Arkansas Supreme Court rules bank must face jury over disputed real estate loan—14 years after the deal allegedly fell through
A decade-long legal fight over a disputed $350,000 real estate loan is returning to trial, after the Arkansas Supreme Court ruled that a lower court overstepped by granting summary judgment on grounds not argued by the parties.
In a decision delivered April 10, 2025, the high court reversed in part and affirmed in part a ruling by the Garland County Circuit Court, which had dismissed all of developer Kenneth W. Tilley’s claims against Malvern National Bank (MNB) and its former commercial lending vice president, Stephen Moore.
The Court held that Tilley’s claims for breach of contract, promissory estoppel, and fraud raise disputed issues of material fact that must be decided by a jury. Other claims—negligence, tortious interference, and violation of the Arkansas Deceptive Trade Practices Act (ADTPA)—were dismissed.
The case arose from a financing arrangement between Tilley and MNB in 2009 and 2010. Tilley alleged that Moore promised him $350,000 in funding for a real estate development project. In support of his claim, Tilley pointed to detailed discussions he had with Moore about interest rates, repayment terms, and allocation of land sale proceeds. MNB issued checks to Tilley for $20,000 and $30,000 in early 2010, followed by a formal $221,000 loan in July.
According to Tilley, the bank later refused to disburse the full $350,000, asserting that his decision to reduce the pledged collateral—from 233.65 acres to 128.7 acres—constituted a material change. He sued in 2011, asserting six claims: breach of contract, promissory estoppel, fraud, negligence, tortious interference with a business relationship, and violations of the ADTPA.
MNB denied any binding obligation to provide additional funds, arguing that the parties' formal loan agreement governed the relationship and that Tilley’s claims were barred by the statute of frauds.
This was the third time the case reached the Arkansas Supreme Court. In 2017 (Tilley I), the Court ruled that Arkansas law does not recognize predispute waivers of jury trials, and reversed a circuit court order that had struck Tilley’s jury demand. In 2019 (Tilley II), the Court again reversed after the circuit court, citing a new statute (Act 13 of 2018), reinstated a prior bench trial verdict. The Supreme Court found the circuit court lacked jurisdiction to revisit the waiver issue and explicitly remanded the case “for a jury trial.”
After the original circuit judge retired, the reassigned court entertained MNB’s third motion for summary judgment. Although MNB offered five arguments for dismissal—including the statute of frauds, existence of a formal contract, and exemption under the ADTPA—the circuit court granted summary judgment based on a new rationale of its own: that Tilley’s reduction of collateral materially altered the agreement and relieved MNB of any duty to disburse more than $221,000. Tilley appealed.
Justice Shawn A. Womack, writing for the majority, held that the circuit court did not violate the Supreme Court’s earlier mandate merely by considering a summary judgment motion. The mandate in Tilley II required a jury trial only if triable issues of fact existed; it did not preclude application of Arkansas Rule of Civil Procedure 56.
However, the Court found reversible error in the circuit court’s decision to grant summary judgment on a rationale never raised by MNB. Doing so deprived Tilley of an opportunity to respond and violated well-established Arkansas and federal law requiring that summary judgment be based solely on grounds raised by the parties.
The Court reviewed each of MNB’s five arguments and affirmed dismissal of Tilley’s:
- ADTPA claim, since MNB is a nationally chartered bank regulated by federal agencies, and thus exempt from the act.
- Tortious interference claim, because Tilley failed to offer evidence of a valid business relationship or expectancy disrupted by the bank.
- Negligence claim, as the bank owed no duty beyond the debtor-creditor relationship and no special fiduciary duty was shown.
But the Court reversed on breach of contract, promissory estoppel, and fraud. On breach of contract, Tilley’s testimony and MNB’s disbursement of partial funds raised a question of fact sufficient to invoke the partial performance exception to the statute of frauds. On promissory estoppel, Tilley’s testimony that he relied on the promise of $350,000 was backed by other evidence, including statements from bank officials. And on fraud, the Court distinguished the facts from prior precedent, finding that Tilley’s account of specific financing terms discussed over a 45-minute meeting went beyond mere “puffery.”
The Court ordered that Tilley’s surviving claims be tried by a jury and made clear that no further summary judgment motions would be entertained on these claims. Unless the case is settled or voluntarily dismissed, a jury will decide whether MNB is liable for failing to provide the full $350,000 loan.
Justice Rhonda K. Wood concurred in the judgment but argued the Court should have omitted any detailed instruction limiting future motions. Justice Courtney Rae Hudson, joined by two others, dissented in part, contending that the circuit court violated the Tilley II mandate and that all claims—including ADTPA, tortious interference, and negligence—should proceed to trial.
For mortgage professionals, the case offers an instructive look at how disputes can escalate when loan discussions are not fully memorialized in writing—and how deviations in collateral and disbursement history can complicate a lender’s position. It also serves as a procedural warning: even after multiple appeals, courts will require strict adherence to party-raised arguments when deciding dispositive motions.
In the aftermath of the April 10 decision, the parties are now poised to prepare for a jury trial nearly 14 years after the original loan discussions began.
