Monday, February 23, 2009

Scottish blood infections inquiry will be 'another whitewash' as documents expected to be withheld to cover up public liability

Prospects for an effective open inquiry into the use of contaminated blood products in Scotland, which has left thousands of victims suffering from fatal infections such as Hepatitis C, do not look good as the results of the private inquiry held in England were announced today, revealing the fact that several witnesses refused to attend, and that documentary evidence was withheld by the NHS once again.

You can read the report from the English inquiry, Chaired by the Rt Hon. Lord Archer of Sandwell QC, here : The Archer Inquiry

ScottishGovernmentThe Scottish inquiry into contaminated blood products, announced nearly a year ago by the Scottish Government, has yet to begin work, and while Nicola Sturgeon, the Cabinet Secretary for Health promised on BBC Radio today : "Not only are we promising a full and open inquiry but we will deliver a full and open inquiry." it turns out the Scottish Inquiry cannot compel witnesses from the rest of the UK to attend, despite assurances from Westminster there will be full cooperation.

While Ms Sturgeon's claims may raise the expectation of some, the fact is that while there are elements of the Scots legal profession who are representing victims of the tainted blood products scandal, victims who are most certainly owed an explanation of why they received tainted blood products from the NHS, and are given a measure of justice so far denied to them, there are other, more powerful elements of the Scots legal profession in the form of the Government Legal Service for Scotland (GLSS), who will be ensuring that many decisions undertaken within NHS Trusts in Scotland, which resulted in the use of the tainted blood products, will never come to light.

GLSS2In-house legal team little more than ‘bouncers’. The GLSS is the Scottish Government's in-house legal team, which represents virtually all aspects of legal business carried out by Government, the Scottish Parliament, and most public services in Scotland, and lawyers from the GLSS have been known to have taken part in many cases over the years, both civil and criminal, where decisions were obviously taken by Ministers on GLSS advice to withhold, lose, & possibly even destroy evidence from inquiries & investigations which could have compromised the Government's line on what really happened in a particular instance.

It seems to be the case there are still a few solicitors at the GLSS who were at their posts during the use of the tainted blood products by NHS Trusts in Scotland and some are sceptical those same solicitors will reverse or even reveal any advice given at the time which seems to have allowed some involved in the scandal to destroy or ‘lose’ documents relating to the use of knowingly tainted blood products.

One legal insider speculated today "This is all about delaying any admission of negligence and any compensation to the victims.Its little more than playing for time in the usual way, and the current Scottish Government are no better on that score than those who were in office when it all happened".

Lets hope Lord Penrose feels otherwise when his inquiry eventually starts ….

More from BBC News :

Concern over Scots Hep C inquiry

By Eleanor Bradford
Health correspondent, BBC Scotland

Scots who were infected with deadly viruses through contaminated blood are calling for a Scottish inquiry to have more powers.

Lawyers acting for hundreds of victims said an independent inquiry, set up by the Scottish Government, would only have the power to call witnesses in Scotland.

As the blood supply was contaminated before devolution, many key decision makers were in Westminster.

More than 4,000 people were infected with Hepatitis C, and in some cases HIV, through blood transfusions or haemophilia treatments before effective screening of blood donations was introduced in the early 1990s.

A separate private inquiry into contaminated blood supplies, headed by Lord Archer of Sandwell, is due to announce its findings.

Although it interviewed Scottish victims and witnesses, it had no powers to force witnesses from the Department of Health to attend because it was not set up by the UK government. Several witnesses refused to attend and documents were withheld.

Lawyer for Scottish victims, Frank McGuire, said: "All these events took place before devolution. The Department of Health had an important role to play in it, and we can't get that evidence."

High Court Judge Lord Penrose has been appointed to lead the Scottish inquiry. He has not yet set a date for the start of his investigations.

“We're not really getting to the heart of the matter. It's another whitewash”
Frank McGuire (Lawyer for Scottish victims)

Health Secretary Nicola Sturgeon told BBC Radio's Good Morning Scotland programme the UK Government's Department of Health had given assurances it would co-operate fully with the inquiry.

