UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

AFS/IBEX OF METABANK, 

Plaintiff, Case No. 15-11409

Honorable Gershwin A. Drain 

v. 

TRAVELERS PROPERTY CASUALTY CO. 

OF AMERICA, et al., 

 Defendants.

_______________________________________/

ORDER DENYING WITHOUT PREJUDICE DEFENDANT VOGEL AND

LAUBER’S MOTION FOR PARTIAL SUMMARY JUDGMENT [#76]

I. INTRODUCTION

On April 19, 2015, Defendants Travelers Property Casualty Company of

America, Travelers Property Casualty Company, Travelers Casualty and Surety

Company of America, Travelers Casualty and Surety Company, Travelers Indemnity

Company of America and Travelers Indemnity Company (the “Travelers Defendants”)

removed the instant action from the Wayne County Circuit Court. Plaintiff,

AFS/IBEX of MetaBank, filed its Amended Complaint on September 21, 2015. 

In the Amended Complaint, Plaintiff alleges the following claims: (i) Violation

of Mich. Comp. Laws § 500.1511, unjust enrichment, statutory conversion, common

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law conversion, vicarious liability, breach of warranty and negligence against the

Travelers Defendants, Counts I through VII; (ii) fraud, statutory conversion, common

law conversion, unjust enrichment and tortious interference against Defendants Keith

and Karen Larson (the “Larson Defendants”), Margaret Lauber and Janet Vogel,

Counts VIII through XII; (iii) violation of Mich. Comp. Laws § 500.1205(2)(b) and

negligent supervision against the Larson Defendants, Counts XIII and XIV. 

Presently before the Court is Defendants Lauber and Vogel’s Motion for Partial

Summary Judgment, filed on December 17, 2015. Plaintiff filed a Response in

Opposition on January 8, 2016, and Defendants filed a Reply on January 19, 2016.1

For the reasons that follow, the Court will deny without prejudice Defendant Lauber

and Vogel’s Motion for Partial Summary Judgment. 

II. FACTUAL BACKGROUND 

Plaintiff is a Texas based lender that specializes in providing loans to cover the

cost of commercial insurance premiums. The Larson Defendants were the owners and

operators of Larson’s Insurance Solutions Agency, Inc. (“Larson’s Agency”). 

Defendants Lauber and Vogel were employed by Larson’s Agency. Plaintiff’s

predecessor in interest, Financial Services, entered into twelve Finance Agreements

1

 The hearing on this motion was originally set for February 22, 2016. However, this

case was stayed from February 2, 2016 through June 1, 2016 so that the Larson Defendants

could obtain alternate counsel. 

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to finance annual premiums of insurance policies purchased by Larson’s Agency’s

clients. Pursuant to each Agreement, the Insured was required to make an out-ofpocket down payment toward the premium, and Financial Services loaned the Insured

the remaining amount necessary to pay the full premium. Each Agreement provides

a payment schedule, which sets forth the number of payments, the amount of each

payment, and the payment due dates. As security for the loan, Financial Services is

granted a security interest in any unearned premium. If the Insured fails to make any

of its payments to Financial Services when due, Financial Services is entitled to cancel

the subject policy and collect the unearned premium from the insurance provider. 

Plaintiff claims that individuals at Larson’s Agency signed some of the

Agreements at issue herein on behalf of the Insured. Discovery has revealed that four

of the Agreements were signed by Defendant Keith Larson and the other eight were

signed by the Insureds. All of the Agreements contain “Producer’s Representations” 

in which Larson’s Agency warranted and agreed to, among other things, the

following:

a) the Insured received a copy of the Agreement.

b) the policies listed on the Agreement are in full force and effect and the

information in the schedule of policies and the amount of the premiums

are correct.

c) the Insured authorized the transaction and recognizes the security

interest assigned by the Agreement.

d) Larson’s Agency would hold in trust for Plaintiff any payments made

or credited to the Insured through or to Larson’s Agency, directly or

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indirectly, actually or constructively by the insurance companies and to

pay the monies to Plaintiff upon demand to satisfy the outstanding

indebtedness of the Insured.

Larson’s Agency was to collect the loan proceeds from Financial Services, along with

the down payment from the Insured and forward the full premium to Travelers. 

