Whatley v. The Ohio National Life Insurance Company

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

SOUTHERN DIVISION

TRIP WHATLEY, et al., )

)

Plaintiffs, )

)

v. ) CIV. ACT. NO. 1:19-cv-40-ECM

) (WO)

THE OHIO NATIONAL LIFE )

INSURANCE COMPANY, et al., )

)

Defendants. )

MEMORANDUM OPINION and ORDER

On January 11, 2019, Trip Whatley, Susan Moore, Tracy Lentz, Keith Bowers, and

Chris Noone (collectively “Plaintiffs”) initiated this lawsuit against Ohio National Life

Insurance Company, Ohio National Life Assurance Company, and Ohio National Equities,

Inc. (collectively “Defendants”). (Doc. 1). On April 2, 2019, the Plaintiffs filed an

amended complaint. (Doc. 19). In their amended complaint, the Plaintiffs bring four causes

of action against the Defendants: (1) breach of contract; (2) unjust enrichment; (3)

promissory estoppel; and (4) tortious interference with business relations. (Id. at 21-25).

This matter is now before the Court on the Defendants’ Motion to Dismiss the

Plaintiffs’ amended complaint. (Doc. 20). The Court must resolve four primary issues in

ruling on the Defendants’ Motion to Dismiss: (1) whether the Court may exercise personal

jurisdiction over the Defendants in connection with the claims of non-resident Plaintiffs

Bowers and Noone; (2) whether the Plaintiffs have standing to assert claims based on an

alleged breach of contract to which they are not a party; (3) whether the Plaintiffs’ may

maintain their equitable claims; and (4) whether the Defendants intentionally interfered

with the Plaintiffs’ business relations.

For the following reasons, the Court resolves each of these issues in favor of the

Defendants.1 Accordingly, the Defendants’ Motion to Dismiss is due to be granted.

I. BACKGROUND

The Plaintiffs are licensed sales representatives for the following broker dealers:

LPL Financial, ProEquities, Inc., Securities America, and Next Financial Group. These

broker dealers, through their representatives such as the Plaintiffs, sold certain variable

annuities issued by the Defendants pursuant to Selling Agreements between the Defendants

and individual broker dealers. The Plaintiffs are not parties to these Selling Agreements,

but they assert that they are intended third-party beneficiaries of the Selling Agreements.

The Plaintiffs allege that the Defendants breached the Selling Agreements by

ceasing payment of trail commissions on previously sold variable annuity contracts after

the Defendants terminated the Selling Agreements without cause effective December 12,

2018. With respect to their third-party beneficiary status, the Plaintiffs contend that “the

Selling Agreements clearly and expressly manifest an intention that sales representatives,

1 The Plaintiffs also allege a claim for declaratory relief pursuant to 28 U.S.C. § 2201. (Doc. 19 at

25). A federal court may only issue a declaratory judgment, however, if an actual controversy exists

between the parties. Gerber Chiropractic LLC v. GEICO Gen. Ins. Co., 925 F.3d 1205, 1210 (11th Cir.

May 30, 2019). Here, no actual controversy exists between the parties because the Plaintiffs fail to establish,

as a matter of law, any of their underlying substantive claims. Thus, the Plaintiffs are not entitled to

declaratory relief.

such as Plaintiffs, will benefit from Selling Agreements in the form of pass-through

commissions, including trail commissions.” (Doc. 19 at 16).

On April 16, 2019, the Defendants filed a Motion to Dismiss the Plaintiffs’ claims

pursuant to rules 12(b)(1), 12(b)(2), and 12(b)(6) of the Federal Rules of Civil Procedure.

The Defendants assert that the Court “lacks personal jurisdiction over [the] Defendants as

to the claims of two of the Plaintiffs, Keith Bowers and Chris Noone.” (Doc. 20 at 2).

Moreover, the Defendants contend that the Plaintiffs do not have standing to assert a breach

of contract claim because they are neither parties to the Selling Agreement nor intended

third-party beneficiaries. (Id. at 3). Lastly, the Defendants argue that the remainder of the

Plaintiffs’ claims – unjust enrichment, promissory estoppel, and tortious interference with

business relations – fail as a matter of law.

II. JURISDICTION and VENUE

The Court possesses subject matter jurisdiction over this case pursuant to 28 U.S.C.

§ 1332(a) because the amount in controversy exceeds $75,000, exclusive of interests and

costs, and complete diversity exists between the parties. Venue is proper pursuant to 28

U.S.C. § 1391(b)(2).

The Defendants, however, contend that the Court may not exercise personal

jurisdiction over them as it relates to the claims of non-resident Plaintiffs Bowers and

Noone. The Plaintiffs disagree, asserting that the Court may exercise personal jurisdiction

over the Defendants because the Defendants’ contacts with Alabama give rise to both

general and specific jurisdiction.

