Judge Teresa A. Beaudet, Case 20STCV15869 2023-03-16 Tentative Ruling

On April 24, 2020, Plaintiffs Noel C. McDaid, Eileen McDaid, Jon Wesley Christensen, Hanne Jo Christensen, Kalista Grace Base, and Kendra Georgeann Base (collectively, “Plaintiffs”) filed this action against various defendants, including Defendants Allianz Life Insurance Company of North America (“Allianz”), Harry Vernon Dawson III (“Dawson”), and Brian Lee Zeek.

The operative Third Amended Complaint (“TAC”) was filed on March 11, 2021, and asserts causes of action for (1) professional negligence, (2) professional negligence, (3) breach of fiduciary duty, (4) breach of fiduciary duty, (5) intentional deceit/fraud, (6) intentional deceit/fraud.[1]

On April 12, 2021, Brian Lee Zeek dba Surf City Financial Group (“Zeek”), erroneously sued as Brian Lee Zeek, an individual, and Surf City Financial Group, an unknown California entity, filed an answer to the TAC.

Zeek now moves for an order granting summary judgment, or in the alternative, summary adjudication on the first, third, and fifth causes of action of the TAC. Plaintiffs oppose.

The Court rules on the Second Revised Joint Statement Re Objections to Evidence Submitted in Support of and in Opposition to Defendant Brian Zeek’s Motion for Summary Judgment or in the Alternative Summary Adjudication as follows:

Objection No. 12: sustained as to the second sentence, overruled as to the remainder

Objection No. 17: overruled as to “[a]fter FIP collapsed in April 2018, Dawson (on behalf of himself and his partner and team member Zeek) remained our agent of record with Allianz,” sustained as to the remainder

Objection No. 18: sustained as to “However, [my spouse] and I were never notified that Dawson’s and Zeek’s conduct breached duties we were owed by Dawson and Zeek, or that they had made misrepresentations and omissions and acted negligently in recommending our purchase of the Allianz IUL and SCF/FIP,” overruled as to the remainder.

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.” (Code Civ. Proc., § 437c, subd. (f)(1).) “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Ibid.)

The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Ibid.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

When a defendant seeks summary judgment or summary adjudication, he/she must show either (1) that one or more elements of the cause of action cannot be established; or (2) that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).) “If the defendant fails to make this initial showing, it is unnecessary to examine the plaintiff’s opposing evidence, and the motion must be denied.” (Powell v. Kleinman (2007) 151 Cal.App.4th 112, 121.)

In the TAC, Plaintiffs allege that in March 2013, the McDaids received a flyer in the mail advertising a “College Planning Network” seminar to be hosted by Dawson, who held himself out as an expert in college financial planning. (TAC, ¶ 37.) In 2013, the McDaids attended Dawson’s seminar. (TAC, ¶ 38.)

The McDaids began financial planning meetings with Dawson in 2013 and continued to meet with him regularly over the next few years. (TAC, ¶ 40.) Dawson also partnered with and brought Zeek, an agent from Surf City Financial Group, to some of the meetings to assist with investment product sales. (TAC, ¶ 40.)

During the initial meeting, Dawson, acting on behalf of all defendants, described his “Private Reserve Strategy” as a way of avoiding or minimizing unnecessary wealth transfer and to accumulate an increasing pool of capital providing accessibility, control and uninterrupted compounding. (TAC, ¶ 41.) On April 14, 2014, the McDaids, acting on Dawson’s advice, purchased the first of three investment vehicles under the “Private Reserve Strategy” —an Athene Target Horizon 5 annuity contract funded with $5,500 in qualified funds. (TAC, ¶ 42.)

On July 1, 2015, Dawson and Zeek, acting on behalf of defendants and for themselves, provided the McDaids with an Allianz Life Pro+ Fixed Index Universal Life Insurance (“IUL”) policy, identifying Zeek as agent. (TAC, ¶ 43.) On August 24, 2015, Allianz issued the IUL policy (Policy No. 3471) to Noel McDaid as the primary insured and naming Eileen McDaid as the primary beneficiary. (TAC, ¶ 46.)

In 2017, the McDaids met Dawson for another financial planning meeting to discuss how to pay for college for their second child attending university, as the McDaids had already taken out Parent Direct loans but realized they would need additional funds to pay for college. (TAC, ¶ 47.) Dawson advised the McDaids that their only option was to refinance their home and utilize the equity to pay for college. (TAC, ¶ 47.) Dawson and Zeek, acting on behalf of the defendants and for themselves, recommended that the funds obtained from the home refinance should be invested in the Structured Cash Flow product of nonparty Future Income Payments, LLC (“FIP”). (TAC., ¶¶ 19, 48.) On May 18, 2017, the McDaids relied on Dawson’s advice to execute FIP’s Non-Qualified Purchase Agreement for $90,000 (PR #3673) as the third investment vehicle under the Private Reserve Strategy. (TAC, ¶ 52.) Plaintiffs allege that Dawson’s and Zeek’s advice, on behalf of all defendants, to purchase the FIP investment product to fund their IUL policy premiums violated California law, insurance regulations, and securities laws, among other laws and rules. (TAC, ¶ 56.)