However, instead of paying the entire premium, Larson’s Agency or its employees

would use the money received from Financial Services and the Insured for their own

purposes. 

Defendant Keith Larson’s signature appears on behalf of Larson’s Agency on

each Agreement, however Plaintiff asserts that in some cases Defendant Karen Larson

or Defendants Lauber and Vogel signed Keith Larson’s name to the Agreements.

Although Financial Services received some of the initial monthly payments required

under the Agreements, it did not receive all of the required payments. 

 In October of 2014, Financial Services sold substantially all of its assets to

Plaintiff, including all right, title and interest in the Agreements, including any claims

or causes of action arising therefrom. Plaintiff claims it is owed a total of

$262,190.51. Plaintiff further asserts that the Travelers Defendants have refused to

cancel the subject policies and return the unearned premiums despite being provided

with Notices of Cancellations and a final demand letter. 

III. LAW & ANALYSIS

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A. Standards of Review 

 1. Rule 9 of the Federal Rules of Civil Procedure 

When ruling on a motion to dismiss for failure to plead with particularity under

Fed. R. Civ. P. 9(b), the Court must accept as true the plaintiff’s well-pleaded facts

and draw all reasonable inferences in favor of the plaintiff. Yuhasz v. Brush Wellman,

Inc., 341 F.3d 559, 563 (6th Cir. 2003). When dealing with a motion to dismiss based

on Fed. R. Civ. P. 9, a court must also consider the policy favoring simplicity in

pleading, codified by Fed. R. Civ. P. 8. Id. The Sixth Circuit has held that Fed. R.

Civ. P. 9's particularity requirement does not “mute the general principles set out in

Fed. R. Civ. P. 8; rather, the two rules must be read in harmony.” Sanderson v.

HCA–The Health Care Co., 447 F.3d 873, 876 (6th Cir. 2006). Rule 9 does not

require plaintiffs to plead detailed evidentiary matters. In re Consumers Power

Company Securities Litigation, 105 F.R.D. 583, 591 (E.D. Mich. 1985).

2. Fed. R. Civ. P. 56 

Federal Rule of Civil Procedure 56(a) empowers the court to render summary

judgment forthwith “if the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is entitled to judgment as a

matter of law." See Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir. 2001). The

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Supreme Court has affirmed the court's use of summary judgment as an integral part

of the fair and efficient administration of justice. The procedure is not a disfavored

procedural shortcut. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); see also Cox

v. Kentucky Dept. of Transp., 53 F.3d 146, 149 (6th Cir. 1995).

The standard for determining whether summary judgment is appropriate is

"'whether the evidence presents a sufficient disagreement to require submission to a

jury or whether it is so one-sided that one party must prevail as a matter of law.'"

Amway Distributors Benefits Ass’n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir.

2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The

evidence and all reasonable inferences must be construed in the light most favorable

to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475

U.S. 574, 587 (1986); Redding, 241 F.3d at 532 (6th Cir. 2001). "[T]he mere

existence of some alleged factual dispute between the parties will not defeat an

otherwise properly supported motion for summary judgment; the requirement is that

there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 247-48 (1986) (emphasis in original); see also National Satellite Sports, Inc. v.

Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001).

If the movant establishes by use of the material specified in Rule 56(c) that

there is no genuine issue of material fact and that it is entitled to judgment as a matter

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of law, the opposing party must come forward with "specific facts showing that there

is a genuine issue for trial." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 270

(1968); see also McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). 

Mere allegations or denials in the non-movant's pleadings will not meet this burden,

nor will a mere scintilla of evidence supporting the non-moving party. Anderson, 477

U.S. at 248, 252. Rather, there must be evidence on which a jury could reasonably

find for the non-movant. McLean, 224 F.3d at 800 (citing Anderson, 477 U.S. at 252).

