# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 3- 19 86

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Crystal D. Kilc he r; Da ni el J. Kil ch er; Ant ho ny C. Mue ll en be rg ; An th on y C.

Mu el le nb erg , as Tru st ee o f th e Tro y D. Mue ll en be rg 20 07 Rev oc ab le Trus t

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll ees

v.

Co nt in en ta l Ca su al ty Com pa ny

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll an t

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

__ __ __ __ __ __

Su bm it te d: Decem

be r 17 , 20 13
Fil ed : Ap ril 3, 2 01 4

__ __ __ __ __ __

Befo re WOL LMAN, LOKEN , and KELLY , Cir cu it Ju dg es

.

__ __ __ __ __ __

W OLLMAN, Circ ui t J ud ge

.

Co nt in en ta l Cas ua lt y Co m pa ny (Co nt in en ta l) ap pe al s fro m th e di st ric t co ur t’s

gr an t of su m

m ary jud gm en t t o Crystal Kil ch er, Dan ie l Kil ch er, an d Ant ho ny

Mu el le nb erg , in di vi du al ly an d a s tru st ee of th e Troy Mu el le nb erg rev oc ab le tru st (co ll ect iv el y , P la in ti ffs ). The di st ric t co ur t de te rm in ed th at th e Pl ai nt iff s ha d m ad e

m or e th an on e cl ai m ag ai ns t th ei r fo rm er fin an ci al ad vi s o r , w h o w a s in su red byCo nt in en ta l un de r a pr of es si on al li ab il it y in su ran ce po li cy

. Acco rd in gl y , th e di st ric t

co ur t he ld th at th e in su ran ce po li cy ’s $1 m il li on co ve rag e li m it fo r a si ng le cl ai m di d

no t ap pl y an d t h a t th e Pl ai nt iff s’ cl ai m s in st ead tri gg ered th e in su ran ce po li cy ’s

ag gr eg at e co ve rag e li m it of $ 2 m il li on . W e rev ers e.

I. Back gr ou nd

A. Fact ua l Ba ck gr ou nd

Crystal Kil ch er, Dan ie l Kil ch er, Ant ho ny Mu el le nb erg , an d Troy Mu el le nb erg

are si bl in gs an d m em

be rs of t h e S ha ko pe e Md ewak an to n Si ou x Co m m un it y (Co m m un it y ). Mem

be rs of th e C o m

m un it y be co m e el ig ib le to sh are in th e pr of it s 1

ge ne rat ed by th e Co m

m un it y ’s ga m in g en te rp ris e whe n th ey tu rn ei gh te en y ears ol d.

Ant ho ny te st ifi ed th at he rece iv ed an an nu al di st rib ut io n of ap pr ox im at el y $1 m il li on

in 20 03 an d th at th e di st rib ut io n has de crea se d each y ear si nc e th en

. Bet ween 19 99

an d 20 03

, aft er each Pl ai nt iff tu rn ed ei gh te en , th ei r m ot he r in tro du ced th em to Hele n
Dale

, a fin an ci al ad vi so r an d r eg is te red ag en t of Tran sa m eri ca Fi na nc ia l Adv is or s,

In c. (TFA). Crystal

, th e ol de st si bl in g, be ga n in ve st in g wit h Dale in 19 99

, fo ll owe d
by Dani el in 20 00 , and twi ns Ant ho ny and Troy in 2 00 3.

Dale ga ve si m il ar ad vi ce to each Pl ai nt iff

, reco m men di ng th e pu rch as e of

who l e l i f e in su ran ce po li ci es an d fix ed an nu it ie s. At ag e ei gh te en , each Pl ai nt iff

p ur ch as ed a $1 0 m il li on who le li fe in su ran ce po li cy at Dale ’s di rec t i o n

. Th e

pr em iu m s fo r th os e po li ci es ran ge d fro m $5

, 0 0 0 t o $6 ,00 0 pe r m on th

. Crystal an d

Dan ie l la te r pu rch as ed m il li on s of do l l ars of who le li fe in su ran ce on th ei r sp ou se s,

as well as $1 m il li on who le li fe in su ran ce po li ci es on each of th ei r ch il dr en

. Heed in g

W e no te th at Troy di ed in 20 09 an d th at hi s tru st is a pa rty to th is act io n. W e 1

wil l refe r to th e si bl i n g s c o ll ect iv el y as Pl ai nt iff s. Co ns is te nt wit h th e Pl ai nt iff s’
br ie fs an d i n t he in te res t o f cl ari ty, we wil l u se th e si bl in gs ’ fir st na m es

.