"The inquiry has the maximum powers we are able to give it under the 2005 Inquiries Act," she said.

"It is the case that there may be issues of access to evidence or documents that are in possession of the UK Government but under the 2005 Inquiries Act no Scottish inquiry can compel that evidence.

"But we have been given assurances by the Department of Health that they will co-operate fully with Lord Penrose's inquiry."

She added: "Not only are we promising a full and open inquiry but we will deliver a full and open inquiry.

"I believe this inquiry is capable of giving those that have campaigned on the issue the answers they are looking for."

One of the victims, musician Andy Gunn, from Inverness, said he expected the Department of Health to withhold evidence from a Scottish inquiry, as it did in the Archer inquiry.

"Whilst we're grateful that they're holding an inquiry it's no use really because they're stopping short and withholding crucial documents and crucial witnesses," he said.

"We're not really getting to the heart of the matter. It's another whitewash."


Anonymous said...

they were purposely trying to kill everyone off. cant you see this? they killed everyone off one by one. if when they tried to kill you didn't work they would let it rest for a while and then try to kill you again. accidents, tainted blood, stealing money and driving you crazy. Now, all of this is around greed. they killed my mother who tried to save me. they killed people all over their own desires. god sent sertain people into the world because he saw what was going to happen. he knew. I came here for that purpose to survive and to help that is what is right. not to have things but so that life will continue. this is where we must focus. you know it isn't so and so who tainted the blood but bigger money hungry, greedy people who only want themselves in power. what does the bible say, that in the last days they will be lovers of themselves, lovers of money, having no natural affection. this is what is happening and you better pray to your father in heaven and make sure he knows your heart to be true. that is all that is going to matter except for a few of people who are truly good judges and authorities, even those will be made to look bad when they aren't just to take them down...

Anonymous said...

good point about the glss

Henderson was there for 20 years plus and now hes Prez at the Law Society !

Anonymous said...

Yes nothing to be revealed here,just another whitewash in the making like Lockerbie Dunblane Piper Alpba et all

Only difference is it will be an SNP whitewash hahaha

Anonymous said...

How much has Frank McGuire got out of his clients in fees ? Will that be declared at the inquiry too ?

Anonymous said...

I'm sure Lord Penrose will do his utmost but doesn't it strike you as being a waste of money which would better go to the victims or their families ?

After all everyone knows the nhs is guilty and all these lawyers who let them get away with it all this time so why not just admit it, pay out and move on ?

Anonymous said...

never heard of this glss until you mentioned it

they sound a right bunch of thugs looking at that link you posted

Scot Free (even if you kill someone) said...

I agree with the sentiments already expressed : this inquiry will be a whitewash in the true tradition of Scots Justice !

Anonymous said...

Hi Peter
Nice to see you giving coverage to all issues of injustice and not just about the Law Society.
Keep up the good work and full marks for pointing that out about the glss.You were probably right about them all along.

Anonymous said...

aye a whitewash it will be

Anonymous said...

Interesting take on the hep c scandal Peter.You seem to get good info so keep it up laddie !

Anonymous said...

read it in the Herald today and seems you are right again !

Anonymous said...

look at this case and see what you think.

