Filson v. Langman, Civil Action No. 99-30021-FHF (D. Mass. 11/13/2002)
| Decision Date | 13 November 2002 |
| Docket Number | Civil Action No. 99-30021-FHF. |
| Parties | BRENT F. FILSON and ELDA MAGALIS RIERA-FILSON, Individually and as Trustees of the Brent Filson Communications Retirement Plan f/k/a Brent Filson Defined Benefit Pension Plan and Trust, Plaintiffs, v. SUE C. LANGMAN, HORACE E. LAPRADE, TERESA A. LAPRADE, RICHARD P. ZAMPICENI, d/b/a ZAMPICENI ASSOCIATES, METROPOLITAN LIFE INSURANCE COMPANY, NEW ENGLAND LIFE INSURANCE COMPANY, NEW ENGLAND SECURITIES CORPORATION, DANIEL LUSSIER, LISA LUSSIER, MARK R. POUDRIER, and DIANE PATRICK POUDRIER, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
I. INTRODUCTION
Brent Filson and his wife Elda Magalis Riera-Filson (the "Filsons") bring suit for various claims arising from the failure of an investment strategy. Before the Court are the separate summary judgment motions of Sue Langman and of Richard Zampiceni d/b/a Zampiceni Associates, Metropolitan Life Insurance Company as the successor in interest to New England Mutual Life Insurance Company ("New England Mutual"), New England Life Insurance Company, and New England Securities Corporation ("NES") (collectively, the "defendants"). The defendants assert similar grounds for summary judgment, so the Court will consider the motions collectively.
I. BACKGROUND
Mr. Filson began writing speeches for General Electric Plastics executives in 1984. Though erratic, the speech writing appointments were lucrative. During 1985, the first full year of Mr. Filson's speech writing, the family reported earning $128,619.42, a nearly thirteen-fold increase from the previous year. Naive in financial matters and unsure of how long the writing appointments would last, the Filsons sought help in investing for their future. In the waning summer of 1986 the Filsons met with Sue Langman and later with Horace LaPrade, an attorney who no longer practiced law. Both Langman and LaPrade were insurance professionals working out of Zampiceni Associates. Richard Zampiceni operated Zampiceni Associates as a sole proprietorship that sold various investment products, including life insurance and securities, to its clients. Zampiceni Associates was a general agency for New England Mutual and a branch office of NES. Langman and LaPrade were licensed agents of New England Mutual and registered representatives with the Securities and Exchange Commission through NES.
Over the course of a decade, the Filsons relied on Langman and LaPrade to design and implement a financial strategy that in the end imploded. The financial strategy induced the Filsons to purchase costly investments recommended by Langman and LaPrade and to borrow large sums of money to satisfy their family's ongoing cash flow needs. These borrowing transactions later grew more complex, and the Filsons allege that Langman and LaPrade converted some funds for their own use. The Filsons also partnered with Langman and LaPrade in a questionable real estate venture. Investment after investment failed, yet the Filsons continued to depend on Langman and LaPrade for financial advice until August 1996.
The Filsons filed suit against the defendants in Berkshire County Superior Court on December 28, 1998. Among other things, the Filsons allege that Langman and LaPrade, as the Filsons' investment advisers, breached their fiduciary duties, rendered negligent investment advice, and employed a scheme to defraud the Filsons. Langman removed the case to this Court on February 10, 1999, invoking federal question jurisdiction pursuant to 28 U.S.C. § 1441 et seq., and supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a), because the Filsons' state law claims arose from the same case or controversy as their federal law claim.
Before this Court are the defendants' summary judgment motions, the Filsons' motion to strike and supplement facts to the defendants' jointly-filed concise statement of undisputed material facts, and the defendants' motions to strike the Filsons' supplemental facts. The defendants move for summary judgment on six of the Filsons' ten state law claims and on the Filsons' lone federal law claim. The Court finds it appropriate, however, to address only those parts of the defendants' summary judgment motions relating to the Filsons' federal law claim. See Camelio v. American Federation, 137 F.3d 666, 672-73 (1st Cir. 1998) ().