-2

-Dale ’s ad vi ce, Crystal an d Troy pu rch as ed su pp le m en ta l in su ran c e po li ci es th at

co ve red li vi ng ex pe ns es in th e ev en t th at th ey be cam e un ab le to wor k du e to si ck ne ss

or in jury. Dale reco m

m en de d th e su pp le m en ta l in su ran ce pro du ct

, ev en th ou gh th e

Pl ai nt iff s’ pr im ary so ur ce of in co m e was th e di st rib ut io n th ey rece iv ed fro m th e

Co m m un it y

. Si m il arl y , Dale reco m m en de d th at Dan ie l pu rch as e cert ai n rid ers to hi s

li fe in su ran ce po li cy th at pr ov id ed be ne fit s th at th e Co m m un it y wou ld ha ve pr ov id ed

at no ch arg e.

Each Pl ai nt iff al so in ve st ed in va rio us an nu it ie s th at were su bjec t to su rren de r

c h a r g e s i f fu nd s were wit hd rawn be fo re th e an nu it y m at ur ed

. Acco rd in g to th e

Pl ai nt iff s’ de po si ti on te st im on y , th e m on ey in ve st ed in th e an nu it ie s was in acce ss ib le

an d ge ne rat ed li tt le in te res t, whi le th e an nu it ie s ch arg ed hi gh fees an d were il l-s ui te d

fo r th e Pl ai nt iff

s’ in ve st m en t go al s. Fo r e x a mp l e , w he n Dan ie l ne ed ed fu nd s to

co m pl et e th e rem od el in g o f hi s ho m e, he su rren de red cert ai n ann ui ti es an d pai d th e

fees as so ci at ed wit h do in g so

. Des pi te Dan ie l’s ne ed fo r li qu id it y at th at ti m e, Dale

no ne th el es s pu rch as ed m or e of th e sa m e ki nd of an nu it ie s for hi m , an act io n Dani el

be li ev es co ns ti tu te d c hu rn in g b y Dale

. 2

The Pl ai nt iff

s co nt in ue d to pu rch as e in su ran ce pr od uc ts fro m an d co nt in ue d to

m ak e in ve st m en ts th ro ug h Dale un ti l m id -2 00 7, whe n a fin an ci al ad vi so r rev ie win g

Ant ho ny’ s p o r t f

o l io di sc ov ered th at hi s in ve st m en ts were un su it ab le fo r hi s ag e,
ba ck gr ou nd

, an d in ve st m en t goals

. T he Pl ai ntiffs th en di sc ov ered th at th ei r po rtf ol io s

were s im il arl y

un su it ab le for th ei r res pe ct iv e si tu at io ns

.

W e ha ve sa id th at “ ‘[c] hu rn in g’ o ccu rs whe n a br ok er, di rect in g th e vo lu m e 2

an d freq ue nc y of tra de s, ab us es hi s cu st om er’s co nf id en ce fo r pe rs on al ga in by
in it ia ti ng tra ns act io ns th at are exce ss iv e in vi ew of th e ch arac te r of th e acc ou nt an d
th e cu st om er’s ob

jecti ve s as ex pr es se d to th e br ok er.” Dav is v. Mer ril l Ly nc h, Pi erce , Fen ne r & Sm it h, In c., 90 6 F .2d 12 06 , 12 11 n.3 (8t h C ir. 1 99 0)

.

-3

-B. Pro ced ur al Back gr ou nd

In Decem be r 20 07

, th e Pl ai nt iff

s fil ed in di vi du al cl ai m s ag ai ns t Dale an d TFA

wit h th e Fi na nc ia l In du st ry R e g u l a t o ry Aut ho rit y (FINRA)

. The y al le ge d, am on g

ot he r th in gs , th at Dale ha d br each ed th e fid uc ia ry du ty sh e owe d to th em , th at sh e ha d

m is rep res en te d th e na tu re of the in ve st m en ts

, an d th at sh e ha d so ld th em un su it ab le

in ve st m en ts

. The Pl ai nt iff s al le ge d th at th e in ve st m en ts were un su it ab le be cau se th ey

were no t su ffi ci en tl y li qu id

, were su bjec t to si gn ifi can t tra ns act io n c o s ts

, an d ha d

be en so ld to ge ne rat e hi gh co m m is si on s fo r Dale

. Th e FINRA arb it rat io n

p r o c e ed in gs were co ns ol id at ed by ag reem en t of th e pa rti es

. In Ju ly 20 08

, th e
arb it rat io n pa ne l de te rm in ed th a t c e r ta in cl ai m s were in el ig ib le fo r su bm is si on an d

di sm is se d ot he r cl ai m s. The Pl ai n t i f f s e ve nt ua ll y wit hd rew th ei r cl ai m s fro m
arb it rat io n.

