## Facts

- Delta School of Commerce operated a private vocational school; Steve McCray was its president.
- Earlene Wood responded to a newspaper advertisement for Delta’s “nursing assistant” diploma program and met with McCray to ask about the program and job prospects.
- Wood testified she asked whether “nursing assistant” was the same as a “nurse’s aide,” and McCray told her it was not.
- Wood testified McCray stated LPNs were being phased out in Arkansas, nursing assistants would replace LPNs, and nursing-assistant pay would be comparable to an LPN’s.
- Wood enrolled the next day and obtained a $3,064 student loan to pay tuition.
- After about seven months, Wood concluded the training was essentially nurse’s-aide work (e.g., making beds, emptying bed pans, taking vital signs) rather than LPN-level training (e.g., medications and injections), and she withdrew.
- A Board of Nursing official testified a nursing assistant cannot and does not take the place of an LPN.
- McCray denied making the “phasing out LPNs” statement but acknowledged he had heard the issue raised before.

## Issues

1. Whether substantial evidence supported the jury’s finding of common-law fraud (deceit) inducing Wood to enroll and incur tuition debt.
2. Whether the evidence supported the award of punitive damages.
3. Whether alleged instructional or evidentiary errors required reversal.

## Decision

- The Arkansas Supreme Court affirmed the judgment for Wood.
- The court held substantial evidence supported each element of fraud, including falsity, materiality, scienter, justifiable reliance, and damages.
- The court upheld $3,064 in compensatory damages and $50,000 in punitive damages as supported by the evidence.
- The court found no reversible error in the challenged jury instructions or evidentiary rulings.

## Legal Principles

- Common-law fraud requires proof of: (1) a false representation of material fact; (2) knowledge of falsity or reckless disregard; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damages.
- On appeal, a jury verdict is sustained if supported by substantial evidence viewed in the light most favorable to the prevailing party.
- Specific statements about the nature of a regulated occupation and expected professional status may be treated as factual representations, not nonactionable opinion or sales talk.
- Scienter and intent may be inferred from circumstances, including the speaker’s role, experience, and awareness of controversy regarding the truth of the statement.
- Punitive damages may be awarded when conduct is willful or wanton, or in reckless disregard of others’ rights; intentional or reckless misrepresentation made to induce a vulnerable consumer to incur debt can satisfy this standard.

## Conclusion

The court sustained a fraud verdict and significant punitive damages where a vocational school’s president made specific, false statements about professional equivalency and earnings to induce a prospective student to enroll and finance tuition, and the student justifiably relied and suffered debt-based losses.


Delta Sch. of Com., Inc. v. Wood, 298 Ark. 195, 766 S.W.2d 424 (Ark. 1989)