Bass, Berry & Sims attorney Chris Lazarini discussed a case in which the plaintiffs sued Edward Jones alleging violations of various securities laws related to their investment in an annuity, which they had thought was joint but was actually single. Plaintiffs acknowledged receipt of the single policy at origination but sued 11 years later arguing for tolling under theories of obstruction, equitable estoppel, and continuing representation. The court rejected the tolling claims, affirming that their state and federal securities law claims and common law claims were time-barred under applicable statutes of limitation and statutes of repose.
Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.
Almond vs. Edward D. Jones & Co., L.P., No. 5:18-cv-00046 (W.D. Va., 3/28/19)
State and federal securities law claims and common law claims time-barred under applicable statutes of limitation and statutes of repose.
Plaintiffs sued in February 2018, alleging violations of the Virginia Securities Act, federal securities laws, common law fraud, unsuitability, negligence, negligent supervision, breach of fiduciary duty, and breach of contract arising from their 2007 purchase of a Hartford variable annuity. The facts relevant to the Court’s decision, and which the Court views as true in considering Edward Jones’ motion to dismiss, are that Plaintiffs met with an Edward Jones representative in early 2007, and elected to invest in the annuity. Plaintiffs wanted a joint/spousal annuity, but mistakenly selected the single life option on the application. Plaintiffs noted a February 2007 email and conversation with their Edward Jones representative where they asked him about the word “single” in documents they had received, and the representative assured them they had a joint annuity. A replacement annuity with a single life rider was issued in February 2007, although the parties disagreed on the reasons for its issuance. In March 2007, Plaintiffs acknowledged receipt of the policy, after which they received quarterly statements noting the single nature of the annuity. In 2013, the Edward Jones representative told Plaintiffs again that they had a joint annuity. In October 2016, the Edward Jones representative stated, for the first time, that the contract provided guaranteed income only for the husband’s life.
In support of its motion, Edward Jones argued all causes of action accrued in March 2007, when Plaintiffs acknowledged receipt of their policy. Plaintiffs responded the time periods were tolled by the discovery rule and that they did not discover the wrongdoing until October 2016. Plaintiffs also argued for tolling under theories of obstruction, equitable estoppel, and continuing representation. The Court sides with Edward Jones, finding Plaintiffs’ claims accrued in March 2017, and rejecting application of the discovery rule and Plaintiffs’ other tolling theories. Thus, the Virginia Securities Act and federal securities law claims were time-barred by their respective two- and five-year statutes of repose; the fraud claims were barred by a two-year statute of limitations; the negligence, negligent supervision, and breach of fiduciary duty claims were barred by a two-year statute of limitations that was not subject to the discovery rule; and the breach of contract claim and any claim for “property damage” were barred by a five-year statute of limitations.
Plaintiffs first filed their claims in a FINRA arbitration, but the panel dismissed the case, without prejudice, under Rule 12206, the six-year eligibility rule. The Court finds the suitability and negligent supervision claims are not “independent” causes of action and presumably rolls them into the time-barred federal securities law and negligence claims, respectively.