Calloway et al v. Bagwell et al
MEMORANDUM OPINION. Signed by Magistrate Judge John E Ott on 10/10/2018. (KAM)
2018 Oct-10 AM 11:31
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
EDWARD WALDRUP, JR.,
and TANISHA WALDRUP
METLIFE SECURITIES, INC.,
Plaintiffs allege Defendant MetLife Securities, Inc. (“MSI”) is responsible
for a fraud perpetrated by its agent Bryan Anderson. The action is before the court
on Defendant’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).
(Doc. 30). The court concludes that Defendant’s motion is due to be granted.
FACTS AND PROCEDURAL HISTORY
This action arises from Plaintiffs’ sixteen-year-old interactions with
Anderson, a former employee of Defendant. In early 2002, after her husband’s
death, Plaintiffs’ mother, Fran Waldrup, was contacted by Bryan Anderson who
informed Fran that her husband’s life insurance policy required the equal division
of the proceeds between Fran and Plaintiffs. (Doc. 29 (“Compl.”) at 5). Anderson
told her that Plaintiffs’ father “had likely made a mistake and that the funds were
likely supposed to have been left to her alone.” (Id.) Faced with the possibility of
a jarring change in lifestyle, Fran called Plaintiffs to relay to them what she had
been told by Anderson. (Id. at 5-6). Shortly thereafter, in about March 2002,
Plaintiffs met with Anderson and Fran to discuss the situation. (Id. at 6).
Anderson repeated his belief that Plaintiffs’ father had meant to leave the insurance
proceeds to Fran alone and that he “had simply made a mistake filling out the
beneficiary form.” (Id.) He went further, suggesting that the tax rate would be
higher if Plaintiffs kept their portion of the proceeds. (Id.) He proposed that
Plaintiffs give their portions of the policy to Fran so that the tax rate would be less
and she could place the money in her MSI account which would allow Anderson to
manage the money. (Id.) Plaintiffs agreed to Anderson’s plan. (Id.)
A short time later, on April 18, 2002, the funds from the life insurance
policy were deposited in Plaintiffs’ accounts. (Id.) On May 8, 2002, Plaintiffs and
Fran met with Anderson to make the transfers of funds from Plaintiffs’ accounts to
Fran. (Id. at 6-7). They did so by writing personal checks for the portion they had
received from the policy. Anderson told Plaintiffs to write “Gift” on the
memorandum line of each check. (Id. at 7). A total of $186,246.00 was
transferred to Fran’s accounts. (Id.) During the meeting, Plaintiff Tanisha
Waldrup Pike suggested to her mother that the money could be used to pay off the
mortgage on Fran’s home. Anderson discouraged that, saying that “paying off the
house sooner would not truly help Fran as much as being able to access the money
and having it grow by investing it.” (Id.)
Plaintiffs met with Anderson and Fran again in about February or March
2004. (Id. at 7). Before the meeting, Fran told Plaintiffs that Anderson had put her
money in a “fool proof” real estate investment and that she was guaranteed a 100%
return on the investment. (Id.) According to Anderson, the investment was “hushhush” and was made available on an exclusive basis. (Id.)
Anderson proceeded to use the money as part of a massive Ponzi scheme for
which he was arrested, charged, and convicted in 2015. (Id. at 8). Fran lost all of
the money by 2010.1 (Id. at 9).
In 2016, fourteen years after the first meeting with Anderson, Plaintiff
Calloway read an article online about the Ponzi scheme and realized that Fran had
been swindled. (Id. at 8). Further, she believed that Plaintiffs had been duped by
Anderson into giving away the proceeds of their father’s life insurance policy.
(Id.) In response to this belief, Plaintiffs filed this action against MSI as
Anderson’s former employer. (Doc. 1). Plaintiffs filed an amended complaint on
August 7, 2018. (Doc. 29). On August 21, 2018, Defendant moved to dismiss the
Plaintiffs’ Second Amended Complaint alleges that rather than safeguarding the money,
Anderson “lost all of it within seven to eight years.” (Id. at 9).
amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc.