The Defendants are Ohio corporations, each with its principal place of business

located in Cincinnati, Ohio. Plaintiff Bowers is a resident of the state of Georgia and

Plaintiff Noone is a resident of the state of Mississippi.

III. PERSONAL JURISDICTION

A. Standard of Review

“A plaintiff seeking the exercise of personal jurisdiction over a nonresident

defendant bears the initial burden of alleging in the complaint sufficient facts to make out

a prima facie case of jurisdiction.” Diamond Crystal Brands, Inc. v. Food Movers Intern.,

Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (quoting United Techs. Corp. v. Mazer, 556

F.3d 1260, 1274 (11th Cir. 2009)). “A prima facie case is established if the plaintiff

presents enough evidence to withstand a motion for a directed verdict.” Meier ex rel. Meier

v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002). Moreover, whether a

district court may exercise personal jurisdiction over a defendant is a question of law.

Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1217 (11th Cir. 2009).

B. Discussion

i. The non-resident Plaintiffs fail to establish personal jurisdiction over the

Defendants

The Defendants move to dismiss the claims of non-resident Plaintiffs Bowers and

Noone pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Specifically, the

Defendants assert that “Bowers and Noone, as non-Alabama residents who have not

alleged any conduct by Defendants in Alabama that caused them alleged harm, are not

entitled to piggy back on the claims of other plaintiffs as to which personal jurisdiction

over Defendants may exist.” (Id. at 9-10). Further, the Defendants contend that the

Plaintiffs’ factual allegations fail to establish either general or specific jurisdiction in

connection with the claims of Bowers and Noone. (Id. at 10). With respect to general

jurisdiction, the Defendants assert that the Plaintiffs’ factual allegations fail to demonstrate

that the Defendants’ contacts with the forum place them “at home” in the state of Alabama.

(Id. at 11). Regarding specific jurisdiction, the Defendants contend that none of their

contacts with the state of Alabama give rise to Bowers’ and Noone’s alleged injuries, thus

defeating personal jurisdiction. (Id. at 13).

The Plaintiffs argue that the Defendants are “subject to general jurisdiction in the

state of Alabama with regard to the claims of all Plaintiffs, including non-resident Plaintiffs

Bowers and Noone, by virtue of [the Defendants’] continuous and systematic activities and

affiliations within the state of Alabama, which render it essentially ‘at home’ in Alabama .

. ..” (Doc. 19 at 7). In support of their general jurisdiction claim, the Plaintiffs allege that

the Defendants had the following contacts with the forum: the Defendants maintained a

subsidiary, sold annuity products, registered to do business, appointed a registered agent,

and marketed life insurance products in Alabama. (Id. at 8-9).

Concerning specific jurisdiction, the Plaintiffs appear to argue that because non-

resident Plaintiffs Bowers and Noone entered into Selling Agreements with the Defendants

in Georgia and Mississippi that were substantially similar to the Selling Agreements the

resident Plaintiffs entered into in Alabama, the Court may exercise personal jurisdiction

over the Defendants. The Court disagrees with both of the Plaintiffs’ jurisdictional

arguments.

“A federal court sitting in diversity undertakes a two-step inquiry in determining

whether personal jurisdiction exists: the exercise of jurisdiction must (1) be appropriate

under the state long-arm statute and (2) not violate the Due Process Clause of the

Fourteenth Amendment of the United States Constitution.” United Techs. Corp. v. Mazer,

556 F.3d 1260, 1274 (11th Cir. 2009). Here, “the two inquiries merge, because Alabama’s

long-arm statute permits the exercise of personal jurisdiction to the fullest extent

constitutionally permissible.” Sloss Indus. Corp. v. Euisol, 488 F.3d 922, 925 (11th Cir.

2007) (citing Ala. R. Civ. P. 4.2(b)). “Thus, the sole issue in this [C]ourt’s jurisdictional

analysis is whether Alabama’s exercise of jurisdiction over [the Defendants] violates due

process.” Aeropower, Ltd. v. Matherly, 511 F.Supp.2d 1139, 1154 (M.D. Ala. 2007).

Addressing general jurisdiction first, “[a] court may assert general jurisdiction over

foreign (sister-state or foreign country) corporations to hear any and all claims against them

when their affiliations with the state are so ‘continuous and systematic’ as to render them

essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown,

564 U.S. 915, 919 (2011). The United States Supreme Court has “made clear that only a

limited set of affiliations with a forum will render a defendant amenable to [general

jurisdiction] there.” Daimler AG v. Bauman, 517 U.S. 117, 137 (2014); see also BNSF Ry.