B. Fraud 

The elements of Plaintiff’s fraud claim include: (1) Defendants made a material

misrepresentation; (2) it was false; (3) when Defendants made it, they knew it was

false, or made recklessly, without any knowledge of its truth and as a positive

assertion; (4) they made it with the intention that it should be acted upon by Plaintiff;

(5) Plaintiff acted in reliance upon it; and (6) Plaintiff suffered injury. Hi-Way Motor

Co. v. International Harvester Co., 398 Mich. 330, 337 (1976). “[A]n action for

fraudulent misrepresentation must be predicated upon a statement relating to a past or

an existing fact.” Id. Future promises are contractual and do not constitute fraud.” Id.

However, a fraudulent misrepresentation claim “may be based upon a promise made

in bad faith without intention of performance.” Id. at 337-38. Defendants argue that

Plaintiff cannot establish the first and fifth elements of its fraud claim–the existence

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and communication of an actionable representation and reliance thereupon. Plaintiff

counters that material misrepresentations were contained in the subject Premium

Finance Agreements, specifically that the Insured received a copy of the agreement

and authorized the transaction and that the subject policy was in full force and effect. 

In some cases, the Insureds did not authorize the transaction with Financial Services,

or the policies were not in full force and effect or the information in the schedule of

policies and the amount of the premiums was incorrect. Additionally, Larson’s

Agency, acting through the Larson Defendants, Vogel, and Lauber represented to

Financial Services that it would use the funds received from Financial Services, along

with funds received from the Insured to pay the subject insurance premiums. 

However, Defendants did not use the funds to pay the premiums. Plaintiff argues that

Financial Services acted in reliance upon the false representations in advancing loan

proceeds to the Insured and sending such loan proceeds directly to Larson’s Agency

to then forward to the Travelers Defendants. 

Plaintiff also argues that discovery is incomplete and that this case represents

a classic case of finger pointing among the individual Defendants and precludes

summary judgment at this stage of the proceedings. Plaintiff further complains that

without additional discovery, it is not in a position to identify which of the Defendants

engaged in the wrongful acts that form the basis of Plaintiff’s claims. 

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As such, based on the foregoing, the Amended Complaint satisfies the

requirements of Fed. R. Civ. P. 9(b) and dismissal is not warranted on this ground.

As to Defendants’ Rule 56 motion for summary judgment, Defendants argue

that Plaintiff has failed to come forward with any evidence in support of its fraud

claim. Defendants have produced their sworn affidavits denying having signed or

having sent the Financial Agreements at issue. The other evidence of record

demonstrates that all twelve advances were transferred to the Larson’s Agency, and

not Defendants Vogel or Lauber. 

Plaintiff counters with the production of Floyce Hoard’s Affidavit. Mr. Hoard

is Plaintiff’s Accounts Receivable Manager. In his affidavit, he states that:

Based on my communications with the attorneys at Erman, Teicher,

Zucker & Freedman, P.C., Defendants Keith Larson and Karen Larson

represented at the Larson’s Insurance Solutions Agency, Inc.’s 341

Meeting of Creditors that Defendants Vogel and Lauber, along with

Joanna Dellin, participated in the making of the false representations and

the procurement of, and failure to use for their intended purposes, funds

from Financial Services, and that supporting forensic evidence would be

produced. Defendants Keith Larson and Karen Larson further

represented that they had no involvement in the same. 

See Plf.’s Resp., Ex. A at ¶ 6. Mr. Hoard further avers that additional discovery is

required to determine “which of the Individual Defendants participated in the

wrongdoing . . . and in what capacity . . . .” Id. at ¶ 9. Accordingly, the Court agrees

with Plaintiff that resolution of this matter under Rule 56 is premature. Federal Rule

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of Civil Procedure 56(d) states in relevant part that: “If a nonmovant shows by

affidavit or declaration that, for specified reasons, it cannot present facts essential to

justify its opposition, the court may . . . defer considering the motion or deny it . . . .” 

Fed. R. Civ. P. 56(d). 

C. Conversion 

Conversion is defined as “any distinct act of domain wrongfully exerted over

another’s personal property in denial of or inconsistent with the rights therein.” 

Foremost Ins. Co. v. Allstate Ins. Co., 439 Mich. 378, 391; 486 N.W.2d 600 (1992). 

