Goldman v. Nationwide Life Ins. Co. ( 2012 )

[Cite as Goldman v. Nationwide Life Ins. Co., 2012-Ohio-3574.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 97871
STANLEY GOLDMAN, EXECUTOR FOR THE ESTATE
OF HARVEY ROSNER
PLAINTIFF-APPELLANT
vs.
NATIONWIDE LIFE INSURANCE COMPANY
DEFENDANT-APPELLEE
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-694931
BEFORE: Keough, J., Blackmon, A.J., and Boyle, J.
RELEASED AND JOURNALIZED: August 9, 2012
ATTORNEYS FOR APPELLANT
Thomas C. Wagner
Thomas C. Wagner, LLC
1610 Hanna Building
1422 Euclid Avenue
Cleveland, OH 44115
Karl D. Kammer
75 Public Square
Suite 650
Cleveland, OH 44114
ATTORNEYS FOR APPELLEE
Natalie T. Furniss
Anne Marie Sferra
Bricker & Eckler, LLP
100 South Third Street
Columbus, OH 43215
KATHLEEN ANN KEOUGH, J.:
{¶1} Plaintiff-appellant, Stanley Goldman, Executor of the Estate of Harvey
Rosner, (“the Estate”), appeals the trial court’s decision granting summary judgment in
favor of defendant-appellee, Nationwide Life Insurance Company. For the reasons that
follow, we affirm.
{¶2} In June 2007, Rosner, age 82, purchased a Nationwide Individual Single
Purchase Payment Immediate Annuity (“the annuity”) for $73,000 through U.S. Bancorp
Investments, Inc. (“USBI”) and its employee, Kristen Hummel. At that time, Hummel
had been Rosner’s financial advisor for approximately six years. Pursuant to the terms of
the annuity, Rosner was to receive regular monthly payments during his lifetime, with the
payments ceasing upon his death. The balance of the annuity, if any, would be paid to
Nationwide.
{¶3} On April 15, 2008, Rosner passed away. Per the terms of the annuity, the
monthly payments paid to Rosner and the balance of the annuity, approximately $65,000,
was delivered to Nationwide.
{¶4} In June 2009, the Estate filed a lawsuit against Nationwide, USBI, and
Hummel, alleging that Hummel, as an agent of both Nationwide and USBI, sold Rosner
an unsuitable financial product given Rosner’s advanced age, serious medical conditions,
and past personal and financial directives.
{¶5} USBI and Hummel filed a joint motion to stay proceedings pending
arbitration, asserting that any controversies arising out of any order or transaction
between USBI and Rosner were subject to mandatory and binding FINRA arbitration.
The trial court granted the joint motion and the Estate did not appeal.
{¶6} While the claims against USBI and Hummel were stayed, the Estate
proceeded with the case against Nationwide. On March 5, 2010, the Estate and
Nationwide filed a joint motion to stay proceedings pending the arbitration with the
Estate, USBI, and Hummel. In this joint motion, the parties agreed that “Nationwide’s
liability, if any, is based solely upon a determination that [the Estate’s] allegations against
Defendant Hummel are true.” The trial court granted the joint motion to stay.
{¶7} Following the arbitration hearing, an arbitration award was issued that
summarily dismissed with prejudice all of the Estate’s claims against USBI and Hummel.
USBI and Hummel moved the trial court to confirm the arbitration award. The Estate
did not oppose confirmation, provided it could still proceed with its case against
Nationwide and Hummel, as an agent for Nationwide. The trial court confirmed the
award and the Estate did not appeal.
{¶8} Based on the arbitration award and the parties’ agreement regarding
Hummel’s liability, Nationwide moved for summary judgment. The Estate opposed the
motion, asserting that Nationwide failed to properly train and supervise Hummel. The
trial court granted Nationwide’s motion.
{¶9} The Estate appeals, raising as its sole assignment of error that the trial court
erred in granting summary judgment in favor of Nationwide.
{¶10} Civ.R. 56(C) provides that summary judgment is appropriate when (1) there
is no genuine issue of material fact, (2) the moving party is entitled to judgment as a
matter of law, and (3) after construing the evidence most favorably for the party against
whom the motion is made, reasonable minds can reach only a conclusion that is adverse
to the nonmoving party. Zivich v. Mentor Soccer Club, Inc. 82 Ohio St.3d 367, 369-370,
1998-Ohio-389, 696 N.E.2d 201; Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327,
364 N.E.2d 267 (1977). We review the trial court’s judgment de novo, using the same
standard that the trial court applies under Civ.R. 56(C). Grafton v. Ohio Edison Co., 77
Ohio St.3d 102, 105, 1996-Ohio-336, 671 N.E.2d 241.
{¶11} It is well established that the party moving for summary judgment bears the
burden of demonstrating that no material issues of fact exist for trial. Dresher v. Burt, 75
Ohio St.3d 280, 292-293, 1996-Ohio-107, 662 N.E.2d 264. The moving party bears the
initial responsibility of informing the trial court of the basis for the motion, and
identifying those portions of the record that demonstrate the absence of a genuine issue of
fact on a material element of the nonmoving party’s claim. Id. The nonmoving party
has a reciprocal burden of specificity and must set forth specific facts showing that there
is a genuine issue for trial. Id. The reviewing court evaluates the record in a light most
favorable to the nonmoving party. Saunders v. McFaul, 71 Ohio App.3d 46, 50, 593
N.E.2d 24 (8th Dist.1990). Any doubts must be resolved in favor of the nonmoving
party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 358-359, 1992-Ohio-95, 604 N.E.2d
138.
