Aldridge v. Metropolitan Life Insurance Co.

• Decision Date: 15 August 2019
• Docket Number: 18 CVS 12201,18 CVS 528,18 CVS 307,18 CS 4978,18 CVS 1050,18 CVS 1124,18 CVS 19512
• Citation: 2019 NCBC 49
• Court: Superior Court of North Carolina
• Parties: JAMES ALDRIDGE, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY; MSI FINANCIAL SERVICES, INC. f/k/a METLIFE SECURITIES, INC.; and BENJAMIN LOWDER, JR., Defendants.

2019 NCBC 49

JAMES ALDRIDGE, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY; MSI FINANCIAL SERVICES, INC. f/k/a METLIFE SECURITIES, INC.; and BENJAMIN LOWDER, JR., Defendants.

Nos. 18 CVS 1050, 18 CVS 1124, 18 CVS 12201, 18 CS 4978, 18 CVS 19512, 18 CVS 528, 18 CVS 307

Superior Court of North Carolina, Union

August 15, 2019

18 CVS 1124 (Union); 18 CVS 12201 (Mecklenburg); 18 CS 4978 (Guilford); 18 CVS 19512 (Mecklenburg); 18 CVS 528 (Lincoln); 18 CVS 307 (Yadkin)

1. THIS MATTER is before the Court on fourteen separate motions to dismiss for lack of standing pursuant to Rule 12(b)(1) of the North Carolina Rules of Civil Procedure ("Rule(s)") filed in the following unconsolidated actions: (i) J. Aldridge v. Metropolitan Life Insurance Co., et al., (18 CVS 1050; Union County); (ii) K Aldridge v. Metropolitan Life Insurance Co., et al., (18 CVS 1124; Union County); (iii) Goulet v. Metropolitan Life Insurance Co., et al., (18 CVS 12201; Mecklenburg County); (iv) Kelly, et al. v. Metropolitan Life Insurance Co., et al., (18 CVS 4978; Guilford County) (v) Olin v. Metropolitan Life Insurance Co., et al. (18 CVS 19512; Mecklenburg County); (vi) Peterson v Metropolitan Life Insurance Co., et al., (18 CVS 528; Lincoln County); and (vii) Williams, et al. v Metropolitan Life Insurance Co., et al., (18 CVS 307; Yadkin County) (the "Actions").^[1]

2. Although the Actions are unconsolidated, on August 15, 2019 the Court entered orders in each of the Actions consolidating them for purposes of issuing this Order and Opinion and designating J. Aldridge v. Metropolitan Life Insurance Co., (18 CVS 1050; Union County), as the "Master File." (See, e.g., ECF No. 75 (18 CVS 1050).)

3. The motions can be divided into five (5) groups:

(a) Defendants Metropolitan Life Insurance Company's ("MetLife Insurance") and MSI Financial Services, Inc., f/k/a MetLife Securities, Inc.'s ("MSI") (collectively, the "MetLife Defendants" or "MetLife") Motions to Dismiss: (i) Plaintiff James Aldridge's ("J. Aldridge") First Amended Complaint (the "J. Aldridge Complaint"), (ECF No. 52 (18 CVS 1050)), ^[2] (ii) Plaintiff Katherine Aldridge's ("K. Aldridge") First Amended Complaint (the "K. Aldridge Complaint"), (ECF No. 51 (18 CVS 1124)), (iii) Plaintiff Adam Goulet's ("Goulet") First Amended Complaint (the "Goulet Complaint"), (ECF No. 37 (18 CVS 12201)), (iv) Plaintiffs John "Kris" Kelly ("Kelly"), Paul M. Leite ("Leite"), Randy J. Reittinger ("Reittinger"), Dana Lemons ("D. Lemons"), and Herbert Lee Lemons's (collectively with D. Lemons, the "Lemonses") First Amended Complaint (the "Kelly Complaint"), (ECF No. 60 (18 CVS 4978)), (v) Plaintiff Donald B. Olin's ("Olin") Complaint (the "Olin Complaint"), (ECF No. 19 (18 CVS 19512)), (vi) Plaintiff Andrew Peterson's ("Peterson") First Amended Complaint (the "Peterson Complaint") (ECF No. 46 (18 CVS 528)), and (vii) Plaintiffs James Williams ("J. Williams") and William Van Williams's (collectively with J. Williams, the "Williamses") First Amended Complaint (the "Williams Complaint"), (ECF No. 48 (18 CVS 307)), (all twelve plaintiffs collectively, "Plaintiffs") (all seven complaints collectively, the "Complaints") (all seven of the MetLife Defendants' motions to dismiss the Complaints collectively, the "MetLife Motions");