STANDARD OF REVIEW
To survive a motion to dismiss, a pleading must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV.
P. 8(a)(2) & 12(b)(6). “[T]he pleading standard described by Rule 8 does not
required detailed factual allegations, but it demands more than an unadorned, the
defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662
(2009). It is insufficient to simply recite the elements of a cause of action or make
conclusory allegations. See id. Mere naked assertions devoid of factual support do
not satisfy the requirements of Rule 8. See id.
To avoid dismissal, “a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Id. A
complaint meets this standard “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. Thus, the complaint must establish more than the mere
possibility that a defendant has acted unlawfully. See Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007). In the end, this inquiry is a “context specific task that
requires the reviewing court to draw on its judicial experience and common sense.”
Plaintiffs’ complaint contains multiple counts. Plaintiffs have alleged the
following claims: (1) failure to supervise and investigate, (2) breach of fiduciary
duty, (3) breach of contract, (4) “common law claims” of intentional and negligent
misrepresentation, unjust enrichment and breach of the duty of good faith and fair
dealing, and (5) fraud. (Doc 29. at 9-17). Defendant contends that various
grounds exist for dismissing each claim. Some contentions apply to every claim
and others apply to only certain claims. They will be addressed below.
Defendant first contends that Plaintiffs lack standing to assert tort claims for
acts committed against Fran. (Doc. 30 at 7). Plaintiffs respond that they have
standing to assert claims arising out of the “multiple statements made directly to
them by Anderson . . . which induced the Plaintiffs to surrender their inheritance”
and that they are not attempting to assert any claim on behalf of their mother.
(Doc. 34 at 6-7).
It is Plaintiffs’ responsibility to demonstrate standing. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (holding that the plaintiff must
demonstrate an “injury in fact”); see also Nunnlee v. United States, 972 F. Supp.
2d 1279, 1287 (N.D. Ala. 2013). They contend they have met this burden
premised on their allegations that Andersons’ knowingly made false statements
concerning the intent of Plaintiffs’ father with regard to the insurance proceeds, the
tax consequences of the transfers, the advantages of having him manage the
money, and their mother’s ability to continue her lifestyle. (Doc. 34 at 7).
Accordingly, any claims by Plaintiffs in this action are limited to those premised
on the loss caused by the transfer of their shares of the policy proceeds to their
mother in 2002 and not the losses their mother sustained when Anderson took all
of the money thereafter.
Statute of Limitations
Defendant next contends that it is entitled to dismissal of Plaintiffs’ claims
because they are barred by the applicable statute of limitations. (Doc. 30 at 16).
Under Ala. Code § 6-2-38(l), the failure to supervise and investigate, breach of
fiduciary duty, intentional and negligent misrepresentation, unjust enrichment and
breach of the duty of good faith and fair dealing, and fraud claims, which all arise
from the alleged fraud, are subject to a two-year statute of limitations. See
RaCON, Inc., v. Tuscaloosa County, 953 So. 2d 321, 326 (Ala. 2006) (noting that
“[a] two-year statute of limitations applies to fraud actions); Tender Care
Veterinary Hosp. v. First Tuskegee Bank, 168 So. 3d 33 (Ala. 2014) (breach of
fiduciary duty claims are subject to a two-year statute of limitations). Plaintiffs’
contract claim is governed by the six year statute of limitations. Ala. Code § 6-234(9).
The statute of limitations for fraud begins to run as a matter of law when a
party actually discovers the fraud or when he or she “becomes privy to facts that
would provoke inquiry in a reasonable person that, if followed up, would lead to
the discovery of the fraud.” Dickinson v. Land Developers Constr. Co., 882 So. 2d
291, 298 (Ala. 2003); See Ala. Code § 6-2-3. Generally, the question of when a
party discovered or reasonably should have discovered a fraud is reserved for the
jury. Bryant Bank v. Talmage Kirkland & Co., Inc., 155 So. 3d 231, 236 (Ala.