No. 06-895
Opinion Delivered February 28, 2007
NO. CV 2004-963,
Appellant Bob Bomar filed a legal malpractice suit against Appellees Barry Jewell and
Keith Moser, of the law firm of Jewell, Moser, Fletcher & Holleman, P.A. After protracted
discovery, the circuit court granted summary judgment in favor of Appellees on the grounds
that Bomar’s claims were barred by the applicable statute of limitations and Bomar lacked
standing to bring the suit. Bomar brings the instant appeal, arguing that the circuit court
erred in granting summary judgment because (1) Appellees’ fraudulent concealment of their
wrongful acts tolled the statute of limitations; (2) Bomar had standing to pursue his claims;
(3) Appellees’ affirmative defenses should have been stricken on account of their assertion
of the Fifth-Amendment privilege against self-incrimination; and (4) an adverse inference
should have been drawn against Appellees due to their assertion of the Fifth-Amendment
privilege. We affirm on the last two points, but we conclude that genuine issues of material
fact remain concerning Bomar’s standing and the tolling of the statute of limitations as a
result of fraudulent concealment. Thus, we reverse and remand on the standing and
fraudulent concealment issues.
In 1986, Bob Bomar and three other investors started Scanning Technologies
Incorporated (STI), a software company. Jewell eventually became legal counsel for both
STI and Bob Bomar. By 1993, STI was experiencing financial difficulties, and Bomar’s
fellow shareholders were seeking buyers for their shares. Jewell allegedly told Bomar that
his partner, Moser, had two interested clients, FBN Investments, Inc., (FBN) and EAB
Enterprises (EAB). FBN loaned STI an initial amount of $400,000 and took a security
interest in the company. EAB acquired 51% of STI’s stock, leaving Bomar as a minority
shareholder. Later, Bomar was elected both president and secretary of STI, and Jewell was
elected treasurer.
After the buy out, Jewell and Moser told Bomar that EAB and FBN wanted their law
firm to take over the management of STI’s accounting and financial records. Shortly
thereafter, Bomar was taken off the signature card for STI’s bank accounts. Also, at
Appellees’ behest, Bomar signed several documents on behalf of STI without receiving
copies and without having knowledge of the documents’ contents.
In 1997, STI and Boeing North American Services, Inc., (Boeing) were working
together on a contract with Coca Cola Enterprises in Charlotte, North Carolina. During that
time, Boeing became interested in licensing STI’s MLMS software. Boeing sent Ken Sweet
to Arkansas to initiate negotiations with STI. Sweet came prepared with business plans that
included several variations on two basic options: (1) Boeing would license the software and
royalties would be distributed periodically to STI and Bomar individually, or (2) Boeing
would completely buy out the software without making any royalty distributions.
Sweet met with Bomar and Jewell to discuss the possibility for a licensing agreement,
and he also met Moser, who played a small role in the negotiations as counsel for FBN and
EAB. In the negotiation meetings, Sweet viewed Bomar as the lead negotiator, but Jewell
seemed to be the primary decision maker. After extensive discussion, the negotiations broke
down because Jewell asked for more “upfront cash” than Boeing was willing to offer. Sweet
returned home, and the negotiations continued through correspondence. According to
Bomar, Jewell and Moser acted arrogantly toward Sweet during the one-on-one negotiations.
In fact, Bomar thought Jewell and Moser had handled the deal in such an unprofessional
manner that he considered suing them for malpractice.
In June 1997, Jewell sent two letters to Sweet on behalf of his purported clients STI,
Bomar, and EAB. The letters proposed an amended business plan in which Boeing could
either purchase the MLMS software or purchase the common stock of STI. Then, on
October 28, 1997, Jewell sent another letter offering Boeing a deal to license the software
with a fixed term and renewable options to purchase. On November 6, 1997, Sweet replied
to Jewell’s letters by rejecting his offers and submitting a final proposal. The final proposal
was not accepted.
In January 1998, Boeing sued STI and FBN for money STI owed under the joint
contract with Coca Cola. The complaint specifically alleged that representatives of STI made
fraudulent misrepresentations to Boeing with regard to the proposed licensing agreement and
FBN aided and abetted STI in making those representations. The parties reached a pretrial
settlement whereby STI agreed to pay Boeing the sum of $640,000.