In 2018, after the failure of FIP, the McDaids incurred the substantial loss of their irreplaceable assets of approximately $90,000. (TAC, ¶ 75.) The loss of principal, coupled with the cessation of FIP’s monthly Structured Cash Flow payments, impacted the McDaids’ ability to pay the high premiums on the Allianz IUL policy, placing this investment at risk. (TAC, ¶75.)

Plaintiffs further allege that the Christensens received a flyer in the mail in early 2016 advertising a free “College Planning Network” seminar to be hosted by Dawson, who held himself out as an expert in college financial planning. (TAC, ¶ 76.) Hanne Christensen attended Dawson’s seminar where he highlighted his expertise to sell his products and services. (TAC, ¶ 77.) During a private, one-on-one appointment with Dawson, the Christensens discussed their financial profile and holdings, including the rental property they owned. (TAC, ¶ 81.) Dawson advised the Christensens to sell their rental property to free up assets to pay for college. (TAC, ¶ 81.)

On September 27, 2016, the Christensens followed the defendants’ advice and endorsement to purchase an Allianz life insurance policy utilizing $110,000 from the liquidation of their real estate property. (TAC, ¶ 86.) Dawson also advised and encouraged the Christensens to invest in FIP’s Structured Cash Flow product to fund their Allianz IUL policy premiums. (TAC, ¶ 91.) On April 25, 2017, the Christensens relied on Dawson’s guidance to execute FIP’s Non-Qualified Purchase Agreement for $95,000 (PR#3612). (FAC, ¶ 94.)

Plaintiffs allege that Dawson’s advice, on behalf of all defendants, to purchase the FIP investment product to fund their IUL policy premiums violated California law, insurance regulations, and securities laws, among other laws and rules. (FAC, ¶ 97.) In 2018, after the failure of FIP, the Christensens incurred the substantial loss of their irreplaceable assets of approximately $95,000. (FAC, ¶ 116.) The loss of principal, coupled with the cessation of FIP’s monthly Structured Cash Flow payments, impacted the Christensens’ ability to pay the high premiums on the Allianz IUL policy, placing this investment at risk. (FAC, ¶ 116.)

As an initial matter, Plaintiffs assert that the moving papers are fatally defective procedurally.

Plaintiffs note that “[i]f summary adjudication is sought, whether separately or as an alternative to the motion for summary judgment, the specific cause of action, affirmative defense, claims for damages, or issues of duty must be stated specifically in the notice of motion and be repeated, verbatim, in the separate statement of undisputed material facts.” (Cal. Rules of Court, Rule 3.1350, subd. (b).) Plaintiffs assert that Zeek’s separate statement of undisputed material facts (“SSUF”) does not specifically state “verbatim” the grounds for summary judgment or adjudication identified in the notice of motion.

Plaintiffs note that the notice of motion provides, inter alia, that “[t]here is no triable issue of fact that would establish that Brian Zeek owed or breached any fiduciary duty as alleged in the third cause of action of the TAC,” (Mot. at p. 2:13-14), however, the SSUF states “there is no triable issue of fact that Brian Zeek had a fiduciary relationship with any plaintiff.” (Zeek’s SSUF at p. 11:16-17.) Plaintiffs assert that Zeek should be precluded from arguing breach as to Issue 2. As discussed below, the Court does not find that Zeek has met his burden of demonstrating that there was no breach of a fiduciary relationship. Thus, the Court does not find that the foregoing procedural issue is determinative as to the motion.

Plaintiffs also note that the notice of motion provides, “[t]here is no triable issue of fact that would establish that Brian Zeek made any misrepresentation to any plaintiff as alleged in the fifth cause of action of the TAC,” while the SSUF provides, “there is no triable issue of fact that Zeek made any misrepresentation or committed any fraud.” (Mot. at p. 2:15-16; SSUF at p. 12:16-17.) In any event, Zeek’s arguments in the memorandum of points and authorities as to Issue 3 concern whether Zeek made the alleged misrepresentations.

Plaintiffs also note that Zeek’s SSUF incorporates certain facts by reference with respect to Issues Nos. 2, 3, and 4. (See SSUF, pp. 11:20-21; 12:20-21; 13:10-12.) Cal. Rules of Court, Rule 3.1350, subdivision (d)(1) provides that “[t]he Separate Statement of Undisputed Material Facts in support of a motion must separately identify: (A) Each cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion; and (B) Each supporting material fact claimed to be without dispute with respect to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion.” Zeek counters that incorporation by reference is not specifically barred by this rule. In light of the fact that the SSUF references the “fact issues” that are incorporated by reference, the Court does not find that this procedural issue is grounds for denying the motion.

Lastly, Plaintiffs assert that “the SSUF and Notice fail to prove that no genuine issue of material fact exists…All of the disputed SSUF/SSDF, supporting admissible evidence in Plaintiffs’ supporting declarations, and the lack of admissible evidence in the moving papers shows that Zeek cannot meet his exacting burden.” (Opp’n at p. 7:23-26.) The Court does not find that this is a procedural argument. The merits of the motion are discussed below.

