United States District Court, W.D. Virginia, Harrisonburg Division
ALFRED L. SNAPP, JR., BETTY V. SNAPP, and SHARON K. SNAPP, Plaintiffs,
LINCOLN FINANCIAL SECURITIES CORPORATION, RIVERSOURCE DISTRIBUTORS, INC., and RIVERSOURCE LIFE INSURANCE COMPANY,
ELIZABETH K. DILLON, UNITED STATES DISTRICT JUDGE
Alfred and Betty Snapp, together with their daughter-in-law,
Sharon Snapp, bring this action against Lincoln Financial
Securities Corporation (Lincoln), RiverSource Distributors,
Inc., and RiverSource Life Insurance Company (together,
RiverSource). Plaintiffs assert various claims arising from
defendants' alleged securities fraud.
the court is defendants' motion to dismiss the complaint
for failure to state a claim under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. In it, defendants argue
that many of plaintiffs' claims are barred by the
applicable statute of limitations, and that others fail to
state a claim. The matter has been fully briefed and argued.
For the reasons set forth below, the court will grant
defendants' motion to dismiss.
2007, Alfred and Betty Snapp met with Randy Watts, who was
both a Financial Industry Regulatory Authority (FINRA)
registered representative of Lincoln Financial and a
professional authorized to sell RiverSource variable
annuities. The Snapps told Watts that they wanted out of
their prior investments that fluctuated with the market, and
they wanted to put their life savings in an investment which
was safe, like an annuity. Watts recommended that the Snapps
invest their life savings in a RiverSource variable annuity.
He told them that the investment “would never go below
the initial amount they would be investing” and that
“it would be paid out in full as a death
benefit.” (Compl. ¶¶ 11, 14.) Before
agreeing, the Snapps “read the paperwork and asked a
lot of questions about the alleged guarantee.”
2008, Sharon Snapp met with Watts, who had previously
recommended that she invest her late husband's life
insurance proceeds in a Hartford variable annuity. Watts
recommended to Ms. Snapp that she move her investment into a
RiverSource variable annuity, and similarly assured her that
“the original amount invested would never decline in
value.” (Id. ¶ 18.)
November 2009, every quarterly and annual statement that the
Snapps received from RiverSource contradicted Watts's
representations that the value would never decline below the
initial investment and that the death benefit would equal the
initial investment. Mr. and Mrs. Snapp “would often
question Mr. Watts about statements received showing a
reduction in the annuity's value.” (Id.
¶ 13.) Likewise, Ms. Snapp “would receive
statements indicating a decline in value, [and] she would ask
Mr. Watts about them.” (Id. ¶ 19.) Watts
repeatedly assured them that their investment would not
2015, Watts purportedly committed suicide after he was
contacted by an investigator regarding thefts from customers.
(Id. ¶ 7.) After Watts's death, Mr. and
Mrs. Snapp called his office “and found out for the
first time” that their death benefit had declined by
approximately $197, 000. (Id. ¶ 15.) Similarly,
Ms. Snapp “learned that her account value” had
declined by approximately $80, 000. (Id. ¶ 21.)
Snapps filed a FINRA arbitration claim against Lincoln and
RiverSource on April 18, 2016. The arbitration panel granted
Lincoln's and RiverSource's motion to dismiss based
on FINRA's six-year “eligibility” rule for
the submission of claims.
Standard of Review
survive a Rule 12(b)(6) motion to dismiss, a plaintiff's
allegations must “state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). This standard
“requires the plaintiff to articulate facts, when
accepted as true, that ‘show' that the plaintiff
has stated a claim entitling him to relief, i.e.,
the ‘plausibility of entitlement to relief.'”
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.
2009) (quoting Iqbal, 556 U.S. at 678). The
plausibility standard requires more than “a sheer
possibility that a defendant has acted unlawfully.”
Iqbal, 556 U.S. at 678.
determining whether the plaintiff has met this plausibility
standard, the court must accept as true all well-pleaded
facts in the complaint and any documents incorporated into or
attached to it. Sec'y of State for Defence v. Trimble
Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007).
Further, it must “draw all reasonable factual
inferences from those facts in the plaintiff's favor,
” Edwards v. City of Goldsboro, 178 F.3d 231,
244 (4th Cir. 1999), but it “need not accept legal
conclusions couched as facts or ‘unwarranted
inferences, unreasonable conclusions, or arguments,
'” Wag More Dogs, LLC v. Cozart, 680 F.3d
359, 365 (4th Cir. 2012) (quoting Giarratano v.
