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Whatley v. The Ohio National Life Insurance Co.

United States District Court, M.D. Alabama, Southern Division

November 19, 2019

TRIP WHATLEY, et al., Plaintiffs,
v.
THE OHIO NATIONAL LIFE INSURANCE COMPANY, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          EMILY C. MARKS CHIEF UNITED STATES DISTRICT JUDGE.

         On January 11, 2019, Trip Whatley, Susan Moore, Tracy Lentz, Keith Bowers, and Chris Noone (collectively “Plaintiffs”) initiated this lawsuit against Ohio National Life Insurance Company, Ohio National Life Assurance Company, and Ohio National Equities, Inc. (collectively “Defendants”). (Doc. 1). On April 2, 2019, the Plaintiffs filed an amended complaint. (Doc. 19). In their amended complaint, the Plaintiffs bring four causes of action against the Defendants: (1) breach of contract; (2) unjust enrichment; (3) promissory estoppel; and (4) tortious interference with business relations. (Id. at 21-25).

         This matter is now before the Court on the Defendants' Motion to Dismiss the Plaintiffs' amended complaint. (Doc. 20). The Court must resolve four primary issues in ruling on the Defendants' Motion to Dismiss: (1) whether the Court may exercise personal jurisdiction over the Defendants in connection with the claims of non-resident Plaintiffs Bowers and Noone; (2) whether the Plaintiffs have standing to assert claims based on an alleged breach of contract to which they are not a party; (3) whether the Plaintiffs' may maintain their equitable claims; and (4) whether the Defendants intentionally interfered with the Plaintiffs' business relations.

         For the following reasons, the Court resolves each of these issues in favor of the Defendants.[1] Accordingly, the Defendants' Motion to Dismiss is due to be granted.

         I. BACKGROUND

         The Plaintiffs are licensed sales representatives for the following broker dealers: LPL Financial, ProEquities, Inc., Securities America, and Next Financial Group. These broker dealers, through their representatives such as the Plaintiffs, sold certain variable annuities issued by the Defendants pursuant to Selling Agreements between the Defendants and individual broker dealers. The Plaintiffs are not parties to these Selling Agreements, but they assert that they are intended third-party beneficiaries of the Selling Agreements.

         The Plaintiffs allege that the Defendants breached the Selling Agreements by ceasing payment of trail commissions on previously sold variable annuity contracts after the Defendants terminated the Selling Agreements without cause effective December 12, 2018. With respect to their third-party beneficiary status, the Plaintiffs contend that “the Selling Agreements clearly and expressly manifest an intention that sales representatives, such as Plaintiffs, will benefit from Selling Agreements in the form of pass-through commissions, including trail commissions.” (Doc. 19 at 16).

         On April 16, 2019, the Defendants filed a Motion to Dismiss the Plaintiffs' claims pursuant to rules 12(b)(1), 12(b)(2), and 12(b)(6) of the Federal Rules of Civil Procedure. The Defendants assert that the Court “lacks personal jurisdiction over [the] Defendants as to the claims of two of the Plaintiffs, Keith Bowers and Chris Noone.” (Doc. 20 at 2). Moreover, the Defendants contend that the Plaintiffs do not have standing to assert a breach of contract claim because they are neither parties to the Selling Agreement nor intended third-party beneficiaries. (Id. at 3). Lastly, the Defendants argue that the remainder of the Plaintiffs' claims - unjust enrichment, promissory estoppel, and tortious interference with business relations - fail as a matter of law.

         II. JURISDICTION and VENUE

         The Court possesses subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332(a) because the amount in controversy exceeds $75, 000, exclusive of interests and costs, and complete diversity exists between the parties. Venue is proper pursuant to 28 U.S.C. § 1391(b)(2).

         The Defendants, however, contend that the Court may not exercise personal jurisdiction over them as it relates to the claims of non-resident Plaintiffs Bowers and Noone. The Plaintiffs disagree, asserting that the Court may exercise personal jurisdiction over the Defendants because the Defendants' contacts with Alabama give rise to both general and specific jurisdiction.

         The Defendants are Ohio corporations, each with its principal place of business located in Cincinnati, Ohio. Plaintiff Bowers is a resident of the state of Georgia and Plaintiff Noone is a resident of the state of Mississippi.

         III. PERSONAL JURISDICTION

         A. Standard of Review

         “A plaintiff seeking the exercise of personal jurisdiction over a nonresident defendant bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction.” Diamond Crystal Brands, Inc. v. Food Movers Intern., Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (quoting United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009)). “A prima facie case is established if the plaintiff presents enough evidence to withstand a motion for a directed verdict.” Meier ex rel. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002). Moreover, whether a district court may exercise personal jurisdiction over a defendant is a question of law. Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1217 (11th Cir. 2009).

         B. Discussion

         i. The non-resident Plaintiffs fail to establish personal jurisdiction over the Defendants

         The Defendants move to dismiss the claims of non-resident Plaintiffs Bowers and Noone pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Specifically, the Defendants assert that “Bowers and Noone, as non-Alabama residents who have not alleged any conduct by Defendants in Alabama that caused them alleged harm, are not entitled to piggy back on the claims of other plaintiffs as to which personal jurisdiction over Defendants may exist.” (Id. at 9-10). Further, the Defendants contend that the Plaintiffs' factual allegations fail to establish either general or specific jurisdiction in connection with the claims of Bowers and Noone. (Id. at 10). With respect to general jurisdiction, the Defendants assert that the Plaintiffs' factual allegations fail to demonstrate that the Defendants' contacts with the forum place them “at home” in the state of Alabama. (Id. at 11). Regarding specific jurisdiction, the Defendants contend that none of their contacts with the state of Alabama give rise to Bowers' and Noone's alleged injuries, thus defeating personal jurisdiction. (Id. at 13).