Co. v. Tyrrell, 137 S. Ct. 1549, 1558 (2017) (noting the limited circumstances that give rise

to general jurisdiction over non-resident defendant).

Absent exceptional circumstances, general jurisdiction only exists over a corporate

defendant in its place of incorporation or principal place of business. E.g., Goodyear, 564

U.S. at 924; Daimler, 571 U.S. at 137; BNSF, 137 S. Ct. at 1558. Exceptional

circumstances exist when “a corporate defendant’s operations in another forum ‘[are] so

substantial and of such a nature as to render the corporation at home in that State.’” BNSF,

137 S. Ct. at 1558 (quoting Daimler, 571 U.S. at 139 n.19).

“The textbook case of general jurisdiction appropriately exercised over a foreign

corporation that has not consented to suit in the forum” is Perkins v. Benguet Consol.

Mining Co., 342 U.S. 437 (1952). Goodyear, 564 U.S. at 928 (citations omitted). In

Perkins, the plaintiff sued a Philippine mining corporation in Ohio on a claim that did not

arise in Ohio nor did it relate to the defendant’s activities in that state. Perkins, 342 U.S. at

415. The defendant mining corporation had stopped its business activities in the

Philippines because of World War II and began conducting such activities in the state of

Ohio. Id at 447. Specifically, the defendant “corporation’s president maintained his office

there, kept company files in that office, and supervised from the Ohio office ‘the

necessarily limited wartime activities of the company.’” Id. at 447-48. Because these facts

established that Ohio was the defendant corporation’s principal, albeit temporary, place of

business, Ohio courts could exercise general jurisdiction over the defendant without

violating due process. Id. at 448.

In the instant case, the Plaintiffs’ factual allegations concerning general jurisdiction

fail to establish that the Defendants are at home in Alabama. First, the Plaintiffs concede

that the Defendants are incorporated in Ohio and maintain their principal places of business

there. (Doc. 19 at 5). Next, unlike Perkins, the fact that the Defendants “marketed and sold

annuities and other insurance products in the state of Alabama on a systematic and regular

basis” did not constitute relocation of their principal places of business from Ohio to

Alabama. (Id. at 6). In fact, the Daimler court held that general jurisdiction did not exist

over a defendant whose contacts with the forum state were far more substantial than those

of the Defendants in the present case. See Daimler, 571 U.S. at 123 (holding that general

jurisdiction did not exist when the defendant’s wholly owned subsidiary maintained a

production facility in the forum state and was the largest supplier of luxury vehicles there,

accounting for 2.4% of the defendant’s worldwide sales). Indeed, “a corporation’s

‘continuous activity of some sorts within a state is not enough to support the demand that

the corporation be amenable to suits unrelated to that activity.’” Id. at 132 (quoting Int’l

Shoe Co. v. Washington, 326 U.S. 310, 318 (1945)).

The Plaintiffs’ arguments that the fact that the Defendants appointed agents for

service of process and registered to do business in Alabama supports a finding of general

jurisdiction also fall short. See Beasley v. Providence Hosp., 2018 WL 2994380 (S.D. Ala.

2018) (finding no general jurisdiction even though the defendant was licensed to do

business in Alabama and had a registered agent for service of process in the state); see also

Consolidated Development Corp. v. Sherritt, Inc., 216 F.3d 1286, 1293 (11th Cir. 2000)

(holding “[t]he casual presence of a corporate agent in the forum is not enough to subject

the corporation to suit where the cause of action is unrelated to the agent’s activities.”).

Moreover, the presence of the Defendants’ subsidiary, Ohio National Insurance

Agency of Alabama, Inc., in Alabama does not, by itself, give rise to general jurisdiction

over the Defendants. See Binder v. Cmty. Health Sys., 2017 WL 283260 at *3 (N.D. Ala.

2017) (finding that the relationship between parent and subsidiary alone did not establish

general jurisdiction over the defendant). Thus, the Defendants’ affiliations with Alabama

“are not ‘so substantial’ as to make this one of those ‘exceptional’ cases in which a non-

resident corporation is at ‘home’ in a forum other than its place of incorporation or principal

place of business. Carmouche v. Tamborlee Mgmt., Inc., 789 F.3d 1201, 1204 (11th Cir.

2015) (quoting Daimler, 571 U.S. at 139 n.19).

Because the Defendants are not subject to general jurisdiction in Alabama, the Court

must consider whether specific jurisdiction exists over the claims of non-resident Plaintiffs

Bowers and Noone. The Eleventh Circuit employs a three-part test to determine if a court

may exercise specific jurisdiction over a defendant:

First, the defendant must have contacts related to or giving rise

to the plaintiff’s cause of action. Second, the defendant must,

through those contacts, have purposefully availed itself of

forum benefits. Third, the defendant’s contacts with the forum

must be such that it could reasonably anticipate being haled

into court there.