2014); Potter v. First Real Estate Co., 844 So. 2d 540, 546 (Ala. 2002). However,
“[t]he question of when a plaintiff should have discovered fraud should be taken
away from the jury and decided as a matter of law only in cases where the plaintiff
actually knew of facts that would have put a reasonable person on notice of fraud.”
Bryant Bank, 155 So. 3d at 237 (quoting Liberty Nat’l Life Ins. Co. v. McAllister,
675 So. 2d 1292, 1297 (Ala. 1995)); McGowan v. Chrysler Corp., 631 So. 2d 842,
845 (Ala. 1993). Plaintiffs have the burden of establishing that they are entitled to
tolling. First Alabama Bank of Montgomery, N.A. v. First State Ins. Co., Inc., 899
F.2d 1045, 1054 (11th Cir. 1990).
Defendant asserts that Plaintiffs were placed on notice for purposes of the
statute of limitations in 2002 when Anderson stated what he believed their father
intended or when Anderson represented to Fran in 2004 that the money was
invested in a “foolproof” real estate investment that would result in a “one hundred
percent (100%) return.” (Doc. 30 at 17-18). Plaintiffs content that they could not
have and did not discover Anderson’s wrongdoing until Plaintiff Calloway read an
article in March 2016 about Anderson’s imprisonment. (Doc. 34 at 14). They also
argue that they have adequately pled facts supporting their tolling argument. (Id.)
The Second Amended Complaint alleges that Plaintiff “could not with
reasonable diligence discover Anderson’s Ponzi scheme, reasonably relied on
Anderson’s representations, and could not have and did not discover Anderson’s
wrong doing until March 2016.” (Doc. 29 at ¶¶ 59-61). These allegations are
insufficient as a matter of law to toll the running of the statute of limitations as to
these claims. The allegations are conclusory and ignore the fact that in 2002
Plaintiffs were aware that Anderson’s statements concerning their father’s intent
were in direct conflict with the insurance policy that named Plaintiffs and their
mother Fran as equal beneficiaries. This information should have provoked
inquiry by Plaintiffs concerning the issue. See Levett v. Independent Life and Acc.
Ins. Co., 814 F. Supp. 1053, 1057 (M.D. Ala. 1993) (holding that statute of
limitations were not tolled where Plaintiff should have read the policy that
conflicted with agent’s alleged omission and therefore plaintiff was on notice of
her claims); Lewis v. East Alabama Funeral Ins. Co., 472 So. 2d 1090, 1091-92
(Ala. Civ. App. 1985) (finding claims time barred where the plaintiffs could have
simply read the policy and “discovered that the benefits in dispute were not
incorporated in the contract” 2). Yet there is no allegation in the complaint or other
pleadings that Plaintiffs conducted any inquiry regarding their father’s intent.
There is no allegation that they further discussed the facts and circumstances with
Fran or Anderson. For instance, there is no allegation that they inquired as to the
basis for Anderson’s representations or whether he had any documentation or notes
supporting his belief. Additionally, there is no indication they asked Fran whether
she and their father ever discussed the matter. Further, there is no indication that
their father ever initiated any efforts to change the beneficiaries under the policy. 3
Thus, the court finds that the fraud related claims are barred by the applicable
statute of limitations. 4 For the same reasons, the court also finds that Plaintiffs’
contract claims are barred by the statute of limitations. 5
The Lewis court also noted that the plaintiffs did not state “why they could not have discovered
the alleged fraud through the exercise of due diligence[,] [n]or [did] they aver[ ] any facts [ ]
show[ing] that East Alabama fraudulently prevented discovery of facts constituting the alleged
fraud.” Id. at 1092.
It also appears from the complaint that Plaintiffs were placed on notice of the need for
additional inquiry in March 2004 when Fran told them that Anderson represented to her that the
“hush-hush” investment was “foolproof” and that she would receive a “one hundred present
(100%) return on her investment.” (See Doc. 29 at ¶ 17).
