Boys v. Mass Mutual Life Insurance et al -( TV2)

Filing 56

OPINION. Signed by Judge Jose L. Linares on 7/22/14. (DD, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

JOHN C. BOYS,
Civil Action No. 13-4506 (JLL) (JAD)
Plaintiff,
OPINION
MASS MUTUAL LIFE INSURANCE
COMPANY, et al.,
Defendants

LINARES, District Judge.
This matter comes before the court by way of Defendants Massachusetts Mutual Life
Insurance Company and MML Bay State Life Insurance Company (“MassMutual”)’s motion for
summary judgment pursuant to Federal Rule of Civil Procedure 56. (ECF No. 16). The Court
has considered the parties’ submissions in support of and in opposition to MassMutual’s motion
and decides this matter without oral argument pursuant to Federal Rule of Civil Procedure 78.
For the reasons set forth below, the Court GRANTS summary judgment in favor of MassMutual.
I.

BACKGROUND
Plaintiff John C. Boys is a longtime client of MassMutual. (Defs.’ App’x 221, ECF No.

18). He began planning his estate with a MassMutual agent, Carol Green, during the 1980s
while in medical school in Charleston, South Carolina. (Id. at 212, 221). He purchased a life
insurance policy on his life from MassMutual in November 1988. (Id. at 209, 212). Thereafier,
in 1993, Plaintiff relocated to Greeneville, Tennessee, where he continued to do business with
MassMutual through a different agent, David Harris. (Id. at 212, 217, 221). During the late
1

1990s, Plaintiff purchased six variable life select (“VLS”) policies from MassMutual on the lives
of his twin sons, John F. Boys and James A. Boys, who were less than seven years old at the
times of purchase. (Id. at 209, 217, 221). A chart summarizing the VLS policies, which are at
the center of this litigation, follows:
Policy Number
7882890
7882892
7893019
7893021
7925080
L7925081

Issue Date
August28, 1996
August 28, 1996
February 14, 1997
February 14, 1997
May 7, 1998
May7, 1998

Insured
JohnF.Boys
James A. Boys
JamesA.Boys
JohnF.Boys
John F. Boys
JamesA.Boys

(Id. at 209).’
These VLS policies, according to a March 2002 letter Plaintiff sent to MassMutual’s
chairman of customer relations, John Milbier, have a combined death benefit of more than six
million dollars. (Id. at 212). In that letter, Plaintiff questioned the death benefit’s
appropriateness, noting his discovery that no children his sons’ ages had such a benefit and his
belief that it was “totally outrageous in number.” (Id.). Plaintiff further noted that his attorney
concurred with him and asked MassMutual to scrutinize the VLS policies. (Id. at 213). Plaintiff
reiterated these concerns in an April 2002 letter to a MassMutual compliance specialist, Barbara

The parties dispute the status of two other insurance policies on the lives of James A. Boys and John F. Boys,
policy numbers 7879736 and 7879739. On the one hand, Plaintiff maintains that MassMutual issued those policies.
(Lucy Z. Boys Aff. ¶ 2, ECF No. 55-2). Plaintiff points to a letter, dated April 22, 2002, wherein a MassMutual
compliance specialist, Barbara A. Moran, noted that Plaintiff’s wife, Lucy Z. Boys, owned the policies and that they
were active and paid current. (Defs.’ App’x 231). On the other hand, MassMutual maintains that Moran was
mistaken-—although it assigned the policies when it received Plaintiff’s applications, it cancelled andlor did not
issue them because Plaintiff withdrew the applications. (Defs.’ Supplemental Br. 2-3, ECF No. 54). MassMutual
points to an August 1996 letter from Harris to an employee in MassMutual’s underwriting department, Jack Royko.
directing him to withdraw policy numbers 7879736 and 7879739. (Ex.1, ECF No. 54-1). Ultimately, the Court
need not resolve the parties’ dispute over the status of the policies to decide this motion. In a March 2002 letter to a
MassMutual employee, Plaintiff explained his concern that the insurance policies he had purchased from
MassMutual placed an “exorbitant” amount of insurance on his sons’ lives. (Defs.’ App ‘x 212-13). In that letter
and in an April 2002 letter to MassMutual reiterating the same concern, Plaintiff did not list each policy by its
number, but instead referred collectively to the policies he had purchased from MassMutual. (Id. at 212-13, 215).
Thus, Plaintiff’s concern extended to policy numbers 7879736 and 7879739 to the extent that they existed at that
time.

