Vazirani & Assoc. Fin. LLC v. Heitz
| Decision Date | 08 June 2011 |
| Docket Number | CIVIL ACTION No. 11-1032-MLB-KGG |
| Parties | VAZIRANI & ASSOCIATES FINANCIAL, LLC, Plaintiff, v. MARK V . HEITZ and JORDAN CANFIELD, Defendants. |
| Court | U.S. District Court — District of Kansas |
This case comes before the court on defendants' motion to dismiss plaintiff's complaint. (Doc. 7). The motion has been fully briefed and is ripe for decision. (Docs. 8, 9, 10). Defendants' motion is granted in part and denied in part for the reasons herein.
Plaintiff Vazirani & Associates Financial, LLC ("Vazirani & Associates") is an independent marketing organization (IMO) located in Arizona that contracts to perform distribution and marketing functions for insurance companies. Anil Vazirani is the president and chief executive officer of Vazirani & Associates. Plaintiff contracted with insurance company Aviva USA ("Aviva") until January 30, 2009. Defendant Mark Heitz was and is the Vice President of Sales for Aviva and Defendant Jordan Canfield was employed by AmerUs Aviva Annuity Group during the relevant time period. Defendants reside in Topeka, Kansas.
On November 6, 2008, Canfield informed Vazirani that Aviva would be terminating plaintiff's contract and the contracts of all downlineagents. Aviva's counsel subsequently notified plaintiff in writing that Aviva was terminating its contract with plaintiff without cause effective January 30, 2009. Canfield told Vazirani that Aviva had received complaints about his business practices from the other agents. On March 20, Aviva's counsel sent a letter to Vazirani stating that the termination was due to a deferred annuity sales bubble and the desire to focus on core marketing groups and producers. After resigning from Aviva, Canfield contracted with Advisors Excel, LLC, a Kansas limited liability company founded by a group of men who were fraternity brothers with Heitz. Advisors Excel is a competitor of plaintiff.
Plaintiff alleges that Advisors Excel exploited its relationship with Heitz and obtained more advantageous commission splits and more support from Aviva than other IMOs. Plaintiff further alleges that Advisors Excel worked with defendants to sever the relationship between the plaintiff and Aviva to the detriment of Aviva. Of the various core annuity groups within Aviva, plaintiff's allegedly was the only contract terminated. In addition to exploiting the relationship between the companies, plaintiff also alleges that defendants' actions were improperly motivated by racial animus towards Vazirani. Plaintiff had not received any consumer complaints during the contractual relationship with Aviva and sold more than $10 million in annuity premiums. Plaintiff filed this action alleging claims of tortious interference with contract and business expectations, civil conspiracy, and aiding and abetting. Defendants move for dismissal on all claims. There is a companion case, Vazirani et al. v. Heitz and Canfield, No. 09-1311-MLB-KGG, which involves similar claims. ByMemorandum and Order of March 15, 2011 (Doc 62), this court granted, in part, and denied, in part, a motion to dismiss similar to that made in this case. The cases are ordered consolidated for all purposes.
The standards this court must utilize upon a motion to dismiss are well known. To withstand a motion to dismiss for failure to state a claim, a complaint must contain enough allegations of fact to state a claim to relief that is plausible on its face. Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974 (2007)). All well-pleaded facts and the reasonable inferences derived from those facts are viewed in the light most favorable to plaintiff. Archuleta v. Wagner, 523 F.3d 1278, 1283 (10th Cir. 2008). Conclusory allegations, however, have no bearing upon this court's consideration. Shero v. City of Grove, Okla., 510 F.3d 1196, 1200 (10th Cir. 2007). In the end, the issue is not whether plaintiff will ultimately prevail, but whether he is entitled to offer evidence to support his claims. Beedle v. Wilson, 422 F.3d 1059, 1063 (10th Cir. 2005).
Defendants move to dismiss plaintiff's complaint on the basis that it fails to state a claim and that plaintiff's tortious interference claim is time-barred. A federal court sitting in diversity jurisdiction must apply the substantive law of the state in which it sits, including that state's choice-of-law rules. See ORI, Inc. v. Lanewala, 147 F. Supp.2d 1069, 1078 n. 9 (D. Kan. 2001). Plaintiffs have alleged tort claims against defendants. The Kansas Supreme Court has held that the law of the state where the tort occurscontrols. See Lemons v. Lewis, 963 F. Supp. 1038, 1050 (D. Kan. 1997)(citing Ling v. Jan's Liquors, 237 Kan. 629, 635, 703 P.2d 731, 735 (1985)). All of the acts alleged by plaintiff occurred in the state of Arizona. Accordingly, Arizona law controls.