III. STANDARD OF REVIEW
This Court may grant summary judgment for the defendants if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," establish that there is no genuine issue as to any material fact and that the moving parties, the defendants, are entitled to a judgment as a matter of law. See Fed.R.Civ.P. 56(c). By "material" the Court means that the Filsons must point to a contested fact that "has the potential to change the outcome of the suit under the governing law" if a reasonable jury were to resolve the dispute over the contested fact in the Filsons' favor. McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995) (citations omitted). By "genuine" the Court means that the Filsons must point to competent evidence about a fact that would justify a reasonable jury deciding the issue in the Filsons' favor. Id.
IV. DISCUSSION
The Filsons allege that the defendants violated Section 206 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-6 (the "IAA"), and demand judgment for "damages plus interest and costs, and such other relief as this court deems appropriate." Complaint at 15. The defendants move for summary judgment because private remedies under the IAA are limited to rescission of an investment advisers contract and restitution of fees paid thereunder. See Transamerica Mortgage Advisers, Inc. v. Lewis, 444 U.S. 11, 24-25 & n. 14 (1979). As such, the defendants deny the existence of an investment advisers contract and note that the Filsons' complaint fails to seek rescission and restitution under Section 215 of the IAA. The Court will assume without deciding that an investment advisers contract existed and will analyze whether the Filsons are entitled to damages under the IAA.
In Transamerica, the Supreme Court held that a limited private right of action for rescission and restitution was implied under Section 215 of the IAA, but a private right of action for damages was not implied under Section 206. See Transamerica, 444 U.S. at 19. The Filsons argue that the 1990 amendments to the IAA entitle them to "more than [the] purely restitutionary damages" contemplated by Transamerica. Filsons' Memorandum in Opposition to Summary Judgment at 28 (emphasis in original). While many courts have explored the scope of private rights of action for damages under the IAA, see e.g., Transamerica, 444 U.S. 11; Goldstein v. Malcolm G. Fries & Associates, Inc., 72 F. Supp.2d 620 (E.D.Va. 1999); Laird v. Integrated Resources, Inc., 897 F.2d 826 (5th Cir. 1990); Levine v. Futransky, 636 F. Supp. 899, 901-02 (N.D.Ill. 1986), none have considered what effect, if any, the 1990 amendments to the IAA have on private rights of action under the IAA.
The Filsons draw attention to Section 214, the section defining district court jurisdiction in IAA cases, see 15 U.S.C. § 80b-14 (the "jurisdictional section"), and note that Congress unambiguously expanded district court jurisdiction in IAA cases. The version of the jurisdictional section that the Supreme Court considered in Transamerica read:
The district courts of the United States . . . shall have jurisdiction of violations of this subchapter. . . and, concurrently with State and Territorial courts, of all suits in equity to enjoin any violation of this subchapter. . . . Any suit or action to enjoin any violation of this subchapter . . . may be brought in any [of the district courts wherein any act or transaction constituting the violation occurred] or in the district wherein the defendant is an inhabitant or transacts business. . . .
15 U.S.C. § 80b-14 (1979), cited in Transamerica, 444 U.S. at 22 n. 11. In 1990, Congress amended the jurisdictional section to read:
The district courts of the United States . . . shall have jurisdiction of violations of this subchapter. . . and, concurrently with State and Territorial courts, of all suits in equity and actions at law brought to enforce any liability or duty created by, or to enjoin any violation of this subchapter. . . . Any suit or action to enforce any liability or duty created by, or to enjoin any violation of this subchapter . . . may be brought in any [of the district courts wherein any act or transaction constituting the violation occurred] or in the district wherein the defendant is an inhabitant or transacts business. . . .
15 U.S.C. § 80b-14 (2002) (emphasis supplied). The Supreme Court in Transamerica specifically pointed to the absence of language similar to that which Congress added in 1990 as an indication "that Congress was simply unwilling to impose any potential monetary liability on a private suitor." Transamerica, 444 U.S. at 21. The Filsons now argue that the addition of such language indicates an intent to expand district court jurisdiction to encompass a private litigant's action at law to enforce liabilities and duties created by the IAA. The Court finds this contention tenuous.
The Court must look "in the language or structure of the statute, or in the circumstances of its enactment" to determine whether Congress actually intended to afford the Filsons a private right of action for damages. See Transamerica, 444 U.S. at 18; see also Thompson v. Thompson, 484 U.S. 174, 180 (). While the addition of such language into the IAA may bolster the Filsons' position slightly, nothing else in...
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