2

Moran, noting: “The amounts of insurance sold as investment are very excessive by all
professionals in the business that I have talked with about this situation.” (Id. at 215). Later that
month, Moran responded in a letter that “each [VLSI policy was suitable for [Plaintiff’s] known
financial needs at the time of each sale.” (Id. at 233).
Plaintiff continued to correspond in writing with various MassMutual employees about
the VLS policies. In a February 2010 letter to a MassMutual general agent, Kevin Collins,
Plaintiff noted: “It is and has always been my belief that the amount and type of insurance sold
to me is and was inappropriate for my estate planning.” (Id. at 217). He explained: “Over the
past years, I’ve described my life insurance situation to other insurance professionals and they
were dubious to the amounts, especially on minor children in particular. They questioned how
the face amounts got through Underwriting, given no income and net worth on my preteen
boys.” (Id.). Plaintiff brought up the same concerns in a November 2010 letter to MassMutual’s
CEO, Roger W. Crandall, noting, among other things, that the combined multi-million dollar
death benefit on his sons’ lives bothered him from day one. (Id. at 22 1-24). In a December 2010
letter, MassMutual’s director of compliance, Jeffrey R. James, responded to Plaintiff on
Crandall’s behalf. (Id. at 235-37). James reaffirmed the company’s belief that the VLS policies
were suitable at the time of sale and refused to provide Plaintiff with extra-contractual relief. (Id.
at 236).
Plaintiff subsequently filed the operative Complaint in this matter before Chief Judge
Thomas A. Varlan of the United States District Court for the Eastern District of Tennessee on
November 9, 2012. (Compl., ECF No. 1). The Complaint alleges that MassMutual and its
agents engaged in three types of misconduct when they sold Plaintiff the VLS policies. First,
MassMutual s agents allegedly misrepresented the policies’ utility as an investment and estate
‘

3

planning tool. (Id. at ¶ 7). Second, MassMutual’s agents allegedly fraudulently altered
Plaintiffs applications for the policies without his knowledge and/or consent. (Id.). Third,
MassMutual allegedly negligently underwrote the policies even though it knew that its agents
had misrepresented the policies’ utility and fraudulently altered the applications. (Id. at 8).
¶
On January 28, 2013, MassMutual filed a motion to transfer venue to this Court pursuant
to 28 U.S.C.

§ 1404(a) and a motion to dismiss, or, in the alternative, for summary judgment.

(ECF Nos. 14, 16). MassMutual argues that Plaintiffs claims are barred by the Settlement
Agreement approved by this Court in Varacallo v. Massachusetts Mutual Life Insurance Co.,
226 F.R.D. 207 (D.N.J. 2009). In July 2013, Chief Judge Varlan granted MassMutual’s motion
to transfer venue, reasoning that this Court is “uniquely equipped” to determine whether the
Varacallo Settlement Agreement bars Plaintiffs claims. Boys v. Mass Mut. Lfe Ins. Co., No.
12-445,2013 WL3834010,at*1 (E.D.Tenn.Ju1y24,20l3).
On June 17, 2014, the Court notified the parties of its intent to consider MassMutual’s
motion as one for summary judgment. (ECF No. 53). In doing so, the Court provided Plaintiff
with an opportunity to challenge the authenticity of the letters that he wrote to MassMutual and
the accuracy of the above chart summarizing the VLS policies on his sons’ lives. (Id.). Plaintiff
does not challenge the authenticity of the letters, but he maintains that the chart is incomplete
because it does not include information pertaining to policy numbers 7879736 and 7879739.2
(Pl.’s Supplemental Br. 1-2, ECF No. 55). The Court now addresses MassMutual’s motion.
II.

LEGAL STANDARD

Summary judgment is appropriate when, drawing all reasonable inferences in the non
movant’ s favor, there exists no “genuine dispute as to any material fact” and the movant is
2

As discussed above, the Court need not address the parties’ dispute over these policies to resolve MassMutual’s
motion for summary judgment.

4

entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986). The moving party is entitled to judgment as a matter of law
when the non-moving party fails to make “a sufficient showing on an essential element of her
case with respect to which she has the burden of proof.” C’elotex C’orp. v. Catrett, 477 U.S. 317,
323 (1986). The Court must, however, consider all facts and their reasonable inferences in the
light most favorable to the non-moving party. See Pennsylvania Coal Ass ‘n v. Babbitt, 63 F.3d
231, 236 (3d Cir. 1995). If a reasonable juror could return a verdict for the non-moving party

regarding material disputed factual issues, summary judgment is not appropriate. See Anderson,
477 U.S. at 242-43 (“At the summary judgment stage, the trial judge’s function is not himself to

weigh the evidence and determine the truth of the matter but to determine whether there is a
genuine issue for trial.”).
III.

