Title: Mary G. Davis v. Sterne, Agee and Leach, Inc., Frank R. Davis, and Robert Davis, Jr.

State: alabama

Issuer: Alabama Supreme Court

Document:

REL: 01/12/2006 - Davis v. Stern, Agee
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
242-4621), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2006-2007
_________________________
1050478
_________________________
Mary G. Davis
v.
Sterne, Agee and Leach, Inc., 
Frank R. Davis, and Robert Davis, Jr.
Appeal from Jefferson Circuit Court
(CV-04-3830)
STUART, Justice.
Mary Davis sued Sterne, Agee & Leach, Inc. (hereinafter
"Sterne Agee"), and her two stepsons, Robert Davis, Jr., and
Frank R. Davis (hereinafter "the sons"), alleging claims of
fraud by forgery, conversion, negligence or wantonness,
1050478
2
conspiracy,  unjust enrichment, fraudulent misrepresentation,
and fraudulent suppression, regarding the disbursement of the
proceeds 
of 
the 
individual retirement account ("IRA")
belonging to her late husband Robert E. Davis, Sr., and
serviced by Sterne Agee.  Sterne Agee and the sons moved
separately for summary judgments.  The trial court entered a
summary judgment for Sterne Agee and the sons as to all
claims.  Davis appeals.  We affirm in part, reverse in part,
and remand.
Facts and Procedural History
Mr. Davis owned an IRA that was serviced by Sterne Agee
and one of its financial advisors, Linda Daniel.  During Mr.
Davis's life, he changed the named beneficiary on this IRA
four times.  Each time the named beneficiary was either Davis
or the sons.
In December 2001, Daniel received in the mail a change-
of-beneficiary ("COB") form allegedly signed by Mr. Davis,
changing the beneficiary of his IRA from Davis to his sons.
Daniel did not compare the signature on this form to other
known signatures of Mr. Davis to confirm its validity.
1050478
3
Mr. Davis died in February 2002.  After his death, Davis
contacted Daniel to inquire about the disbursement of the
proceeds in the IRA.  Daniel informed Davis that she was not
the designated  beneficiary on the IRA, and she refused to
disclose information about the account.  The sons also
contacted 
Daniel. 
 
Because 
they 
were 
the 
designated
beneficiaries, Daniel provided information about the IRA to
them and pursuant to their request began to liquidate the IRA
and to distribute the proceeds to the sons. 
In July 2002, Davis, believing that the signature on the
COB form dated December 8, 2001, had been forged, requested
copies of the last three COB forms allegedly executed by Mr.
Davis.  Daniel released the documentation.  After Davis had
the signatures on the forms evaluated, Davis concluded that
the signature on the COB form dated December 8, 2001 was not
that of Mr. Davis.    
On June 22, 2004, Davis filed her complaint in the
circuit court, naming Sterne Agee and the sons as defendants.
The sons completely liquidated the IRA after receiving notice
of the lawsuit.  
1050478
4
Sterne Agee and the sons answered the complaint.  In June
2005 Sterne Agee moved for a summary judgment.  In its motion,
Sterne Agee maintained that Davis's claims of conversion,
negligence or wantonness, and conspiracy were barred by
application of § 7-8-115, Ala. Code 1975, and that her
negligence claim was barred by the two-year limitations
period, see § 6-2-3, Ala. Code 1975.  Sterne Agee also argued
that there was not substantial evidence to support any of
Davis's claims.  In support of its motion, Sterne Agee
provided an affidavit from Daniel; that affidavit stated:
"I 
received 
what 
turned 
out 
to 
be 
a 
final
designation of beneficiary from [Mr. Davis] in
December 2001.  This form was completed and executed
and directed that the beneficiaries on the IRA
account be [the sons].  I was surprised when I
received the form because Mr. Davis had not recently
requested a form and I had not recently sent him a
form.  It was during the holidays and I had already
planned to call Mr. Davis and wish him a happy
holiday.  When I called to wish him happy holidays,
I also asked him about the December 2001 beneficiary
change, to verify that he wanted his sons to be his
beneficiaries. [Mr. Davis] confirmed that he did in
fact want his sons to be the beneficiaries and had
sent the form to me to effectuate the change.
"....
"If I had suspected, or if there had been any
hint of a forgery, I would have reported it
immediately to the branch manager.  As to the
December 2001 final beneficiary change, although the
1050478
5
form had not been requested [by or sent to] Mr.
Davis 
immediately 
prior 
to 
the 
change 
in
beneficiary, I called [Mr. Davis] and verified that
the completed and executed designation I received,
indicating 
he 
wanted 
his 
sons 
to 
be 
the
beneficiaries of his IRA account, was correct. [Mr.
Davis] confirmed that he wanted his sons to be the
beneficiaries 
of 
his 
IRA 
account 
as 
he 
had
previously stated on a number of occasions."
Sterne Agee also included excerpts from Daniel's deposition
conducted in February 2005 in which she testified that she had
had numerous conversations with Mr. Davis about changing the
designated beneficiary of his IRA.  She stated that she could
not recall when she last spoke with Mr. Davis about the
designation of a beneficiary for his IRA.  Additionally,
Sterne Agee submitted deposition testimony from Davis in which
Davis admitted that she did not have any facts to support her
contention that Sterne Agee and the sons had conspired to
deprive her of the proceeds of Mr. Davis's account and that
she was not aware of any conversations between Sterne Agee and
the sons.  Sterne Agee also attached excerpts from the
deposition testimony of the sons, which  indicated that they
did not have contact with Sterne Agee or Daniel until after
Mr. Davis had died.  Last, Sterne Agee attached excerpts from
the deposition testimony of Steven A. Slyter, Davis's expert
1050478
6
witness on handwriting analysis, establishing that he believed
an expert's assistance would be required to analyze Mr.
Davis's signatures on the three COB forms to conclude that the
signature on the December 8, 2001, COB form was not that of
Mr. Davis.    
In opposition to Sterne Agee's motion for a summary
judgment, Davis argued that § 7-8-115 did not protect Sterne
Agee from liability because, she argued, Sterne Agee did not
satisfy the statutory requirement that it was acting "at the
direction of its customer or principal" when it disbursed the
proceeds of the IRA to the sons.  In support of her argument,
Davis presented evidence, in the form of the testimony of
Slyter, that the signature on the December 2001 COB form was
not that of Mr. Davis.  She argued that a genuine issue of
material fact was created as to whether the signature on the
document was forged and whether Sterne Agee had breached its
duty of care in disbursing the proceeds of the IRA.  She also
argued that Sterne Agee had presented no evidence to refute
Slyter's testimony that the signature on the December 2001 COB
form was not Mr. Davis's and that Daniel and Sterne Agee had
breached the standard of care in servicing Mr. Davis's IRA.