On March 21, 2000, an STI stockholder’s meeting was held at the offices of Jewell,
Moser, Fletcher & Holleman, P.A. During the meeting, Jewell informed the stockholders
that three of STI’s creditors were threatening litigation. Namely, STI owed in excess of $
2,000,000 to FBN and $500,000 to Jewell, Moser, Fletcher & Holleman, P.A. As a result,
Bomar resigned from the board during that meeting. He later sent a letter to Jewell and
Moser, stating his intention to start a new company and license the MLMS software from
In the spring of 2002, representatives from the FBI and the Department of Justice
approached Bomar concerning a pending criminal investigation of Moser. They informed
Bomar that he had been listed as president of two corporations other than STI and his
signature appeared on pro se pleadings for those corporations in federal court. Bomar also
discovered that FBN still held an insurance policy on his life two years after his resignation,
and the policy was for five million dollars, rather than the one million dollars he had been
lead to believe it was worth. Bomar then commenced his own investigation. He learned
from Dan Elliot, an IRS investigator, that EAB and FBN were shell corporations set up by
Jewell and Moser for the purpose of siphoning money from their client trust accounts into
STI. Bomar also discovered that Fran Post, who had been represented to him as FBN and
EAB’s president, was merely FBN’s agent for service of process. This information lead
Bomar to conclude that it was Jewell and Moser, and not the shell corporations, who
thwarted the Boeing deal.
In January 2004, Bomar filed a legal malpractice suit against Jewell and Moser,
claiming breach of fiduciary duty, negligence, and fraud. He specifically asserted that Jewell
and Moser breached their fiduciary duty to him because they falsely represented that FBN
and EAB, their alleged clients, invested in STI and stopped the Boeing deal. During
discovery, Jewell and Moser both asserted their Fifth-Amendment privilege against selfincrimination
and thereby avoided giving depositions and answering some of Bomar’s
interrogatories. Both Appellees filed motions for summary judgment against Bomar,
contending that he had no standing to sue, and his claims were barred by the applicable
statute of limitations. Moser also argued in his motion that he was not liable because he did
not have privity of contract with Bomar. Bomar replied by arguing that he had standing and
the Appellees’ acts of fraudulent concealment tolled the statute of limitations. He also filed
a motion to strike the Appellees’ affirmative defense of the statute of limitations because they
had asserted their Fifth-Amendment privilege and thereby thwarted any meaningful
After hearings on the motions, the circuit court entered an order, releasing Moser from
liability on the claims of negligence and breach of fiduciary duty. The circuit court later
entered another order denying Bomar’s motion to strike and granting Appellees’ summaryjudgment
motions on the basis that Bomar lacked standing and his claims were barred by the
statute of limitations. Bomar now appeals from that order.
Standard of Review for Summary Judgment
A motion for summary judgment should be granted when, in light of the pleading, and
other documents before the circuit court, there is no genuine issue of material fact and the
moving party is entitled to a judgment as a matter of law. Ark. R. Civ. P. 56(c) (2006).
When reviewing whether a motion for summary judgment should have been granted this
court determines whether the evidentiary items presented by the moving party in support of
the motion left a material question of fact unanswered. Flentje v. First National Bank of
Wynne, 340 Ark. 563, 11 S.W.3d 531 (2000). The burden of sustaining a motion for
summary judgment is always the responsibility of the moving party. Id. All proof submitted
must be viewed in a light most favorable to the party resisting the motion, and any doubts and
inferences must be resolved against the moving party. Id.
We recognize a “shifting burden” in summary-judgment motions, in that while the
moving party has the burden of proving that it is entitled to summary judgment, once it has
done so, the burden then shifts to the nonmoving party to show that material questions of fact
remain. Id. However, summary judgment is not proper where evidence, although in no
material dispute as to actuality, reveals aspects from which inconsistent hypotheses might
reasonably be drawn and reasonable minds might differ. Id. The object of summaryjudgment
proceedings is not to try the issues, but to determine if there are any issues to be
