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Browning v. Ohio National Life Insurance Co.

United States District Court, S.D. Ohio, Western Division

June 28, 2019

LANCE BROWNING, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
THE OHIO NATIONAL LIVE INSURANCE COMPANY et al., Defendants.

          Dlott, J.

          REPORT AND RECOMMENDATION

          Stephanie K. Bowman, United States Magistrate Judge

         This civil action is now before the Court on Defendants Ohio National Life Insurance Company (“ONLIC”), Ohio National Life Assurance Company (“ONLAC”), Ohio National Equities, Inc. (“ONEQ”) (collectively, Ohio National”), and Ohio National Financial Services, Inc. (“ONFS”)[1] motion for judgment on the pleadings (Doc. 15) and the parties' responsive memoranda. (Docs. 17, 21).

         I. Background and Facts

         Plaintiff is one of the many licensed securities representatives of the broker-dealer LPL Financial LLC (“LPL”) who have sold variable annuities to customers nationwide that feature a guaranteed minimum income benefit (GMIB) rider, offered by The Ohio National Life Insurance Company and its subsidiaries Ohio National Life Assurance Corporation and Ohio National Equities, Inc. (these three collectively referred to herein as, “Ohio National” or “ON”). (Doc. 11, ¶ 1.) All of these entities operate under the umbrella of Ohio National Financial Services, Inc. (“ONFS”). Id. at 2.

         Pursuant to the Selling Agreement entered into by Ohio National and LPL (“Selling Agreement”), LPL and its affiliated securities representatives, including Plaintiff, marketed and sold the Ohio National GMIB variable annuities (the “Annuities”) to customers, with all customer premiums from those sales being paid directly to Ohio National. In return for promoting, selling, and servicing these complex Annuities, LPL and its affiliated securities representatives received commissions, including “trailing commissions, ” that were paid to LPL and affiliated securities representatives on a regular basis until and unless the Annuities were surrendered or annuitized. Id. at ¶ 2.

         On September 28, 2018, Ohio National announced that it was terminating the Selling Agreement with LPL, and numerous other broker-dealers, with regard to the Annuities. As part of that termination, it also announced that it would no longer pay trailing commissions stemming from Annuities that were already in existence. Effective December 12, 2018, Ohio National stopped paying LPL and its affiliated securities representatives any trailing commissions on the Annuities. Id. at ¶ 3.

         Thereafter, Plaintiff filed the instant action for breach of contract, unjust enrichment, tortious interference and promissory estoppel, Plaintiff also seeks an injunction to require Ohio National to live up to its obligations under the Selling Agreement and cease causing damage and irreparable harm, including the loss of goodwill and the negative impact to the business relationships and reputation of Plaintiff and the proposed class. Plaintiff additionally seeks declaratory relief resolving Ohio National's future obligations pursuant to the Selling Agreement with LPL. Plaintiff also brings this suit as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of himself and all members of the following Class:

All persons who: (1) act as securities representatives of LPL; and (2) have solicited the sale of an Ohio National guaranteed minimum income benefit Variable Annuity that that has not been surrendered or annuitized.

         Ohio National moves for Judgment on the Pleadings asserting that Plaintiff lacks standing and/or fails to state a claim upon which relief can be granted.

         II. Standard of Review

         A district court reviews a Rule 12(c) motion for judgment on the pleadings under the same standard applicable to a Rule 12(b)(6) motion to dismiss. EEOC v. J.H. Routh Packing Co., 246 F.3d 850, 851 (6th Cir. 2001). Accordingly, “we construe the complaint in the light most favorable to the nonmoving party, accept the well-pled factual allegations as true, and determine whether the moving party is entitled to judgment as a matter of law.” Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007). While such determination rests primarily upon the allegations of the complaint, “matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint, also may be taken into account.” Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001) (quoting Nieman v. NLO, Inc., 108 F.3d 1546, 1554 (6th Cir. 1997)) (emphasis omitted). The court “need not accept the plaintiff's legal conclusions or unwarranted factual inferences as true.” Commercial Money Ctr., 508 F.3d at 336. To withstand a Rule 12(c) motion for judgment on the pleadings, “a complaint must contain direct or inferential allegations respecting all the material elements under some viable legal theory.” Id.

         The Sixth Circuit has explained the pleading requirements that are necessary to survive a Rule 12(c) motion as follows:

In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court explained that “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.... Factual allegations must be enough to raise a right to relief above the speculative level....” Id. at 1964-65 (internal citations omitted). In Erickson v. Pardus, ... 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007), decided two weeks after Twombly, however, the Supreme Court affirmed that “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief.' Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'” Id. at 2200 (quoting Twombly, 127 S.Ct. at 1964). ... We read the Twombly and Erickson decisions in conjunction with one another when reviewing a district court's decision to grant a motion to dismiss for failure to state a claim or a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12.

Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 - 550 (6th Cir. 2008) (quoting Sensations, Inc. v. City of Grand Rapids, 526 F.3d at 295-96 (6th Cir. 2008)) (footnote omitted); see also generally, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         III. Analysis

         Defendant Ohio National argues that Plaintiff is not a party to the Selling Agreement at issue and therefore lacks contractual privity to enforce the agreement.

         A. Selling Agreement

         The Selling Agreement states that the only parties thereto are the Ohio National Contracting Defendants and LPL. (Doc. 11, Ex. A). The Selling Agreement also specifically states that all commissions owed by Ohio ...


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