1050478
7
Last, to counter statements in Daniel's affidavit regarding
Mr. Davis's intent, she attached an affidavit from Beverly
Scott, a former nurse of Mr. Davis's, who stated:
"At one time he told me that he had changed the
beneficiary of his IRA account to his [sons].  He
then said that he felt bad about it and started
crying.  He said that he loved [Davis] and that he
wanted to change the beneficiary back to her.  He
changed the beneficiary back to [Davis] because I
saw him sign the change form and I placed it in the
mailbox.  He intended for [Davis] to be the
beneficiary of that account.  He never said anything
about changing the beneficiary back to his [sons]."
In July 2005, the sons also moved for a summary judgment,
claiming that Davis's action was barred by the limitations
period and that no substantial evidence indicated that they
had "forged or otherwise affixed the signature of [Mr. Davis]
to an IRA designation beneficiary form through fraud by
forgery, conversion, negligence, wantonness, and conspiracy."
Davis responded to the sons' motion, arguing that the
deposition testimony of Slyter created a genuine issue of
material fact as to whether Mr. Davis's signature on the
December 2001 COB form was forged and, consequently, a genuine
issue of material fact as to whether the sons, who were the
beneficiaries of the IRA, had committed fraud by forgery and
conversion. 
1050478
This Court issued the Fortis decision on July 29, 2005.
1
8
In July 2005, Davis filed a request to amend her
complaint to add claims of fraudulent misrepresentation and
fraudulent suppression against Sterne Agee.  On September 6,
2005, Sterne Agee's counsel filed a letter in the trial court,
dated August 15, 2005, directing the court's attention to this
Court's decision in Fortis Benefits Insurance Co. v. Pinkley,
926 So. 2d 981 (Ala. 2005),  and asserting that the claims in
1
Fortis were "almost identical" to Davis's claims.  On
September 12, 2005, the trial court permitted Davis to amend
her complaint.  The trial court ordered a hearing on the
summary-judgment motions for October 2005.
Sterne Agee filed a renewed and supplemental motion for
a summary judgment on September 23, 2005, again alleging that
§ 7-8-115, Ala. Code 1975, protected it from liability, that
Davis's negligence and wantonness claims were barred by the
two-year 
limitations 
period, 
and 
that 
there 
was 
not
substantial evidence supporting any of Davis's claims.  The
sons also renewed and supplemented their motion for a summary
judgment, alleging that there was no genuine issue of material
fact as to whether they had forged Mr. Davis's signature on
1050478
9
the December 2001 COB form and that Davis's claims were barred
by the applicable limitations period.
After conducting a hearing on the summary-judgment
motions, the trial court entered a summary judgment for Sterne
Agee and the sons as to all claims.  The trial court based its
judgment on its application of § 7-8-115, Ala. Code 1975,
stating:
"This matter came before the court on a motion for
summary judgment on October 25, 2005.  The case is
a dispute between [Davis] and [Sterne Agee] over the
entitlement of financial assets in an Individual
Retirement Account ('IRA') owned by [Mr. Davis] at
the time of his death.
"The applicable statutory provision finds the
Alabama Commercial Code § 7-8-115, its language and
purpose [is] to protect brokers from liability when
they deal with financial assets that are subject to
competing claims.  In pertinent part, § 7-8-115
provides:
"'A securities intermediary that has
transferred a financial asset pursuant to
an effective entitlement order, or a broker
or other agent or bailee that has dealt
with a financial asset at the direction of
its customer or principal, is not liable to
a person having an adverse claim to the
financial asset ....'
"Ala. Code § 7-8-115 (emphasis added.)  As set forth
in the legislative commentary, the purpose of this
statute is to enable brokers to act on the
instructions of their customers without fear of
liability arising from disputed claims to the
1050478
10
financial assets maintained in their accounts.
Quoting the Official Comment, 
"'It 
is 
essential 
to 
the 
securities
settlement 
system 
that 
brokers 
and
securities intermediaries be able to act
promptly 
on 
the 
direction 
of 
their
customers.  Even though a firm has notice
that 
someone 
asserts 
a 
claim 
to 
a
customer's 
securities 
or 
securities
entitlements, the firm should not be placed
in the position of having to make a legal
judgment about the validity of the claim at
the risk of liability either to its
customer or to a third party for guessing
wrong.'
"Ala. 
Code 
§7-8-102, 
Official 
Comment 
at 
3.
Further, 'the protections of Section 8-115 do not
depend on the presence or absence of notice of
adverse claims.'  Id.
"The court takes notice of the notarized
affidavit of Linda Daniel, the employee of Sterne
Agee who had worked as the investment broker for Mr.
Robert E. Davis for over ten years.  Ms. Daniel's
stated during the life of the IRA at issue, she
personally spoke with Mr. Davis and verified his
intent to change and his knowledge of the change
before and after the change of beneficiary.  Most
importantly, [Davis] can offer no evidence to
dispute, either directly or circumstantially, Ms.
Daniel's testimony that Mr. Davis, Sr. verbally
confirmed his intention under the December 8, 2001
designation to make his sons the beneficiaries of
his account.  While evidence presented by [Davis]
that the signature on the change of beneficiary form
was not that of Mr. Davis, there is also from the
same source an acknowledgment that a layperson would
not recognize this.  The court finds no legal,
regulatory or other standard applicable to Sterne
Agee that would have required them to have or to
1050478
11
implement any special procedure for detecting forged
signatures on IRA beneficiary designation forms.
"[Davis] has offered no substantial evidence to
show that Sterne Agee wantonly or negligently
breached any duty of care owed to her when it
transferred in February 2002 the financial assets in
the IRA account of [Mr. Davis] to accounts of his
two sons pursuant to his designation of them as
beneficiaries on this account.  For these reasons,
it is hereby ORDERED, ADJUDGED, and DECREED that
summary judgment is denied on all claims to the
plaintiff and granted to [Sterne Agee and the
sons]."
Davis appeals.
Standard of Review
"The standard of review for the grant or denial of
a summary-judgment motion is as follows:
"'"We review this case de novo,
applying 
the 
oft-stated 
principles
governing appellate review of a trial
court's grant or denial of a summary
judgment motion:
"'"'We apply the same standard of
review the trial court used in
determining 
whether 
evidence
presented to the trial court
created 
a 
genuine 
issue 
of
material fact.  Once a party
moving for a summary judgment
establishes that no genuine issue
of material fact exists, the
burden shifts to the nonmovant to
present 
substantial 
evidence
creating such a genuine issue of
material 
fact. 
 
"Substantial
evidence" is "evidence of such
1050478
12
weight and quality that fair-
minded persons in the exercise of
impartial judgment can reasonably
infer the existence of the fact
sought 
to 
be 
proved." 
 
In
reviewing a summary judgment, we
view the evidence in the light
most favorable to the nonmovant
and entertain such reasonable
inferences as the jury would have
been free to draw.'"