tried, and if there is any doubt whatsoever, the motion should be denied. Id.
Although Bomar does not argue standing as his first point on appeal, the question of
standing is a threshold issue that must be addressed first. See Farm Bureau Ins. Co. of Ark.,
Inc. v. Running M Farms, Inc., 366 Ark. 480, ___ S.W.3d ___ (2006). Appellees argue that
Bomar lacked standing to bring suit against them because his claims were based upon an
injury to STI as a corporation and not to himself individually. Bomar, however, argues that
he has standing because he would have received individual royalties and employment under
the Boeing licensing agreement.
This court acknowledges the “near universal” rule that a corporation and its
stockholders are separate and distinct entities, even though a stockholder may own the
majority of the stock. Farm Bureau Ins. Co. of Ark., Inc. v. Running M Farms, Inc., supra.
We recognize that, under Ark. R. Civ. P. 23.1 (2006), a shareholder may bring a derivative
action on behalf of a corporation to enforce a right of the corporation when the corporation
has failed to do so. Id. However, in order for a shareholder to bring an individual cause of
action against a third party, the shareholder must be injured for a wrong directly or
independently of the corporation. Id. This court has also determined that individual
stockholders do not have standing to sue in their individual capacities for injuries allegedly
suffered primarily by the corporation and its shareholders. Id. Direct suits brought by a
shareholder are only appropriate when the shareholder asserts an injury that is distinct and
separate from the harm caused to the corporation. Id.
In Bomar’s deposition he admitted that his claims against Appellees were based solely
upon his allegations that they mishandled the Boeing negotiations. Jewell and Moser based
their motion on Bomar’s admission, claiming the only person with standing to bring the
action was STI as a corporation. Bomar, however, argued that he had standing to bring the
action because he would have received employment and royalties from Boeing if the
licensing deal had succeeded. In support of his argument, Bomar presented the circuit court
with copies of the various business plans that Boeing negotiated with STI, some of which
provided for Bomar to personally receive employment and royalties from Boeing. Bomar
also presented the court with Ken Sweet’s deposition in which Sweet testified that Bomar
would have received royalties and employment. In rebuttal, Appellees pointed out parts of
Sweet’s testimony that indicated Boeing was contemplating a complete buy-out of STI’s
software without any royalty distributions.
With regard to whether Bomar asserts an injury to himself that is separate and distinct
from the harm caused to the corporation, contrary conclusions can be drawn from the
evidence submitted by the parties and summarized herein. Accordingly, we hold that genuine
issues of material fact exist concerning Bomar’s standing to file the instant action. For that
reason, we conclude that the circuit court erred in granting summary judgment on the
standing issue.
Motion to Strike
During discovery, Appellees asserted their Fifth-Amendment privilege against selfincrimination
and thereby avoided giving depositions and answering some of Bomar’s
interrogatories. In response, Bomar filed a motion to strike their affirmative defense that his
claims were barred by the statute of limitations. Specifically, Bomar argued that the circuit
court should penalize Appellees because they evaded any meaningful discovery by asserting
their Fifth-Amendment privilege.
We decided a similar issue in Dunkin v. Citizens Bank of Jonesboro, 291 Ark. 588,
727 S.W.2d 138 (1987). In that case, the defendant in a wrongful-death action claimed the
affirmative defense of self-defense and made a blanket assertion of her Fifth-Amendment
privilege against self-incrimination, stating that she would not answer any of the plaintiff’s
interrogatories. Id. The circuit court sanctioned the defendant by striking her affirmative
defense, and we affirmed. Id. We clarified that sanctions are appropriate when a party uses
his or her Fifth-Amendment privilege to preclude the opposing party from obtaining relevant
and critical discovery. Id. Rather, assertions of the privilege should be limited to
information that “clearly falls within its ambit.” Id. at 591, 727 S.W.2d at 140. Additionally,
for the privilege to be properly asserted, the party asserting it should make a “particularized
showing of the potentially incriminating nature of each question asked and each document
signed.” Id. at 592, 727 S.W.2d at 140 (citing Wolfson, Civil Discovery & the Privilege