Johnson, 521 F.3d 298, 302 (4th Cir. 2008)).
already noted, defendants argue that many of plaintiffs'
claims are time-barred. Statutes of limitation and statutes
of repose are affirmative defenses that may be raised in a
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6). United States v. Kivanc, 714 F.3d 782, 789
(4th Cir. 2013) (citing Dean v. Pilgrim's Pride
Corp, 395 F.3d 471, 474 (4th Cir. 2005)). While a Rule
12(b)(6) motion “invites an inquiry into the legal
sufficiency of the complaint, not an analysis of potential
defenses to the claims set forth therein, dismissal
nevertheless is appropriate when the face of the complaint
clearly reveals the existence of a meritorious affirmative
defense.” Brockington v. Boykins, 637 F.3d
503, 506 (4th Cir. 2011) (internal citations and quotations
Consideration of Extrinsic Documents
their motion to dismiss, Lincoln and RiverSource attach 14
exhibits. Exhibit A, the only exhibit to which the Snapps
object, is the FINRA dispute resolution order. Exhibits B
through N are the Snapps' RiverSource annuity statements.
To their memorandum in opposition to defendants' motion
to dismiss, the Snapps attach one exhibit, to which
defendants do not object, which includes a 2007 RiverSource
welcome letter, RiverSource's “how to contact
us” page, and the Snapps' 2007 contract
when a defendant moves to dismiss under Rule 12(b)(6), a
court is “limited to considering the sufficiency of
allegations set forth in the complaint and the
‘documents attached or incorporated into the
complaint.'” Zak v. Chelsea Therapeutics
Int'l, Ltd., 780 F.3d 597, 606 (4th Cir. 2015)
(quoting E.I. du Pont de Nemours & Co. v. Kolon
Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011)). If a
court goes beyond these documents during the pleading stage
of litigation, then it “improperly converts the motion
to dismiss into a motion for summary judgment.”
Id. “Such conversion is not appropriate where
the parties have not had an opportunity for reasonable
discovery.” E.I. du Pont de Nemours & Co.,
637 F.3d at 448.
a court should generally focus its “inquiry on the
sufficiency of the facts relied upon by the plaintiff in
the complaint.” Zak, 780 F.3d at 606. It may,
however, consider extrinsic documents attached to the
pleadings that are “‘integral to and explicitly
relied on in the complaint, '” when the
documents' authenticity is unchallenged. Id.
(quoting Am. Chiropractic Ass'n v. Trigon Healthcare,
Inc., 367 F.3d 212, 234 (4th Cir. 2004)).
the only document attached to the pleadings that falls
outside these parameters is defendants' Exhibit A, the
FINRA dispute resolution order. All of the other documents
meet the requirements for consideration at the
motion-to-dismiss stage. The court thus considers the annuity
statements and the Snapps' exhibit in deciding
Lincoln's and RiverSource's Rule 12(b)(6) motion, and
excludes Exhibit A.
The Snapps' Virginia Securities Act Claims Are
and RiverSource argue that the Snapps' Virginia
Securities Act claims in Count I are time-barred under the
two-year limitations period. The court agrees.
Virginia Securities Act imposes liability in connection with
the purchase or sale of a security. The Act provides: “No
suit shall be maintained to enforce any liability under this
section unless brought within two years after the transaction
upon which it is based . . . .” Va. Code §
13.1-522. The Fourth Circuit has emphasized that this
two-year limitation is “an absolute cutoff.”
Caviness v. Derand Res. Corp., 983 F.2d 1295,
1305-06 (4th Cir. 1993) (holding that the limitations period
is not subject to equitable tolling because “we
conclude from the plain meaning of the statute that the
Virginia legislature intended to provide unqualifiedly that a
claim must be brought within two years”).
Snapps allege that Lincoln and RiverSource violated the
Virginia Securities Act “by engaging in a course of
deceptive schemes, devices, [and] misrepresentations . . .
related to the sale of securities.” (Compl. ¶ 37.)
But the relevant transactions-the Snapps' purchase of the
annuities at issue-occurred in late 2007 and early 2008.
(Id. ¶¶ 9, 18.) The parties agree that the
operative date of the Snapps' assertion of their claims
for statute-of-limitations purposes is April 18, 2016.
Because the Snapps failed to assert their claims ...