In Mar ch 20 08

, each Pl ai nt iff se rv ed Dale an d TF A wit h co m pl ai nt s fo r

la wsu it s ve nu ed in st at e di st ric t co ur t. In Aug us t 20 08

, th e Pl ai nt iff s fil ed a joi nt

am en de d c om

pl ai nt ag ai ns t Dale and TFA in Hen ne pi n Cou nt y Dis tri ct Co ur t. T he

am en de d co m

pl ai nt al le ge d cl ai m s of ch ur ni ng , br each of fid uc ia ry du ty,

un s u i ta bi li ty, m is rep res en ta ti on , an d vi ol at io ns of fed eral an d st at e se cu rit ie s la ws.
The act io n was la te r di sm is se d. In Decem be r 20 09

, th e Pl ai nt iff

s fil ed on e la wsu it

in Sco tt Co un ty Dis tri ct Co ur t. The y al le ge d si x co un ts ag ai ns t Dale : br each of

f i d u c i a r y d u t y , u n s u i t a b i l i t y , n e g l i g e n t m i s r e p r e s e n t a t i o n , f r a u d u l e n t

m is rep res en ta ti on , frau d, an d v io la ti on s o f st at e se cu rit ie s l aws

. 3

Dale m ov ed fo r su m

m ary jud gm en t, an d th e Pl ai nt iff s m ov ed fo r pa rti al

su m m ary jud gm en t. In su pp or t of th ei r m ot io n, t h e P l a i n ti ffs su bm it te d ex pe rt

Acco rd in g to th e Sco tt Co un ty Dis tri ct Co ur t’s or de r, th e Pl ai nt iff s an d TFA 3

se tt le d t he ir d is pu te whi le th e m ot io ns for su m m ary jud gm en t wer e p en di ng

.

-4

-e v id en ce. The ir ex pe rt op in ed th at th e in ve st m en ts reco m m en de d by Dale were 4

un su it ab le an d th at Dale ha d fai le d to act in th e Pl ai nt iff s’ be st in te res ts

. The ex pe rt

e xp la in ed th at th e $1 0 m il li on who le li fe in su ran ce po li ci es were in ap pr o p r i a t e
be cau se th e Pl ai nt iff

s ha d no de pe nd en ts whe n th ey pu rch as ed th e po li ci es

. The

po li ci es th us of

fere d li tt le be ne fit to th e Pl ai nt iff s an d c a me a t a su bs ta nt ia l co st to

th em , by w ay of pr ic ey pr em iu m s an d fees

. Acco rd in g to th e ex pe rt, te rm li fe

in su ran ce po li ci es wou ld ha ve be en m or e su it ab le be cau se su ch po li ci es wou ld ha ve
be en le ss ex pe ns iv e an d wou ld ha ve of fere d m or e fle xi bi li ty. The sa le of who le li fe

in su ran ce po li ci es ge ne rat ed a hi gh er co m m is si on fo r Dale

, ho wev er, th an th e sa le of

te rm li fe i ns ur an ce p ol ic ie s wo ul d ha ve ge ne rat ed

. The ex pe rt fu rth er te st ifi ed th at

th e an nu it ie s Dale so ld to each Pl ai nt iff ha d si gn ifi can t su rren de r ch arg es an d po li cy

ex pe ns es

. Mo reo ve r, Dale so ld m ul ti pl e co nt ract s to each Pl ai nt iff

, ra t h e r th an

ap p l yi n g f

u nd s to th ei r ex is ti ng an nu it ie s, a pr act ic e th at al lo wed Dale to ge ne rat e
ad di ti on al co m

m is si on s. Ult im at el y , th e ex pe rt o pi ne d t ha t:

[Dal e] ov ers ol d th e in su ran ce pr od uc ts an d fai le d to act in th e Pl ai nt iff s’
be st in te res ts by fo cu si ng on in di vi du al pr od uc t sa le s (wh ic h ge ne rat ed

su bs ta nt ia l co m

m is si on s fo r t h e D efen da nt s) whi le fai li ng to em pl oy
pr op er as se t al lo cat io n an d pr od u ct di ve rs ifi cat io n te ch ni qu es

. Thi s

cau se d th e Pl ai nt iff

s to st ru gg le wit h li qu id it y is s u e s , fru st rat io n wit h
ad m in is tra ti ng th e la rg e n u mber of in di vi du al pr od uc ts

, hi gh er

co m m is si on s an d in te rn al in ve st m en t ex pe ns es th a n o t he rwis e sh ou ld
ha ve be en pa id

, fai le d to ad eq ua te l y mee t ti m e ho riz on req ui rem en ts

,
an d l ed to po or fin an ci al ou tc om es

.

