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Cote v. Tennant

May 10, 2010

JOSEPH COTE, PLAINTIFFS,
v.
RICHARD E. TENNANT, JOHN M. STERLING, AND RIVERSOURCE LIFE INSURANCE COMPANY OF NEW YORK F/K/A/ IDS LIFE INSURANCE COMPANY OF NEW YORK, DEFENDANTS.



The opinion of the court was delivered by: Hon. Norman A. Mordue, Chief U.S. District Judge

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

In this action, plaintiff claims that the individual defendants, acting as agents of defendant Riversource Life Insurance Company of New York ("Riversource"), wrongfully and fraudulently persuaded plaintiff to "roll over" his fully-paid single premium life insurance policy into a flexible premium variable life insurance policy, causing him monetary loss. Plaintiff asserts various New York State common law claims and one claim based on the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1961, et seq. Defendants removed the action from New York State Supreme Court, County of Oneida, to District Court, alleging federal question jurisdiction based on the RICO cause of action.

Defendants move (Dkt. No. 6) to dismiss the complaint on various grounds. As explained below, the Court dismisses the RICO cause of action for failure to state a claim and remands the action to state court.

COMPLAINT

In the complaint, plaintiff states that the individual defendants, Richard E. Tennant and John M. Sterling (together, "Advisors"), "set themselves out to be Certified Financial Planners and Personal Financial Advisors to the general public and are either independent agents or agents of among others the defendant [Riversource]." The complaint alleges the following:

That at all times hereinafter mentioned the plaintiff was a recent widower of advanced age, on a limited income, and susceptible to being influenced and deceived by those he believed to be honest, truthful and trusting individuals.

That at all times hereinafter mentioned the plaintiff had a long standing friendly, business, confidential, and trusting relationship with the Advisors. During this relationship the Advisors prepared the plaintiff's income tax returns, handled his investments, and sold him insurance. That as a consequence of this relationship the plaintiff relied upon the knowledge, direction and advice of the Advisors and verily believed them to be honest, truthful and trusting individuals.

Upon information and belief the Advisors knew the plaintiff was of advanced age, on a limited income, a recent widower, and susceptible to being influenced and deceived. The Advisors, also, knew the plaintiff relied upon their advice, directions, and trusted them because of their long standing friendship, confidential, and trusting relationship that they nurtured with the plaintiff over the years.

Prior to September 1999 the plaintiff was the owner of a fully paid-up and secure Single Premium Life Insurance Policy (SPL) #979200693585. The SPL, was sold to the plaintiff by the Advisors in October 1987 and was placed with the defendant Riversource.

The Advisors met with the plaintiff in September 1999. During this meeting the Advisors reviewed plaintiff's financial portfolio including his fully paid-up and secure SPL. Upon information and belief, the plaintiff's SPL had a death benefit of $54.120,00 which was fully payable to plaintiff's daughters upon his death. At that time, the SPL's roll over cash value was $37,065.25.

The plaintiff explained to the Advisors, during the September 1999 meeting, that he was desirous of securely maximizing his legacy to his daughters. The Advisors advised that they could make the plaintiff more money than he was earning and without risk, and directed the plaintiff to roll-over the cash value of his SPL insurance policy into a Riversource Flexible Premium Variable Life Insurance Policy (FPVL).

Upon information and belief, the FBVL by its terms was an inappropriate policy of life insurance for the plaintiff considering the plaintiffs financial goals, his age, fixed retirement income, and the death benefit provided to the plaintiff by his paid-up SPL policy.

Notwithstanding the above, the Advisors represented to the plaintiff, who verily believed, that the FPVL was a better insurance vehicle for him because the death benefit was equal in an amount to that of the SPL, and may increase in value over time. They further explained to the plaintiff, who verily believed, that the SPL roll over cash value exchange would be ...


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