(b) Defendant Benjamin Lowder, Jr.'s ("Lowder") Motion to Dismiss the J. Aldridge Complaint, (ECF No. 50 (18 CVS 1050));

(c) Lowder and Defendant Gary Wayne Hammond's ("Hammond") Motions to Dismiss: (i) the K. Aldridge Complaint, (ECF No. 52 (18 CVS 1124)), and (ii) the Olin Complaint, (ECF No. 17 (18 CVS 19512));

(d) Hammond's Motions to Dismiss: (i) the Goulet Complaint, (ECF No. 39 (18 CVS 12201)), and (ii) the Peterson Complaint, (ECF No. 44 (18 CVS 528)); and

(e) Defendant John D. Phillips's ("Phillips") Motions to Dismiss: (i) the Kelly Complaint, (ECF No. 58 (18 CVS 4978)), and (ii) the Williams Complaint, (ECF No. 46 (18 CVS 307)), (Lowder, Hammond, and Phillips collectively, the "Individual Defendants") (the Individual Defendants' motions to dismiss collectively, the "Individual Defendants' Motions").

The Individual Defendants and the MetLife Defendants are collectively referred to herein as "Defendants." The MetLife Motions and the Individual Defendants' Motions are collectively referred to herein as the "Motions."

4. Having considered the Motions, the parties' briefs in support of and in opposition to the Motions, the arguments of counsel at the March 6, 2019 hearing on the Motions, and other appropriate matters of record, the Court hereby DENIES the Individual Defendants' Motions and GRANTS in part and DENIES in part the MetLife Motions, for the reasons set forth below.

Hemmings & Stevens, PLLC, by Aaron C. Hemmings and Kelly Ann Stevens, for Plaintiffs.

Parker Poe Adams & Berstein LLP, by Charles E. Raynal IV, William Esser, Stephen Vincent Cary, and Katie M. Iams; and Morgan Lewis & Bockius, LLP, by Amy J. Greer and John Alfred Vassallo, for the MetLife Defendants.

Cranfill Sumner & Hartzog LLP, by Marshal F. Wall and Mica Nguyen Worthy, for Defendants Lowder and Hammond.

Wyatt & Blake, by James Frank Wyatt III; and Mullins Duncan Harrell & Russell PLLC, by Leslie Cooper Harrell, for Defendant Phillips.

ORDER AND OPINION ON DEFENDANTS' RULE 12(B)(1) MOTIONS

Michael L. Robinson Special Superior Court Judge

I. INTRODUCTION

5. These lawsuits arise out of an alleged Ponzi scheme^[3] operated by Charlotte, North Carolina businessman Richard C. Siskey^[4] ("Siskey") for a number of years prior to his death on December 28, 2016. Each plaintiff engaged Siskey as a securities broker, investment advisor, and/or insurance agent.

6. From 2000 until his death in December 2016, Siskey is alleged to have been a MetLife employee, working as a financial and investment advisor, securities broker, and insurance salesman at Wall Street Capitol, MetLife's Charlotte, North Carolina branch office through which MetLife and its agents sold securities and insurance policies and provided financial and investment advice. The Individual Defendants are all MetLife employees who worked with Siskey at the Wall Street Capitol office. Plaintiffs bring these Actions alleging that Defendants knew of, participated in, and/or assisted Siskey in concealing his Ponzi scheme and allowed Siskey to continually defraud Plaintiffs and others^[5] over his sixteen years working for MetLife at the Wall Street Capitol office.

