion.
5.

Negligence

CCG alleges that the defendants so negligently operated their respective insurance
companies that the existence of a loss payee was undiscovered or ignored by defendants (Dkt. No.
1, ¶ 54). CCG alleges that the defendants were negligent in failing to procure, effectuate, or extend
insurance coverage as promised and represented to CCG (Id., ¶ 55). CCG contends that the
defendants owed CCG a duty to provide the standard of care that an ordinary prudent person would
provide in similar circumstances and that defendants breached that duty (Id., ¶ 56). The Court
finds that the applicable statute of limitations for claims of negligence is three years. As such,
CCG’s claim for negligence against Swett is barred by the statute of limitations. See Ark. Code
Ann. § 16-56-105; Tony Smith Trucking v. Woods & Woods, Ltd., 55 S.W.3d 327, 330 (Ark. App.
2001); Gibson v. Herring, 975 S.W.2d 860, 862 (Ark. App. 1998).
CCG contends that the three-year statute of limitations should be tolled because Swett
purportedly concealed material facts by failing to speak (Dkt. No. 53, at 12-13). As the Court
explained above, the general rule of fraudulent concealment requires “some positive act of fraud,
something so furtively planned and secretly executed as to keep the plaintiff's cause of action
concealed, or perpetrated in a way that conceals itself.” Shelton, 8 S.W.3d at 562. Failure to speak
is the equivalent of fraudulent concealment only in circumstances involving a confidential

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relationship when a duty to speak rises where one party knows another is relying on
misinformation to his detriment. See Ward, 681 S.W. 2d at 368; Berkeley Pump Co., 653 S.W.2d
at 134. This rule is applicable under “special circumstances . . . such as a confidential relationship.”
Floyd, 274 S.W.3d at 342 (citing Berkeley Pump Co., 653 S.W.2d at 134).
Swett was the wholesale insurance broker contacted by Community to locate an insurance
policy for Uniserve. Swett served as an intermediary wholesale broker. There is no record
evidence of any contact between Swett and CGG. CCG alleges that Swett continued to remain
integrally involved in the administration of the Policy well past the date of its issuance (Dkt. No.
66, at 12). CCG points to email correspondence between Barbara Hannon of Swett and Wendee
Lester at Community regarding the claim for CDY316 and from Ms. Hannon to AGCS forwarding
the notice of loss for CDY316 (Dkt. No. 66-1, at 95-96). CCG also points to email correspondence
from Swett to Uniserve in April 2010 regarding renewal of the Policy (Dkt. No. 66-1, at 104-05).
The record simply does not support the conclusion that a confidential relationship existed between
the parties. See Floyd, 274 S.W. 3d at 342-43. No reasonable juror could conclude, based on the
record evidence with all reasonable inferences drawn in favor of CCG, that there were special
circumstances, was a confidential relationship, or was fraudulent concealment on the part of Swett.
Therefore, the Court determines that the three year statute of limitations bars CCG’s
negligence claim. See Ark. Code Ann. § 16-56-105. As such, the Court grants summary judgment
in favor of Swett on CCG’s negligence claim.
IV.

Conclusion

The Court grants summary judgment to defendant Swett as to all of CCG’s claims (Dkt.
No. 45). The Court dismisses with prejudice all claims against Swett.

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So ordered this 30th day of March, 2018.

_________________________________
Kristine G. Baker
United States District Court Judge

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