Dimarco v. Guardian Life Ins. Co. of Am.
| Decision Date | 06 July 2017 |
| Docket Number | 16-P-112 |
| Citation | 91 Mass.App.Ct. 1131,87 N.E.3d 113 (Table) |
| Parties | Stephen DIMARCO & others v. The GUARDIAN LIFE INSURANCE COMPANY OF AMERICA. |
| Court | Appeals Court of Massachusetts |
The plaintiffs, Stephen DiMarco, Marie DiMarco, and Coolidge Management Corp. (Coolidge Management),3 filed an action in the Superior Court alleging that various defendants, including The Guardian Life Insurance Company of America (Guardian), fraudulently induced the plaintiffs into participating in an insurance sales scheme disguised as a purported voluntary employee welfare benefit plan.4 Guardian filed a motion for judgment on the pleadings pursuant to Mass.R.Civ.P. 12(c), 365 Mass. 754 (1974). The judge concluded that "all of the claims pleaded against Guardian are precluded by the unambiguous release agreed to" by the DiMarcos, allowed Guardian's motion, and dismissed the first amended complaint as to Guardian with prejudice. The plaintiffs appeal from the judgment entered thereon pursuant to Mass.R.Civ.P. 54(b), 365 Mass. 820 (1974). We vacate the judgment for the reasons that follow.
Background. Accepting the factual pleadings of the first amended complaint as true, Guardian and the other defendants participated in a conspiracy designed to defraud investors in the Regional Employers' Assurance Leagues Voluntary Employees' Beneficiary Association Health and Welfare Benefit Plan (regional plan). "In approximately 2001," Michael Mingolelli of Pinnacle Financial Group and other defendants met with Stephen in person and made various misrepresentations that the plaintiffs relied upon to their detriment, including the false claim that the regional plan was a valid "419A plan."5 Mingolelli, acting as an agent of Guardian,6 advised Stephen that the regional plan would provide "tremendous benefits" such as tax deductible insurance premiums for policies purchased through the regional plan; money that could be borrowed against the policies tax free; and insurance proceeds paid upon the death of the insureds that would be tax free. The plaintiffs further allege that Mingolelli and the other defendants intentionally failed to disclose certain facts to the DiMarcos, including that "the [Internal Revenue Service (IRS) ] has never approved a § 419A(f)(6) insurance entrepreneurial enterprise plan so far as the public record shows." As a result of the misrepresentations, the plaintiffs were induced to establish their own plan, the Coolidge Management Corp. Health and Welfare Benefit Plan, and executed an adoption agreement "in order to get into" the regional plan. The regional plan's benefits were funded by life insurance coverage on the lives of Coolidge Management's employees.
When the DiMarcos completed applications for a Guardian life insurance policy in November, 2001, they each executed a "Disclosure Statement," which we discuss infra.7
Discussion. 1. Motion for judgment on the pleadings. "A defendant's rule 12(c) motion is ‘actually a motion to dismiss ... [that] argues that the complaint fails to state a claim upon which relief can be granted.’ " Jarosz v. Palmer, 436 Mass. 526, 529 (2002), quoting from Smith & Zobel, Rules Practice § 12.16 (1974). As we would with a motion to dismiss, we review the judge's ruling de novo. Ridgeley Mgmt. Corp. v. Planning Bd. of Gosnold, 82 Mass. App. Ct. 793, 797 (2012). "In deciding a rule 12(c) motion, all facts pleaded by the nonmoving party must be accepted as true."Jarosz, supra at 529-530, citing Minaya v. Massachusetts Credit Union Share Ins. Corp., 392 Mass. 904, 905 (1984).
The central issue in this case is whether the disclosure statement executed by the DiMarcos precludes the plaintiffs' claims. The plaintiffs contend that the DiMarcos' signatures on the disclosure statement (sometimes referred to hereinafter as disclaimer) were obtained through fraud, rendering it invalid. In addition, they maintain that in view of the misrepresentations by Mingolelli regarding the alleged benefits associated with the regional plan, Guardian cannot enforce the disclosure statement. We review each contention in turn.
a. Procurement of signatures by fraud. The judge ruled that the allegations of the first amended complaint were insufficient to state a claim that the signatures were obtained by fraud. We agree. Faced with the plain language of the disclaimer, the plaintiffs claim that the defendants procured the DiMarcos' signatures on the disclosure statement by fraud. Specifically, the plaintiffs contend that the disclaimer was "slipp[ed]" into the "reams of paperwork" that the DiMarcos were instructed to sign, and that they unwittingly executed the disclosure statement without carefully reviewing its contents. The argument is unavailing.