"'American Liberty Ins. Co. v. AmSouth
Bank, 
825 
So. 
2d 
786, 
790 
(Ala.
2002)(quoting Nationwide Prop. & Cas. Ins.
Co. v. DPF Architects, P.C., 792 So. 2d
369, 372 (Ala. 2000)(citations omitted))'
"General Motors Corp. v. Kilgore, 853 So. 2d 171,
173 (Ala. 2002)."
Nesbitt v. Frederick, [Ms. 1040060, May 5, 2006] __ So. 2d __,
__ (Ala. 2006).
Legal Analysis
Davis contends that the trial court erred in entering a
summary judgment for Sterne Agee because, she says, § 7-8-115,
Ala. Code 1975, does not protect Sterne Agee from liability
when it improperly relied on a forged December 2001 COB form
to  pay the proceeds of Mr. Davis's IRA to the sons.
The parties agree that this case involves a "financial
asset" as that term is defined in § 7-8-102(a)(9), Ala. Code
1975.  Thus, this transaction is governed by Title 7, Ala.
1050478
See § 7-8-102(a)(7), Ala. Code 1975.
2
See § 7-8-102(a)(14), Ala. Code 1975.
3
13
Code 1975, this state's version of the Uniform Commercial
Code, 
which 
includes 
an 
article 
entitled 
Investment
Securities. § 7-5-101, Ala. Code 1975.  Title 7 governs the
rights and obligations of entitlement holders, i.e., those who
own financial assets,  and the holders and servicers, i.e.,
2
security intermediaries,  of those financial assets.
3
Section 7-8-115 Ala. Code 1975, provides:
"A securities intermediary that has transferred
a 
financial 
asset 
pursuant 
to 
an 
effective
entitlement order, or a broker or other agent or
bailee that has dealt with a financial asset at the
direction of its customer or principal, is not
liable to a person having an adverse claim to the
financial asset, unless the securities intermediary,
or broker or other agent or bailee:
"(1) took the action after it had been
served with an injunction, restraining
order, or other legal process enjoining it
from doing so, issued by a court of
competent 
jurisdiction, 
and 
had 
a
reasonable opportunity to act on the
injunction, restraining order, or other
legal process; or
"(2) acted in collusion with the
wrongdoer in violating the rights of the
adverse claimant; or
1050478
An "adverse claim" is "a claim that a claimant has a
4
property interest in a financial asset and that it is a
violation of the rights of the claimant for another person to
hold, transfer, or deal with the financial asset." § 7-8-
102(a)(1), Ala. Code 1975.
14
"(3) 
in 
the case of a security
certificate that has been stolen, acted
with notice of the adverse claim."
(Emphasis added.)
Thus, in order to determine whether § 7-8-115, Ala. Code
1975, protects Sterne Agee from the adverse claims  of Davis,
4
this Court must first determine whether Sterne Agee's
distribution of the proceeds of Mr. Davis's IRA to his sons
was done at "the direction of Mr. Davis."
Section 7-8-107(b), Ala. Code 1975, provides: 
"An indorsement, instruction, or entitlement order
is effective if:
"(1) it is made by the appropriate
person;
"(2) it is made by a person who has
power under the law of agency to transfer
the security or financial asset on behalf
of the appropriate person ...; or
"(3) 
the 
appropriate 
person 
has
ratified it or is otherwise precluded from
asserting its ineffectiveness."
An "'appropriate person' means ... with respect to an
instruction, the registered owner of an uncertificated
1050478
15
security [or financial asset]."  § 7-8-107(a)(2), Ala. Code
1975.
According to Davis, Mr. Davis's signature on the December
2001 COB form was forged; therefore, she maintains, Sterne
Agee did not act at Mr. Davis's "directive" when it
distributed the proceeds of the IRA to the sons pursuant to
the forged COB form.  Sterne Agee argues that because it
distributed the proceeds of the IRA pursuant to Mr. Davis's
direction as indicated on the December 2001 COB form, § 7-8-
115 protects it from liability from Davis's adverse claims.
Whether a COB form, allegedly not executed by the owner of the
account or his agent, directing a change of beneficiary on an
investment account is an effective directive as provided in §
7-8-115, Ala. Code 1975, is an issue of first impression in
Alabama.
Section 7-8-115, Ala Code 1975, and its comments were
adopted verbatim from § 8-115 of the Uniform Commercial Code.
Very few cases have addressed whether a document that is not
executed by the owner of the financial asset or his agent or
representative and that provides directions to a securities
intermediary is an effective directive.  Powers v. American
1050478
16
Express Financial Advisors, Inc., 82 F. Supp. 2d 448 (D. Md.
2000), aff'd, 238 F.3d 414 (4th Cir. 2000)(table), however, is
one of these rare cases.  In Powers, Powers and her boyfriend
entered into a mutual-fund investment, in joint-and-survivor
form, with American Express Financial Advisors, Inc.  The
contract with American Express required the signatures of both
Powers and the boyfriend for any redemption request over
$50,000. 
 
Powers 
and 
the 
boyfriend 
terminated 
their
relationship and, pursuant to an agreement, "froze" the
account while they determined how to distribute the proceeds.
Some months later, American Express received a letter,
signed purportedly by Powers and the boyfriend, directing
American Express to release the freeze on the account and to
transfer the proceeds of the account, amounting to over
$50,000, to another financial agency.  The signatures on the
letter were notarized.  A financial worker at American Express
compared the signature on the letter with an exemplar of
Powers's signature, verified the signature as Powers's, and
transferred the proceeds of the mutual fund.  82 F. Supp. 2d
at 451.  The evidence presented to the district court,
however, established that the signature was not that of Powers
1050478
17
but was forged by her ex-boyfriend.  Additionally, no evidence
was presented indicating that the ex-boyfriend had authority
to affix Powers's signature to the letter or that Powers had
ratified the forgery.  The district court held that, even if
American Express exercised due care in accordance to accepted
standards in the business,  American Express was "still liable
to Powers, because the order, for which she never gave any
form of authorization or ratified, was 'ineffective.'" 82 F.
Supp. 2d at 452.   
The district court explained its reasoning, stating:
"[T]he commentary found by the Court supports this
conclusion.  For example, it is noted in Hawkland's
Uniform Commercial Code Series, Section 8-107:03:
"'Thus, to say that ... a direction is not
effective 
is 
to 
say 
that 
... 
the
[intermediary] is liable to the true owner
... 
if 
it 
turns 
out 
that 
the 
...
entitlement 
order 
was 
not 
actually
authorized. Note too that ... liability ...
does not depend on awareness of the lack of
authority. The record keepers must, at
peril of absolute liability, take steps to
assure themselves that the transfer is
authorized.'
