Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_06-cv-00111/USCOURTS-almd-2_06-cv-00111-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1330 Breach of Contract

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1 IN THE UNITED STATES DISTRICT COURT

 2 FOR THE MIDDLE DISTRICT OF ALABAMA

 3 NORTHERN DIVISION

 4 JAMES E. CROUCH, 

 5 Plaintiff,

 6 Vs. CASE NO.: 2:06cv111-MHT 

 7 AMSOUTH BANK, INA SUE CROUCH, 

AND JOHN AND JANE DOES 1-10,

 8

Defendants.

 9

* * * * * * * * * * * * * * * 

 10

EXCERPT OF BENCH TRIAL

 11

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 12

* * * * * * * * * * * * * * * 

 13

BEFORE THE HONORABLE MYRON H. THOMPSON, UNITED STATES 

 14

DISTRICT JUDGE, at Montgomery, Alabama, on Friday, October 5, 

 15

2007, commencing at 9:05 a.m.

 16

APPEARANCES

 17

FOR THE PLAINTIFF: Mr. Samuel S. McHard

 18 Mr. Erica McHard

BRYAN NELSON RANDOLPH, PA

 19 Attorneys at Law

Post Office Box 18109

 20 Hattiesburg, Mississippi 39404

 21 FOR THE DEFENDANT 

AMSOUTH: Mr. Charles B. Paterson

 22 Mr. Joseph S. Moore

BALCH & BINGHAM

 23 Attorneys at Law

105 Tallapoosa Street, Suite 200

 24 Montgomery, Alabama

 25

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

1

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 1 of 10
 1 APPEARANCES (continuing)

 2 FOR THE DEFENDANT 

INA SUE CROUCH: Ms. Glenda W. Hughes

 3 Attorney at Law

2306 Mt. Hebron Road

 4 Eclectic, Alabama 

 5 Ms. Jacqueline E. Austin

Attorney at Law

 6 108 Court Street

Wetumpka, Alabama 36092

 7

Proceedings reported stenographically;

 8

transcript produced by computer. 

 9

 10 (The following excerpt of proceedings were heard before the 

 11 Honorable Myron H. Thompson, United States District Judge at 

 12 Montgomery, Alabama, on Friday, October 5, 2007, commencing at 

 13 9:10 a.m.:)

 14 THE COURT: The Court now enters its findings of fact 

 15 and conclusions of law. 

 16 In this lawsuit, plaintiffs James -- plaintiff James 

 17 Edward Crouch alleges that his mother forged his father's name 

 18 on a banking form, thereby wrongfully depriving him, after his 

 19 father's death, of the proceeds of an annuity contract purchased 

 20 by his father. The son further contends that the banking 

 21 institutions from which the annuity was purchased had actual and 

 22 constructive knowledge that the mother forged the signature, and 

 23 that these institutions failed to train, educate, and supervise 

 24 their employees. The son names as defendants his mother, Ina 

 25 Sue Crouch, and the two banking institutions, AmSouth and 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

2

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 2 of 10
 1 AmSouth Investment Services, Inc. The son asserts four claims 

 2 against the defendants: breach of contract; negligence; fraud; 

 3 and tortious interference with contract. The diversity 

 4 jurisdiction of the Court has been invoked pursuant to Section 

 5 1332 of Title 28 of the United States Code. 

 6 For reasons that follow, the court finds in favor of 

 7 the mother and the banking institutions and against the son. 

 8 The facts, as established by a preponderance of the

 9 evidence, are as follows: On May 7, 1998, the mother and the 

 10 father went to their local AmSouth Bank in Wetumpka, Alabama. 

 11 With the assistance of bank official Rhonda Robinson, the couple 

 12 applied for an Investors Choice annuity and made an initial 

 13 premium deposit of $250,000. The application listed the father 

 14 as the annuitant, the mother as the joint owner, and the son as 

 15 the primary beneficiary. The application was sent to Lincoln 

 16 National Life Insurance Company so that company could process 

 17 and issue the annuity. 

 18 Shortly thereafter, on May 7, upon receiving the 

 19 annuity documents back from Lincoln National, Robinson noticed 

 20 that she had made a mistake in filling out the application for 

 21 an annuity. As the application was written, if the father 

 22 passed away, all the proceeds of the annuity would go directly 

 23 to the son as the primary beneficiary. This was an error 

 24 because the father and mother both had made clear their 

 25 intention that the survivor of the two would receive the 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

3

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 3 of 10
 1 benefits. This intention is also strongly evidenced by the 

 2 facts that all the father and mother's other financial 

 3 arrangements provided for an arrangement in which the survivor 

 4 of the two would receive the benefits; the money that funded the 

 5 annuity came from a CD that had both the father's and mother's 

 6 names on it and for which the survivor of the two would receive 

 7 the benefits; and that it is an anomaly in the banking industry 

 8 to have an annuity where there are two joint owners without the 

 9 benefits going to the surviving owner. 