Fraser v. Smith, 594 F.3d 842, 850 (11th Cir. 2010) (citing Sculptchair, Inc. v. Century

Arts, Ltd., 94 F.3d 623, 631 (11th Cir. 1996)). Further, “a fundamental element of the

specific jurisdiction calculus is that the plaintiff’s claim must ‘arise out of or relate to’ at

least one of the defendant’s contacts with the forum.” Id. (citations omitted). Put

differently, the court’s “inquiry must focus on the direct causal relationship among ‘the

defendant, the forum, and the litigation.’” Id. (citations omitted).

The United States Supreme Court decision, Bristol-Myers Squibb Co. v. Superior

Court, 137 S. Ct. 1773 (2017), sheds light on the requirement that a non-resident plaintiff’s

claim must arise out of or relate to the defendant’s contacts with the forum state. In Bristol-

Myers, a group of non-resident plaintiffs brought suit against the defendant in California

Superior Court, “asserting a variety of state-law claims based on injuries allegedly caused

by [the defendant’s] drug called Plavix.” Id. at 1777. Importantly, the court held that

California could not exercise specific jurisdiction over the defendant as it related to the

non-resident plaintiffs’ claims. In reaching its decision, the court noted that the non-

resident plaintiffs failed to allege any connection between their claims and the forum state.

Id. at 1781. Specifically, “[t]he nonresident plaintiffs did not allege that they obtained

Plavix through California physicians or from any other California source; nor did they

claim that they were injured by Plavix or were treated for their injuries in California.” Id.

at 1778. Moreover, the court reasoned “[t]he mere fact that other plaintiffs were

prescribed, obtained, and ingested Plavix in California – and allegedly sustained the same

injuries as did the nonresidents – does not allow the State to assert specific jurisdiction over

the nonresidents’ claims.” Id. 1781 (emphasis in original).

Here, the claims of non-resident Plaintiffs Bowers and Noone do not arise out of or

relate to any of the Defendants’ contacts with Alabama. First, like Bristol-Myers, non-

resident Plaintiffs Bowers and Noone do not allege that they entered into the Selling

Agreements with the Defendants in Alabama, solicited sales in Alabama, or suffered harm

in the state. Further, as the court in Bristol-Myers highlighted, the fact that the resident

Plaintiffs’ claims arose from the Defendants’ contacts with the forum does not allow the

Court to assert specific jurisdiction over the claims of non-resident Plaintiffs Bowers and

Noone. Nor can the Court exercise specific jurisdiction simply because the non-resident

Plaintiffs allegedly suffered similar injuries as the resident Plaintiffs.

Bowers and Noone are residents of Georgia and Mississippi, and they have not

alleged any connection between the state of Alabama and their specific claims. Thus, the

Court finds specific jurisdiction lacking as to the claims of non-resident Plaintiffs Bowers

and Noone. Because the Plaintiffs fail to establish a basis for either general or specific

jurisdiction, the Defendants’ Motion to Dismiss Bowers’ and Noone’s claims is due to be

granted.

IV. MOTION TO DISMISS

A. Standard of Review

“To survive a motion to dismiss [for failure to state a claim], a complaint must

contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. “Determining whether a complaint

states a plausible claim for relief [is] . . . a context-specific task that requires the reviewing

court to draw on its judicial experience and common sense.” Id. at 679.

In analyzing a motion to dismiss for failure to state a claim pursuant to Rule

12(b)(6), the court accepts the factual allegations in the complaint as true, and construes

them in the light most favorable to the plaintiff. Chaparro v. Carnival Corp., 693 F.3d

1333, 1335 (11th Cir. 2012). However, “if allegations [in the complaint] are indeed more

conclusory than factual, then the court does not have to assume their truth.” Id. at 1337.

“[A] plaintiff’s obligation to provide the grounds of his entitlement to relief requires more

than labels and conclusions, and a formulaic recitation of the elements of a cause of action

will not do.” Twombly, 550 U.S. at 555.

B. Discussion

i. The Plaintiffs are not intended third-party beneficiaries under the Selling

Agreements

The Defendants move to dismiss the Plaintiffs’ breach of contract claim. (Doc. 20).

Specifically, the Defendants argue that the Plaintiffs are not intended third-party

beneficiaries because “the plain language of the Selling Agreements forecloses a finding

that such agreement [sic] was [sic] entered directly or primarily for the benefit of [the

Plaintiffs.]” (Id. at 15). The Court agrees.