"In this case, it may be argued that the imposition
of liability on [American Express] is unfair. There
are two answers to that argument. The first is that,
whenever 
two 
relatively 
innocent 
persons 
are
bamboozled by the same evil-doer, the loss must rest
somewhere. In such cases, the loss usually rests
1050478
18
with he who is in the better position to protect
himself and does not do so. Looking at the analogous
situation under the (perhaps more familiar) law of
commercial paper, and particularly the warranties on
presentment, in the case of a forged drawer's
signature on a check, the loss rests with the paying
drawee, who is in a position to verify the drawer's
signature.  See Price v. Neal, 3 Burr. 1354 (1762).
That loss rests with the drawee no matter how artful
the forgery, unless the drawer is precluded from
asserting the forgery (as he may be by, inter alia,
agency law, just as an entitlement holder may be
under Section 8-107(b)(3)). Similarly, the ultimate
loss from a forged title endorsement rests with the
first taker of the check post-forgery, no matter how
artful the forgery. In short, the drawee and the
taker, respectively, are in better positions to
protect themselves from the loss occasioned by the
forgery than is the person whose signature has been
forged 
while 
she 
was 
unaware 
she 
was 
being
victimized, even though they exercised due care and
followed reasonable commercial standards."
Powers, 82 F. Supp. 2d at 452-53.
 In Watson v. Sears, 766 N.E.2d 784 (Ind. 2002), the
Court of Appeals of Indiana, citing Powers, also came to the
conclusion that a securities intermediary is liable for a
wrongful transfer when it acts pursuant to a forged
instruction.  The Watson court, adopting the rationale of
Powers, held that a forged document does not qualify as an
effective directive, stating: "Simply put, if the appropriate
person does not make the order to transfer assets, then the
order is ineffective."  766 N.E.2d at 789.
1050478
19
This Court adopts the rationale of Powers and Watson and
holds that a forged directive, i.e., one not executed by the
owner 
of 
the 
financial 
asset, 
his 
agent, 
or 
his
representative, or one that is not ratified by the owner, his
agent, or his representative, is not an effective instruction.
Thus, 
a 
securities 
intermediary 
acting 
upon 
such 
an
ineffective directive is not protected from liability by § 7-
8-115, Ala. Code 1975.
Our holding is consistent with the examples provided in
§ 7-8-115, Ala. Code 1975.  Each of the examples involves a
situation wherein the securities intermediary has acted
pursuant to an effective directive from the customer. When the
securities 
intermediary acts pursuant to an effective
directive, then the protections of § 7-8-115, Ala. Code 1975,
clearly apply.   
We decline Sterne Agee's request to apply to our
interpretation of § 7-8-115 and to the facts of this case the
rationale 
we 
used 
in 
Fortis 
Benefits 
Insurance 
Co.,
interpreting § 27-14-24, Ala. Code 1975, a statute relating to
the disbursement of the proceeds of a life or disability
insurance policy.
1050478
20
In Fortis, the appellant's husband, Jay Pinkley, owned a
life insurance policy issued by Fortis Benefits Insurance
Company.  A person purporting to be Jay Pinkley requested via
telephone a COB form.  The form was sent to Pinkley's address
and returned to Fortis with a signature purporting to be that
of Jay Pinkley; the form changed the beneficiary of the life
insurance policy from Pinkley's wife to his daughter-in-law.
Pinkley died and Fortis paid the insurance policy proceeds to
the daughter-in-law pursuant to the COB form it had received.
Pinkley's wife sued Fortis, asserting that the signature was
forged and that Fortis had wrongfully paid the insurance
benefits, which, she said, should have been paid to her.
Fortis moved for a summary judgment, which the trial court
denied.  Fortis then petitioned this Court for permission to
appeal the trial court's denial of a summary judgment to this
Court.
For purposes of the appeal, this Court assumed that the
signature on the COB form was forged.  Fortis, 926 So. 2d at
983.  The trial court certified the following controlling
question of law for this Court's review: "'[W]hether [Ala.
1050478
21
Code 1975 §] 27-14-24, bars [Pinkley's] claims.'" 926 So. 2d
at 983.  Section 27-14-24 states, in pertinent part:
"Whenever the proceeds of, or payments under, a
life or disability insurance policy ... become
payable in accordance with the terms of such policy
or contract ... and the insurer makes payment
thereof in accordance with the terms of the policy
or contract or in accordance with any written
assignment thereof, the person then designated in
the policy or contract, or by such assignment ...
shall be entitled to receive such proceeds or
payments ... and such payments shall fully discharge
the insurer from all claims under the policy or
contract."
(Emphasis added.)
This Court held
"that § 27-14-24 does not cast upon the insurer a
duty to investigate and discover whether a change of
beneficiary has been procured by forgery, and that
where an insurer in good faith pays life-insurance
benefits 
in 
reliance 
on 
a 
forged 
change-of-
beneficiary request form, which appears regular in
all respects, the insurer is fully discharged 'from
all claims under the policy or contract.'"
Fortis, 926 So. 2d at 989.
The language in § 27-14-24, however, is distinguishable
from the language in § 7-8-115.  Insurance law is different
from investment-securities law.  In insurance law, there is an
accepted premise that "'the insurer is not under any duty to
determine whether the change of beneficiary was procured or
1050478
22
induced by improper means where it has no reason to believe or
know that such was the case'" 926 So. 2d at 984 (quoting 5
George J. Couch et al., Couch on Insurance § 28:97 (Rev. 2d
ed. 1984)).  There is also an established good-faith exception
in light of the presumption that insurance benefits might be
paid to someone with an inferior claim. Fortis.  No such
general premise, good-faith exception, or presumption exists
with regard to investment-securities law.  For example, § 7-8-
507 recognizes that a securities intermediary has a duty to
comply with an effective entitlement order and provides the
consequences for the securities intermediary when it acts
pursuant to an ineffective entitlement order, stating:
"If a securities intermediary transfers a financial
asset pursuant to an ineffective entitlement order,
the securities intermediary shall reestablish a
security entitlement in favor of the person entitled
to 
it, 
and 
pay 
or 
credit 
any 
payments 
or
distributions that the person did not receive as a
result of the wrongful transfer. If the securities
intermediary 
does 
not 
reestablish 
a 
security
entitlement, the securities intermediary is liable
to the entitlement holder for damages."
Thus, because the language in Title 7, Art. 8, does not lend
itself to a good-faith exception and no such presumptions
exist as they do in insurance law, we refuse to interpret § 7-
8-115 so broadly when nothing in the caselaw or the language
1050478
23
of the statute lends itself to such a broad interpretation.
Indeed, in light of the facts of this case, we can perceive of
situations in which such a broad interpretation of § 7-8-115
would be inequitable and unjust. 
