United States District Court, N.D. Alabama, Northeastern Division
MEMORANDUM OPINION
ABDUL
K. KALLON UNITED STATES DISTRICT JUDGE
Ronald
Hardy filed this lawsuit against Transamerica Life Insurance
Company, alleging breach of contract claims individually and
on behalf of all others similarly situated in two proposed
classes, the Certificate Value Class and Enhancement
Endorsement Class. Doc. 11. Hardy subsequently dismissed,
without prejudice, his enhancement endorsement class claim
(Count II). Doc. 18 at 15, n. 5. As such, the only remaining
claim is the certificate value class claim (Count I). As to
this claim, Hardy maintains that Transamerica mismanaged the
account values of his life insurance policy and charged an
undisclosed administrative fee affecting his potential
interest earnings. Doc. 11 at 5-15. Before the court is
Transamerica's Motion to Dismiss, in which it contends
that Hardy's claim is barred by Alabama's Rule of
Repose, or alternatively, Alabama's six year statute of
limitations for contract claims. Doc. 15. The motion, which
is fully briefed and ripe for review, docs. 15, 18, 19, is
due to be granted on the alternative statute of limitations
grounds.
I.
STANDARD OF REVIEW
Under
Federal Rule of Civil Procedure 8(a)(2), a pleading must
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
“[T]he pleading standard Rule 8 announces does not
require ‘detailed factual allegations,' but it
demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). Mere “labels and conclusions” or
“a formulaic recitation of the elements of a cause of
action” are insufficient. Iqbal, 556 U.S. at
678 (citations and internal quotation marks omitted).
“Nor does a complaint suffice if it tenders
‘naked assertion[s]' devoid of ‘further
factual enhancement.'” Id. (citing
Twombly, 550 U.S. at 557).
Federal
Rule of Civil Procedure 12(b)(6) permits dismissal when a
complaint fails to state a claim upon which relief can be
granted. “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face.”
Iqbal, 556 U.S. at 678 (citations omitted) (internal
quotation marks omitted). A complaint states a facially
plausible claim for relief “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. (citation omitted). The
complaint must establish “more than a sheer possibility
that a defendant has acted unlawfully.” Id.;
see also Twombly., 550 U.S. at 555 (“Factual
allegations must be enough to raise a right to relief above
the speculative level.”). Ultimately, this inquiry is a
“context-specific task that requires the reviewing
court to draw on its judicial experience and common
sense.” Iqbal, 556 U.S. at 679.
II.
FACTUAL BACKGROUND[1]
In
September 1988, Pacific Fidelity and/or General Services,
predecessor companies to Transamerica, issued Hardy a
certificate of life insurance under a “split dollar
arrangement” with a value amount of $550, 000. Doc. 11
at 3. In 1995, the insurers notified Hardy that his
arrangement no longer qualified and purportedly
“orchestrated a plan to terminate” this
“split dollar” plan, resulting in a value amount
loss of $182, 000. Id. at 11-12. In addition,
Transamerica also purportedly reduced the policy's
interest earnings to pay administrative charges. Id.
at 9-10; doc. 18 at 16. Allegedly, Transamerica charged an
unauthorized “asset management fee” and attempted
to disguise it as an additional “administrative
charge.” Doc. 1 at 8-9. Thus, the administrative
charges were “withdrawn on a monthly basis from the
Account Values, ” and Transamerica deducted the charges
before the interest earnings rate was applied to the
account value. Doc. 11 at 9. Hardy maintains that he
discovered this conduct 21 years later when, in response to a
notice in 2016 that his death benefits would terminate in
four years and that his premium would increase substantially
if he wanted to maintain the benefit, Hardy “engaged
counsel who undertook investigation of [Hardy's] claims
and through the course of that investigation the claims
asserted [in this lawsuit] were discovered.”
Id. at 14.
III.
DISCUSSION
Transamerica
argues that the lawsuit is barred by Alabama's statute of
repose or, alternatively, the statute of limitations. The
court reviews each contention below.
A.
Applicable Law and the Rule of Repose
Although
the Master Policy is “governed by the laws of the
jurisdiction where it is delivered, ” and
“Missouri” is listed as the “State of
Delivery, ” doc. 11-1 at 3, Transamerica contends that
Alabama law, which has a 20-year rule of repose, should
govern this dispute. Because Hardy's alleged claims
accrued more than 20 years ago, Transamerica maintains that
this lawsuit is barred by Alabama's Rule of Repose, and
that applying Missouri law would be contrary to Alabama's
public policy favoring a rule of repose. Hardy counters that
Missouri law, which does not have a repose rule, applies. The
court agrees with Hardy.
Generally,
“[w]hen the parties to a contract have chosen the law
of a particular state to apply, that selected state's law
ordinarily will govern the contract dispute in a court in
Alabama, notwithstanding the fact that the contract may have
been formed in a different state.” DJR Assocs., LLC
v. Hammonds, 241 F.Supp.3d 1208, 1220 (N.D. Ala. 2017)
(citing Lifestar Response of Ala., Inc. v. Admiral Ins.
Co., 17 So.3d 200 (Ala. 2009)). The only exception is if
the selected state law is contrary to the fundamental public
policy of Alabama. Cherry, Bekaert & Holland v.
Brown, 582 So.2d 502, 507 (Ala. 1991) (citing
Restatement Second of Conflict of Laws, §§
187 and 188). At issue here is Transamerica's contention
that applying Missouri law would violate the
“long-settled public policy in Alabama” reflected
in the rule of repose.[2] Doc. 15 at 5-6. Transamerica's
contention is unavailing, in part, as it is based on cases
that are inapposite to Hardy's breach of contract claims
and that do not analyze contracts in which a choice of law
clause is at issue.[3] More fundamentally, Transamerica
“cite[s] no case in which the Alabama Supreme Court has
held that another state's statute of repose, or any other
foreign statute, violates public policy to the extent that it
is unenforceable.” Terrell v. Damon Motor Coach
Corp, No. 6:12-CV-02390-LSC, 2013 WL 6145534, at *6
(N.D. Ala. Nov. 20, 2013) (noting that “neither
[Tennessee's statute of repose] nor any other Alabama
precedent suggests that Alabama courts would not apply a
sister state's statute of repose”). Therefore, in
the absence of a case holding that Alabama's rule of
repose trumps the laws of other states, the court joins its
sister courts in finding that applying the parties'
choice of law provision would not result in a fundamental
violation of Alabama public policy, [4]and finds that Hardy's
claims are not barred by Alabama's rule of repose.
B.
Statute of Limitations [5]
Transamerica
next contends that Hardy's claim accrued as far back as
1996, based on the account statement Hardy received after the
“split dollar” plan was terminated, and that
Hardy's claims are barred by Alabama's six-year
statute of limitations for contract disputes. See
docs. 15 at 11-14; 15-1 at 2. Hardy maintains that the laws
of Missouri, [6] as the chosen state of delivery of the
Master Policy, should govern the applicable statute of
limitations. Doc. 18 at 7. Under Missouri law, “the
cause of action shall not be deemed to accrue when the wrong
is done or the technical breach of contract or duty occurs,
but when the damage resulting therefrom is sustained and is
capable of ascertainment.” Id. “Capable
of ascertainment” is defined as when “the
evidence [is] such to place a reasonably prudent person on
notice of a potentially actionable injury, ” and the
“objective” test is viewed from the standpoint of
a “reasonable person in [plaintiff's]
situation.” Powel v. Chaminade Coll. Preparatory,
Inc., 197 S.W.3d 576, 582-586 (Mo. ...