Ohio courts2 employ the “intent to benefit” test found in the Restatement (Second)

of Contracts § 302 to determine whether a third-party beneficiary may sue to enforce a

contract to which they are not a party. See Hill v. Sonitrol of SW Ohio, Inc., 36 Ohio St. 3d

36, 521 N.E.2d 780, 784 (1988). Under this test, “if the promisee . . . intends that a third-

party should benefit from the contract, then that third party is an ‘intended beneficiary’

who has enforceable rights under the contract.” Norfolk & W. Co. v. U.S., 641 F.2d 1201,

1208 (6th Cir. 1980).

Conversely, “[i]f the promisee has no intent to benefit a third party, then any third-

party beneficiary to the contract is merely an ‘incidental beneficiary’, who has no

enforceable rights under the contract.” Id. The Supreme Court of Ohio elaborated on the

2 The Court analyzes liability for breach of contract under Ohio law because Section 22 of the

Selling Agreements reads “[t]his agreement will be construed in accordance with the laws of the State of

Ohio.” (Doc. 19-1 at 3).

intent to benefit test, stating “Ohio law . . . requires that for a third party to be an intended

beneficiary under a contract, there must be evidence that the contract was intended to

directly benefit that third party.” Huff v. FirstEnergy Corp., 130 Ohio St. 3d 196, 957

N.E.2d 3, 7 (2011) (emphasis added).

In support of their alleged status as intended third-party beneficiaries, the Plaintiffs

assert, among other things, “[t]he Selling Agreements explicitly contemplate that broker-

dealers will delegate the marketing and sale of Annuities to their employees or other third-

parties who will act as “Representatives” as set forth in the Selling Agreements.” (Doc. 19

at 14). Further, the Plaintiffs contend that “[t]he Selling Agreements expressly

acknowledge that commissions paid by [the Defendants] to the broker-dealers will pass

through to these sales representatives, including Plaintiffs, according to a separate

agreement between the broker-dealer and sales representatives.” (Id.). The Plaintiffs also

allege that the Selling Agreements refer to them in their capacity as sales representatives

more than twenty-five (25) times. (Id. at 15).

Even accepting the factual allegations as true and construing them in the light most

favorable to the Plaintiffs, the Court concludes that they fail to plausibly state a claim for

breach of contract. In two nearly identical cases, Browning v. Ohio Nat’l Life Ins. Co, 2019

WL 4885205 (S.D. Ohio Oct. 2, 2019) and Cook v. Ohio Nat’l Ins. Co., 2019 WL 4885500

(S.D. Ohio Oct. 2, 2019), a federal court in Ohio addressed whether sales representatives

qualified as intended third-party beneficiaries under Selling Agreements similar to those at

issue in the present case. In both Browning and Cook, the Ohio court determined that the

sales representatives did not qualify as intended third-party beneficiaries, thus depriving

them of standing to enforce the contract.

In reaching its decision, the Browning court examined several provisions of the

Selling Agreements. First, the court highlighted Section 9 of the Selling Agreement, which

reads “[c]ommissions payable in connection with the contracts shall be paid to [the broker

dealers], or its affiliated insurance agency, according to the Commission Schedule(s)

relating to this Agreement . . ..” (Doc. 19-1 at 3). Based on this language, the court

concluded “under the Selling Agreement the payment of compensation . . . flows only from

[the Defendants] to [the broker dealers].” Browning, 2019 WL 4885205 at *3.3 In other

words, pursuant to the plain language in the Selling Agreements, the Defendants paid

commissions to the broker dealers, not the Plaintiffs.

The court highlighted another provision of Section 9, which reads “[c]ompensation

to the [broker dealers’] Representatives for Contracts solicited by the Representatives and

issued by [the Defendants] will be governed by agreement between [the broker dealers]

and its Representatives and its payment will be the [broker dealers’] responsibility.” (Doc.

19-1 at 3). This provision “disclaimed any intention for [the Defendants] to render payment

to [the plaintiff] for the solicitation of the variable annuity contracts.” Browning, 2019 WL

4885205 at *3.

Moreover, the court found that this provision “did not mandate that [the broker

dealers] remit the commissions it receiv[ed] from [the Defendants] for the sale of its

3 The Court only cites Browning for purposes of brevity. However, Cook provides identical analysis

of the issues presented in Browning and the present case.

annuities to [the plaintiff] who sold the annuities.” Id. Instead, the provision made clear

that the broker dealers maintained the responsibility to pay compensation, if any, to the

plaintiff. Id. Thus, the Ohio court concluded “[t]he requirement to have a separate contract

cuts against any suggestion that the Selling Agreement was intended to directly benefit [the

plaintiff].” Id. (citing Huff, 957 N.E.2d at 7).