Now, we must determine whether there is substantial
evidence creating a genuine issue of material fact as to
whether Sterne Agee distributed the proceeds of Mr. Davis's
IRA pursuant to an ineffective directive.  In other words, we
must determine whether Davis produced substantial evidence
that Mr. Davis's signature was forged or that Mr. Davis did
not ratify the directive.
In Peterman v. Auto-Owners Insurance Co., 623 So. 2d
1059, 1061 (Ala. 1993), this Court held that where a
handwriting expert determined that the signature on a disputed
agreement was not the appellant's, the appellant had presented
substantial evidence creating a genuine issue of material fact
as to whether the signature was forged.
Here, Davis presented evidence, in the form of Slyter's
opinion, indicating that the signature on the December 2001
COB form was not that of Mr. Davis.  The evidence established
that Slyter examined the signature purported to be Mr. Davis's
1050478
24
on the December 2001 COB form and compared it to other known
exemplars of Mr. Davis's signature.  In Slyter's expert
opinion, the December 2001 COB form was not signed by Mr.
Davis.  Thus, Davis produced substantial evidence that Mr.
Davis did not sign the December 2001 COB form, creating a
genuine issue of material fact as to whether Sterne Agee,
relying on the December 2001 COB form, was acting pursuant to
an effective directive from Mr. Davis.  
Sterne Agee, however, argues that even if Mr. Davis did
not sign the December 2001 COB form, summary judgment is
nonetheless proper as to it because Mr. Davis made the
directive 
effective 
by 
confirming 
it 
in 
a 
telephone
conversation with Daniel.  Sterne Agee submitted an affidavit
from Daniel executed in June 2005, in which she stated that
she verified with Mr. Davis "that the completed and executed
[the December 2001] designation ..., indicating he wanted his
sons to be the beneficiaries of his IRA account, was correct."
Daniel specifically stated in her affidavit that "[Mr. Davis]
confirmed that he wanted his sons to be the beneficiaries of
his IRA account as he had previously stated on a number of
occasions."  
1050478
25
Davis argues that consideration of Daniel's affidavit is
improper 
because, 
she 
says, 
the 
affidavit 
contains
inadmissible 
hearsay 
and 
statements 
that 
 
directly
contradicted her deposition testimony.  She moved to strike
the affidavit, and the trial court denied the motion.
Rule 56(e), Ala. R. Civ. P., provides that "[s]upporting
and opposing affidavits [to a summary-judgment motion] shall
be made on personal knowledge, shall set forth such facts as
would be admissible in evidence, and shall show affirmatively
that the affiant is competent to testify to the matters stated
therein."   In Blanton v. Liberty National Life Insurance Co.,
464 So. 2d 773, 776 (Ala. 1983), this Court explained that
"[a] court may not consider statements in affidavits based on
hearsay, or otherwise inadmissible."   
Rule 801(c), Ala. R. Evid., provides that hearsay "is a
statement ... offered in evidence to prove the truth of the
matter asserted."
Daniel's affidavit contains the following pertinent
testimony:
"When I called to wish [Mr. Davis] happy holidays,
I also asked him about the December 2001 beneficiary
change, to verify that he wanted his sons to be his
beneficiaries. [Mr. Davis] confirmed that he did in
1050478
26
fact want his sons to be the beneficiaries and had
sent the form to me to effectuate the change.
"....
"....  [Mr. Davis] confirmed that he wanted his
sons to be the beneficiaries of his IRA account as
he had previously stated on a number of occasions."
The 
above-quoted 
portion 
of 
Daniel's 
affidavit
constitutes hearsay if it was offered to prove the truth of
the matter asserted, i.e., to prove that Mr. Davis intended
for his sons to be the beneficiaries of his IRA.  Sterne Agee
asserts that even if statements in the affidavit are hearsay,
the statements are proper for consideration because they fall
within the exception provided in Rule 803(3), Ala. R. Evid.
Rule 803(3), Ala. R. Evid., provides that "[a] statement
of the declarant's then existing state of mind, emotion,
sensation, or physical condition (such as plan, intent,
motive, design, mental feeling, pain and bodily health), but
not including a statement of memory or belief to prove the
facts remembered or believed" is not excluded by the hearsay
rule.  Sterne Agee asserts that the statements in Daniel's
affidavit fall within this hearsay exception because the
statements indicate Mr. Davis's then existing intent to make
his sons the beneficiaries of his IRA.  We agree.  
1050478
27
The statements contained in Daniel's affidavit fall
within the hearsay exception set forth in Rule  803(3), Ala.
R. Evid., because even though Mr. Davis made the statement to
Daniel after the COB form had been delivered to Stern Agee,
the statement is not about what Mr. Davis remembered, but a
statement of his then existing intent for his sons to be the
beneficiaries of his IRA.   Therefore, Davis's argument that
the trial court's consideration of Daniels's statement in her
affidavit was improper based on hearsay grounds is meritless.
Davis further argues that even if consideration of
Daniel's statement in her affidavit that she confirmed with
Mr. Davis that he had submitted the December 2001 COB form and
that he intended for his sons to be his beneficiaries was
proper, 
a 
telephone 
confirmation 
does 
not 
constitute
ratification as contemplated by § 7-8-107(b)(3), Ala. Code
1975, and make  the directive effective.  The trial court
stated in its order that "[Davis] can  offer no evidence to
dispute, either directly or circumstantially, Ms. Daniel's
testimony that [Mr. Davis] verbally confirmed his intention
under the December 8, 2001 designation to make his sons the
beneficiaries of his account."  This conclusion, however, is
1050478
28
improper because the trial court erred when it resolved in
favor of Sterne Agee a challenge to Daniel's credibility.
"It goes without saying that '"'a court may not determine
the credibility of witnesses on a motion for summary
judgment.'"'"  Dixon v. Board of Water & Sewer Comm'rs of the
City of Mobile, 865 So. 2d 1161, 1166 n. 2 (Ala. 2003).
According to Davis, Daniel's credibility is at issue
because statements in her affidavit directly contradict her
deposition testimony.  According to Davis, "Daniel was asked
specifically [during her deposition] whether she had any other
conversations with [Mr. Davis] within the last year of his
life concerning changes in beneficiaries" and "[s]he testified
that there were no other conversations with [Mr. Davis]."
(Davis's brief at p. 13).  Davis's assertion, however, is
misleading because the question and answer referred to in her
brief occur 58 pages apart in Daniel's deposition.
On page 42 in the excerpts of Daniel's deposition
contained in the record, she is asked, "Have you told me all
the conversations you had with Mr. Davis, say, within the last
year of his death regarding change of beneficiaries?"  Daniel
answered "I –- there were so many conversations, I couldn't
1050478
29
say."  On page 100 of Daniel's deposition, she is asked,
"Other than the conversation you've told me that you had with
his two [sons], and the conversation with [Davis], and the
conversation you had with [Mr. Davis], did you have any other
conversations with anyone with regard to this account?"