Pl ai nt iff s’ acco un ti ng ex pe rt d e t e rm in ed th at th e Pl ai nt iff s ha d su ffer ed di st in ct

da m ag es , to ge th er t ot al in g a lm os t $ 4 m il li on

.

The su m m ary of ex pe rt ev id en ce th at fo ll ows rel ie s on bo th affi da vi t s a n d 4

de po si ti on te st im on y

. It ap pe ars th at t h e p a rti es di d no t su bm it th e de po si ti on
te st im on y to th e Sco tt Co un ty D is tri ct Co ur t.

-5

-In Ja nu ary 20 12

, th e Sco tt Co un ty Dis tri ct Co ur t de ni ed Dale ’s m ot io n f o r

su m m ary jud gm en t an d gr an te d, i n p art , Pla in ti ffs ’ m ot io n. It he ld th at Dale owe d

a fid uc ia ry du ty to th e Pl ai nt iff s, bu t it di d no t de ci de whe th er Dale ha d br each ed th at

d u t y. I n May 20 12

, th e pa rti es en te red in to a se tt le m en t ag reem en t, whe rei n

Co nt in en ta l ag reed to pa y $1 m il li on un de r th e po li cy , le ss Dale ’s de fen se co st s, an d

th e P l a i n t i f

f s ag reed to di sm is s wit h pr ejud ic e th e act io n ag ai ns t Dale th at was

pe nd in g in Sco tt Co un ty. The pa rti es en te red in to th e fu nc ti on al eq u i va le nt of a

Mi ll er-S hu ga rt ag reem en t, th e te rm s of whic h pr ovi de d tha t Cont in en ta l ha d sa ti sf ie d 5

al l cl ai m s t ha t Pl ai nt iff

s h ad or m ay

ha ve ha d a ga in st Dale

.

The se tt le m en t ag reem en t di d no t de ci de whe th er th e Pl ai nt iff s ha d su bm it te d

o n e cl ai m un de r th e in su ran ce po li cy or m or e th an on e cl ai m

. The se tt le m en t

ag reem en t th us pe rm it te d th e Pl ai nt iff s to fil e a de cl arat or y jud gm en t act io n ag ai ns t

Co nt in en ta l s o t h a t th e fed eral di st ric t co ur t co ul d de ci de th e is su e, whi ch th e

se tt le m en t ag reem en t fram ed as fo ll ows : “ W he th er Pl ai nt iff s ’ cl ai m s ag ai ns t Dale

in vo lv e th e sa m e ‘W

ro ng fu l Acts ’ an d/ or ‘Inte rrel at ed W ro ng fu l Acts ’ as de fin ed by

th e Po li cy .” If th e Pl ai nt iff s pr ev ai le d an d th e di st ric t co u r t h el d th at th ey ha d

su bm it te d m or e th an on e cl ai m , Co nt in en ta l ag reed th at it wou ld pa y an ad di ti on al $1

m il li on , th e ag gr eg at e p ol ic y li m it

.

C. The I ns ur an ce Po li cy

an d t he Dis tri ct Co ur t’s Ord er

Fo r th e pe rio d fro m Ja nu ary 1, 20 08

, to Ja nu ary 1, 20 09

, Dale was in su red by

Co nt in en ta l un de r a Life Age nt /B ro ke r Deal e r S ol ut io ns Po li cy (th e Po li cy ). The

Mi ll er v. Sh ug art pr ov id es th at in so m e ci rcu m st an ces , “ th e in su red m ay en te r 5

in to a se tt le m en t ag reem en t wit h th e cl ai m an t su bjec t to t h e co nd it io n th at th e cl ai m an t wil l on ly su e fo r th e in su ran ce pr oc eed s to en fo r c e t h e s et tl em en t.” Bo b

Use ld in ge r & So ns , In c. v

. H an gs le be n, 50 5 N.W .2d 32 3, 32 5 n.2 (Mi nn

. 19 93 ) (ci ti ng Mi ll er v . Shu ga rt, 3 16 N.W . 2d 72 9 (M in n. 1 98 2) ).