The analysis in Browning and Cook is on point and persuasive. Specifically, the

provisions found in Section 9 of the Selling Agreements illustrate three important aspects

of the contract: (1) the Defendants paid commissions directly to the broker dealers, not the

Plaintiffs; (2) a separate agreement governed the payment of commissions, if any, from the

broker dealers to the Plaintiffs; and (3) the payment of such commissions was the sole

responsibility of the broker dealers. Taken together, the provisions contained in Section 9

of the Selling Agreements establish, as a matter of law, that the Plaintiffs are not intended

third-party beneficiaries. 4

Additionally, the number of other references5 in the Selling Agreements to the

Plaintiffs “do not demonstrate an intent to give enforceable rights to [the Plaintiffs].” Id. at

4 The Browning court indicated that Financial Industry Regulatory Authority (“FINRA”) Rule 2030

provided additional support for the finding that the Plaintiffs did not qualify as intended third-party

beneficiaries under the Selling Agreements. See Browning, 2019 WL 4885205 at *3 (noting that FINRA

Rule 2030 would create a “procedural dilemma” for the court because the rule “prohibits securities

representatives from receiving compensation for the sale of variable insurance policies from the company

that issued the policies.”). Here, the Plaintiffs refute the Browning court’s finding concerning FINRA Rule

2030 and contend that the rule actually supports their position that they qualify as intended third-party

beneficiaries. (Doc. 33 at 4). The Defendants make no argument in their briefing about the application of

FINRA Rule 2030 to the Plaintiffs’ ability to qualify as intended third-party beneficiaries. Because the plain

language of the Selling Agreements dictates a finding that the Plaintiffs are not intended third-party

beneficiaries, the Court declines to make a determination about the application of FINRA Rule 2030 to the

present case.

5 For example, Section 4 of the Selling Agreement reads “[broker dealer] certifies that any

Representative who requests appointment from [the Defendants] has not been convicted of a felony or a

*4. Far from directly benefitting them, these “[o]ther references to [the Plaintiffs] in the

Selling Agreement appear intended for [the Defendants’] protection.” Id. For example,

such references “provide protection for [the Defendants] from unscrupulous, unqualified,

or negligent representatives.” Id.

The Plaintiffs rely on Visintine & Co. v. New York, Chicago & St. Louis R. Co., 169

Ohio St. 505, 160 N.E.2d 311 (1959) to support their claim that they are intended third-

party beneficiaries under the Selling Agreements. (Doc. 28 at 20). Specifically, the

Plaintiffs cite Visintine for the proposition that “separate contracts that are interdependent

and related to the same subject matter can, in fact, create third-party beneficiary rights in

nonsignatories to one of the interrelated contracts . . ..” (Id.). Contrary to the Plaintiffs’

claims, Visintine does not apply to the instant case.

In Visintine, the Ohio Supreme Court held that the plaintiff was an intended third-

party beneficiary under the construction contract at issue because the plaintiff fell “squarely

within the definition of ‘creditor beneficiary.’” Visintine, 160 N.E.2d at 313. The court

noted “a person is a creditor beneficiary if the performance of the promise will satisfy an

actual, supposed or asserted duty of the promisee to the beneficiary and is not intended as

a gift.” Id.

misdemeanor involving fraud or dishonesty.” (Doc. 19-1 at 2). Section 5 reads “[broker dealers] shall have

full responsibility for training and supervision of all Representatives associated with [broker dealers] who

are engaged directly or indirectly in the offer or sale of the Contracts . . ..” (Id. at 3). Section 16 provides

“[broker dealers] and [their] Representatives are independent contractors with respect to [the Defendants].”

(Id. at 4). Finally, Section 17 reads “[broker dealers] agree to notify [the Defendants] in a timely fashion of

any disciplinary proceedings against any of [the broker dealers] Representatives arising from the solicitation

of sales of the Contracts . . ..” (Id.)

Unlike Visintine, the Plaintiffs are not creditor beneficiaries under the Selling

Agreements. The Defendants did not enter into the Selling Agreements with the broker

dealers to “satisfy an actual, supposed or asserted duty” to the Plaintiffs. Rather, the

provisions of the Selling Agreements previously discussed emphasize that any duty to pay

trail commissions to the Plaintiffs rested with the broker dealers, not the Defendants. Thus,

the Plaintiffs’ reliance on Visintine is unavailing.

Based on the plain language of the Selling Agreements, the Court concludes that

the Plaintiffs are not intended third-party beneficiaries. Accordingly, the Defendants

Motion to Dismiss the Plaintiffs’ breach of contract claim is due to be granted.

ii. The Plaintiffs’ unjust enrichment and promissory estoppel claims fail as a

matter of law

The Plaintiffs bring two claims in the alternative to their breach of contract cause of

action: (1) unjust enrichment and (2) promissory estoppel. (Doc. 19 at 22-24). The

Defendants move to dismiss both claims, asserting “Plaintiffs cannot circumvent their lack

of third-party beneficiary status by relabeling their claims as non-contractual, even though

such claims arise out of the same factual predicate.” (Doc. 20 at 27). The Court agrees and

addresses each claim in turn.

