FOTHERINGHAM, CHARLES R. v. RIVERSOURCE LIFE INSURANCE CO. OF, NEW YORK ( 2017 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
23
CA 16-01251
PRESENT: CENTRA, J.P., PERADOTTO, CARNI, AND LINDLEY, JJ.
CHARLES R. FOTHERINGHAM, PLAINTIFF-APPELLANT,
V MEMORANDUM AND ORDER
RIVERSOURCE LIFE INSURANCE CO. OF NEW YORK,
FORMERLY KNOWN AS IDS LIFE INSURANCE OF NEW YORK,
AND AMERIPRISE FINANCIAL SERVICES, INC., FORMERLY
KNOWN AS AMERICAN EXPRESS FINANCIAL ADVISORS, INC.,
DEFENDANTS-RESPONDENTS.
JAMES I. MYERS, PLLC, WILLIAMSVILLE (JAMES I. MYERS OF COUNSEL), FOR
PLAINTIFF-APPELLANT.
PHILLIPS LYTLE LLP, BUFFALO (JOANNA J. CHEN OF COUNSEL), FOR
DEFENDANTS-RESPONDENTS.
Appeal from an order of the Supreme Court, Erie County (John M.
Curran, J.), entered January 25, 2016. The order granted defendants’
cross motion to dismiss the complaint.
It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.
Memorandum: In 1997, plaintiff and his now-deceased wife
consulted with an agent and registered representative of defendants
Ameriprise Financial Services, Inc., formerly known as American
Express Financial Advisors, Inc. (Ameriprise), and Riversource Life
Insurance Co. of New York, formerly known as IDS Life Insurance of New
York (Riversource), to discuss their investment planning. The agent
advised plaintiff and his wife to purchase a variable universal life
insurance policy from Riversource (Policy). From 1997 until 2014, the
premiums and cost for the Policy rose to the point that the monthly
premiums were over $4,000. In 2014, plaintiff terminated the policy,
at which time his investment accounts were worth half of the original
amount invested with Ameriprise. Plaintiff commenced this action
asserting causes of action for, inter alia, fraud, negligence and
breach of fiduciary duty. In his complaint, plaintiff alleged that
defendants’ agent and representative made false and misleading
representations about the Policy, made unsuitable recommendations
concerning the Policy and violated defendants’ duty of care in
recommending that plaintiff purchase the Policy.
Fifteen years before this action was commenced, a class action
was commenced in Federal District Court in Minnesota based on the
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CA 16-01251
Policy. That action was settled, and the September 18, 2000
Stipulation of Settlement (Settlement), which was incorporated into
the May 15, 2001 “Final Order and Judgment Approving Class Action
Settlement and Dismissing Complaint” (Judgment), contained a broad
waiver and release provision.
Before answering the complaint herein, defendants moved to
enforce the Settlement and Judgment in the United States District
Court for the District of Minnesota, contending that plaintiff should
be enjoined from proceeding with the New York State litigation.
Defendants also moved, in Supreme Court, to dismiss the complaint,
contending, inter alia, that plaintiff’s claims were barred by the
express terms of the class action Settlement and Judgment and,
alternatively, they sought a stay pending the outcome of the federal
enforcement action. Supreme Court granted the alternative relief
sought, and stayed the state action. Ultimately, in ruling on
defendants’ motion “for an order to enforce the settlement and bar the
New York action” (enforcement order), the District Court found that
plaintiff had received adequate notice of the class action lawsuit and
Settlement and that his claims rested on conduct that had occurred
during the class period. The District Court further found that
plaintiff’s claims were, “at the very least, . . . ‘based upon,
related to, or connected with, directly or indirectly, in whole or in
part’ the misrepresentations made [during the Class Period]” and that
they “did not independently arise out of any circumstances that first
occurred after the close of the Class Period.” As a result, the
District Court granted defendants’ motion to enforce the Settlement
and enjoin plaintiff’s state court action. Plaintiff did not take an
appeal from that order or move to reargue in the District Court.
Plaintiff then moved, in Supreme Court, to lift the stay and for
leave to amend the complaint, contending that the enforcement order,
“if enforced[,] would deny [plaintiff’s] due process rights to pursue
his remedies in his state of residence.” Defendants cross-moved to
dismiss the complaint on the ground that plaintiff’s claims were
barred by the Settlement and Judgment in the class action lawsuit.
Supreme Court granted defendants’ cross motion, finding that the
waiver and release provisions of the class action Settlement and
Judgment encompassed all of plaintiff’s claims in this matter. We now
affirm.
Contrary to plaintiff’s contention, the District Court had
jurisdiction over plaintiff. Plaintiff was a class member in the
class action by virtue of the fact that he was afforded the requisite
notice and neither opted out nor sought to be excluded from the
Settlement (see Phillips Petroleum Co. v Shutts, 472 US 797, 811-812;
Matter of American Express Fin. Advisors Sec. Litig., 672 F3d 113,
129), and plaintiff does not allege that the named parties did not
adequately represent the absent class (see generally Phillips
Petroleum Co., 472 US at 808). Moreover, the Settlement and Judgment
in the class action gave the District Court continued jurisdiction
over class members as well as “all matters relating to the . . .
enforcement and interpretation of the Settlement Agreement and . . .
Judgment,” including “resol[ution of] any disputes, claims or causes
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CA 16-01251
of action that, in whole or in part, are related to or arise out of
the Settlement . . . [and] Judgment (including . . . whether claims or
causes of action allegedly related to this case are or are not barred
by this . . . Judgment).”
Plaintiff contends that the enforcement order violates the Anti-
Injunction Act (28 USC § 2283). We reject that contention. The
District Court’s enforcement order is necessary “to protect or
effectuate” the District Court’s class action Judgment (id.), and the
relitigation exception of the Anti-Injunction Act authorizes the
enforcement order in this case because plaintiff’s claims were
“ ‘presented to and decided by the federal court’ ” (Smith v Bayer
Corp., 564 US 299, 306). Here, “preclusion is clear beyond
peradventure” (id. at 307).
Plaintiff further contends that the enforcement order violates
the All Writs Act (28 USC § 1651 [a]). We again reject that
contention and conclude that the District Court was authorized to
issue “all writs necessary or appropriate in aid of [its] respective
jurisdiction[]” (id.; see American Express Fin. Advisors Sec. Litig.,
672 F3d at 141 n 20; Thompson v Edward D. Jones & Co., 992 F2d 187,
189).
Inasmuch as this Court must “give full faith and credit to [the]
federal court [enforcement order]” (Matter of Frontier Ins. Co., 27
AD3d 274, 275, lv denied 7 NY3d 713; see Stoll v Gottlieb, 305 US 165,
170-171, reh denied 305 US 675; Garvin v Garvin, 302 NY 96, 103), from
which no appeal was taken, we conclude that Supreme Court properly
granted defendants’ cross motion to dismiss the complaint.
Entered: March 24, 2017 Frances E. Cafarell
Clerk of the Court