-6

-Po li cy was a cl ai m s- m ad e po li cy , m ean in g th at it pr ov id ed co ve rag e fo r lo ss res ul ti ng

fro m “ a Cl ai m ” fir st m ad e an d rep or te d du rin g th e Po li cy pe rio d fo r “ a W ro ng fu l Act”

in th e ren de rin g or fai li ng to ren de r pr of es si on al se rv ic es

. Dale no ti fie d Co nt in en ta l

of th e FINRA arb it rat io n pr oc eed in gs by co rres po nd en ce da te d Ja nu ary 3, 20 08

. The 6

Po li cy pro vi de d a m ax im

um of $1 m il li on in co ve rag e p er cl ai m , wit h a n a gg reg at e

li m it of $ 2 m il li on

.

The on ly i ss ue in th is cas e is whe th er th e P l a i n t i f f s su bm it te d m or e th an on e
cl ai m ag ai ns t Dal e. Und er t he Po li cy , “ Cl ai m ” m ean s:

a. a wri tt en de m an d fo r m on et ary da m ag es , or b. a ci vi l ad

jud ic at or y or arb it rat io n pr oc eed in g fo r m on et ary da m ag es ,

ag ai ns t an Ins ur ed fo r a W ro ng fu l Act, in cl ud in g an y ap pe al th eref ro m br ou gh t b y

or o n b eh al f of

or f or th e b en efi t o f an y

Cli en t.

The Po li cy fu rth er pr ov id es tha t “ [m ]ore th an on e Cl ai m in vo lv in g th e sa m e W ro ng fu l

Act or In te rrel at ed W ro ng fu l Acts sh al l b e co ns id ered as o ne Cla im [.]” The Po li cy
de fin es In t e rrel at ed W ro ng fu l Acts as “ an y W ro ng fu l Acts whi ch are lo gi cal ly or

cau sa ll y co nn ect ed by re as on of an y co m m on fa ct

, ci rc um sta

nc e, si tu at io n, tra ns act io n

or ev en t.” A W ro ng fu l Act, in tu rn , m ean s “ an y ne gl ig en t act

, erro r or om is si on

of

. . . th e In su red s i n re nd eri ng or f ai li ng to ren de r Pro fes si on al Serv ic es .”

The di st ric t co ur t he ld th at th e rel ev an t po li cy la ng ua ge was no t am bi gu ou s an d

th at th e Pl ai nt iff

s ha d su bm it te d m or e th an on e cl ai m ag ai ns t Dale

. The di st ric t co ur t

ack no wle d g e d th at so m e of th e Pl ai nt iff s’ cl ai m s were si m il ar, bu t ul ti m at el y
d e te rm in ed th at th e “ Pl ai nt iff s’ cl ai m s are no t ‘Inte rrel at ed W ro ng fu l Acts ’ as t h e

The pa rti es do no t d is pu te th at th e Po li cy ap pl ie s, ev en th ou gh th e Pl ai nt iff s 6

fil ed th ei r FINRA cl ai m s i n Dec em be r 20 07

.

-7

-Po li cy de fin es th at te rm

. . . . Pl ai nt iff s ha ve pa ral le l cl ai m s whi ch do no t ne ces sa ril y

co nn ect wit h each ot he r.” D. Ct

. Ord er of Apr

. 1, 20 13

, at 11 -1 2. The di st ric t co ur t

rel ie d on th e fo ll owi ng fact s to co nc lu de th at th e Pl ai nt iff s ha d su bm it te d m or e th an

on e cl ai m : th at each Pl ai nt iff m et wit h Dale se pa rat el y , fo rm ed a un iq ue rel at io ns hi p
wit h Dale , a nd in ve st ed in di vi du al ly; th at each Pl ai nt iff in ve s t ed di ffer en t am ou nt s

an d th at no t al l Pl ai nt iff s pu rch as ed th e sa m e po li ci es or a nn ui ti es ; th at Dan ie l

pr es en te d a c h u r n in g cl ai m , whi le th e ot he r Pl ai nt iff s di d no t; th at each Pl ai nt iff

su ffer ed lo ss es in di ffer en t am ou nt s; an d th at each Pl ai nt iff “ wou ld ha ve to pr es en t

hi s o r he r own ev id en ce t o c arry the ir r es pe ct iv e b ur de ns of p ro of .” Id . at 1 4.

The di st ric t co ur t de te rm in ed th at th e Pl ai nt iff s ha d st at ed at le as t two se pa rat e
cl ai m s be cau se “ Dale ’s wro ng fu l a c t s in cl ud ed se ll in g in su ran ce po li ci es bu t al so

un su it ab l e an nu it ie s; m or e br oa dl y sp eak in g, th e wro ng fu l act s cl ai m s in vo lv ed

se ll in g u ns ui ta bl e in ve st m en ts bu t al so ch ur ni ng .” Id . at 1 5.