To succeed on an unjust enrichment claim under Ohio law, 6 a plaintiff must prove

three elements: “(1) a benefit conferred by a plaintiff upon a defendant; (2) knowledge by

6 The parties agree that Ohio law applies to the Plaintiffs’ unjust enrichment and promissory

estoppel claims. (Doc. 28 at 25 n.22). While Ohio law applies, the Court would reach the same conclusion

if it were to apply Alabama law because the two states’ laws are substantially similar concerning unjust

enrichment and promissory estoppel. See Sykes v. Payton, 441 F.Supp.2d 1220, 1224 (M.D. Ala. 2006)

(defining the elements of promissory estoppel); Matador Holdings, Inc. v. HoPo Realty Inv., L.L.C., 77 So.

3d 139, 145 (Ala. 2011) (defining the elements of unjust enrichment).

the defendant of the benefit; and (3) retention of the benefit by the defendant under

circumstances where it would be unjust to do so without payment.” Bihn v. Fifth Third

Mortg. Co., 980 F. Supp. 2d 892, 904 (quoting Hambleton v. R.G. Barry Corp., 12 Ohio

St. 3d 179, 465 N.E.2d 1298, 1302 (1984)). Typically, “unjust enrichment claims may be

pled in the alternative to a breach of contract claim when the existence of a contract is in

dispute.” Id. However, “a plaintiff may not recover under a theory of unjust enrichment

when an express contract covers the same subject.” Id.

Here, the Selling Agreements cover the same subject giving rise to the Plaintiffs’

unjust enrichment claim. Namely, whether the Defendants had the obligation to pay the

Plaintiffs trail commissions on previously sold variable annuity contracts after termination

of the Selling Agreements. The Court finds no such obligation under the contract. Thus,

“[the Plaintiffs] cannot bring an unjust enrichment claim to recover payment for the same

prior sales of variable annuity contracts.” See Browning v. Ohio Nat’l Life Ins. Co, 2019

WL 4885205 at *4 (S.D. Ohio Oct. 2, 2019) (finding that the plaintiff could not assert an

unjust enrichment claim because the Selling Agreement covered the same subject); Wuliger

v. Mfg. Life Ins. Co., 567 F.3d 787, 799 (6th Cir. 2009) (stating “Ohio law is clear that a

plaintiff may not recover under the theory of unjust enrichment or quasi-contract when an

express contract covers the same subject.”); Ford v. Penn. Higher Educ. Assistance

Agency, 2018 WL 1377858 at *8 (dismissing the plaintiff’s unjust enrichment because it

relied on the same conduct that formed the basis of their breach of contract claim).

Accordingly, the Defendants’ Motion to Dismiss the Plaintiffs’ unjust enrichment claim is

due to be granted.

The Plaintiffs’ promissory estoppel claim fares no better. Under Ohio law, a

plaintiff must prove the following elements to establish a promissory estoppel claim: “(1)

there must be a clear and unambiguous promise; (2) the party to whom the promise was

made must rely on it; (3) the reliance is reasonable and foreseeable; and (4) the party relying

on the promise must have been injured by the reliance.” Patrick v. Painesville Commercial

Prop., Inc., 123 Ohio App. 3d 575, 704 N.E.2d 1249, 1254 (Ohio Ct. App. 1997).

To satisfy the first element, the Plaintiffs allege that the Defendants “promised to

make payments, including trail commissions, to broker-dealers, which would, in turn, be

passed on in large part to sales representatives, including Plaintiffs.” (Doc. 19 at 24)

(emphasis added). This allegation fails to establish that the Defendants made a clear and

unambiguous promise to the Plaintiffs concerning the payment of trail commissions. In

fact, the Plaintiffs’ contention makes clear that the Defendants promised to pay trail

commissions to the broker dealers, not the Plaintiffs.

Additionally, the Plaintiffs’ failure to qualify as intended third party beneficiaries

under the Selling Agreements precludes them from asserting their promissory estoppel

claim. See Ballard Group, Inc. v. DNP Intern., Inc., 2006 WL 3168348 at *2 (S.D. Ohio

2006) (finding that the plaintiffs could not bring their promissory estoppel claim in the

alternative because they were not intended third-party beneficiaries under the contract at

issue). Accordingly, the Defendants’ Motion to Dismiss the Plaintiffs’ promissory

estoppel claim is due to be granted.

iii. The Plaintiffs fail to state a claim for tortious interference

Finally, the Defendants move to dismiss the Plaintiffs’ tortious interference with

business relations claim. (Doc. 20 at 32). In support of their motion, the Defendants argue

that “a party’s breach of contract that incidentally impacts a third-party’s contractual rights

is insufficient to satisfy the intentional interference element of a tortious interference

claim.” (Id. at 33). The Court agrees.