Plaintiff alleges that defendants tortiously interfered with both the Aviva contract and the plaintiff's business expectancies with its agents and customers. To prevail on these claims, plaintiff must establish the following: 1) the existence of a valid contractual relationship or business expectancy; 2) interferer's knowledge of the relationship or expectancy; 3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and 4) resultant damage to the party whose relationship or expectancy has been disrupted. Neonatology Associates, Ltd. v. Phoenix Perinatal Associates, Inc., 216 Ariz. 185, 187, 164 P.3d 691, 693-64 (Ariz. Ct. App. 2007). Defendants respond that plaintiff's claims are barred by the applicable statute of limitations.
Defendants assert that plaintiff's tortious interference claims accrued in November 2008, when plaintiff was informed that Aviva would be terminating the contractual relationship. Plaintiff argues that the injury did not occur until the actual termination of the Aviva relationship, at the earliest January 30, 2009. Even though Arizonaprovides the substantive law in this case, Kansas generally "applies its own statutes of limitations to actions before it." Muzingo v. Vaught, 18 Kan. App. 2d 823, 859 P.2d, 977, 979 (1993). Under K.S.A. 60-513(4), the statute of limitations for tortious interference claims is two years.
In Kansas, a cause of action accrues "at the time of the occurrence of the act giving rise to the cause of action, unless the fact of injury is not reasonably ascertainable." See v. Hartley, 257 Kan. 813, 820, 896 P.2d 1049, 1054 (Kan. 1995). The running of the statute of limitations starts as soon as the right to maintain a legal action arises. Johnston v. Farmers Alliance Mutual Ins. Co., 218 Kan. 543, 548, 545 P.2d 312, 317 (1976). In Johnston v. Farmers Alliance Mutual Ins. Co., the Kansas Supreme Court determined that the statute of limitations began running for a terminated employee when he received notice of his termination even though his damages accrued once the termination became effective. Id. The court affirmed this decision in Whye v. City Council for the City of Topeka by holding that the cause of action accrued and the statute of limitations began to run when an employee tendered resignation or announced plans to retire and not when the resignation became effective. 278 Kan. 458, 464, 102 P.3d 384, 387 (2004).
Aviva notified plaintiff of the termination of their contractual relationship, as well as the termination of all contracts with downline agents, during the November 6, 2008 call. Although the injury did not occur until the termination became effective on January 30, 2009, the injury was reasonably ascertainable to plaintiff in November because the damages associated with the contract terminationswere known at that time. The statute began to run as soon as plaintiff received notice of termination and could maintain a legal action, not when the termination became effective. Because this action was filed on January 28, 2011 and the two year statute of limitations ended on November 6, 2010, plaintiff's claim of tortious interference is time-barred. Therefore, defendants' motion to dismiss plaintiff's claim of tortious interference is granted.
A civil conspiracy claim requires an agreement between two or more persons to accomplish an underlying tort. Wells Fargo Bank v. Ariz. Laborers, Teamsters and Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 498, 38 P.3d 12, 36 (2002). Plaintiff claims defendants conspired to tortiously interfere with plaintiff's Aviva contract and plaintiff's business expectancies. Defendants respond that because the tortious interference claim fails based on the statute of limitations, the civil conspiracy claim must also fail because there is no underlying tort. Here, unlike Wells Fargo, the court dismissed the underlying tort because it was time barred and not because the alleged tort had not been accomplished. The court has not decided the tortious interference claim on the merits. Although the claim is dismissed because of the statute of limitations, the underlying tort might still have been accomplished and a claim for civil conspiracy could still exist.2
Defendants also argue that plaintiff did not plead facts makingit plausible that defendants entered into an agreement to tortiously interfere with the contract or business expectancies. A civil conspiracy claim requires an agreement between two or more persons to accomplish an unlawful purpose or a lawful purpose by unlawful means. See Dawson v. Withycombe, 216 Ariz. 84, 163 P.3d 1034, 1053 (Ariz. Ct. App. 2007). A plaintiff does not need to show an express agreement to prevail on a civil conspiracy claim; however, there must be at least a tacit...
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