This includes the claims for failure to supervise and investigate, breach of a fiduciary duty,
misrepresentation, unjust enrichment, breach of the duty of good faith and fair dealing, and
In view of the court’s holding regarding the statute of limitations, it pretermits any discussion
of Defendant’s assertion that Plaintiffs were on notice of their claims by 2010 when all the
money was lost. (See Doc. 30 at 20).
Breach of Fiduciary Duty
While the court concludes all of Plaintiffs’ claims are untimely, the court
also agrees that they fail for additional reasons. Plaintiffs allege that MSI violated
its fiduciary duty owed to them premised on Anderson’s mishandling of the money
given to Fran by Plaintiffs. (Doc. 29 at 10-13). MSI asserts that this claim is due
to be dismissed because MSI did not have a fiduciary relationship with Plaintiffs
after the money was transferred. (Doc. 30 at 9). Defendant also asserts this claim
has been abandoned by Plaintiffs. (Doc. 35 at 9). The court agrees on both counts.
First, Plaintiffs have not responded to Defendant’s challenges to the breach
of fiduciary claim. Therefore, this claim is deemed to be abandoned. Defendant’s
motion is due to be granted as to this claim. Coal. for the Abolition of Marijuana
Prohibition v. City of Atlanta, 219 F.3d 1301, 1326 (11th Cir. 2000) (““[F]ailure to
brief and argue [an] issue during the proceedings before the district court is
grounds for finding that the issue has been abandoned.”); see also Howell v.
Morrison Mgmt. Specialists, Inc., No. 4:08-cv-02232-JEO, 2010 WL 11561470, at
*7 (N.D. Ala. July 23, 2010) (finding Plaintiff abandoned her claim when she did
not respond to Defendant’s arguments on summary judgment).
Second, under Alabama law, a defendant is not liable for breach of fiduciary
duty when it has no fiduciary relationship with the plaintiff. See Maloof v. John
Hancock Life Ins. Co., 60 So. 3d 263, 273 (Ala. 2010). It might be assumed
Plaintiffs have alleged the existence of a fiduciary relationship between MSI and
their mother. However, they have not alleged facts supporting that such a
relationship existed between MSI and Plaintiffs themselves. Plaintiffs do not claim
that they entrusted their money to Anderson. Nor do they claim that they hired
MSI or Anderson to manage their funds or act as a financial advisor. Rather, the
facts alleged in the complaint are that Anderson mishandled Fran’s money through
his Ponzi scheme, not Plaintiffs’ money. (Doc. 29 at 12-13). Plaintiffs’ transfer of
the money to Fran at Anderson’s suggestion did not create a fiduciary relationship
between them and MSI because the granted money ceased being their money at the
time of the transfer. Thus, the Second Amended Complaint does not state a
plausible cause of action for a breach of fiduciary duty.
Fraud and Misrepresentation
Defendant next contends that it is entitled to a dismissal of Plaintiffs’ tort
claims for fraud and misrepresentation because Anderson’s statements of opinion
are not actionable fraud. (Doc. 30 at 10). Plaintiffs respond that Anderson’s
statements were more than mere opinions and even if they were opinions, they are
still actionable. (Doc. 34 at 8-12).
To support a claim for fraud, Plaintiffs must allege facts establishing (1) that
Defendant made a false representation, (2) the misrepresentation involved a
material fact, (3) Plaintiffs relied on the misrepresentations, and (4) the
misrepresentation damaged Plaintiffs. See AmerUs Life Ins. Co. v. Smith, 5 So. 3d
1200, 1207 (Ala. 2008).