Daniels responded "No."  Clearly, the "no" answer Davis is
relying on in her argument in her brief to challenge the
veracity of Daniel's affidavit does not lend itself to Davis's
conclusion that when she deposed Daniel, Daniel informed her
of all of her conversations with Mr. Davis.  Indeed, Daniel's
deposition 
establishes 
otherwise in light of Daniel's
admission during her deposition that she was uncertain if she
had recalled all of her conversations with Mr. Davis.
Davis also states that "at no time during Daniel's
deposition prior to her affidavit did she disclose the
conversation she later asserted."  (Davis's brief at p. 12.)
Although Davis, Sterne Agee, and the sons each submitted
portions of Daniel's deposition testimony in support of their
various motions, the record does not contain the entirety of
Daniel's deposition testimony.  Our review of the submitted
portions of Daniel's deposition indicates that Daniel did
1050478
30
state that her last conversation with Mr. Davis regarding the
beneficiaries of the IRA was when he requested a COB form and
at that time Mr. Davis did not specify who the new beneficiary
would be.  Her deposition reveals:
"Q.  Did he ever have any conversations with you
about changing the beneficiaries of his account?
"A.   Yes.
"Q.  Okay.  How many conversations with him did you
have about that?
"A.  A number.
"Q.  And when was the last one you had with him
about that subject?
"A.  Whenever he has requested a beneficiary change
form.
"Q.  Do you remember when that was?
"A.  No.
"Q.  Okay.  Do you remember what he said; who he
wanted to change the beneficiary to?
"A.  He did not say.  He said just send me the
form."
The above-quoted portion of Daniel's deposition appears
to indicate that she had no further conversations with Mr.
Davis after his request for a COB form and, therefore, draws
into question the credibility of Daniel's subsequent statement
1050478
31
in her affidavit that Mr. Davis orally endorsed the December
2001 COB form, which Daniel had previously stated had not been
requested.  The credibility of Daniel's statements in her
deposition and her affidavit are at issue and present an issue
for the jury to resolve.  McCombs v. Bruno's, Inc., 667 So. 2d
710, 713 (Ala. 1995).  Thus, Davis has created an issue of
material fact that must be resolved by the jury as to whether
Sterne Agee acted pursuant to an effective directive when it
distributed the funds in Mr. Davis's IRA to the sons.
Because Davis has created a genuine issue of material
fact as to whether Sterne Agee acted pursuant to an effective
directive, the trial court erred in entering a summary
judgment for Sterne Agee on Davis's conversion claim.  See
Riscorp, Inc. v. Norman, 915 So. 2d 1142, 1152 (Ala.
2005)(recognizing that "'[t]o establish conversion, one must
present proof of a ...  wrongful detention or interference
with another's property'").
Likewise, 
Davis 
has 
produced 
substantial 
evidence
creating an issue of material fact with regard to her
fraudulent-misrepresentation claim against Sterne Agee.  
Section § 6-5-101, Ala. Code 1975, provides:
1050478
32
"Misrepresentations of a material fact made
willfully 
to 
deceive, 
or 
recklessly 
without
knowledge, and acted on by the opposite party, or if
made by mistake and innocently and acted on by the
opposite party, constitute legal fraud."
Thus, a false representation, even if made innocently or
by mistake, operates as a legal fraud if it is a material fact
that is acted upon with belief in its truth.  See Mid-State
Homes, Inc. v. Startley, 366 So. 2d 734 (Ala. Civ. App. 1979);
Hall Motor Co. v. Furman, 234 So. 2d 37 (Ala. Civ. App. 1970).
Moreover, 
"[a]n innocent misrepresentation is as much a
legal fraud as an intended misrepresentation and the
good faith of a party in making what proves to be a
material misrepresentation is immaterial as to the
question whether there was an actionable fraud if
the other party acted on the misrepresentation to
his detriment."
Smith v. Reynolds Metal Co., 497 So. 2d 93, 95 (Ala.
1986)(citing Maring-Crawford Motor Co. v. Smith, 285 Ala. 477,
233 So. 2d 484 (1970)).
Here, Davis has presented substantial evidence creating
a genuine issue of material fact as to whether Sterne Agee
made a fraudulent misrepresentation when Daniel informed Davis
that she was not the beneficiary of Mr. Davis's IRA.  Davis
asked Daniel who was the designated beneficiary on Mr. Davis's
1050478
33
IRA.  Daniel informed Davis that she was not the beneficiary
of the IRA; however, if the December 8, 2001, COB form was not
an effective instruction, then the preexisting, last COB form,
which designated Davis as the beneficiary, was effective, and
Daniel had a duty to disclose to Davis that she was the
beneficiary.  Therefore, Davis has created an genuine issue of
material fact as to whether Sterne Agee made a fraudulent
misrepresentation.
Similarly, 
Davis 
has 
supported 
her 
fraudulent-suppression
claim.  Section 6-5-102, Ala. Code 1975, provides:
"Suppression of a material fact which the party
is under an obligation to communicate constitutes
fraud.  The obligation to communicate may arise from
the confidential relations of the parties or from
the particular circumstances of the case."
"'"A duty to speak depends on the relation of the
parties, the value of the particular fact, the relative
knowledge of the parties, and other circumstances."'"  Deupree
v. Butner, 522 So. 2d 242, 245-46 (Ala. 1988)(quoting Deupree
v. Ruffino, 505 So. 2d 1218, 1222 (Ala. 1987)).  "Section 6-5-
102 does not require proof of intent to deceive.  The breach
of an obligation to disclose is sufficient to trigger
liability for fraudulent suppression."  Intercorp, Inc. v.
1050478
34
Pennzoil Co., 877 F.2d 1524, 1535 (11th Cir. 1989).  Moreover,
knowledge of the falsity of the misrepresentation is not an
element of fraudulent suppression under § 6-5-102.  Barrett v.
Hanks, 155 So. 2d 339, 343 (Ala. 1963).  See also Mutual Sav.
Life Ins. Co. v. Brown, 17 So. 2d 164 (Ala. 1944).  However,
"the misrepresentation or suppression of the existing material
fact must have led the plaintiff to act to his detriment in
reasonable reliance thereon."  Chowder v. Memory Hill Gardens,
Inc., 516 So. 2d 602, 605 (Ala. 1987) (citing Cooper v. Rowe,
208 Ala. 494, 94 So. 725 (1922)).
Davis has produced substantial evidence to support her
claim of fraudulent suppression.  Davis presented evidence
indicating that Sterne Agee may have acted pursuant to an
ineffective directive and that if Sterne Agee did act pursuant
to an ineffective directive Daniel had a duty to answer
Davis's inquiry and refused.  Therefore, she has created a
genuine issue of material fact with regard to her fraudulent-
suppression claim.