 10 Robinson telephoned the couple of her mistake in 

 11 filling out the application. She advised them that a separate 

 12 document would be required to fix the error.

 13 On April 4, 2000, nearly two years after they initially 

 14 applied for the annuity, the mother and father finally returned 

 15 to AmSouth to complete the required paperwork. The Annuity 

 16 Service Request form read, in accordance -- quote, in accordance 

 17 with the provisions of this contract, I hereby revoke all former 

 18 designations and replace them as follows, end of quote. The new 

 19 form designated the mother as the primary beneficiary, while 

 20 designating the son as the contingent beneficiary. 

 21 While filling out the new form, Robinson instructed the 

 22 mother and father that both of them as joint owners would need 

 23 to sign it. Because the father did not have his reading glasses 

 24 on hand and could not see the line for his signature, he 

 25 instructed the mother to sign his name for him. As expressly 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

4

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 4 of 10
 1 requested by the father, the mother signed the father's name. 

 2 Robinson signed the document as well, indicating her role as 

 3 agent witness. Both the father and the mother knowingly and 

 4 without any coercion intended this change, and both were 

 5 mentally competent to make the change. After Robinson sent the 

 6 Annuity Service Request back to Lincoln National, Lincoln 

 7 National sent a letter to the mother and father on May 16, 2000, 

 8 confirming the beneficiary change. 

 9 In February 2001, at the age of 72, the father died of 

 10 respiratory failure. Robinson called Lincoln National to notify 

 11 the company that the father had passed away and later filed the 

 12 appropriate forms with Lincoln National requesting a 

 13 cancellation of the annuity contract and a single sum 

 14 distribution to the mother. Lincoln National issued a check to 

 15 the mother in the amount of $290,487.96. 

 16 In July 2001, the son called Lincoln National and was 

 17 informed by the company that it had paid the death claim in 

 18 full. The son questioned the change of beneficiary, suggesting 

 19 that the change was made without the father's knowledge. 

 20 This lawsuit then ensued. 

 21 The first legal issue for the Court is whether the 

 22 father authorized the mother to sign his name and, if so, 

 23 whether the authorization was legal. The court has already 

 24 found that the father knowingly, willingly, and competently 

 25 authorized the mother to sign his name. Moreover, even if this 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

5

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 5 of 10
 1 issue is an affirmative defense, defendants have overwhelmingly 

 2 met it. That is, the defendants have established by a 

 3 preponderance of the evidence, indeed overwhelmingly, that the 

 4 father knowingly, willingly, and competently authorized the 

 5 mother to sign the same. 

 6 Also, under Alabama law, a person, even if physically 

 7 and mentally capable of signing her own name, may authorize 

 8 another to do so in the presence of a witness. In this regard, 

 9 the Court cites the cases of Lewis v. Watson, 13 So. 570 (Ala. 

 10 1993), Middlebrooks v. Barefoot, 25 So. 102 (Ala. 1899), Purser 

 11 v. Smith, 76 So. 931 (Ala. 1917). In Middlebrooks the Alabama 

 12 Supreme Court stated that a person, quote, may affix his 

 13 signature by the hand of another, the subscription being made in 

 14 his presence and at his direction, however capable he may be 

 15 mentally and physically at the time of the writing of his own 

 16 name, end of quote. 

 17 The courts from other jurisdictions have similarly 

 18 held. In Patterson v. Leyden, 947 F. Supp. 1211 (N.D. Ill 

 19 1996), the Court stated that under Illinois law, one person may 

 20 authorize another to sign a document on his behalf, and in 

 21 Phillip Werlein, Ltd. v. Daniels, 538 So.2d 722 (La. Ct. App. 

 22 4th Cir. 1989), at page 725, the Court stated that, quote, a 

 23 person is bound by her signature being executed by another 

 24 person when done in her presence and under her authority, end of 

 25 quote. 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

6

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 6 of 10
 1 Here, the father's authorization of the mother to sign 

 2 his name was legal. 

 3 The Court now turns to the four claims in this case: 

 4 breach of contract; tortious interference with contract; 

 5 negligence; and fraud. 

