Bayles v. Jeffrey N. Evans, Ameriprise Fin. Servs., Inc.

Decision Date24 April 2020
Docket Number No. 18-0876,No. 18-0871,18-0871
Citation842 S.E.2d 235,243 W.Va. 31
Parties Debra K. BAYLES, Plaintiff Below, Petitioner v. Jeffrey N. EVANS, Ameriprise Financial Services, Inc., Kristina Nicholls, and Stephen Bayles, Defendants Below, Respondents Jeffrey N. Evans, Ameriprise Financial Services, Inc., Kristina Nicholls, and Stephen Bayles, Defendants Below, Petitioners v. Debra K. Bayles, Plaintiff Below, Respondent
CourtWest Virginia Supreme Court

Herman D. Lantz, Esq., Lantz Law Offices, Moundsville, West Virginia, Chad Groome, Esq., David Jividen, Esq., Jividen Law Office, Wheeling, West Virginia, Counsel for the Plaintiff.

Edward P. Tiffey, Esq., Tiffey Law Practice, PLLC, Charleston, West Virginia, Counsel for Defendants Jeffrey N. Evans and Ameriprise Financial Services, Inc.

Christi R.B. Stover, Esq., Steptoe & Johnson, PLLC, Morgantown, West Virginia, Ancil G. Ramey, Esq., Steptoe & Johnson, PLLC, Huntington, West Virginia, Counsel for Defendants Kristina Nicholls and Stephen Bayles.

HUTCHISON, Justice:

In this appeal from the Circuit Court of Marshall County, we are asked to examine an order compelling a plaintiff to arbitrate her dispute with an investment firm. The plaintiff's deceased husband created two accounts with the investment firm (the "brokerage account" and the "portfolio account"), and the contracts he signed required the arbitration of any account disputes. The plaintiff asserts she is the proper beneficiary and should have received the proceeds of both accounts upon her husband's demise. However, the investment company paid the proceeds of both accounts to two other individuals (the husband's children by another marriage).

The plaintiff brought suit to assert her right to the proceeds of both accounts. The circuit court found that, even though the plaintiff was a nonsignatory she was required to comply with the arbitration agreements signed by her deceased husband.

As we discuss below, despite her being a nonsignatory, the circuit court's order correctly determined that the plaintiff is required to arbitrate her claims to the proceeds of both accounts. However, we find that the circuit court included surplus language in its order that invaded the province of the arbitrator. As we discuss later in our opinion, the order is reversed to the extent it included this language. We otherwise affirm the circuit court's order dismissing the plaintiff's suit and compelling her to arbitrate.

I. Factual and Procedural Background

William Nelson Bayles was married to his second wife, plaintiff Debra Bayles, for 22 years. During his career, Mr. Bayles had invested in his employer's 401(k) retirement plan,1 and he designated the plaintiff as the beneficiary of that plan. However, the record suggests that, by early 2012, medical issues compelled Mr. Bayles to find ways to access the money in the 401(k) plan.

Mr. Bayles had two children from his prior marriage: defendants Kristina Nicholls and Stephen Bayles. In early 2012, Kristina introduced her father to a friend she had in the financial industry, defendant Jeffrey Evans, who worked for an investment company, defendant Ameriprise Financial Services, Inc. ("Ameriprise"). Defendant Evans explained to Mr. Bayles that he could access his money by rolling the 401(k) plan over into an Ameriprise individual retirement account ("IRA"). However, Evans also explained that, under federal law, the plaintiff would have to agree to the rollover.2

On June 20, 2012, Mr. Bayles returned to Evans's Ameriprise office, this time in the company of the plaintiff (Mrs. Bayles). At this meeting, Mr. Bayles signed an application to create the "brokerage account," an Ameriprise IRA account to receive money rolled over from his 401(k) plan.3 The application incorporates a requirement that Mr. Bayles arbitrate any dispute he might have with Ameriprise regarding the brokerage account.

When Mr. Bayles completed and signed the application to create the brokerage account, he designated the plaintiff as the sole beneficiary. Central to the plaintiff's dispute is her claim that, during the June 2012 meeting, Evans told her that she could not be removed as the beneficiary; conversely, Evans says he told the plaintiff that the beneficiary designation could be changed.

What is undisputed is that after the June of 2012 meeting, Mr. Bayles initiated the process of moving the proceeds of his 401(k) plan into his newly created Ameriprise brokerage account. The record shows that, on June 26, 2012, Mr. Bayles signed forms from his employer to transfer money out of the 401(k) plan. More importantly, the plaintiff also signed a "spousal consent" form that permitted Mr. Bayles to complete the transfer. Thereafter, his employer transferred a lump sum of $132,660.86 into the Ameriprise brokerage account.

On September 5, 2012, Mr. Bayles returned to defendant Evans's Ameriprise office, but did not take the plaintiff or inform her of the visit. During this visit, Mr. Bayles completed and signed two documents. With the first document, Mr. Bayles created a second Ameriprise account: the "portfolio account."4 The portfolio account was funded with a transfer of $100,000.00 from the brokerage account. As with the brokerage account, this document incorporated Mr. Bayles's agreement that any disputes regarding the portfolio account would be subject to arbitration.