Davis,  however,  has  not  established that  the trial
court erred in entering a summary judgment for Sterne Agee on
1050478
35
her claims of conspiracy, negligence or wantonness, and unjust
enrichment.  
Davis contends that the trial court erred in entering a
summary judgment for Sterne Agee on her conspiracy claim.
According to Davis, Sterne Agee and the sons "conspired to
injure [her] by depriving her of the proceeds of the IRA
account."  However, Davis's one-paragraph argument in her
brief to this Court in support of this contention is
conclusory.  She quotes a general proposition of the law of
conspiracy from Shook v. St. Bede School, 74 F. Supp. 1172,
1181 (M.D. Ala. 1999), and states:  "The defendants conspired
by agreeing together to liquidate the accounts of Frank Davis
and Robert Davis, Jr., after notice of a dispute with Mary
Davis concerning the IRA."  She does not direct this Court to
the "substantial evidence" establishing the elements of
conspiracy to support her conclusion.
This Court has recently said:
"Rule 28(a)(10), Ala. R. App. P., requires the
appellant to cite relevant authority in support of
its arguments.  This is so, because '"it is neither
our duty nor function to perform all the legal
research for an appellant."'  Henderson v. Alabama
A & M Univ., 483 So. 2d 392, 392 (Ala. 1986)(quoting
Gibson v. Nix, 460 So. 2d 1346, 1347 (Ala. Civ. App.
1984)).  'Nor is it the function of the appellate
1050478
36
courts to "make and address legal arguments for a
party based on undelineated general propositions not
supported by sufficient authority or argument."'
Pileri Indus., Inc. v. Consolidated Indus., Inc.,
740 So. 2d 1108, 1110 (Ala. Civ. App. 1999)(quoting
Dykes v. Lane Trucking, Inc., 652 So. 2d 248, 251
(Ala. 1994)).   Authority supporting only 'general
propositions 
of 
law' 
does 
not 
constitute 
a
sufficient argument for reversal.  Geisenhoff v.
Geisenhoff, 693 So. 2d 489, 491 (Ala. Civ. App.
1997)." 
Beachcroft Props., LLP v. City of Alabaster, 901 So. 2d 703,
708 (Ala. 2004).
Davis's lone citation to a general principle of law
without specific relevance to this case does not meet the
requirements of Rule 28(a)(10), Ala. R. App. P.; therefore,
this Court will not address her conspiracy issue.
Davis further contends that the trial court erred in
entering a  summary judgment for Sterne Agee on her claims of
negligence and wantonness.  According to Davis, she presented
substantial evidence showing that Sterne Agee breached its
duty of care in distributing the proceeds of Mr. Davis's IRA.
Sterne Agee asserts that these claims are barred by the
statute of limitations.  This Court, however, will not address
the merits of either party's argument because Davis, the
appellant, has not satisfied the requirements of Rule
1050478
37
28(a)(10), Ala. R. App. P., for presenting this issue.
Davis's citation to the statute and a general principle of
law, along with a conclusory statement that she presented
substantial evidence to support her claims do not establish
sufficient argument to necessitate  reversal.  See Beachcroft
Props., supra.
Additionally, Davis has not established that the trial
court erred in entering a summary judgment for Sterne Agee on
her unjust-enrichment claim.  "The essence of the theor[y] of
unjust enrichment ... is that facts can be proved which show
that defendant holds money which in equity and good conscience
belongs to plaintiff or was improperly paid to the defendant
because of mistake or fraud."  Foshee v. General Tel. Co. of
Southeast, 295 Ala. 70, 72, 322 So. 2d 715, 717 (1975).
Davis's evidence does not establish that Sterne Agee
holds money that belongs to her or that it was unjustly
enriched by earning fees when it distributed the proceeds of
Mr. Davis's IRA to the sons.  Therefore, the summary judgment
on the unjust-enrichment claim for Sterne Agee was proper.  
With regard to Davis's claims against the sons, Davis has
produced substantial evidence to support her claims of fraud
1050478
Within her argument that she presented substantial
5
evidence of fraud by forgery by the sons, Davis asserts that
Rule 44(j), Ala. R. Civ. P., allows her to present witnesses
familiar with the handwriting of the sons to testify as to
whether it appears that they did, indeed, forge Mr. Davis's
signature on the December 8, 2001, COB form.
Rule 44(j), Ala. R. Civ. P., provides, in pertinent part:
"Proof of Handwriting.  Whenever the genuineness of
the handwriting of any person may be involved, any
admitted or proved handwriting of such person shall
be competent evidence as a basis for comparison to
prove or disprove such genuineness.  Comparison of
a disputed writing with any writing admitted or
proven to the reasonable satisfaction of the court
38
by forgery and unjust enrichment; she, however, has not
established that the trial court erred in entering a summary
judgment on her claims against them of conspiracy and
conversion.  Davis's evidence supporting her claims against
the sons consists of Slyter's opinion that the signature on
the COB form was not made by Mr. Davis, Davis's testimony that
Mr. Davis did not sign the COB, and the designation of the
sons as the beneficiaries on the COB.  This evidence does
present substantial evidence creating a jury question as to
whether, if the December 8, 2001, COB is an ineffective
directive, the sons or another at the direction of the sons
committed fraud and forged Mr. Davis's signature on the COB
form  to support her claim of fraud by forgery and whether,
5
1050478
to be genuine shall be permitted to be made by
witnesses who are qualified as experts, or who are
familiar with the handwriting of the person whose
handwriting is in question."
(Emphasis added.)
  The plain language of Rule 44(j), Ala. R. Civ. P.,
indicates that when the genuineness of a person's handwriting
is at issue, samples of that person's handwriting may be used
for comparison.  Rule 44(j) does not provide, as Davis
asserts, that one may offer into evidence samples of numerous
individuals' handwriting to allow the jury to guess who may
have forged a particular document.  Therefore, Davis's
argument is unpersuasive.
39
if Sterne Agee distributed the proceeds of Mr. Davis's IRA
pursuant to an ineffective directive to the sons, the sons may
hold money which in equity and good conscience belongs to her.
She, however, has not presented sufficient argument, see Rule
28(a)(10), Ala. R. App. P., to require a reversal of the
summary judgment on her claim of conspiracy against the sons.
Additionally, she has not presented substantial evidence
indicating that the sons illegally assumed ownership of and
took the proceeds of the IRA to support her claim of
conversion against the sons.  Thus, the trial court's summary
judgment for the sons on the claims of conspiracy and
conversion is affirmed, and its summary judgment for the sons
1050478
40
on the claims of fraud by forgery and unjust enrichment is
reversed.