Zeek asserts that there is no triable issue of fact that can establish that he was negligent. “The elements of a claim for professional negligence are (1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional’s negligence.” (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1095 [internal quotations omitted].)[2]

Zeek asserts that Plaintiffs can put forward no proof that Zeek owed any duty of care to anyone except Noel McDaid. Zeek states that in late May 2015, Dawson contacted Zeek about Dawson’s clients Noel and Eileen McDaid. (Zeek Decl., ¶ 4.) Though Dawson held a life insurance sales license in July 2015, he did not have an appointment from Allianz Life Insurance Company to sell its policies. (Zeek Decl., ¶ 5.) Dawson identified an Allianz LifePro+ indexed universal life policy to be a suitable investment for the McDaids, and felt it would be better if Zeek stepped in to design, place, and assist with the intended life insurance policy. (Zeek Decl., ¶ 5.)

Zeek met with Noel and Eileen McDaid in Dawson’s office on July 6, 2015, and at this meeting, he “led a discussion with Noel and Eileen McDaid and reviewed an Allianz policy illustration with them, showing them how the various indices work…” (Zeek Decl., ¶ 6.) Zeek states that he “reviewed the data, confirmed the data with the family, designed the policy, met with the McDaids at the July 6, 2015 meeting, and walked them through the mechanics of placing the contract. In July 2015, Noel McDaid moved forward with the purchase of the Allianz Life Pro+ indexed universal life contract.” (Zeek Decl., ¶ 8.) Zeek states that he only met the McDaids on one occasion, which was at the July 6, 2015 meeting, and that they did not contact him for ongoing sales or service. (Zeek Decl., ¶ 10.) Zeek states that in connection with the McDaids, his only actions were to design, present, and place the Allianz policy to Noel McDaid. (Zeek Decl., ¶ 14.) In addition, Zeek indicates that he does not know, has never met, and never made any representations to the Christensens regarding any policy mentioned in the TAC. (Zeek Decl., ¶ 14.)

Zeek also states that during the July 6, 2016 meeting, he did not discuss or make any reference to the FIP investment that the McDaids refer to in their complaint. (Zeek Decl., ¶ 11.) Zeek states that he has never made any representations or recommendations to the McDaids or the Christensens about an FIP investment. (Zeek Deck., ¶ 13.) Zeek had no knowledge of or involvement in the McDaids’ or the Christensens’ purchase of the FIP investments at the time they made them. (Zeek Decl., ¶ 15.) Zeek states that “[o]ther than [his] role in placing the Allianz IUL policy for Noel McDaid, [he] took no part with Mr. Dawson and was not engaged in any joint enterprise with him in his consultation with and services rendered to the McDaids or the Christensesns for their families’ college tuition or other financial planning.” (Zeek Decl., ¶ 14.)

Zeek asserts that “[a]s to Noel McDaid, Zeek only placed the IUL policy for him…This product functioned as the McDaids expected until the FIP investment, in which Zeek had no involvement, failed…Thus, Zeek could not have breached any legal duty of care even if he owed one to Noel McDaid.” (Mot. at p. 6:5-8.) In support of this assertion, Zeek references the following testimony from Noel McDaid’s deposition: “Q: So you indicated that the policy would meet your needs and I’m just wondering, did that change at some point? A. It changed when we couldn’t afford the original premium. Q. After FIP collapsed in 2018? A. Yes.” (Lazo Decl., ¶ 2, Ex. A. (Noel McDaid Depo.) at p. 86:17-23.)

Zeek also asserts that Plaintiffs cannot show causation. Zeek asserts that because he took no part in the FIP’s purchase or the decision to buy it, he could not cause losses to the Plaintiffs through the FIP’s decline.

Plaintiffs contend that “contrary to Zeek’s contention, the record shows genuine issues of material fact reflecting that Zeek was involved throughout the entire SCF/FIP investment process for both the McDaids and the Christensens.” (Opp’n at p. 8:17-19.)

Plaintiffs provide evidence that Dawson and Zeek jointly presented to the McDaids all aspects of the Structured Cash Flow (“SCF”)/FIP insurance investment plan. (Noel McDaid Decl., ¶ 6; Eileen McDaid Decl., ¶ 6.) The McDaids state that “Dawson and Zeek jointly presented the Allianz IUL and SCF/FIP investment to [them] as part of the same comprehensive plan to pay for [their] kids’ college education and continue on for [their] retirement plan.” (Noel McDaid Decl., ¶ 6; Eileen McDaid Decl., ¶ 6.) The McDaids also met with both Zeek and Dawson on the day they jointly presented their investment recommendation to proceed with the Allianz IUL policy at issue. (Noel McDaid Decl., ¶ 8; Eileen McDaid Decl., ¶ 8.)

Plaintiffs also provide the Declaration of Katja Base in support of the opposition, who was employed as the Executive Assistant to Dawson from approximately March 2015 to May 2019. (Base Decl., ¶ 3.) Ms. Base states that Dawson instructed her to assist Zeek with servicing the needs of their shared clients, Jon and Hanne Christensen and Noel and Eileen McDaid. (Base Decl., ¶ 9.) In addition, Ms. Base states that Zeek and Dawson instructed her to work with the Surf City team as partners throughout the entire SCF/FIP investment process. (Base Decl., ¶ 17.) Based was directed to “work with the Surf City Financial Group team to service the needs of the shared clients of Zeek and Dawson.” (Base Decl., ¶ 5.) Ms. Base states, “Dawson told me that he had relied on Zeek and the Surf City Financial Group team for the due diligence into the SCF/FIP investment.” (Base Decl., ¶ 19.)