 6 The elements of an action for breach of contract are: 

 7 existence of a contract between plaintiff and defendant; 

 8 performance by the plaintiff; defendant's failure to perform; 

 9 and resulting damage to the plaintiff. Here the son alleges 

 10 that the original application for an annuity, which was signed 

 11 by the father, mother and Robinson, constituted a valid annuity 

 12 contract. He further argues that the subsequent change to this 

 13 contract was not valid because the owner of the annuity did not 

 14 sign it and did not authorize anyone else to sign it. The 

 15 breach of contract claim is meritless because, as the Court has 

 16 found, the subsequent change to the annuity was valid; that is, 

 17 the mother and father legally changed the annuity to designate 

 18 the mother as the primary beneficiary, while designating the son 

 19 as the contingent beneficiary. 

 20 To establish a tortious interference claim, the son

 21 must prove the following: That there was a contract between him 

 22 and another; that the defendants knew of the contract; that they 

 23 intentionally disrupted or interfered with the performance of 

 24 this contract; and that the son was harmed by the defendants' 

 25 conduct. The tortious interference claim fails for two 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

7

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 7 of 10
 1 reasons. First, as the court stated in Waddell & Reed, Inc. v. 

 2 United Investors Life Insurance Company, 875 So.2d 1143 (Ala. 

 3 2003), at page 1154, quote, a party to a contract or a business 

 4 relationship cannot be liable for tortious interference with 

 5 that contract or business relationship. In BellSouth Mobility, 

 6 Inc. v. Cellulink, Inc., 814 So.2d 203 (Ala. 2001), at page 212, 

 7 the Court concluded that the plaintiff could not maintain -- I 

 8 should say the court, quote, concluded that the plaintiff could 

 9 not maintain a tortious interference action in the context of a 

 10 three-way relationship where the parties were mutually dependent 

 11 upon one another, because, in that context the plaintiff could 

 12 not establish, as a matter of law, that the defendant was a 

 13 stranger to the relationship, end of quote.

 14 Second, the tortious interference claim fails because, 

 15 for reasons already given, the son simply had no claim to the 

 16 annuity benefits. The mother and father knowingly, willingly, 

 17 competently, and legally changed the annuity to designate the 

 18 mother as the primary beneficiary.

 19 In Life Insurance Company of Georgia v. Smith, 719 

 20 So.2d 797, (Ala. 1998), at page 809, the Court stated that, 

 21 quote, forgery is a species of fraud under Alabama law. In 

 22 Duckworth v. National Bank of Commerce, 656 So.2d 340 (Ala. 

 23 1994), the Court held that a bank was liable for fraud when it 

 24 knew that a party to a contract had forged a signature on a bank 

 25 document, but the bank failed to report that knowledge. The 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

8

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 8 of 10
 1 bank had held the mortgage of property that the plaintiff 

 2 investors had been paying a developer to build upon, and, 

 3 therefore, the Court found that the bank had a duty under the 

 4 law to tell the plaintiffs that the developer forged a signature 

 5 on a document. 

 6 The forgery claim fails here because there was, simply 

 7 put, no forgery. The father knowingly, willingly, competently, 

 8 and thus legally authorized the mother to sign his name. 

 9 Finally, the son claims that the banks failed to 

 10 provide Robinson with proper policies, and failed to educate or 

 11 train her regarding the sale and administration of an annuity 

 12 contract. This negligence claim fails because even if Robinson 

 13 was negligent, the son was not injured or damaged. The mother 

 14 and father, as stated, knowingly, willingly, competently, and 

 15 legally later changed the annuity to designate the mother as the 

 16 primary beneficiary. 

 17 Do I need to make any additional findings, Mrs. Crouch?

 18 MS. AUSTIN: No, Your Honor.

 19 THE COURT: AmSouth Bank counsel? Do I need to make 

 20 any additional findings? 

 21 MR. PATERSON: No, sir. Thank you.

 22 THE COURT: Anything else from the plaintiff 

 23 Mr. Crouch? 

 24 MR. McHARD: No, Your Honor.

 25 THE COURT: The Court will enter a judgment finding, as 

PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

9

Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 9 of 10
 1 I said, in favor of the defendants and against the plaintiff. 

 2 (Excerpt concluded at 9:22 a.m.)

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PATRICIA G. STARKIE, RDR, CRR, OFFICIAL COURT REPORTER

U.S. District Court, Middle District of Alabama

One Church Street, Montgomery, AL 36104 334-262-1221 

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Case 2:06-cv-00111-MHT-CSC Document 169 Filed 10/10/07 Page 10 of 10