To f i n d th at Pl ai nt iff

s’ c la im s are cau sa ll y or lo gi cal ly co nn ect ed on l y by reas on of Dale ’s de si re to ge ne rat e co m m is si on s pu sh es th e Po li cy ’s
la ng ua ge to un reas on ab le ex tre m es

. Abs en t su ch br oa d ge ne ral iz at io ns , ho wev er, Co nt in en ta l can no t id en ti fy a si ng le act io n, de ci si on , or ot he r fact th at reas on ab ly en co m pa ss es , co nn ect s, or gi ve s ris e to al l of
Pl ai nt iff s’ cla im s.

Id . at 1 7.

On ap pe al

, Co nt in en ta l arg ue s th at th e di st ric t co ur t erre d in fin di ng no lo gi cal

co nn ect io n a m on g t he Pla in ti ffs ’ cl ai m s. It c on te nd s t ha t t he Pla in ti ffs ’ de ci si on to joi n th e i r c l a i ms i n a si ng le act io n “ co m pe ls th e co nc lu si on th at th ei r cl ai m s sh are

su ffi ci en t co nn ect io ns to de em th em on e Cl ai m un de r t h e Po li cy .” App el la nt ’s Br.

25

. Mo reo ve r, it arg ue s th at Dale al le ge dl y br each ed th e fid uc ia ry du ty sh e owe d to

each Pl ai nt iff in su bs ta nt ia ll y th e sa m e way

. Giv en th e sh ared at tri bu t e s of th e

-8

-P l ai nt iff

s’ cl ai m s an d th e co m m on al it ie s am on g th e Pl ai nt iff s th em se l v e s , Co nt in en ta l’s arg um en t go es , th e cl ai m s were lo gi cal ly co nn ect ed an d th us

co ns ti tu te d o nl y

on e cl ai m

un de r th e Po li cy

.

II. Ana lysis

W e rev ie w de no vo th e di st r i c t c o u r t ’s gr an t of su m m ary jud gm en t. W 3i

Mo bi le

, LLC v. W es tc he st er Fi re In s. Co

., 63 2 F.3 d 43 2, 43 6 (8 th Ci r. 20 11 ). The

pa rti es ag ree th at th ere ex is ts no m at eri al fact ua l di sp ut e, th at Mi nn es ot a la w go ve rn s

ou r in te rp ret at io n of th e Po li cy , an d th at th e Po l i cy ’s la ng ua ge is un am bi gu ou s.

Acco rd in gl y , we m

us t gi ve th e Po li cy it s pl ai n an d or di n ary m ean in g an d de ci de

whe th er th e Pl ai nt iff

s su bm it te d on e cl ai m or m or e th an on e cl ai m

. See Tho m m es v.

Mi lwau ke e In s. Co

., 64 1 N.W .2d 87 7, 88 0 (Mi nn

. 20 02 ) (“ W he n th e la ng ua ge of an

in su rance co ntr act is un am bi gu ou s, it m

us t be gi ve n it s pl ai n an d or di na ry m ean in g.” ).

On ap pe al

, Co nt in en ta l fram es th e is su e a s w h e t h er th e Pl ai nt iff s’ fo ur
cl ai m s— on e fo r each Pl ai nt iff —i nv ol ve in te rrel at ed wro ng fu l act s. C o nt in en ta l

arg ue s th at we sh ou ld gr ou p Dale ’s wro ng fu l act s by Pl ai n t i f f a n d th en de te rm in e
whe th er th ere ex is ts a lo gi cal co nn ect io n b e t w e e n th e se t of wro ng fu l act s each

Pl ai nt iff ha s all eg ed

. The Pla in ti ffs arg ue th at Co nt in en ta l h as ig no red th e Po li cy ’s

la ng ua ge t h a t d e f

i ne s th e te rm “ Cl ai m ” to be “ a W ro ng fu l Act.” Acco rd in g to th e

Pl ai nt iff s, on e wro ng fu l act co ns ti tu te s on e cl ai m an d each Pl ai nt iff ha s al le ge d m or e

th an on e wro ng fu l ac t an d t hu s h as su bm it te d m or e th an on e cl ai m

.

