Yenchi v. Ameriprise Fin., Inc.

• Decision Date: 15 September 2015
• Docket Number: No. 753 WDA 2014,753 WDA 2014
• Citation: 2015 PA Super 195,123 A.3d 1071
• Parties: Eugene R. YENCHI and Ruth I. Yenchi, Husband and Wife Appellants v. AMERIPRISE FINANCIAL, INC., Ameriprise Financial Services, Inc., RiverSource Life Insurance Company and Bryan Gregory Holland, Appellees.
• Court: Pennsylvania Superior Court

123 A.3d 1071

2015 PA Super 195

Eugene R. YENCHI and Ruth I. Yenchi, Husband and Wife Appellants

v.AMERIPRISE FINANCIAL, INC., Ameriprise Financial Services, Inc., RiverSource Life Insurance Company and Bryan Gregory Holland, Appellees.

No. 753 WDA 2014

Superior Court of Pennsylvania.

Argued Feb. 24, 2015.

Filed Sept. 15, 2015.

Reargument Denied Nov. 19, 2015.

Kenneth R. Behrend, Sr., Pittsburgh, for appellants.

Kathy K. Condo, Pittsburgh, for appellees.

Opinion

OPINION BY BENDER, P.J.E.:

Eugene R. Yenchi and Ruth I. Yenchi (the Yenchis or Appellants) appeal from the judgment entered May 5, 2014, following a trial that resulted in a favorable verdict for Appellees, Ameriprise Financial, Inc., Ameriprise Financial Services, Inc., Riversource Life Insurance Company, and Bryan Gregory Holland. Essentially, the Yenchis challenge allegedly improper sales practices by Appellees, which induced them to purchase life insurance. In our view, where the offer to sell an insurance product is premised upon the results of an allegedly independent financial analysis, a question of fact may arise regarding whether the financial analyst/insurance salesperson incurs a fiduciary duty.

This conclusion requires a rather complicated disposition. Initially, we reverse in part the summary judgment entered by the trial court in favor of Appellees. The trial court's decision on summary judgment formed the basis of evidentiary decisions affecting the Yenchis' remaining claims. Accordingly, we vacate the judgment entered and remand for a new trial on those claims. For clarity on remand, we affirm two of the trial court's rulings. Thus, we affirm in part, reverse in part, vacate the judgment entered and remand.

In 1995, Mr. Holland contacted the Yenchis, identified himself as a financial advisor from American Express, and offered to perform a financial analysis on their behalf. The Yenchis met with Mr. Holland at his office in December 1995, and agreed to purchase a financial analysis for $350.00. The Yenchis discussed their current financial status with Mr. Holland, providing him information regarding their employment, savings and insurance coverage. Thereafter, Mr. Holland presented the Yenchis with a detailed, financial management proposal, including several recommendations to better prepare for their retirement.

One recommendation from the proposal entailed consolidation of the Yenchis' several life insurance policies into a single, universal life insurance policy from IDS Life Insurance (IDS).¹Mr. Holland represented to the Yenchis that they could use the cash value of their pre-existing policies to finance a new, single policy, and that the premiums required would never increase and would cease after eleven years. In June 1996, the Yenchis followed this recommendation; cash-surrendered several policies; and used the proceeds to help finance the purchase of a new policy in Mr. Yenchi's name. The policy provided an initial death benefit of $100,000.00, decreasing at regular intervals, and included a $25,000.00 rider for 20 years for Mrs. Yenchi. The premium for the policy was to be $240.00 per month.

Mr. Holland also recommended that the Yenchis purchase a deferred, variable annuity from IDS to prepare for Mrs. Yenchi's retirement. According to Mr. Holland, the annuity would mature when Mrs. Yenchi reached age sixty-five, at which point, she would receive a monthly check. In March 1997, the Yenchis followed this recommendation. In order to finance the purchase of the annuity, the Yenchis cash-surrendered their remaining life insurance policies and further agreed to deposit $75.00 per month into the annuity fund.

In 2000, the Yenchis had the life insurance policy reviewed independently. Following this review, they learned that the policy was underfunded, that their premiums would never cease, and that, in fact, their premiums would increase. At some point, the Yenchis also learned that the annuity purchased in 1997 would not mature until 2025, when Mrs. Yenchi will be eighty-four years old (not sixty-five). Moreover, the Yenchis learned that any early withdrawals from the annuity fund would incur penalty charges.

The Yenchis commenced this lawsuit in April 2001.²Thereafter, they filed a complaint in November 2003, alleging negligent misrepresentation, fraudulent misrepresentation, violation of the Unfair Trade Practices Consumer Protection Law (UTPCPL),³bad faith, breach of fiduciary duty, and negligent supervision.