Finally, Davis contends that the trial court erred in
excluding the testimony of Curtis Bicking, Davis's proposed
expert witness on the practices of the securities industry,
in support of her motion in opposition to the motions for a
summary judgment.  According to Davis, the trial court erred
because 
his 
testimony 
is 
relevant 
and 
proper 
for
consideration.  The trial court summarily granted Sterne
Agee's motion to exclude Bickings's  testimony without stating
its reasons.  Bicking's testimony appears relevant only to
Davis's claims of negligence and wantonness.  Because we have
concluded that summary judgment for Sterne Agee was proper as
to these claims, this contention by Davis is moot.
Conclusion
Based on the foregoing, the trial court's judgment is
affirmed in part and reversed in part, and this cause is
remanded for proceedings consistent with this opinion.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
Nabers, C.J., and Lyons, Harwood, Smith, and Parker, JJ.,
concur.
1050478
41
Bolin, J., concurs in the result.
See and Woodall, JJ., concur in part and dissent in part.
1050478
42
SEE, Justice (concurring in part and dissenting in part).
I respectfully dissent from the main opinion to the
extent it reverses the summary judgment in favor of Frank R.
Davis and Robert Davis, Jr. ("the sons"), on Davis's claims of
fraud by forgery and the summary-judgment motion of Sterne,
Agee & Leach, Inc., with respect to Davis's claims of
fraudulent misrepresentation and fraudulent suppression.  In
all other respects, I concur.  
The main opinion holds that Davis produced substantial
evidence to support her claims alleging (1) that Sterne Agee
committed "fraudulent misrepresentation when Daniel informed
Davis that she was not the beneficiary of Mr. Davis's IRA,"
(2) that Sterne Agee committed fraudulent suppression when
Sterne Agee refused to answer Davis's inquiry "pursuant to an
ineffective directive," and (3) that the sons committed fraud
by forgery in forging Mr. Davis's signature to the December
2001 COB form.  To constitute substantial evidence, the
evidence must be "of such weight and quality that fair-minded
persons in the exercise of impartial judgment can reasonably
infer the existence of the fact sought to be proved." West v.
Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871
1050478
43
(Ala. 1989); § 12-21-12(d), Ala. Code 1975.  Thus, the
evidence must suffice to permit a reasonable person to infer
that Sterne Agee committed fraudulent misrepresentation and
fraudulent suppression and that the sons committed fraud by
forgery. 
To 
recover 
under 
her 
claim 
of 
fraudulent
misrepresentation, Davis "must prove (1) that there was a
false representation; (2) that it concerned a material fact;
(3) that the plaintiff reasonably or justifiably relied on the
material misrepresentation; and (4) that the plaintiff was
damaged as a proximate result of the reliance." Dodd v. Nelda
Stephenson Chevrolet, Inc., 626 So. 2d 1288, 1291 (Ala. 1993).
The fourth element necessitates a showing that the plaintiff
incurred 
damage 
as 
a 
result 
of 
relying 
on 
the
misrepresentation.  Smith v. Reynolds Metals Co., 497 So. 2d
93 (Ala. 1986).  With respect to her claim of fraudulent
misrepresentation, Davis has not presented any evidence
indicating that she was damaged by relying on Sterne Agee's
misrepresentations.  "In order to sustain an action alleging
fraud, [Davis] must prove not only that ... she relied on the
representation, but also that ... she acted upon that
1050478
44
reliance." Liberty Nat'l Ins. Co. v. Allen, 699 So. 2d 138,
142 (Ala. 1997).  I believe Davis has failed to present
evidence sufficient to establish a prima facie case of
fraudulent misrepresentation; therefore, I do not agree with
the main opinion that Davis has produced substantial evidence
to create a genuine issue of material fact as to her claim of
fraudulent misrepresentation.
Similarly, Davis has failed to produce substantial
evidence to create a genuine issue of material fact as to her
claim of fraudulent suppression.  
"In order to establish a prima facie claim of
fraudulent 
suppression, 
[Davis] 
must 
produce
substantial evidence establishing the following
elements: 
"'"(1) that the defendant had a duty to
disclose an existing material fact; (2)
that 
the 
defendant 
suppressed 
that 
existing
material fact; (3) that the defendant had
actual knowledge of the fact; (4) that the
defendant's 
suppression 
of 
the 
fact 
induced
the plaintiff to act or to refrain from
acting; and 
(5) that the 
plaintiff suffered
actual damage as a proximate result."'" 
Johnson v. Sorenson, 914 So. 2d 830, 837 (Ala. 2005).  Thus,
Davis must show that she suffered actual damage as a result of
Sterne Agee's suppression of an existing material fact.  The
main opinion notes: "Davis presented evidence indicating that
1050478
45
Sterne Agee may have acted pursuant to an ineffective
directive and that if Sterne Agee did act pursuant to an
ineffective directive Daniel had a duty to answer Davis's
inquiry and refused." ___ So. 2d at ___.  The main opinion
concludes: "Therefore, she has created a genuine issue of
material fact with regard to her fraudulent-suppression
claim."  However, Davis presents no evidence indicating that
she suffered actual damage as a proximate result of the
alleged suppression, as is required in order to establish the
prima facie case of fraudulent suppression.  Because I do not
believe that the record demonstrates that Davis suffered
actual damage as a result of the fraudulent suppression, I
believe she has failed to produce substantial evidence of her
fraudulent-suppression claim.
With respect to Davis's claim of fraud by forgery, the
main opinion concludes that Davis "produced substantial
evidence to support her claims of fraud by forgery and unjust
enrichment" against the sons. ___ So. 2d at ___.  However, as
the main opinion acknowledges, "Davis admitted that she did
not have any facts to support her contention that Sterne Agee
and the sons had conspired to deprive her of the proceeds of
1050478
46
Mr. Davis's account and that she was not aware of any
conversations between Sterne Agee and the sons." ___ So. 2d at
___.  In fact, the only evidence Davis produced to support her
claim of fraud by forgery is the expert testimony that the
signature was not made by Mr. Davis and the fact that the sons
would gain by the change of beneficiary.  Even when viewed in
the light most favorable to Davis, this evidence does not link
both of the sons, or either of them individually, to the
forgery absent unsubstantiated speculation; thus, she has
failed to provide substantial evidence creating a genuine
issue of material fact as to whether the sons committed
forgery.  II Charles W. Gamble, McElroy's Alabama Evidence, §
448.01 (5th ed. 1996) ("[A] case is not to go to the jury if
the evidence in support of it is mere speculation, conjecture
or guess. ... [T]he moving party ... must offer substantial
evidence before that party's case is properly given to the
jury." (citations omitted)).  Therefore, I believe that Davis
has failed to produce substantial evidence of her claim of
fraud by forgery.
For the foregoing reasons, I respectfully dissent in part
from the main opinion.   
1050478
47
WOODALL, Justice (concurring in part and dissenting in part).
I respectfully dissent from the majority opinion insofar
as it reverses the summary judgment for the sons on the claim
of fraud by forgery.  Otherwise, I concur.