Hamburger v. Pfm Capital Management, Inc.

• Decision Date: 06 July 2007
• Docket Number: No. A07A0694.,A07A0694.
• Citation: 649 S.E.2d 779,286 Ga. App. 382
• Parties: HAMBURGER v. PFM CAPITAL MANAGEMENT, INC. et al.
• Court: Georgia Court of Appeals

286 Ga. App. 382

649 S.E.2d 779

HAMBURGER v. PFM CAPITAL MANAGEMENT, INC. et al.

No. A07A0694.

Court of Appeals of Georgia.

July 6, 2007.

Robert D. Howell, Atlanta, O. Wayne Ellerbee, Valdosta, for Appellant.

Kilpatrick Stockton, Stephen Earl Hudson, Atlanta, for Appellee.

RUFFIN, Judge.

Nancy R. Hamburger sued PFM Capital Management, Inc., an investment advisory company, alleging that PFM mismanaged her retirement account by making risky and unsuitable investments and failing to diversify her holdings.¹ Specifically, Hamburger sought to recover damages for breach of fiduciary duty, breach of contract, negligence, fraud, and intentional infliction of emotional distress. PFM filed a motion for summary judgment, alleging that Hamburger's claims were time-barred, and the trial court granted the motion. Hamburger appeals, arguing that the trial court erred in finding that her claims were barred by the applicable statutes of limitation.² For reasons that follow, we affirm in part and reverse in part.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.³ A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn therefrom, in a light most favorable to the nonmovant.⁴ Where the moving party has shown an absence of evidence to support any element of the nonmoving party's case, the nonmoving party cannot rest on its pleadings, but must point to specific evidence creating a triable issue.⁵

So viewed, the evidence shows that as part of her divorce settlement in March 1998, Hamburger received approximately 31,000 shares of Coca-Cola stock. In February 1998, she retained PFM as her investment advisors to manage her assets — including the Coca-Cola stock — in her IRA held by Charles Schwab & Co., Inc. The parties entered into an agreement on February 9, 1998 which memorialized the parties' "understanding of the terms and objectives of [PFM's] engagement to provide Personal Financial Planning Services to [Hamburger]." The agreement provided that in exchange for a management fee of 1½ percent of the "investable assets," PFM would analyze Hamburger's financial information, provide a written analysis of her existing investments, and, after conferring with Hamburger, provide a finalized investment plan. The agreement described the limitations on the scope of services provided by PFM:

[T]hese services are not designed, and should not be relied upon, as a substitute for a participant's own business judgment[,] nor are they meant to mitigate the necessity of a participant's personal review and analysis of a particular investment. These services are designed to supplement the individual's own planning and analysis and aid the individual in fulfilling ... her financial objectives. In addition, these services are not designed to discover fraud, irregularities, or misrepresentations made in materials provided to us concerning existing or potential investments.

However, PFM had authority to execute stock trades without express permission from Hamburger. The parties also signed a separate document on February 9, 1998 entitled "Statement of Investment Policies, Objectives[,] and Guidelines for Nancy R. Hamburger." The Statement explained that the desired rate of return was "10% per year and at least 4% per year, on average, above the rate of consumer price inflation over the investment time horizon" and that the parties "desired that the portfolio return surpass the Standard & Poor's 500 total return over the investment time horizon." The Statement also provided that: "[t]here are no specific limitations on asset turnover levels"; [t]here are no specific guidelines on the number of different securities to own[, but] ... good diversification will be a key ongoing objective" and "these objectives are in no way a guarantee that the goals outlined herein will be achieved." Pursuant to the Statement PFM was required to provide Hamburger quarterly communications "reviewing the account holdings, transactions over the recent quarter, performance[,] and the economic environment." PFM sent Hamburger quarterly statements as required by the parties' agreement. The statements included a summary of the investments and activity in Hamburger's IRA account, including, inter alia, the dollar value of the account, the type and percentage of investments in the account, the percentage of gain or loss for each investment and the account as a whole, a description of the investments, with the value and price per share of the investment when bought or sold, and a list of all transactions in the account.