In June 2011, Appellees filed a motion for summary judgment, inter alia,contending that the Yenchis could not establish a fiduciary relationship as a matter of law. Appellees' Motion for Summary Judgment, 06/03/2011, at 4; see alsoAppellees' Memorandum of Law in Support of Motion for Summary Judgment, 06/03/2011, at 24–28. The trial court agreed and dismissed the claim for breach of fiduciary duty. SeeTrial Court Order, 03/25/2013.⁴

Prior to trial, the Yenchis voluntarily dismissed their claim for negligent misrepresentation. Trial commenced in January 2014. Thereafter, a jury returned a verdict in favor of Appellees on the claim of fraudulent misrepresentation, whereas the trial court found in favor of Appellees on the UTPCPL claim. The Yenchis timely filed post-trial motions for relief that were denied by the trial court, seeTrial Court Order, 04/14/2014; timely appealed from the judgment entered; and filed a court-ordered Pa.R.A.P.1925(b)statement. The trial court issued responsive memoranda.

The Yenchis raise the following issues on appeal:

[1.] [Whether] the trial court err[ed] in partially granting [Appellees'] motion for summary judgment by dismissing [Appellants'] fiduciary duty claim[;]

[2.] [Whether] the trial court err[ed] by entering an order denying [Appellants'] “global” motion to compel discovery concerning production of documents responsive to [Appellants'] request regarding management's knowledge and awareness of planning, design[,] and use of financial planning services as a tool for deceptive life insurance sales, and the knowledge of sales problems with universal life insurance policies[;]

[3] [Whether] the trial court err[ed] by granting [Appellees'] motions in limine based on the dismissal of [Appellants'] fiduciary duty claim and thereby limiting the introduction of evidence of fraudulent misrepresentation at trial[;]

[4] [Whether] it was reversible error for the trial court[ ] to decide the UTPCPL claim using the pre-amended 1996 version of the statute[; and]

[5.] [Whether] the trial court err[ed] by entering an order striking all of [Appellants'] voir dire questions without amending the questions.

Appellants' Brief at 5 (internal capitalization modified).

In their first issue, the Yenchis contend that the trial court erred when it dismissed their claim for breach of fiduciary duty on Appellees' motion for summary judgment.

Our scope of review of an order granting summary judgment is plenary. We apply the same standard as the trial court, reviewing all the evidence of record to determine whether there exists a genuine issue of material fact. We view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Only where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to a judgment as a matter of law will summary judgment be entered.

Motions for summary judgment necessarily and directly implicate the plaintiff's proof of the elements of his cause of action. Thus, a record that supports summary judgment will either (1) show the material facts are undisputed or (2) contain insufficient evidence of facts to make out a prima facie cause of action or defense and, therefore, there is no issue to be submitted to the fact-finder. Upon appellate review, we are not bound by the trial court's conclusions of law, but may reach our own conclusions. The appellate court may disturb the trial court's order only upon an error of law or an abuse of discretion.

DeArmitt v. N.Y. Life Ins. Co.,73 A.3d 578, 585–586 (Pa.Super.2013)(internal citations and quotation marks omitted; some punctuation modified).

Further background on Appellees' motion will be helpful. Their precise contention before the trial court was that “[t]here was no fiduciary relationship as a matter of law.” Appellees' Motion for Summary Judgment, 06/03/2011, at 4. In support of this contention, Appellees first characterized their relationship with the Yenchis merely as one between the seller and purchaser of insurance.SeeAppellees' Memorandum of Law in Support of Motion for Summary Judgment, 06/03/2011, at 24. As such, Appellees thereafter argued that no confidential relationship could arise, absent evidence that the Yenchis ceded decision-making authority to Mr. Holland. Id.at 24–25 (citing in support Ihnat v. Pover,1999 WL 34788321 (Pa.Com.Pl. Feb. 1, 1999)(Wettick, J.)).

In response, the Yenchis identified evidence supporting their basic contentions that Appellees presented themselves as financial experts, who conducted a financial analysis on their behalf (in exchange for payment) that resulted in a financial management proposal. See, e.g.,Appellants' Response to Motion for Summary Judgment (Response), 02/06/2013, at 3–4. The Yenchis conceded that elements of this proposal included both the purchase of new life insurance, see id.at 4–7, and the purchase of the annuity, see id.at 7–9. However, according to the Yenchis, because they paid Mr. Holland to provide investment-planning advice, their relationship was not merely a typical relationship between insurer and insured, and a confidential relationship arose.⁵Id.at 20.

The trial court rejected the Yenchis' argument. Relying on its previous rulings, the court concluded that “the relationship between the seller of insurance and the purchaser of insurance should not be characterized as a fiduciary relationship,” absent those “instances in which the policyholder...