         The Plaintiffs argue that the Defendants are “subject to general jurisdiction in the state of Alabama with regard to the claims of all Plaintiffs, including non-resident Plaintiffs Bowers and Noone, by virtue of [the Defendants'] continuous and systematic activities and affiliations within the state of Alabama, which render it essentially ‘at home' in Alabama . . ..” (Doc. 19 at 7). In support of their general jurisdiction claim, the Plaintiffs allege that the Defendants had the following contacts with the forum: the Defendants maintained a subsidiary, sold annuity products, registered to do business, appointed a registered agent, and marketed life insurance products in Alabama. (Id. at 8-9).

         Concerning specific jurisdiction, the Plaintiffs appear to argue that because nonresident Plaintiffs Bowers and Noone entered into Selling Agreements with the Defendants in Georgia and Mississippi that were substantially similar to the Selling Agreements the resident Plaintiffs entered into in Alabama, the Court may exercise personal jurisdiction over the Defendants. The Court disagrees with both of the Plaintiffs' jurisdictional arguments.

         “A federal court sitting in diversity undertakes a two-step inquiry in determining whether personal jurisdiction exists: the exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment of the United States Constitution.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009). Here, “the two inquiries merge, because Alabama's long-arm statute permits the exercise of personal jurisdiction to the fullest extent constitutionally permissible.” Sloss Indus. Corp. v. Euisol, 488 F.3d 922, 925 (11th Cir. 2007) (citing Ala. R. Civ. P. 4.2(b)). “Thus, the sole issue in this [C]ourt's jurisdictional analysis is whether Alabama's exercise of jurisdiction over [the Defendants] violates due process.” Aeropower, Ltd. v. Matherly, 511 F.Supp.2d 1139, 1154 (M.D. Ala. 2007).

         Addressing general jurisdiction first, “[a] court may assert general jurisdiction over foreign (sister-state or foreign country) corporations to hear any and all claims against them when their affiliations with the state are so ‘continuous and systematic' as to render them essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). The United States Supreme Court has “made clear that only a limited set of affiliations with a forum will render a defendant amenable to [general jurisdiction] there.” Daimler AG v. Bauman, 517 U.S. 117, 137 (2014); see also BNSF Ry. Co. v. Tyrrell, 137 S.Ct. 1549, 1558 (2017) (noting the limited circumstances that give rise to general jurisdiction over non-resident defendant).

         Absent exceptional circumstances, general jurisdiction only exists over a corporate defendant in its place of incorporation or principal place of business. E.g., Goodyear, 564 U.S. at 924; Daimler, 571 U.S. at 137; BNSF, 137 S.Ct. at 1558. Exceptional circumstances exist when “a corporate defendant's operations in another forum ‘[are] so substantial and of such a nature as to render the corporation at home in that State.'” BNSF, 137 S.Ct. at 1558 (quoting Daimler, 571 U.S. at 139 n.19).

         “The textbook case of general jurisdiction appropriately exercised over a foreign corporation that has not consented to suit in the forum” is Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952). Goodyear, 564 U.S. at 928 (citations omitted). In Perkins, the plaintiff sued a Philippine mining corporation in Ohio on a claim that did not arise in Ohio nor did it relate to the defendant's activities in that state. Perkins, 342 U.S. at 415. The defendant mining corporation had stopped its business activities in the Philippines because of World War II and began conducting such activities in the state of Ohio. Id. at 447. Specifically, the defendant “corporation's president maintained his office there, kept company files in that office, and supervised from the Ohio office ‘the necessarily limited wartime activities of the company.'” Id. at 447-48. Because these facts established that Ohio was the defendant corporation's principal, albeit temporary, place of business, Ohio courts could exercise general jurisdiction over the defendant without violating due process. Id. at 448.

         In the instant case, the Plaintiffs' factual allegations concerning general jurisdiction fail to establish that the Defendants are at home in Alabama. First, the Plaintiffs concede that the Defendants are incorporated in Ohio and maintain their principal places of business there. (Doc. 19 at 5). Next, unlike Perkins, the fact that the Defendants “marketed and sold annuities and other insurance products in the state of Alabama on a systematic and regular basis” did not constitute relocation of their principal places of business from Ohio to Alabama. (Id. at 6). In fact, the Daimler court held that general jurisdiction did not exist over a defendant whose contacts with the forum state were far more substantial than those of the Defendants in the present case. See Daimler, 571 U.S. at 123 (holding that general jurisdiction did not exist when the defendant's wholly owned subsidiary maintained a production facility in the forum state and was the largest supplier of luxury vehicles there, accounting for 2.4% of the defendant's worldwide sales). Indeed, “a corporation's ‘continuous activity of some sorts within a state is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.'” Id. at 132 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 318 (1945)).

         The Plaintiffs' arguments that the fact that the Defendants appointed agents for service of process and registered to do business in Alabama supports a finding of general jurisdiction also fall short. See Beasley v. Providence Hosp., 2018 WL 2994380 (S.D. Ala. 2018) (finding no general jurisdiction even though the defendant was licensed to do business in Alabama and had a registered agent for service of process in the state); see also Consolidated Development Corp. v. Sherritt, Inc., 216 F.3d 1286, 1293 (11th Cir. 2000) (holding “[t]he casual presence of a ...


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