On the application to create the portfolio account, Mr. Bayles designated the plaintiff as the beneficiary of the portfolio account.

This dispute seems to arise from the second document completed and signed by Mr. Bayles on September 5, 2012. This document was a change of beneficiary form.5 On the form, Mr. Bayles appeared to authorize Ameriprise to change the beneficiaries to the Ameriprise brokerage account (and only the brokerage account).6 Mr. Bayles checked a box designating as the beneficiaries of the brokerage account his "Living Lawful Children, Equality [sic] With Rights of Survivorship." Below the box checked by Mr. Bayles, the form defines the beneficiaries as "[t]he living lawful children of the owner and they will receive equal shares of the proceeds[.]"

In sum, after completing the portfolio account application and the change of beneficiary form on September 5, 2012, it appears that Mr. Bayles intended, upon his death: (1) for the money in the brokerage account to go to his children, defendants Kristina Nicholls and Stephen Bayles; and (2) for the money in the portfolio account to go to his wife, plaintiff Debra Bayles.

Unfortunately, in a letter dated September 24, 2012, Ameriprise informed Mr. Bayles that it had removed the plaintiff as beneficiary from both the brokerage and the portfolio accounts. The letter indicates that Ameriprise had substituted Mr. Bayles's children as the sole beneficiaries.7 The letter asked Mr. Bayles to "review the information ... to see if any action is required." Mr. Bayles did not respond to the letter, and he gave a copy of the letter to his daughter Kristina.

Mr. Bayles died on March 26, 2013, at the age of 64.

The record indicates that, the day before Mr. Bayles died, Evans informed Mr. Bayles's children that they were the beneficiaries of both Ameriprise accounts. Conversely, when the plaintiff called after her husband's death and asked about the status of the Ameriprise accounts,8 Evans told her "if she had been the beneficiary she would have been notified by now" and said he could give her no more information.

Apparently unknown to both the plaintiff and Mr. Bayles's children, upon Mr. Bayles's death, Ameriprise began investigating the discrepancy between the September 5, 2012, portfolio account application (listing the plaintiff as the sole beneficiary) and the September 24, 2012, letter (listing Mr. Bayles's children as the beneficiaries of the portfolio account). Ameriprise employees recognized that the plaintiff and the children were "so combative we don't know what they would be willing to do," and decided that "the bottom line is – if they don't know about this situation, who knows how they would react[.]" Ameriprise later decided to pay the benefits from both accounts solely to Mr. Bayles's children.9

On September 5, 2014, plaintiff Debra Bayles filed this lawsuit asserting she was entitled to the benefits from both the brokerage and portfolio accounts. Her complaint specifically referred to the contracts Mr. Bayles had signed with Ameriprise, and she sought damages including the "benefits due under said contract[s.]" She sued defendants Jeffrey Evans and Ameriprise for negligence, breach of contract and detrimental reliance. The plaintiff also sued her husband's children (defendants Kristina Nicholls and Stephen Bayles) and alleged they were unjustly enriched by Ameriprise's wrongful disbursement of both accounts.

The defendants promptly moved to dismiss the lawsuit. Citing to the arbitration clauses in both the brokerage and portfolio applications, the defendants sought an order to compel the plaintiff to arbitrate her claims. On May 19, 2015, the circuit court entered an order that denied the motion and finding "as a matter of law that the decedent [Mr. Bayles] did not enter into a valid arbitration agreement with Ameriprise[.]" The defendants appealed that order to this Court, and we reversed. In our opinion, we concluded that there was an arbitration agreement; however, we also found unresolved issues in the record regarding the enforceability of that agreement, including the plaintiff's assertion that the agreement was unconscionable. Evans v. Bayles , 237 W. Va. 269, 274, 787 S.E.2d 540, 545 (2016). We remanded the case to the circuit court for additional review.

On June 14, 2016 (two weeks after this Court issued its opinion), plaintiff Bayles filed a motion to amend her complaint, and the circuit court granted the motion. The amended complaint alleged fraud by defendants Ameriprise and Evans. Specifically, the plaintiff asserted that Evans "fraudulently induced Pla...

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    ...including "estoppel[,]" which is the one most relevant to the facts of this case. Syl. Pt. 4, in part, Bayles v. Evans , 243 W. Va. 31, 842 S.E.2d 235 (2020) (quoting Syl. Pt. 10, Chesapeake Appalachia, L.L.C. v. Hickman , 236 W. Va. 421, 781 S.E.2d 198 (2015) ).2 "A nonsignatory is estoppe......
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    ...]" including "estoppel[, ]" which is the one most relevant to the facts of this case. Syl. Pt. 4, in part, Bayles v. Evans, 243 W.Va. 31, 842 S.E.2d 235 (2020) (quoting Syl. Pt. 10, Chesapeake Appalachia, L.L.C. v. Hickman, 236 W.Va. 421, 781 S.E.2d 198 (2015)).[3] "A nonsignatory is estopp......
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