Against Self-Incrimination, 15 Pac. L. J. 785, 793 (1984)).
Unlike the defendant in Dunkin, Appellees used discretion in answering Bomar’s
interrogatories. Instead of making a blanket assertion of their Fifth-Amendment privilege,
Appellees answered several of Bomar’s interrogatories and only asserted their privilege with
regard to questions involving the Boeing deal. Appellees also gave clear reasons for not
answering Bomar’s interrogatories and for not giving depositions— namely, they were under
investigation by federal law enforcement. Moreover, counsel for Bomar admitted in the
motion hearings that Appellees properly applied their privilege and there were no unresolved
discovery issues that did not properly fall under their Fifth-Amendment privilege.
Accordingly, because Bomar cannot show that Appellees precluded his discovery by
improperly asserting their Fifth-Amendment privilege, we affirm the circuit court’s denial
of Bomar’s motion to strike.
Bomar also asked the circuit court to draw an adverse inference against Appellees
because they asserted their Fifth-Amendment privilege. A review of the record, however,
reveals that there is no ruling by the circuit court on this issue. It is well settled that a party’s
failure to obtain a ruling is a procedural bar to this court’s consideration of the issue on
appeal. Hurst v. Dixon, 357 Ark. 439, 182 S.W.3d 102 (2004). Thus, we are precluded from
addressing Bomar’s argument on this point.
Fraudulent Concealment
Bomar’s central argument on appeal is that the circuit court erred in granting
Appellees’ motions for summary judgment based upon the expiration of the applicable statute
of limitations. Bomar admits that he brought his claims a full six years after the failed
Boeing deal, which is well beyond the three-year statute of limitations for legal malpractice.
See Ark. Code Ann. § 16-56-105(3) (Repl. 2006). Nonetheless, he argues that the statute of
limitations was tolled by Appellees’ fraudulent concealment of their wrongdoing. He
specifically argues that Appellees fraudulently represented to him that EAB and FBN were
their clients, rather than their alter egos. He asserts that Appellees thereby concealed their
role in frustrating the Boeing negotiations.
Appellees reply with the argument that Bomar was apprised of all of the facts
surrounding the Boeing deal in 1997 when the negotiations took place. They also argue that
even if Bomar did not know they were allegedly behind EAB and FBN, he was still aware
of their law firm’s $500,000 loan to STI. Finally, Appellees point out that Bomar could have
used his right as a shareholder in STI to examine the company’s books and discover any
material information about FBN and EAB’s involvement.
Though the question of fraudulent concealment is usually one of fact and unsuited for
summary judgment, when there is no evidentiary basis for a reasonable difference of opinion,
a circuit court may resolve the question as a matter of law. Delanno v. Peace, 366 Ark. 542,
___ S.W.3d ___ (2006). In Meadors v. Still, 344 Ark. 307, 40 S.W.3d 294 (2001), we
clarified that in cases of fraudulent concealment we must apply the standard of review for
summary judgment and the standard of review for determinations on the tolling of the statute
of limitations due to fraudulent concealment. When the running of the statute of limitations
is raised as a defense, the defendant has the burden of affirmatively pleading that defense.
Id. But, once it is clear from the face of the complaint that the action is barred by the statute
of limitations period, the burden shifts to the plaintiff to prove by a preponderance of the
evidence that the statute was in fact tolled. Id.
Fraud suspends the statute of limitations until the party having the cause of action
discovers the fraud, or should have discovered it by the exercise of reasonable diligence.
Delanno v. Peace, supra. For fraud to toll the statute of limitations it must be concealed. Id.
Fraud consists of five elements that the plaintiff must prove by a preponderance of the
evidence: (1) a false representation of a material fact; (2) knowledge that the representation
is false or that there is insufficient evidence upon which to make the representation; (3) intent
to induce action or inaction in reliance upon the representation; (4) justifiable reliance on the
representation; and (5) damage suffered as a result of the representation. Id. (citing Tyson
Foods v. Davis, 347 Ark. 566, 66 S.W.3d 568 (2002). Fraudulent concealment consists of
a positive act of fraud that is “so furtively planned and secretly executed as to keep the