Plaintiffs also argue that “regardless of Zeek’s direct involvement, the record is replete with genuine issues of material fact showing Zeek is jointly and severally liable to both the McDaids and Christensens for negligence under agency, partnership and/or joint venture principles.” (Opp’n at p. 9:4-6.)

Plaintiffs cite to Bank of California v. Connolly (1973) 36 Cal.App.3d 350, 364, where the Court of Appeal noted that “[a]lthough a partnership ordinarily involves a continuing business, whereas a joint venture is usually formed for a specific transaction or a single series of transactions, the incidents of both relationships are the same in all essential respects. A joint venture exists where there is an agreement between the parties under which they have a community of interest, that is, a joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control. An essential element of a partnership or joint venture is the right of joint participation in the management and control of the business. Absent such right, the mere fact that one party is to receive benefits in consideration of services rendered or for capital contribution does not, as a matter of law, make him a partner or joint venturer…Whether a partnership or joint venture exists is primarily a factual question to be determined by the trier of fact from the evidence and inferences to be drawn therefrom.” (Internal quotations and citations omitted.)[3]

Plaintiffs also cite to Victor Valley Transit Authority v. Workers’ Comp. Appeals Bd. (2000) 83 Cal.App.4th 1068, 1076, where the Court of Appeal noted that “[a] joint venture is a distinct entity virtually identical to a partnership, and capable of contracting--that is, acquiring obligations--in its own name. Although joint venturers and partners are jointly and severally liable to third parties for the obligations of the joint venture or partnership, the partners are free to allocate responsibility among themselves as they see fit.” (Internal citations and emphasis omitted.) Plaintiffs also note that “the partners of a partnership are jointly and severally liable for the conduct and torts injuring a third party committed by one of the partners.” (Black v. Sullivan (1975) 48 Cal.App.3d 557, 569.)

Plaintiffs contend that the record is clear that Dawson was Zeek’s partner and joint venturer, and that Dawson was acting within the scope of his partnership/joint venture. Plaintiffs also note that Zeek does not make any argument as to whether Dawson was negligent.

Plaintiffs provide evidence that Zeek was asked about his Surf City Financial website during his deposition: “Q. Okay. And you see on the bottom there, you see it says Skip Dawson is your Surf City College Planning team member?” to which Zeek responded, “A. Yeah. And the main reason for that was because, like I said, back in the day, and he would be the one I would refer college planning business to, if it came through.” (Furgison Decl., ¶ 3, Ex. A (Zeek Depo.) at p. 123:22-124:10.) Plaintiffs also provide evidence of the following testimony from Zeek’s deposition: “Q. Okay. Do you recall putting out – or having a Surf City sign put on Mr. Dawson’s door at his office location? A. I do remember seeing it…But what I recall is when we had the shared college planners, that my college planners were meeting somebody from my side that were closer to there, then they would go there is all. That was the only reason I think the sign might have been put up so they could find the office.” (Furgison Decl., ¶ 3, Ex. A (Zeek Depo.) at p. 113:12-23.) In addition, with respect to the McDaids, Zeek was asked, “[s]o at the time of the presentation and sale of the IUL policy, they were both your clients and Skip’s clients, correct?” to which Zeek responded, “Yes.” (Furgison Decl., ¶ 3, Ex. A (Zeek Depo.) at p. 47:20-23.)

Plaintiffs also indicate that Dawson and Zeek shared an employee named Michael Allen for approximately six months that split time between Dawson’s office and the Surf City Financial Group main office. (Base Decl., ¶ 13.) On or about September 3, 2015, Dawson asked Ms. Base to provide a “Third Party Witness Signature” to the Employment Agreement Dawson and Zeek jointly offered to Michael Allen. (Base Decl., ¶ 14.) Plaintiffs note that the Employment Agreement provides, inter alia, “A) Surf City Financial Group, a partnership comprised of College Planning of Greater Long Beach and Surf City College Planning, separate and distinct companies, is engaged in the business of assisting families with their college planning needs.” (Base Decl., ¶¶ 14-15, Ex. 1.) The “Employer” identified on the Employment Agreement is “Surf City Financial Group and College Planning of Greater Long Beach and/or Surf City College Planning incl. Brian Zeek and Skip Dawson.” (Base Decl., ¶ 14, Ex. 1, p. 4.)

In addition, Ms. Base states that “[d]uring my time employed by Dawson, Zeek and Dawson instructed me to operate their businesses together as a partnership. Zeek and Dawson instructed me to share business resources such as client files, email, and client relationship management (‘CRM’) software. Dawson instructed me to upload his email and client contact information into Zeek’s CRM system so that they could share client information, including information regarding Jon and Hanne Christensen and Noel and Eileen McDaid.” (Base Decl., ¶ 12.)

The Court notes that in the reply, Zeek cites to a variety of new evidence in support of the assertion that there are no genuine issues of material fact as to Plaintiffs’ negligence cause of action. Zeek also cites to new evidence in support of the assertion that Zeek was not and is not in a joint venture and/or partnership relationship with Dawson. The Court notes that “¿[t]he general rule of motion practice…is that new evidence is not permitted with reply papers.¿” (¿Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537¿.)