Defendants argue that Plaintiff cannot state a claim for conversion because the subject

transactions were loans advanced by Plaintiff to pay for insurance premiums. The law

in Michigan is well-settled that in order to state a viable claim for conversion, “[t]he

defendant must have obtained the money without the owner’s consent to the creation

of a debtor and creditor relationship.” Head v. Phillips Camper Sales & Rental, Inc.,

234 Mich. App. 94, 112 (1999); Lawsuit Financial v. Curry, 261 Mich. App. 579

(2004). 

Plaintiff argues that this well settled rule of law is inapplicable under the

circumstances herein because Financial Services did not lend money to any of the

individual Defendants. Rather, the loans were for insured non-parties identified in the

Finance Agreements. However, Plaintiff fails to cite any authority in support of its

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argument. In Lawsuit Financial, the plaintiff was in the business of “non-recourse

capital advances” and loaned money to the defendant to cover litigation expenses

during the pendency of her lawsuit arising from an automobile accident. 261 Mich.

App. at 581-82. Once the defendant recovered damages from her lawsuit, the plaintiff

brought suit for common law and statutory conversion against her and the law firm

that represented her in the lawsuit based on their refusal to pay plaintiff under the

agreement. Id. at 581. 

The Michigan Court of Appeals concluded that the plaintiff failed to state a

claim for common law conversion because the plaintiff did not allege any facts

establishing that the law firm obtained the litigation proceeds without consent. Id. at

592. Similarly, in the instant case, Plaintiff alleges that it lent money to the Insureds

and agreed to forward the money to the Larson’s Agency for payment to the Travelers

Defendants. As such, like the law firm in Lawsuit Financial, it appears Plaintiff

cannot establish Defendants initial exercise over the property was in fact wrongful. 

However, the law provided by Defendants is distinguishable since Plaintiff did

not enter into a creditor/debtor relationship with any of the Defendants, nor with the

Larson’s Agency. As such, the facts alleged in the Complaint fall within the

definition of conversion or “the act of domain wrongfully exerted over another’s

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personal property in denial of or inconsistent with the rights therein.” When

Defendants failed to forward the loan payments to the Travelers Defendants, they

exerted dominion over property inconsistent with their rights. It may be true that all

the evidence of record reveals that Defendants did not receive any of the subject funds

since the loans were transferred directly to the Larson’s Agency account and

Defendants’ pay stubs do not reflect any payments beyond their salaries. Because

Plaintiff has offered a Rule 56(d) affidavit, these arguments are premature at this stage

of the proceedings. 

D. Statutory Conversion 

Statutory conversion consists of knowingly “buying, receiving, or aiding in the

concealment of any stolen, embezzled, or converted property.” MICH. COMP. LAWS 

§ 600.2919a. Defendants argue that they cannot be liable under MICH. COMP. LAWS 

§ 600.2919a because conversion cannot lie where the plaintiff lent money and

assented to the creation of a creditor/debtor relationship. Thus, according to

Defendants, because Larson’s Agency cannot be liable for conversion based on

Plaintiff’s consent, Defendants cannot be held liable under MICH. COMP. LAWS §

600.2919a for receiving, possessing, concealing or aiding in the concealment of

converted property. However, as discussed supra, Plaintiff did not consent to creating

a creditor/debtor relationship with the Larson’s Agency or any of the individual

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Defendants. 

Moreover, for the same reasons that summary judgment is premature on

Plaintiff’s fraud and common law conversion claims, it is likewise premature on

Plaintiff’s statutory conversion claim. Discovery does not close until December of

2016. Plaintiff has filed a Rule 56(d) affidavit asserting that it cannot present

evidence in support of its claims without an opportunity to conduct additional

discovery. As such, summary judgment is inappropriate at this stage of the

proceedings. 

IV. CONCLUSION 

Accordingly, Defendant Lauber and Vogel’s Motion for Partial Summary

Judgment [#76] is DENIED WITHOUT PREJUDICE

SO ORDERED.

/s Gershwin A. Drain 

GERSHWIN A. DRAIN

UNITED STATES DISTRICT JUDGE

Dated: June 29, 2016

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CERTIFICATE OF SERVICE

Copies of this Order were served on the attorneys of record on June 29, 2016, by

electronic and/or ordinary mail.

 /s/ Tanya Bankston 

Deputy Clerk

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