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AMI 2806 Issues—Claim for Damages Based on Misleading and Fraudulent Schemes in Sale or Purchas...

Arkansas Supreme Court Committee On Jury Instructions-Civil

Ark. Model Jury Instr., Civil AMI 2806
Arkansas Model Jury Instructions-Civil
November 2021 Update
Arkansas Supreme Court Committee On Jury Instructions-Civil
Chapter 28. Franchise Practices Act
AMI 2806 Issues—Claim for Damages Based on Misleading and Fraudulent Schemes in Sale or Purchase of Franchise
[Plaintiff] claims damages from [defendant] and has the burden of proving each of six essential propositions:
First, that [plaintiff] sustained damages;
Second, that [defendant] granted a franchise to [plaintiff];
Third, that the performance of the franchise contemplated or required [Plaintiff] to establish or maintain a place of business in the State of Arkansas;
Fourth, that, directly or indirectly, in connection with the (offer)(sale)(purchase)(transfer)(or)(assignment) of a franchise, [defendant] knowingly
[employed a device, scheme or artifice with the intent of defrauding [plaintiff];] [or]
[(made an untrue statement of a material fact) (or) (omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading);][or]
[engaged in an act, practice, or course of business that operated as a fraud or deceit upon [plaintiff];]
Fifth, that [plaintiff] justifiably relied upon [defendant]'s conduct; and
Sixth, that [defendant]'s conduct was a proximate cause of [plaintiff]'s damages.
[A fact or statement of fact is material if it was a substantial factor in influencing [plaintiff]'s decision. It is not necessary, however, that it be the paramount or decisive factor, but only one that a reasonable person would attach importance to in making a decision.]
NOTE ON USE
The fourth element should include those bracketed and parenthetical provisions that are justified by the evidence. If more than one of the bracketed provisions is used, the provision(s) preceding it should be followed by the word “or.” The final bracketed paragraph concerning materiality should only be used if the second of the three bracketed alternatives in the fourth element is used.
COMMENT
This instruction is based on Ark. Code Ann. § 4-72-207. Other instructions may be appropriate for use with this instruction. See, e.g., O'Malley, Grenig and Lee, Federal Jury Practice and Instructions ch. 162 (6th ed.); Fifth Circuit Pattern Jury Instructions—Civil,§ 7.1 (West 1999), which include related instructions for federal securities claims based upon statutes with similar language. However, because Arkansas authority concerning this statute is sparse, the Committee elected to prepare only an instruction that provides the elements of the cause of action and a related instruction (AMI 2807), which defines the terms “sale,” “transfer,” and “assignment.”
The Committee has included justifiable reliance as an essential element of this claim. Although Ark. Code Ann. § 4-72-207 does not expressly state such an element, the Committee notes that the remedies of § 4-72-208 apply to any franchisee “who is harmed by a violation or violations of § 4-72-207.” When viewed in light of authority from other states that holds reliance is an essential element in franchise claims, see, e.g., Hardee's of Maumelle, Ark., Inc. v. Hardee's Food Systems, Inc., 31 F.3d 573 (7th Cir. 1994), the Committee believes the remedies provision supports the decision to include reliance as an element of this claim. See also Morrison v. Back Yard Burgers, Inc., 91 F.3d 1184 (8th Cir. 1996) (discussing the traditional elements of fraud in connection with a franchise claim).
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