Based on the foregoing, the Court finds that Plaintiffs have raised a triable issue of fact regarding Dawson’s partnership and/or joint venture relationship with Zeek. The Court also finds that Plaintiffs have raised a triable issue of fact as to whether Zeek was involved in the FIP process for the McDaids and the Christensens.

Zeek asserts that he did not owe a fiduciary duty to Plaintiffs, warranting dismissal of Plaintiffs’ third cause of action for breach of fiduciary duty. “The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach.” (O’Neal v. Stanislaus County Employees’ Retirement Assn. (2017) 8 Cal.App.5th 1184, 1215.)

In the TAC, Plaintiffs allege that “[t]he fiduciary duty arises not solely from the procurement of an insurance policy, but also from the special relationship the Allianz Defendants created and cultivated with the McDaids and Christensens, by offering them expert counseling and advice regarding portfolio allocations, life insurance, refinancing their home and repurposing these assets to purchase the FIP Structured Cash Flow as an investment plan through a complicated structured finance program endorsed by the Allianz Defendants.” (TAC, ¶ 172.) Plaintiffs allege that “[t]he Allianz Defendants breached their fiduciary duties by engaging in all acts discussed herein.” (TAC, ¶ 176.)

Zeek states that he never met Jon Christensen or Hanne Christensen, and thus does not know them. (Zeek Decl., ¶ 12.) Zeek asserts that they thus could not have entered a relationship of trust and confidence that would establish him as their fiduciary. Zeek also asserts that he owed no fiduciary duty to the McDaids. Zeek notes that “[a]s a general rule, an insurance agent assumes only those duties found in any agency relationship such as reasonable care, diligence, and judgment in procuring the insurance requested by an insured.” (Murray v. UPS Capital Ins. Agency, Inc. (2020) 54 Cal.App.5th 628, 639 [internal quotations omitted].) As set forth above, Zeek asserts that in connection with the McDaids, his only actions were to design, present, and place the Allianz policy to Noel McDaid. (Zeek Decl., ¶ 14.) Zeek asserts that it was the failure of the FIP that “triggered the alleged decline in value to the Allianz policy…” (Mot. at p. 7:3-4.)

Plaintiffs counter that there exists a fiduciary duty as to both the McDaids and the Christensens “because Zeek and his agent, partner and/or joint venturer Dawson held themselves out to be experts and advisors in college financial planning, insurance, and retirement planning, and the McDaids and Christensens both reposed trust and confidence in Zeek and Dawson and relied upon them for investment advice.” (Opp’n at p. 12:8-11.) Plaintiffs cite to Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29, where the Court of Appeal noted that “[a] fiduciary relationship is any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent…” (Internal quotations omitted.)

Plaintiffs provide evidence that Zeek and Dawson held themselves out to the McDaids and the Christensens as experts in college financial planning, insurance and retirement planning. (Noel McDaid Decl., ¶ 2; Eileen McDaid Decl., ¶ 2; Hanne Christensen Decl., ¶ 2; Jon Christensen Decl., ¶ 2.) In addition, the McDaids indicate that Dawson and Zeek jointly presented the Allianz IUL and SCF/FIP investment to the McDaids as part of the same comprehensive plan to pay for their kids’ college education and continue on for their retirement plan. (Noel McDaid Decl., ¶ 6; Eileen McDaid Decl., ¶ 6.) Plaintiffs also indicate that Dawson told Ms. Base that he and Zeek worked together as partners to provide the Christensens (as well as the McDaids) with college financial planning, retirement planning and insurance advice. (Base Decl., ¶ 9.) The McDaids and the Christensens state that they relied upon the insurance and investment advice of Dawson and Zeek. (Noel McDaid Decl., ¶ 10; Eileen McDaid Decl., ¶ 10; Hanne Christensen Decl., ¶ 8; Jon Christensen Decl., ¶ 10.)

Based on the foregoing, the Court finds that Plaintiffs have raised a triable issue of fact regarding the existence of a fiduciary relationship between Zeek and the McDaids, as well as between Zeek and the Christensens.

As to the element of breach, Zeek argues that he “gave no advice, direction, nor made any other suggestion to the McDaids regarding their tuition and other financial planning aside from designing the insurance policy, for which Zeek met his general duty of care.” (Mot. at p. 8:6-8.) The Court notes that Zeek does not appear to present any evidence that he met his general duty of care with respect to the procurement of the Allianz IUL policy. The Court does not find that Zeek has met his burden of demonstrating that he did not breach his fiduciary relationship with the McDaids or the Christensens.

Based on the foregoing, the Court denies the motion for summary adjudication as to the third cause of action.

The Court notes that “[t]he elements of fraud or deceit…are: a representation, usually of fact, which is false, knowledge of its falsity, intent to defraud, justifiable reliance upon the misrepresentation, and damage resulting from that justifiable reliance.” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 72–73.)