As rel ev an t to th is cas e, a Cl ai m is “ a ci vi l ad jud ic at or y

. . . pr oc eed in g” ag ai ns t

th e in su red fo r “ a W ro ng fu l Act” br ou gh t by “ an y Cl ie nt .” Co nt in en ta l in te rp ret s th e

Po li cy to li m it each cl ie nt to on ly on e cl ai m br ou gh t in th ei r joi nt civ il ad jud ic at or y

pr oc eed in g. The Po li cy , h owe ve r, do es no t re fer t o wro ng fu l ac ts or to in te rrel at ed

wro ng fu l act s in it s de fin it io n of cl ai m

. In st ead

, th e Po li cy ex pl ai ns in a d i f f e r e nt

-9

-se ct io n th at “ [m ]ore th an on e Cl ai m in vo lv in g

. . . In te rrel at ed W ro ng fu l Acts sh al l

be co ns id ered as on e Cl ai m [.]” W e th us de cl in e to read th e Po li cy as c a t e g o r i cal ly

li m it in g each Pl ai nt iff to on e cl ai m

. Acco rd in gl y , to de te rm in e whe th er th e Pl ai nt iff s

ha ve su bm it te d m or e th an on e cl ai m , we m us t co ns id er D a l e ’s wro ng fu l act s an d

de ci de whet he r th ey

co ns ti tu te in te rrel at ed wron gf ul act s.

T he Pl ai nt iff

s arg ue th at th ey ha ve su bm it te d m or e th an on e cl ai m be cau se D al e

co m m it te d m or e th an on e wro ng fu l act

. Alt ho ug h th e Pl ai nt iff s ha ve no t en um erat ed

ex act ly ho w m an y di ffer en t wro ng fu l act s Dale co m m it te d, th ey se t fo rth in th ei r br ie f

a ta bl e th at li st s cl ai m s ba se d on $1 0 m il li on who le li fe in s u r a n c e p o l ic ie s, li fe

in su ran ce on ch il dr en , li fe in su ran ce on sp ou se s, su pp le m en ta l in su r a n c e po li ci es ,

an nu it ie s, an d ch ur ni ng

. The y co nt en d th at “ th e im pr op er sa le of who le li fe in su ran ce

po li ci es

. . . ha s no th in g to do wit h im pr op er sa le of fix ed an nu it ie s” an d th at of feri ng

un su it ab le in ve st m en ts is se pa rat e fro m a cl ai m fo r ch ur ni ng

. App el le es ’ Br. 53

. Fo r

it s pa rt, Co nt in en ta l di d no t li st each of Dale ’s wro ng fu l act s, fo cu si ng in st ead on th e
si m il ari ti es of t he Pla in ti ffs an d t he ir p ro ceed in gs ag ai ns t Dal e.

The Mi nn es ot a Su pr em e Co ur t ha s no t co ns id ered po li cy la ng ua ge de fin in g th e

te rm “ In te rrel at ed W ro ng fu l Acts ” as C o n t i ne nt al ’s po li cy do es , bu t we fin d

in st ru ct iv e it s in te rp ret at io n o f th e wor d “ rel at ed ” se t fo rth in Am eri can Co m m erce

In su ran ce Bro ke rs , In c. v. Mi nn es ot a Mu tu al Fi re an d Cas ua lt y Co

., 55 1 N.W .2d 22 4
(Mi nn

. 19 96 ). In th at cas e, an em pl oyee ha d eng ag ed in 15 5 acts of em be zzl em en t,

ei th er by is su in g un au th or iz ed ch eck s to he rs el f or by ta ki ng th e fu nd s cu st om ers ha d

pa id fo r th ei r in su ran ce pr em iu m s. The em pl oyer fil ed a cl ai m wit h it s in su rer, whi ch

pr ov id ed co ve rag e f

o r l o s s es res ul ti ng fro m em pl oyee di sh on es ty. The po li cy

pr ov id ed fo r $1 0,0 00 in co ve rag e fo r each oc cu rren ce, wit h a “ se rie s of rel at ed act s”

co ns ti tu ti ng on e oc cu rren ce. The co ur t d efi ne d t he wor d “ rel at ed ” as “ co ve r[i ng ] a

ve ry br oa d ran ge of co nn ect io ns , bo th lo gi cal an d cau sa l.” Id

. at 22 8. It he ld th at “ a

co ur t m ay co ns id er se ve ral fact or s in c on cl ud in g whe th er di sh on es t act s are pa rt of

-1 0-a ‘seri es of rel at ed act s,’ in cl ud in g whe th er th e a c t s are co nn ect ed by ti m e, pl ace,

op po rtu ni ty, pa tt ern , an d, m os t im po rta nt ly, m et ho d or m od us op eran di .” Id

. at 23 1.