DISCUSSION

MassMutual maintains that it is entitled to summary judgment on two alternative bases.
First, MassMutual contends that the applicable statute of limitations bars Plaintiff’s claims.
(Defs.’ Br. 16-19, ECF No. 17). Alternatively, MassMutual contends that the Varacallo
Settlement Agreement bars Plaintiffs claims. (Id. at 19-24).
A.

Whether the Applicable Statute of Limitations Bars Plaintiff’s Claims

MassMutual contends that the applicable statute of limitations, Tenn. Code Ann.

§ 28-3-

105, bars Plaintiff’s claims. (Id. at 16). That statute provides that a plaintiff must commence an
action for an injury to personal property within three years of the accrual of the cause of action.
Tenn. Code Ann.

§ 28-3-105. According to MassMutual, Plaintiffs claims accrued in March

2002, at the latest, because Plaintiff was aware of the allegations that are at the heart of his
Complaint, i.e., that MassMutual induced him into purchasing unsuitable life insurance, by that

5

date. (Id. at 16-17). In support, MassMutual points to Plaintiff’s March 2002 letter to the
company’s chairman of customer relations, in which he questioned the suitability of the VLS
policies on his sons’ lives, and noted that he had spoken with others, including his CPA and
attorney, about the policies. (Id. at 17).
Plaintiff counters that the statute of limitations on his claims did not accrue in 2002.
(P1.’ s Opp’n Br. 1, ECF No. 51). Instead, according to Plaintiff, “he has continuous causes of
action for fraud, misrepresentation, and negligence.

.

.

because the agents of MassMutual made

continuous misrepresentations to [him] to induce him to continue to make premium payments on
the insurance policies at issue in this litigation.” (Id.). In support, Plaintiff refers solely to the
Supreme Court of New Jersey’s approach to the continuing tort doctrine, as set forth in Wilson v.
Wal-Mart Stores, 158 N.J. 263 (1999). Pursuant to Wilson, “[w]hen an individual is subject to a
continual, cumulative pattern of tortious conduct, the statute of limitations does not begin to run
until the wrongful action ceases.” 158 N.J. at 272 (citation omitted). MassMutual rebuts that
Plaintiff’s reliance on Wilson is misplaced because New Jersey law does not apply here; instead
Tennessee law applies. (Def.’s Reply Br. 2-4, ECF No. 52). The Court agrees with
MassMutual.
When a civil action based on diversity of citizenship is transferred from one district court
to another pursuant to 28 U.S.C.

§ 1404(a), “the transferee forum must apply the law of the

initial forum.” Arnica Mitt. Ins. Co. v. Fogel, 656 F.3d 167, 171 (3d Cir. 2011) (citing Van
Dusen v. Barrack, 376 U.S. 612, 639 (1964)). Here, the United States District Court for the
Eastern District of Tennessee transferred Plaintiff’s action to this Court pursuant to 28 U.S.C.
1404(a). Consequently, this Court must apply Tennessee law. See Ferens v. John Deere Co.,

6

§

494 U.S. 516, 523 (1990) (“A transfer under

§ 1404(a).. does not change the law applicable to
.

a diversity case.”).
In Tennessee, “[t]he applicable statute of limitations in a particular cause [of action is]
determined according to the gravamen of the complaint.” Vance v. Schulder, 547 S.W.2d 927,
931 (Tenn. 1977) (citations omitted). In other words, “the appropriate statute of limitations is
determined by the type of injuries claimed and the damages sought.” Electric Power Bd. v.
Monsanto Co., 879 F.2d 1368, 1375 (6th Cir. 1989), cert. denied, 493 U.S. 1022 (1990). Here,

Plaintiffs claimed injury is economic: he invested over $360,000 in his sons’ VLS policies
because of the alleged misrepresentations that MassMutual’s agents made to him. (Compi. 13).
¶
Plaintiff seeks the return of this money and the award of punitive damages. (Id. at
¶J 13-14).
“[A]n economic loss sustained by a plaintiff from fraud or misrepresentation is an ‘injury to
personal property...

.“

Johnson v. Welch, No. M2002-00790-COA-R3-CV, 2004 WL 239756,

at *22 (Tenn. Ct. App. Feb. 9, 2004) (citing Vance, 547 S.W.2d at 932). Pursuant to Tenn. Code
Ann.