In support of the fifth cause of action for intentional deceit/fraud, Plaintiffs allege that “[t]he Allianz Defendants, and each of them, intentionally or willfully misrepresented, misled and/or deceived the McDaids and Christensen to conduct the transactions set forth in this civil complaint including, but not limited to: (a) the recommendation for Plaintiffs to purchase an IUL policy; (b) the recommendation for the McDaids to refinance their home to purchase the FIP Structured Cash Flow investment product; (c) the recommendation for the Christensens to liquidate their assets to purchase the Allianz IUL policy and FIP Structured Cash Flow investment product; (d) the IUL policy and FIP product’s illiquidity, risk level, investment safety, mechanics of the investment and Structured Cash Flow program and the overall recommendations and insistence that the McDaids and Christensens follow the Allianz Defendants’ advice under the misrepresentation as in their best interests. The Allianz Defendants, and each of them, abused their position of influence and persuasion over the McDaids and Christensens.” (TAC, ¶ 191.)

Zeek asserts that he did not make any such misrepresentations to the McDaids or the Christensens, warranting dismissal of the fifth cause of action.

As to the first alleged “recommendation for Plaintiffs to purchase an IUL policy,” (SAC, ¶¶ 191(a)) Zeek asserts that he never made any such misrepresentation to the Christensens because he never met them. (Zeek Decl., ¶ 12.) Zeek asserts that as to the McDaids, it was Dawson who “identified an Allianz LifePro+ indexed universal life policy to be a suitable investment for the McDaids.” (Zeek Decl., ¶ 5.) Zeek states that he only “stepped in to design, place, and assist with the intended life insurance policy.” (Zeek Decl., ¶ 5.)

Plaintiffs counter that if they can “show a genuine issue of material fact as to whether Zeek or his agent/partner/joint venture partner made any one of the four misrepresentations discussed in Zeek’s moving papers, Zeek’s motion should be denied on this ground.” (Opp’n at p. 13:28-14:2.) As Plaintiffs note, Zeek only addresses the first element of whether a false representation was made. (See, e.g., Mot. at p. 10:20-21, “[w]ithout proof that Zeek made any misrepresentation to the Plaintiffs, there is no triable issue of fact as to Zeek in the TAC’s alleged fifth cause of action.”)

As to the first alleged “recommendation for Plaintiffs to purchase an IUL policy” (SAC, ¶ 191(a)), Plaintiffs note that Zeek admits in the motion that Dawson made such representation to the McDaids: “[a]s to the McDaids, it was Dawson who identified the Allianz IUL policy as a suitable investment for the McDaids.” (Mot. at p. 9:12-13.) As set forth above, the Court finds that Plaintiffs have raised a triable issue of fact regarding Dawson’s partnership and/or joint venture relationship with Zeek. Plaintiffs note that “the partners of a partnership are jointly and severally liable for the conduct and torts injuring a third party committed by one of the partners.” (Black v. Sullivan, supra, 48 Cal.App.3d at p. 569.) Plaintiffs also indicate that Dawson told the Christensens that “the Allianz IUL policy and Structured Cash Flow (“SCF”) plan, including the Future Income Payments (“FIP”) investment was safe and suitable for [their] needs.” (Hanne Christensen Decl., ¶ 8.)

As to the second alleged “recommendation for the McDaids to refinance their home to purchase the FIP Structured Cash Flow investment product” (SAC, ¶ 191(b)), Zeek asserts that he did not recommend that the McDaids refinance their home to purchase the FIP investment because he made no statement to them whatsoever regarding FIP. (See Zeek Decl., ¶ 11, “I did not discuss, mention, allude to, or in any other way make reference in the July 6, 2015 meeting to the Future Income Payments, LLC (‘FIP’) investment that the McDaids refer to in their complaint.”)

Plaintiffs counter that the McDaids had a meeting with Dawson in 2017, when they “delivered a $90,000 check for the FIP investment as part of the SCF plan. [The McDaids] told Dawson…that the $90,000 was obtained through a refinance of [their] home. This was not the first time [the McDaids] told Dawson that [they] did not have available funds for FIP and would have to refinance [their] home in order to follow their recommendations.” (Eileen McDaid Decl., ¶ 9; Noel McDaid, ¶ 9.) Eileen McDaid asked Dawson, “Can’t I just use the $90,000 to pay for college?” (Eileen McDaid Decl., ¶ 9.) Dawson told the McDaids, “That’s not a plan. This is the only plan for you. You have no other options.” (Eileen McDaid Decl., ¶ 9.)

As to the third alleged “recommendation for the Christensens to liquidate their assets to purchase the Allianz IUL policy and FIP Structured Cash Flow investment product,” (SAC, ¶ 191(c)), Christensen asserts that he never made any such recommendation because he did not meet the Christensens, as set forth above. (Zeek Decl., ¶ 12.) In the opposition, Plaintiffs do not appear to set forth any fact in dispute of this point.[4]

As to the alleged misrepresentation concerning the “IUL policy and FIP product’s illiquidity, risk level, investment safety, mechanics of the investment and Structured Cash Flow program and the overall recommendations and insistence that the McDaids and Christensens follow the Allianz Defendants’ advice,” (SAC, ¶ 191(d)), Zeek asserts that he made no representation regarding the “FIP’s illiquidity, risk level, investment safety, mechanics of the investment and Structured Cash Flow program,” because he never made any representations to either the Christensens or the McDaids about the FIP. (See Zeek Decl., ¶¶ 11, 12, 14.) Zeek also asserts that he “stepped in to design, place, and assist with the intended life insurance policy” (Zeek Decl., ¶ 5) such that he made no representation concerning the IUL policy’s illiquidity, risk level, or investment safety, or the mechanics of the investment and Structured Cash Flow program. Plaintiffs also do not appear to set forth any facts in dispute of this point.

