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Premier Funding Group LLC v. Aviva Life and Annuity Co.

United States District Court, D. Arizona

February 25, 2015

Premier Funding Group LLC, Plaintiff,
Aviva Life and Annuity Company, et al., Defendants.


DAVID G. CAMPBELL, District Judge.

Defendant Crump Life Insurance Services, Inc. has filed a motion to dismiss. Doc. 89. The motion is fully briefed. The Court will grant the motion on Premier's claims for insurance fraud and negligent supervision, and deny the motion on Premier's claims for unjust enrichment and vicarious liability.[1]

I. Background.

This case involves a $566, 850 loan that Plaintiff Premier Funding Group made on the basis of Defendant Richard Baldwin's alleged fraud. Baldwin was an insurance agent who had an agreement with Aviva Life and Annuity Company to sell insurance products. Doc. 84, ¶¶ 2, 18-19. In the spring of 2011, Baldwin began working with Gardner Brown to sell two Aviva life insurance policies to Brown's clients. Id., ¶ 23. Among Brown's clients were David and Victor Kimball, who live in Utah. Id., ¶¶ 6-7, 38. Although the Kimballs had completed much of the paperwork necessary to acquire two $10 million life insurance policies for themselves, they ultimately informed Brown that they did not want the policies. Id., ¶¶ 44-47, 57. Brown gave this information to Baldwin. Id., ¶ 58. Baldwin told Brown that he would nevertheless complete the underwriting on the Kimballs' application in case they changed their minds. Id., ¶ 59.

Baldwin worked with Nicholas Larsen and the company that employed Larsen, Crump Life Insurance Services. Id., ¶¶ 67, 93-94. Crump is an independent wholesale distributor of life insurance. Id., ¶¶ 3, 16. Baldwin and Larsen used Crump to process Aviva life insurance policy applications and Crump paid them commissions for their work. Id., ¶¶ 47-48, 67. At some point, Larsen allegedly forged the Kimballs' signatures on promissory notes that were to be given to Plaintiff Premier Funding Group, LLC in exchange for a loan to fund the substantial premiums on the life insurance policies. Id., ¶¶ 93, 216-18.

Premier is an Arizona company that provides premium financing. Id., ¶¶ 1, 51. Premium financing involves the loaning of funds necessary to pay insurance premiums. Id., ¶ 26. To obtain financing for the Kimballs' life insurance policy, Baldwin sent Premier the promissory notes with the forged signatures of the Kimballs. Id., ¶¶ 74, 216-18. As was common for this type of transaction, Baldwin also agreed to purchase the promissory notes from Premier with the commission money he would receive for selling the life insurance policies. Id., ¶¶ 53-55, 74. Following Baldwin's instructions, Premier wired $566, 850 that ultimately went to Aviva. Id., ¶ 83. Aviva then issued the policies for the Kimballs and paid commissions to Baldwin and Crump. Id., ¶ 84-85.

Gardner Brown soon discovered that Aviva had issued the life insurance policies even though his clients, the Kimballs, did not want them. Id., ¶ 92. Brown's lawyer and the Kimballs informed Aviva that the Kimballs had not agreed to purchase the policies. Id., ¶¶ 96-98. Soon after, Aviva terminated Baldwin and began an investigation into the Kimballs' policies. Id., ¶¶ 103-15. In January of 2012, Premier's counsel sent a letter to Aviva demanding that Aviva hold in trust the money it had received for the Kimballs' life insurance. Id., ¶ 109. After receiving these letters, Aviva began to unwind the fraudulent transactions involving the Kimballs ( id., ¶¶ 115-24), but Aviva refused to return the $566, 850 to Premier ( id., ¶ 175).

On February 6, 2014, Premier filed this lawsuit in Maricopa County Superior Court. Doc. 1-3. Premier sued Aviva, Crump, Baldwin, Larsen, Anthony Lengeling, and the Kimballs. Id. Premier subsequently dismissed its claims against the Kimballs. Doc. 1-3 at 97. On July 18, 2014, Defendants removed the case to this Court. See Doc. 1-2; Doc. 73. The Court granted Defendant Lengeling's motion to dismiss for lack of personal jurisdiction and granted in part Aviva's motion to dismiss for failure to state a claim. Doc. 96.

II. Legal Standard.

When analyzing a complaint for failure to state a claim to relief under Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the complaint must plead enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This plausibility standard "is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged B but it has not show[n]' B that the pleader is entitled to relief.'" Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

III. Material Outside the Pleadings.

Crump asks the Court to consider two documents in ruling on the motion to dismiss. Generally, the Court will not consider evidence beyond the complaint when ruling on a Rule 12(b)(6) motion. See United States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003). "If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court the motion must be treated as one for summary judgment under Rule 56." Fed.R.Civ.P. 12(d). "A court may, however, consider certain materials - documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice - without converting the motion to dismiss into a motion for summary judgment." Ritchie, 343 F.3d at 908. A court may also "consider evidence on which the complaint necessarily relies' if: "(1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion." Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (citation omitted). If a plaintiff disputes the truth of statements contained in an extrinsic document, a court may not consider those statements in ruling on a motion to dismiss. See Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001).

The first document submitted by Crump is a transcript of a Utah criminal preliminary hearing in which Defendants Richard Baldwin and Nicholas Larsen testified. Doc. 89-1. Premier's Second Amended Complaint cites testimony from this hearing to support its claim that Larsen was responsible for forging the Kimballs' signatures on the promissory notes. Doc. 84, ¶ 216. Crump seeks to use Larsen's testimony to establish that his conduct was outside the course and scope of his employment with Crump. See Doc. 89 at 15. In its response, Premier questions the credibility of Larsen's testimony. Doc. 110 at 3-4. Because Premier disputes the truth of Larsen's statements, the Court will not consider these statements in ruling on the motion to dismiss. See Lee, 250 F.3d at 689.

The second document consists of the Kimballs' life insurance applications. Doc. 89-2. Premier also questions the authenticity of these documents. Doc. 110 at 4. The Court therefore will not consider them. See Marder, 450 F.3d at 448. Given the early stage of this litigation, the Court ...

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