§ 28-3-105, actions for injuries to personal property—including those sounding in

misrepresentation, fraud, or negligence—have a three year statute of limitations. Electric Power
Rd., 879 F.2d at 1375. Having determined that Tenn. Code Ann.

§ 28-3-105 applies to Plaintiffs

3
claims, the Court must next determine when those claims accrued.
In Tennessee, pursuant to the discovery rule, a cause of action for property damages
“accrues at the time the injury occurs, or when it is discovered, or when in the exercise of
reasonable care and diligence the injury should have been discovered.” Prescott v. Adams, 627
S.W.2d 134, 138 (Tenn. Ct. App. 1981). This rule “is not intended to permit a plaintiff to delay
filing suit until the discovery of all the facts that effect the merits of his.

.

.

claim.” Redwing v.

To the extent that Plaintiff brings a claim for breach of fiduciary duty, the three year statute of limitations
set forth
in Term. Code Ann. § 28-3-105 applies to that claim, as well. See Smith v. Hilliard, No. 11-172,
2014 WL 223668,
at *4 (E. D. Term. Jan. 21, 2014) (collecting cases).

7

Catholic Bishop for Diocese ofMemphis, 363 S.W.3d 436, 459 (Tenn. 2012) (citing Mills v.
Booth, 344 S.W.3d 922, 929 (Tenn. Ct. App. 2010)). Indeed, a cause of action may accrue under
the discovery rule even when a plaintiff is unaware of the specific type of claim he has or the full
extent of the damages. See id. (collecting cases). In the final analysis,

“[ut is knowledge of

facts sufficient to put a plaintiff on notice that an injury has been sustained which is crucial.”
Shadrick v. Coker, 963 S.W.2d 726, 734 (Tenn. 1998) (quoting Stanbury v. Bacardi, 953 S.W2d
671, 678 (Tenn. 1997)).
Here, Plaintiff had discovered the allegation at the center of his Complaint, i.e., that
MassMutual fraudulently induced him into purchasing unsuitable life insurance, by March 2002.
At that time, in a letter to MassMutual’s chairman of customer relations, Plaintiff noted that he
had spoken with his CPA and estate planning team about the VLS policies on his sons’ lives.
(Defs.’ App’x 212). He noted his belief that the death benefit was “totally outrageous” and his
subsequent discovery “that no other children their age [had] such a death benefit for any reason
whatsoever.” (Id.). He even noted that his attorney concurred with him. (Id. at 213). Plaintiff
reiterated these concerns in an April 2002 letter to a MassMutual compliance specialist, noting:
“The amounts of insurance sold as investment are very excessive by all professionals in the
business that I have talked without about this situation.” (Id. at 215). What is more, in his
November 2010 letter to MassMutual’s CEO, Plaintiff explicitly stated that the combined multimillion dollar death benefit on his sons’ lives bothered him from day one. (Id. at 22 1-24). Based
on these letters, no reasonable trier of fact could conclude that Plaintiff did not know or have
notice that MassMutual’s wrongful conduct had injured him by March 2002. Because Plaintiff
did not bring this action until November 2012—more than a decade later—Plaintiffs’ claims are

8

time barred under Tenn. Code Ann.

§ 28-3-l05. See, e.g., Graham v. Lake Park Condo-Signal

View, No. E2011-02739, 2013 WL 5974921, at *5 (Tenn. Ct. App. Nov. 8,2013) (concluding

that Tenn. Code Ann.

§ 28-3-105 barred plaintiffs fraud and breach of fiduciary claims because

plaintiff had discovered defendant’s wrongful conduct more than three years before filing suit).
B.

Whether the Varacallo Settlement Agreement Bars Plaintiffs Claims

Because the applicable statute of limitations, Tenn. Code Ann.

§ 28-3-105, bars Plaintiffs

claims, the Court declines to address MassMutual’ s contention that the Varacallo Settlement
Agreement also bars those claims.
IV.

CONCLUSION

For the reasons discussed herein, the Court GRANTS MassMutual’s motion for
summary judgment.
An appropriate Order accompanies this Opinion.

DATED:,22of July, 2014.

DISTRICT JUDGE

Under Tennessee law, the doctrine of continuing tort does not save Plaintiff’s claims. Plaintiff
cites no precedent
extending this narrow doctrine to garden-variety tort claims for misrepresentation, fraud,
or negligence in
Tennessee, and this Court is not aware of any such precedent. See Seaton v. Seaton, 971 F.
Supp. 1188, 1195 (E. D.
Tenn. 1997) (noting that Tennessee courts apply the continuing tort doctrine in only a few types
of cases, and
recognizing the tension between the doctrine and the discovery rule).

9