7. Of relevance to the Motions, Plaintiffs allege that through Defendants' actions they invested in one or more of the following four entities now in bankruptcy proceedings before the United States Bankruptcy Court for the Western District of North Carolina (the "Bankruptcy Court" or "Bankruptcy Proceedings"): TSI Holdings, LLC ("TSI Holdings"), WSC Holdings, LLC ("WSC Holdings"), SouthPark Partners, LLC ("SPP"), and Sharon Road Properties, LLC ("SRP") (collectively, the "Bankrupt Entities").^[6] The issue before the Court on the Motions is whether Plaintiffs, rather than the trustee in the Bankruptcy Proceedings, Joseph W. Grier (the "Bankruptcy Trustee"), has standing to assert the claims brought in the Complaints to the extent such claims are based on Plaintiffs' investments in the Bankrupt Entities.

II. PROCEDURAL BACKGROUND

8. The Court sets forth here only those portions of the procedural history relevant to its determination of the Motions.

9. Plaintiffs initiated the Actions in 2018, ^[7] and the Actions were thereafter designated as mandatory complex business cases under N.C. G.S. § 7A-45.4(a) by order of then-Chief Justice Mark R. Martin, (see, e.g., ECF No. 6 (18 CVS 1050)), and assigned to the Honorable Louis A. Bledsoe, III, (see, e.g., ECF No. 2 (18 CVS 1050)). Thereafter, the Actions were re-assigned to the undersigned on February 15, 2019. (See, e.g., ECF No. 66 (18 CVS 1050).)

10. The J. Aldridge Complaint, K. Aldridge Complaint, Goulet Complaint, Kelly Complaint, Peterson Complaint, and Williams Complaint each allege nine claims for relief: fraud; constructive fraud; violations of the North Carolina Securities Act ("NCSA"); negligent misrepresentation; professional negligence^[8]; negligence^[9]; unfair and deceptive trade practices ("UDTP")^[10]; vicarious liability^[11]; and punitive damages. The Olin Complaint contains these same claims for relief along with claims for violations of the North Carolina Investment Advisors Act ("NCIAA") against (i) the MetLife Defendants, and (ii) Lowder and Hammond.

11. Defendants filed the Motions on December 3, 2018 with respect to all Complaints other than the Olin Complaint. Lowder and Hammond filed their motions as to the Olin Complaint on December 19, 2018, and the MetLife Defendants filed their motions on with respect to the Olin Complaint on December 20, 2018. The Motions have been fully briefed, and the Court held a hearing on the Motions on March 6, 2019 at which all parties were represented by counsel.

12. The Motions are ripe for resolution.

III. FACTUAL BACKGROUND^[12]

13. The Court does not make findings of fact when ruling on motions to dismiss under Rule 12(b)(1) but only recites those factual allegations that are relevant and necessary to the Court's determination of the Motions.

A. The Parties

14. Plaintiffs are all residents of North Carolina. J. Aldridge and K. Aldridge reside in Union County. (J. Aldridge Compl. ¶ 2, ECF No. 37; K. Aldridge Compl. ¶ 2, ECF No 36.) Goulet and Olin reside in Mecklenburg County. (Goulet Compl. ¶ 2, ECF No. 24; Olin Compl. ¶ 2, ECF No. 3.) Kelly, Leite, Reittinger, and the Lemonses, reside in Guilford County. (Kelly Compl. ¶¶ 2-6, ECF No. 48.) Peterson resides in Lincoln County. (Peterson Compl. ¶ 2, ECF No. 31.) The Williamses reside in Yadkin County. (Williams Compl. ¶¶ 2-3, ECF No. 36...