{¶12} In this case, Nationwide moved for summary judgment asserting (1) that the
Estate’s vicarious liability claims against it must fail as a matter of law because Hummel
was found not liable; thus, no agency liability exists; and (2) the doctrine of res judicata
applies due to the arbitration decision dismissing USBI and Hummel. In support of its
motion, Nationwide relies on the allegations in the complaint, Nationwide and the
Estate’s joint motion to stay arbitration, and the arbitration award.
{¶13} The Estate contends that a genuine issue of material facts exists about
Nationwide’s duty to train and supervise the appropriate sale of the annuity.
Specifically, the Estates sets forth the following questions as material facts:
1. How could Nationwide have permitted this insurance product to be sold
by their agent to this elderly and infirm man?
2. What training and supervisory systems did Nationwide have in place at
the time this product was sold to someone in the position of Mr. Rosner?
Did they include measures designed to detect and prevent the inappropriate
sale of the product to an elderly and serious[ly] infirm customer?
3. How did the “supervisory” procedures allegedly employed by Bancorp
— the securities firm — compare with those required by Nationwide — an
insurance company and the issuer of the annuity, especially with respect to
an applicant’s age and medical condition.
{¶14} In essence, the Estate argues that genuine issues of material fact exist on a
claim of negligent supervision. However, reviewing the complaint filed in this matter,
the Estate did not assert a claim of negligent supervision. In fact, our review of the
pleadings reveal the claim of negligent supervision was raised for the first time in
response to Nationwide’s motion for summary judgment. “A response by a plaintiff in
opposition to a defendant’s motion for summary judgment is not the appropriate avenue
by which to raise causes of action not previously set forth in a pleading.” Young v.
Leslie, 9th Dist. No. 08CA0015, 2009-Ohio-396, ¶ 9. A plaintiff cannot include claims
beyond those raised in the complaint for the first time in the summary judgment stage of
the litigation without amending the complaint. Everstaff, LLC v. Sansai Enviromental
Techs, LLC, 8th Dist. No. 96108, 2011-Ohio-4824, ¶ 13, citing Wolk v. Paino, 8th Dist.
No. 94850, 2011-Ohio-1065, ¶ 36. Accordingly, the claim for negligent supervision is
waived, and the Estate cannot use this claim to defeat Nationwide’s motion for summary
judgment.
{¶15} Nevertheless, even if the Estate had properly pled a cause of action for
negligent supervision, summary judgment would still be proper because an essential
element of a claim for negligent supervision is that the plaintiff must show that the agent,
here Hummel, was incompetent and that Nationwide had actual or constructive
knowledge of Hummel’s incompetence. Crable v. Nestle USA, Inc., 8th Dist. No. 86746,
2006-Ohio-2887, ¶ 39, citing Payton v. Receivables Outsourcing, Inc., 163 Ohio App.3d
722, 2005-Ohio-4978, 840 N.E.2d 236 (8th Dist.). The Estate has failed to allege any
facts demonstrating that Hummel was incompetent in her duties or that Nationwide knew
or should have known of her incompetence. Accordingly, a claim for negligent
supervision could not survive summary judgment.
{¶16} Our de novo review of the record demonstrates that summary judgment was
properly granted in favor of Nationwide. The Estate and Nationwide jointly moved the
trial court to stay proceedings pending resolution of the arbitration between the Estate and
USBI, and Hummel. The motion, stated: “[t]he parties agree that Nationwide’s liability,
if any, is based solely upon a determination that [the Estate’s] allegations against
Defendant Hummel are true.” Furthermore, the parties agreed:
Although neither plaintiff nor defendant herein concedes any of the claims
and defenses that have been asserted, the parties recognize that the
[arbitration] panel’s determination as to the suitability of the annuity may
either dispose entirely of the claim against Nationwide, or in the alternative,
may have the practical effect of shaping the course of this lawsuit and/or
any potential settlement negotiations between the parties.
{¶17} Thereafter, the parties cite the Ohio Supreme Court’s rule of law in Comer
v. Risko, 106 Ohio St.3d 185, 2005-Ohio-4559, 833 N.E.2d 712, ¶ 20, which states,
An agent who committed the tort is primarily liable for its action, while the
principal is merely secondarily liable. The liability for the tortious conduct
flows through the agent by virtue of the agency relationship to the principal.
If there is no liability assigned to the agent, it logically flows that there can
be no liability imposed upon the principal [for the agent’s actions].
(Internal citations omitted).
{¶18} We find that no genuine issue of material facts exist that would preclude
summary judgment in favor of Nationwide. The parties agreed in their joint motion to
stay that “Nationwide’s liability, if any, is based solely upon a determination that the
Estate’s allegations against Defendant Hummel are true.” As a result of the arbitration,
the claims against USBI and Hummel were dismissed with prejudice. While we cannot
speculate as to the rationale behind the arbitrator’s decision, it can be presumed based on
the dismissal and the allegations raised in the complaint that Hummel was not found
liable for selling Rosner the annuity.
{¶19} The Estate’s complaint does not raise any cause of action specifically
against Nationwide. Rather, it alleges that Hummel exercised undue influence in her role
as both an agent of USBI and Nationwide in inducing Rosner to purchase an unsuitable
annuity based on his age, medical condition, and past and personal directives. Because
no liability was found against Hummel during the arbitration proceedings, it logically
flows that there can be no liability imposed upon Nationwide for Hummel’s actions. See
Comer. Furthermore, because the Estate has failed to demonstrate any genuine issue of
material fact specifically against Nationwide, summary judgment is appropriate.
{¶20} Accordingly, we find the trial court did not err in granting summary
judgment in favor of Nationwide; the Estate’s sole assignment of error is overruled.
{¶21} Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
KATHLEEN ANN KEOUGH, JUDGE
PATRICIA ANN BLACKMON, A.J., and
MARY J. BOYLE, J., CONCUR