plaintiff’s action concealed, or perpetrated in such a way that conceals itself. Shelton v.
Fiser, 340 Ark. 89, 96, 8 S.W.3d 557, 562 (2000). Thus, in order to toll the statute of
limitations on the basis of fraudulent concealment, there must be (1) a positive act of fraud
(2) that is actively concealed, and (3) is not discoverable by reasonable diligence.
In our recent case of Delanno v. Peace, supra, we dealt with the issue of fraudulent
concealment in the context of legal malpractice. There, the plaintiff’s attorney mistakenly
represented to the plaintiff that he had obtained a tax clearance letter, absolving the plaintiff
from tax liability on a recent purchase of assets. Id. Plaintiff relied on that representation
and ignored tax notices from the state for three years. Id. But, eventually, the parties
discovered that the attorney had inadvertently filed the tax clearance letter with the wrong
tax identification number, and, due to the oversight, the plaintiff owed back taxes to the state.
Id. The plaintiff then filed a legal malpractice action and alleged fraudulent concealment,
but the circuit court granted the attorney’s summary judgment motion on the basis that the
statute of limitations had expired. Id. We affirmed because the plaintiff did not show that
the attorney made intentional fraudulent statements or attempted to conceal any fraud. Id.
The plaintiff in Delanno also argued that because attorneys stand in a fiduciary
relationship to their clients, the clients should be able to rely without qualification on
statements of the attorney. Id. We rejected the plaintiff’s argument, stating that such a
theory would unduly restrict the statute of limitations for legal-malpractice issues and
eliminate the client’s duty to exercise reasonable diligence in analyzing the accuracy of the
attorney’s statements. Id. Instead, this court held that in situations such as the one in
Delanno, where the client received information from an authoritative source which directly
contradicted the representations of the attorney, it was incumbent upon the client to reconcile
the contradiction by some act of reasonable diligence. Id.
Delanno and the case now before us are distinguishable in that the instant case does
not involve an inadvertent misstatement of the facts. Here, Bomar produced evidence that
Appellees committed positive acts of fraud. According to the testimony of Dan Elliot, an
IRS investigator, FBN and EAB were set up as “shell corporations” for Appellees to invest
money from their client trust accounts into STI. Bomar also submitted evidence of actions
taken by Appellees to conceal their wrongdoing. First, Appellees, posing as FBN and EAB,
obtained control of STI and took over the management of STI’s finances. Then, they
eliminated Bomar’s ability to access STI’s accounts and financial records. Appellees also
created a fictional president for FBN and EAB in Fran Post, the companies’ agent for service
of process. Finally, Appellees wrote letters to Bomar and others verifying that they
represented FBN and EAB in the negotiations with Boeing.
Moreover, contrary to the situation in Delanno, it is unlikely that Bomar could have
discovered the concealment of Appellees’ wrongful acts through reasonable diligence. At
least a material issue of fact has been created on this issue. Appellees had control of the
books for STI, FBN, and EAB, and they maintained the sole communication between the
companies. Appellees argue that Bomar could have discovered the financial status of STI
by exercising his rights as a shareholder to examine the corporation’s books, under Ark. Code
Ann. §4-26-715 (Repl. 2001). Yet, Bomar only had the right to access STI’s books because
he did not own stock in either EAB or FBN. Furthermore, it is unlikely that access to STI’s
books would have provided any information about the true nature of EAB and FBN, both of
which were controlled by Appellees. Accordingly, we hold that summary judgment was
improper because Bomar submitted evidence that raised a genuine issue of material fact as
to whether Appellees committed acts of fraudulent concealment that tolled the statute of
Derivative Liability
Appellee Jewell argues separately that he has no derivative liability for the actions of
Moser. While he argued this issue in his motion for summary judgment, he never obtained
a ruling from the circuit court. For that reason, we are barred from addressing the issue on
appeal. See Hurst v. Dixon, 357 Ark. 439, 182 S.W.3d 102 (2004).
Affirmed in part, reversed and remanded in part.

Anonymous said...

Mr Gunn has all my sympathies.Who else could be holding up an inquiry and settlement - it has to be those rotten lawyers again !