Under Alabama law,7 the elements of tortious interference with a business

relationship are “(1) the existence of a protectible business relationship; (2) of which the

defendant knew; (3) to which the defendant was a stranger; (4) with which the defendant

intentionally interfered; and (5) damage.” White Sands Group, L.L.C. v. PRS II, LLC, 32

So. 3d 5, 14 (Ala. 2009).

In the instant case, the Plaintiffs fail to state a claim for tortious interference with

business relations because “mere refusal to deal is not an intentional interference with

contractual relations.” Barber v. Bus. Products Center, Inc., 677 So. 2d 223, 228 (Ala.

1996), overruled on other grounds by White Sands Group, L.L.C., 32 So. 3d at 14; see also

Bear Creek Enters. v. Warrior & Gulf Navigation Co., 529 So. 2d 959, 961 (Ala. 1988)

(holding that the defendant’s decision to terminate a contract with the plaintiff amounted

to a refusal to deal, thus precluding any claim for intentional interference with contractual

relations); Restatement (Second) of Torts, § 766 cmt. b (1979) (explaining “[d]eliberately

7 The Court applies Alabama law to the Plaintiffs’ tortious interference claim because under

Alabama’s choice-of-law rules “the law of the state in which the injury occurred governs the substantive

right of an injured party . . ..” Rosa and Raymond Parks Inst. for Self Development v. Target Corp., 90

F.Supp.3d 1256, 1261 (M.D. Ala. 2015).

and at his pleasure, one may ordinarily refuse to deal with another, and the conduct is not

regarded as improper, subjecting the actor to liability.”).

The Plaintiffs’ allegations illustrate that the Defendants’ decision to terminate its

contract with the broker dealers amounted to nothing more than a refusal to deal.

Specifically, the Plaintiffs contend “[b]y announcing that it would not pay, and refusing to

pay, trailing commissions to the broker dealers pursuant to the Selling Agreements . . . [the

Defendants] intentionally and wrongfully caused the pass-through arrangements between

the broker-dealers and Plaintiffs to be terminated.” (Doc. 19 at 23-24) (emphasis added).

When the Defendants terminated the Selling Agreements and stopped payment on

trail commissions, they simply exercised their right to refuse to deal with the broker

dealers. Thus, the Defendants did not intentionally interfere with the Plaintiffs’ business

relations because Alabama law makes clear that they “have the right to do business with

whoever they choose and . . . it is not actionable in tort.” Barber, 677 So. 2d at 228 (ellipses

added).

Accordingly, the Defendants’ Motion to Dismiss the Plaintiffs’ tortious interference

claim is due to be granted.

V. CONCLUSION

In sum, the Plaintiffs fail to plead sufficient facts to establish that the Court may

exercise either general or specific jurisdiction over the Defendants as it relates to the claims

of non-resident Plaintiffs Bowers and Noone. Nor do the Plaintiffs establish that they

qualify as intended third-party beneficiaries under the Selling Agreements. Moreover, the

Plaintiffs’ unjust enrichment and promissory estoppel claims fall short because the Selling

Agreements expressly cover the same subject matter. Lastly, the Defendants’ mere refusal

to deal with the broker dealers did not constitute intentional interference with the Plaintiffs’

business relations.

Accordingly, it is

ORDERED that the Defendants’ Motion to Dismiss (doc. 20) is GRANTED as

follows:

1. The Defendants’ Motion to Dismiss the claims of non-resident Plaintiffs Bowers

and Noone for lack of personal jurisdiction is GRANTED.

2. The Defendants’ Motion to Dismiss the Plaintiffs’ breach of contract claim is

GRANTED, and this claim is DISMISSED with prejudice.

3. The Defendants’ Motion to Dismiss the Plaintiffs’ unjust enrichment claim is

GRANTED, and this claim is DISMISSED with prejudice.

4. The Defendants’ Motion to Dismiss the Plaintiffs’ promissory estoppel claim is

GRANTED, and this claim is DISMISSED with prejudice.

5. The Defendants’ Motion to Dismiss the Plaintiffs’ tortious interference with

business relations claim is GRANTED, and this claim is DISMISSED with

prejudice.

6. The Defendants’ Motion to Dismiss the Plaintiffs’ declaratory judgment claim is

GRANTED, and this claim is DISMISSED with prejudice.

A separate final judgment will be entered.

DONE this 19th day of November, 2019.

/s/ Emily C. Marks

EMILY C. MARKS

CHIEF UNITED STATES DISTRICT JUDGE