Plaintiffs are unable to show that there was a false representation of an
existing material fact. The statements made by Anderson that allegedly led to
Plaintiffs’ injury were statements of opinion or belief. Statements of opinion or
belief are generally not considered statements of material fact. See e.g., McCutcen
Co., Inc. v. Media General, Inc., 988 So. 2d 998, 1002 (Ala. 2008). According to
the complaint, Plaintiffs allege that Anderson asserted his belief that their father
wanted Fran to have the entirety of the insurance policy proceeds. (Doc. 29 at 57). Plaintiffs argue that an opinion will support a fraud claim if it is knowingly
false and induced plaintiffs to reasonably rely on it to their detriment. (Doc. 34 at
9). However, to allege that an opinion supports a fraud claim, a plaintiff must also
allege that the individual making the statement possessed facts unavailable to the
plaintiffs. See e.g., Cooper & Co., Inc. v. Lester, 832 So. 2d 628, 634-35 (Ala.
2000) (seller’s opinion that there was no problem with water was actionable when
he had knowledge of previous flooding); Reynolds v. Mitchell, 529 So. 2d 227,
231 (Ala. 1988) (“a person may reasonably rely on the representation of an opinion
…. where the facts are not equally known to both sides, a statement of opinion by
the one who knows the facts better, often involves a statement of a material fact
that justifies his opinion). As discussed above, no allegation was made in the
complaint that Anderson possessed facts about Plaintiffs’ father’s intentions
regarding the allocation of his insurance policy funds that was unavailable to
Plaintiffs. In addition, the other statements regarding the investment opportunity
for Fran, his suggestions regarding Fran’s money, and his assertions that he would
take care of Fran financially cannot be considered to have caused Plaintiffs’ injury
as they occurred after Plaintiffs gave their share of the insurance money to Fran.
(Doc. 29 at 7).
Breach of Contract
Plaintiffs allege that Defendant breached a valid life insurance policy
contract with Plaintiffs’ father; thereby, injuring Plaintiffs in their status as thirdparty beneficiaries. (Doc. 29 at 13-14). As noted above, this claim is barred by the
applicable statute of limitations. Even if the claim was not barred by the statute of
limitations, it would still be subject to dismissal. According to facts alleged in the
complaint, Defendant upheld its obligations under the insurance policy held by
Plaintiffs’ father. (Doc. 29 at 6). MSI deposited the policy proceeds in Plaintiffs’
accounts in accordance with the insurance contract. (Id.) That is all that was
required under the contract. The subsequent transfer of the money to Fran at
Anderson’s encouragement does not constitute a breach of the contract. Thus, on
the face of the complaint, there is no plausible claim of breach of contract.
Plaintiffs allege that Defendant negligently failed to supervise Anderson’s
actions as their agent. (Doc. 29 at 9-10). Defendant asserts that this claim fails
because the underlying claims are without merit. (Doc. 30 at 15). The court
Under Alabama law, there is no independent action for negligent
supervision, hiring, training, and retention (collectively “negligent supervision”).
See Flying J. Fish Farm v. Peoples Bank of Greensboro, 12 So. 3d 1185, 1196
(Ala. 2008). Rather, assertions of negligent supervision are a means by which
plaintiffs may seek to impose liability against an employer for an underlying injury
caused by an employee. See Stevenson v. Precision Standard, Inc., 762 So. 2d
820, 825 (Ala. 1999). Thus, negligent supervision claims are derivative of and
reliant upon the underlying claims. See Ekokotu v. Boyle, 294 F. App’x 523, 527
(11th Cir. 2008) (holding that negligent retention is derivative of the underlying
claim). In other words, if the underlying claims fail, a plaintiff cannot sustain a
claim for negligent supervision. See id. Because Plaintiffs’ underlying claims in
this case fail, they cannot maintain their claim regarding any alleged negligent
supervision by Defendant.6
The title to this claim in the complaint also includes a reference to a failure to investigate.
(Doc. 29 at 9). There are, however, no allegations in the body of the count supporting such a
claim. Accordingly, it is deemed to be abandoned.
Based on the foregoing, the court finds that Defendant’s motion to dismiss
the Second Amended Complaint (doc. 30) is due to be granted in its entirety. All
claims against Defendant MSI are due to be dismissed with prejudice. An
appropriate order will be entered.
DONE, this the 10th day of October, 2018.
JOHN E. OTT
Chief United States Magistrate Judge
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