The Court notes that “[a] motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1).) Zeek asserts that “[w]hile Code of Civil Procedure section 437c, subdivision (f)(1) provides it may be granted only if it disposes completely of a cause of action, a party may present a motion for summary adjudication challenging a separate and distinct wrongful act even though combined with other wrongful acts alleged in the same cause of action.” (Opp’n at p. 11:11-14.) Zeek cites to Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110, 1114, where the Court of Appeal “review[ed] the trial court’s order of summary adjudication that a bank customer’s claim for damages based on the bank’s payment of checks issued from 1991 through 1993 containing less than all of the required signatures is barred by the retroactive application of California Uniform Commercial Code sections 4111 and 4406, subdivision (f).” In Edward Fineman, “Fineman contend[ed] that the trial court’s order of summary adjudication [was] impermissible because it does not ‘. . . completely dispose[] of a cause of action [or] an affirmative defense . . . .’ (Code Civ. Proc., § 437c, subd. (f)(1).) The premise for Fineman’s contention [was] that it pled all of the 23 of the 1991 to 1993 unauthorized checks in the aggregate amount of $63,500 in each of its 3 causes of action.” (Id. at p. 1116.)

The Court of Appeal found that “Sun'n Sand instructs that each altered, forged, or unauthorized check stands on its own as a separate claim, independently subject to such affirmative defenses as may be applicable. In other words, notwithstanding the aggregation of the 23 1991-1993 checks, each constitutes a separate cause of action susceptible to a complete disposition if barred by affirmative defenses asserted by Bank of America.” (Edward Fineman Co. v. Superior Court, supra, 66 Cal.App.4th at p. 1118.) The Court of Appeal “conclude[d] that the clearly articulated legislative intent of [Code of Civil Procedure] section 437c, subdivision (f), is effectuated by applying the section in a manner which would provide for the determination on the merits of summary adjudication motions involving separate and distinct wrongful acts which are combined in the same cause of action. To rule otherwise would defeat the time and cost saving purposes of the amendment and allow a cause of action in its entirety to proceed to trial even where, as here, a separate and distinct alleged obligation or claim may be summarily defeated by summary adjudication. Accordingly, we hold that under subdivision (f) of section 437c, a party may present a motion for summary adjudication challenging a separate and distinct wrongful act even though combined with other wrongful acts alleged in the same cause of action.” (Id. at p. 1118 [internal quotations omitted].)

The Court finds that Edward Fineman is distinguishable, as in that case, the Court of Appeal found that “each altered, forged, or unauthorized check stands on its own as a separate claim, independently subject to such affirmative defenses as may be applicable. In other words, notwithstanding the aggregation of the 23 1991-1993 checks, each constitutes a separate cause of action susceptible to a complete disposition if barred by affirmative defenses asserted by Bank of America.” (Edward Fineman Co. v. Superior Court, supra, 66 Cal.App.4th at p. 1118.) The Court does not find that Zeek has cited to legal authority demonstrating that the misrepresentations alleged in subsections (a)-(d) of paragraph 191 of the TAC constitute separate causes of action for purposes of Code of Civil Procedure section 437c, subdivision (f)(1).

Based on the foregoing, the Court denies Zeek’s motion for summary adjudication as to the fifth cause of action.

Lastly, Zeek asserts that the first, third, and fifth causes of action are time barred.

Zeek asserts that any claim that he was negligent under the first cause of action is barred by Code of Civil Procedure section 339. Zeek cites to Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1155, where the Court of Appeal found that “[a] cause of action for negligent misrepresentation is barred by the two-year statute of limitations (§ 339) where the allegations amount to a claim of professional negligence.” Zeek indicates that he met with Noel and Eileen McDaid in Dawson’s office on July 6, 2015, and that he only met the McDaids on one occasion, which was at the July 6, 2015 meeting. (Zeek Decl., ¶¶ 6, 10.) Zeek notes that this action was filed on April 24, 2020, nearly five years later.

As to the third cause of action for breach of fiduciary duty, Zeek asserts that the applicable cause of action is set forth in Code of Civil Procedure section 343, which provides that “[a]n action for relief not hereinbefore provided for must be commenced within four years after the cause of action shall have accrued.” In Stalberg v. Western Title Ins. Co. (1991) 230 Cal.App.3d 1223, 1230, the Court of Appeal noted that “[t]he statute of limitations for breach of fiduciary duty is four years. (§ 343.)” Zeek asserts that the filing of this action falls outside of the four-year limitation period, because it was filed five years after the purported breach occurred.

As to the fifth cause of action for intentional deceit/fraud, Zeek asserts that the applicable statute of limitations is set forth in Code of Civil Procedure section 338, subdivision (d), which provides for a three year statute of limitations for “[a]n action for relief on the ground of fraud or mistake.” Zeek asserts that “[a]s with the other counts, even if the Plaintiffs offered evidence of some sort of misrepresentation by Zeek, basing an action thereon would be futile based on the passage of more than three years before commencing the action.” (Mot. at p. 12:22-24.)