Three quarterly statements sent to Hamburger in 1998 showed the percentage of the IRA that was invested in Coca-Cola stock: 81 percent in the July 1, 1998 statement; 74 percent in the October 1, 1998 statement; and 60 percent in the January 1, 1999 statement. Beginning in 1998, the quarterly statements revealed substantial losses in Hamburger's IRA, including a nearly $500,000 loss from February 8, 1998 to October 1, 1998. The value of the Coca-Cola stock in the IRA also declined, resulting in losses of over $200,000 for both the fourth quarter of 1998 and the first quarter of 1999. From March 31, 1998 to August 31, 2001, Hamburger's IRA lost over $611,000 under PFM's management, while the S & P 500 index gained over $34,000 during that same time period.

Hamburger terminated her agreements with PFM in August 2001 and transferred her accounts to another investment advisor. On January 4, 2005, Hamburger filed her complaint seeking damages for breach of fiduciary duty, breach of contract, negligence, fraud, and intentional infliction of emotional distress. The complaint specifically alleges that PFM placed Hamburger's "retirement savings into unreasonably risky investments, unsuitable investments, failed to diversify her holdings, and mismanaged [Hamburger]'s account," contrary to the parties' agreements and the duties PFM owed to her.

PFM moved for summary judgment, arguing that Hamburger's claims were barred by the applicable statutes of limitation. The trial court agreed and granted PFM's motion. On appeal, the sole issue presented is whether Hamburger's claims are barred by the applicable statutes of limitation.

1. Hamburger contends that the trial court erred in concluding that her breach of contract claims were time-barred. Under OCGA § 9-3-24, an action for breach of a written contract must be brought within six years of the breach. Thus, in the instant case, where the complaint was filed on January 4, 2005, Hamburger's breach of contract claims must have accrued no later than January 4, 1999, unless Hamburger can establish that the statute of limitation was tolled.⁶ "The discovery rule is not applicable to a cause of action based on breach of contract; with respect to a breach of contract claim, the statute of limitation runs from the time the contract is broken rather than from the time the actual damage results or is ascertained."⁷ Here, the trial court concluded that all of Hamburger's breach of contract claims began to accrue in 1998 and, therefore, were time-barred.

(a) We agree with the trial court that Hamburger's claims that PFM failed to properly diversify or otherwise manage her IRA in 1998 were not timely filed.⁸ And unless Hamburger can establish that the statute of limitation is tolled, she cannot recover damages for any losses she sustained as a result of investments made prior to January 4, 1999.⁹

Hamburger also alleged, however, that PFM made risky and unsuitable investments with her account. Specifically, Hamburger contends that PFM "purchased many high-risk, technology stocks" for her IRA after January 4, 1999 and that "each of these purchases constitutes a separate and independent breach of the parties' written contract that occurred within the six-year limitations period." Pretermitting whether each investment would constitute a separate breach, Hamburger has not pointed to any competent evidence in the record that PFM actually purchased such stocks after January 4, 1999. In her appellate brief, Hamburger lists five stocks that she contends were high-risk and purchased by PFM after that date. To support her allegation, she refers to statements for her IRA for the quarters ending on March 31, 2001 and June 30, 2001. Although the statements indicate that she held the stocks about which she complains during those periods, it is not clear from our reading of the statements that PFM purchased those stocks on her behalf after January 4, 1999. And we will not cull the record for evidence to support Hamburger's claim, as "[t]he responsibility to locate and cite evidence in the record rests with counsel, not this Court."¹⁰ "`Allegations, conclusory facts, and conclusions of law cannot be utilized to support or defeat motions for summary judgment.'"¹¹ Thus, because Hamburger has failed to point to competent evidence in the record to support her claim that PFM made risky stock purchases in her account after January 4, 1999, we conclude that her breach of contract claim on this ground was not timely filed.

(b) Hamburger also alleges that PFM breached the parties' agreement "by transferring Coca-Cola stock into an unmanaged asset category while continuing to collect a management fee on that stock." PFM erroneously argues that we cannot consider this argument because Hamburger asserted it for the first time on appeal. Although she did not allege this specific claim in her complaint, Hamburger briefly addressed it in her written response to PFM's motion for summary judgment.¹² And despite PFM's argument to the contrary, she clearly raised this issue at oral argument.¹³ Thus, we deem it proper to consider this argument.¹⁴

There is evidence that PFM reclassified the Coca-Cola stock from a managed asset to an unmanaged asset between March 31,...