First, the plaintiffs did not explicitly allege in the first amended complaint that the disclaimer was slipped into the reams of paperwork.8 Second, slipping a disclaimer into reams of paperwork is not the equivalent of procuring a signature by means of fraud. See Commerce Bank & Trust Co. v. Hayeck, 46 Mass. App. Ct. 687, 692 (1999), quoting from Boston Five CentsSav. Bank v. Brooks, 309 Mass. 52, 55 (1941) (). See also Kuwaiti Danish Computer Co. v. Digital Equip. Corp., 438 Mass. 459, 467-469 (2003). The plaintiffs do not allege that any of the defendants misrepresented the nature of the document, the substance of the disclaimer, or the consequences of executing it. We see no reason to ignore the longstanding rule that parties who sign a legal document without bothering to ascertain the contents therein are bound by its terms. See Mayflower Seafoods, Inc. v. Integrity Credit Corp., 25 Mass. App. Ct. 453, 459 (1988). Massachusetts favors the enforcement of releases. See Sharon v. Newton, 437 Mass. 99, 105 (2002).
b. Enforceability of disclosure statement. In her memorandum and order allowing the motion for judgment on the pleadings, the judge did not explicitly address the related argument that Mingolelli's misrepresentations barred enforcement of the disclosure statement. On this point, we consider the allegations of the first amended complaint to be sufficient, and accordingly remand for further proceedings.
Although many of the allegations of fraud are generic and diffuse, the plaintiffs specifically allege that Mingolelli, acting on behalf of Guardian and the regional plan, and knowing his representations to be false, represented to the plaintiffs that the regional plan was an IRS-qualified 419A plan; that the plaintiffs could put any amount of money into the regional plan; that the plaintiffs could withdraw all monies from or terminate the regional plan at any time; that premium payments made into the regional plan were tax deductible; and that proceeds paid to beneficiaries under the regional plan were tax free.
The disclosure statement's introductory paragraph states that the regional plan, "upon information and belief, is established pursuant to Internal Revenue Code § 419A(f)(6)." It is signed by the employer, the regional plan trustee (trustee), and the insured, but not Guardian. However, the disclosure statement then contains disclaimer and exculpation clauses that purport to make no representation on behalf of Guardian regarding the tax qualification or tax treatment of the regional plan or the insurance policy purchased thereunder. Specifically, the disclosure statement provides that "Guardian and the general agent/agent involved in the sale of the life insurance policy in this transaction have NOT evaluated (1) the appropriateness of the proposed trust ownership, (2) the placement of the policy therein, or (3) the [regional plan] pursuant to which this policy is being placed." It states that the plaintiffs "affirm that the legal and tax consequences of the ... plan of benefits have been thoroughly reviewed by qualified counsel contracted by [the DiMarcos] to offer such opinion," though the pleadings are silent as to whether the DiMarcos actually retained counsel to review the regional plan. The disclosure statement further states that Guardian "makes no representations regarding any tax consequences arising from payments under the [regional plan] or payments from the life insurance policy itself." Finally, the disclosure statement obligates the signers to acknowledge that Guardian's "only role is the issuance of a life insurance policy contract," that its "obligations are described in full in the life insurance policy contract," that "[n]o other rights, guarantees or obligations are established herein," that Guardian "has no obligations arising under the terms of the [regional plan]," and that the employer and the trustee will hold Guardian harmless for liabilities arising "under the terms or actual operation of the [regional plan]."
The plaintiffs contend that Massachusetts law does not permit Guardian's alleged deceit to be avoided by the disclosure statement, which they categorize as a general disclaimer or exculpatory provision. Our case law rejects the application of general or boilerplate disclaimers "as an automatic defense to allegations of fraud or deceit." Sheehy v. Lipton Indus., Inc., 24 Mass. App. Ct. 188, 193 (1987). See Granlund v. Saraf, 263 Mass. 76, 79 (1928) ; Bates v. Southgate, 308 Mass. 170, 180-183 (1941) ; Starr v. Fordham, 420 Mass. 178, 188 (1995) ; Greenleaf Arms Realty Trust I, LLC v. New Boston Fund, Inc., 81 Mass. App. Ct. 282, 286-287 (2012).
On the other hand, specific disclaimers that plainly contradict alleged prior oral assurances are enforceable. See Plumer v. Luce, 310 Mass. 789, 804-805 (1942) ; Kuwaiti Danish, 438 Mass. at 467-469 ; Masingill v. EMC Corp., 449 Mass. 532, 541 (2007). See also Turner v. Johnson & Johnson, 809 F.2d 90, 97 (1st Cir. 1986) ; HSBC Realty Credit Corp. (USA) v. O'Neill, 745 F.3d...
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