In the opposition, Plaintiffs assert that the earliest possible beginning of the accrual period was April 10-11, 2018, when the McDaids and Christensens received correspondence relating to FIP’s “restructuring.”[5] The McDaids state in their respective declarations that “[i]n an email dated April 11, 2018, Dawson provided [the McDaids] with a letter dated April 10, 2018 from FIP stating that it was ‘restructuring’ its operations and that it would either resume its collection and service departments or that buyers such as us could collect our investments ourselves in place of FIP.” (Noel McDaid, ¶ 17; Eileen McDaid; ¶ 17.) In addition, the Christensens state in their respective declarations that “[i]n or about April 2018, Dawson provided [the Christensens] with a letter dated April 10, 2018 from FIP stating that it was ‘restructuring’ its operations and that it would either resume its collection and service departments or that buyers such as us could collect our investments ourselves in place of FIP.” (Hanne Christensen Decl., ¶ 14; Jon Christensen Decl., ¶ 16.)

Plaintiffs also assert that delayed discovery applies to the claims here. Plaintiffs note that “[w]here a fiduciary relationship exists, facts which ordinarily require investigation may not incite suspicion and do not give rise to a duty of inquiry. Where there is a fiduciary relationship, the usual duty of diligence to discover facts does not exist. Thus, a plaintiff need not establish that she exercised due diligence to discover the facts within the limitations period unless she is under a duty to inquire and the circumstances are such that failure to inquire would be negligent.” (Hobbs v. Bateman Eichler, Hill Richards (1985) 164 Cal.App.3d 174, 201-202 [internal citations omitted].) Plaintiffs also note that “[a] cause of action for professional negligence does not accrue until the plaintiff (1) sustains damage and (2) discovers, or should discover, the negligence.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc., supra, 115 Cal.App.4th at p. 1161.) Further, Code of Civil Procedure section 338, subdivision (d) provides that “[t]he cause of action in that case [on the ground of fraud or mistake] is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”

As Plaintiffs note, Zeek does not address what the McDaids or Christensens knew, or when they learned of Zeek’s and Dawson’s alleged wrongdoing. The McDaids indicate that “between at least April 2018 and December 2018, Dawson met with, interviewed, and ultimately retained a law firm to represent [the McDaids] in recovering [their] investment from SCF/FIP.” (Noel McDaid, ¶ 20; Eileen McDaid, ¶ 20.) The McDaids did not know at that time that they had claims against Dawson and Zeek. (Ibid.) Similarly, the Christensens indicate that “between at least April 2018 and December 2018, Dawson met with, interviewed, and ultimately retained a law firm to represent [the Christensens] in recovering [their] investment from SCF/FIP.” (Hanne Christensen, ¶ 17; Jon Christensen, ¶ 19.) The Christensens did not know at that time that they had claims against Dawson and Zeek. (Ibid.)

Based on the foregoing, the Court finds that Plaintiffs have raised a triable issue of fact as to whether the first, third, and fifth causes of action are barred by the statute of limitations.

Based on the foregoing, Zeek’s motion for summary judgment, or in the alternative, summary adjudication, is denied.

[1]The first, third, and fifth causes of action are alleged against Zeek.

[2]In support of the first cause of action, Plaintiffs allege that “[t]he McDaids and Christensens allege that…Zeek…owed the McDaids and Christensens the duty of care applicable to similar professionals and professional entities,” and that he breached his duty of care. (TAC, ¶¶ 161, 163.)

[3]In addition, in the reply, Zeek cites to Corporations Code section 16202, subdivision (a), which provides that “[e]xcept as otherwise provided in subdivision (b), the association of two or more persons to carry on as coowners a business for profit forms a partnership, whether or not the persons intend to form a partnership.”

[4]Rather, Plaintiffs argue that “[w]ith respect to the remaining misrepresentations, Zeek fails to make a single argument or suggestion that Dawson did not make these misrepresentations to the McDaids and Christensens, or that a genuine disputed material fact does not exist on the issue. Rather, Zeek argues only that he himself did not make these statement…Thus, as with the other claims, a genuine issue of material fact regarding the issue of agency, partnership or joint venture precludes summary judgment here.” (Opp’n at p. 14:11-15.)

[5]Plaintiffs assert that “[s]ince the action was filed on April 24, 2020, that would be well within the applicable statute of limitations period for the fraud and fiduciary duty claims. And as to the negligence claim, Emergency Rules to the California Rules of Court No. 9 tolled statutes of limitations in all civil actions between April 6, 2020, and October 1, 2020 due to COVID-19. Thus, the negligence claim would also not be time barred even based on that date.” (Opp’n at p. 15:16-20.) The Court notes that pursuant to Cal. Rules of Court, Appx., Emergency rule 9, subdivision (a), “[n]otwithstanding any other law, the statutes of limitations and repose for civil causes of action that exceed 180 days are tolled from April 6, 2020, until October 1, 2020.”

NOEL C. MCDAID, et al., Plaintiffs, vs. ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA, et al., Defendants.	Case No.:	20STCV15869
	Hearing Date:	March 16, 2023
	Hearing Time:	8:30 a.m.
	[TENTATIVE] ORDER RE: MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION BY DEFENDANT BRIAN L. ZEEK, DBA SURF CITY FINANCIAL GROUP
AND RELATED CROSS-ACTION

Superior Court of California

County of Los Angeles

Department 50