W hi le th e op in io n warn ed ag ai ns t “ m ic ro -d is ti ng ui sh in g[ ,] ” id

. at 23 0, it li ke wis e

cau ti on ed th at “ at so m e po in t ‘a lo gi cal co nn ect io n m ay be to o te nu ou s reas on ab ly to

be cal le d a rel at io ns hi p[ ,] ’” id

. at 22 8 (q uo ti ng Greg or y v. Hom e In s. Co

., 87 6 F.2 d

60 2, 60 6 (7 th Ci r. 19 89 )). The co ur t ul ti m at el y co nc lu de d, as a m at te r of la w, th at two

oc cu rren ces aro se un de r th e ci rcu m st an ces of th e cas e be cau se th e em pl oyee h ad

em be zzl ed m on ey

vi a two di st in ct m et ho ds

.

The Po li cy ad op te d Am eri can Co m m erce ’s de fin it io n of th e te rm “ rel at ed ,” in

th at it req ui res a lo gi cal or cau sa l co nn ect io n fo r wro ng fu l act s to be in te rrel at ed

. The

Po li cy ’s la ng ua ge , ho wev er, is ev en br oa de r, in th at wro ng fu l act s are in te rrel at ed if

t h e y are lo gi cal ly rel at ed “ by reas on of an y co m m on fact

, ci rcu m st an ce, si tu at io n,

tra ns act io n or ev en t.” (em ph as is ad de d)

. Pl ai n t i f

f s ’ cl ai m s sh are th e fact th at th e

wro ng fu l act s were co m

m it te d by Dale

, who se m ot iv e was to ge ne rat e co m m is si on s.
Dale ’s wro ng fu l act s, in tu rn , are lo gi cal ly rel at ed by reas on of th e fo ll owi ng co m m on

fact s an d ci rcu m st an ces

. Each Pl ai nt iff pr es en te d th e sa m e op p o r t u n i t y to Dale : a

y ou ng , un so ph is ti cat ed in ve st or who be ga n earn in g a si gn ifi can t in co m e an d who se

m ot he r ha d in tro du ced Dale as a fin an c i a l a d v i s o r. As ti m e pa ss ed an d each

Pl ai nt iff ’s rel at io ns hi p wi th Dale gre w, t he Pl ai nt iff s co nt in ue d to pr es en t t he same

op po rtu ni ty to Dale : an in ve st or who tru st ed Dale to act in hi s or he r be st in te res t.

Dale al so en ga ge d in th e sa m e m et ho d or m od us op eran di

, ad vi si ng each Pl ai nt iff to

pu rch as e u ns ui ta bl e who le li fe i ns ur an ce p ol ic ie s an d u ns ui ta bl e an nu it ie s.

Pl ai nt iff s u rg e u s t o h ol d t ha t th e act s of sel li ng who le li fe i ns ur an ce p ol ic ie s

to th e Pl ai nt iff

s ar e n ot rel at ed to th e act s o f se ll in g wh ol e li fe i ns ur an ce p ol ic ie s t o Crystal an d Dan fo r th ei r ch il dr en an d sp ou se s or to th e act s of se ll in g su pp le m en ta l

in su ran ce po li ci es to Crystal an d Troy. W e co nc lu de th at do in g so , ho wev er, wou ld

co ns ti tu te th e type of “ m ic ro -d is ti ng ui sh in g” th e Mi nn es ot a Su pr em e Co ur t warn ed

-1 1-wou ld “ su bv ert [] th e pu rp os e of th e ph ras e ‘seri es of rel at ed act s[ .] ’” Am

. Co m m erce

In s. Bro ke rs , In c. , 5 5 1 N.W .2d at 23 0. W e al so co nc lu de th at th e of feri ng of

un su it ab le in ve st m en ts is lo gi cal ly co nn ect ed to th e ch ur ni ng cla im , whi ch res ul te d

fro m Dale ’s ad vi ce th at Dan ie l pu rch as e in ap pr o p r i a te an nu it ie s, whi le sh e
si m ul ta ne ou sl y

li qu id at ed si m il arl y

in ap pr op ria te an nu it ie s o n Dan ie l’s b eh al f.

The Pla in ti ffs di sp ut e th at th e co m m on al it ie s be twee n th ei r cl ai m s co ns ti tu te

a m ean in gf

ul lo gi c a l co nn ect io n, bu t as th ey were se ek in g to es ta bl is h th ei r br each

of fid uc ia ry du ty cl ai m ag ai ns t Dale in Sco tt Co un ty Dis tri ct Co ur t, th ey arg ue d th at

Dale to ok ad va nt ag e of th e sa m e op po rtu ni ty wit h each Pl ai nt iff an d ha d en ga ge d in

th e sa m e p at te rn of d ecep ti on wit h e ach Pla in ti ff:

[Pl ai nt iff s] h av e pr ov id ed te st im on y reg ard in g ho w t he y ca me t o Dale

at 18

, fin an ci al ly un ed uc at ed ; th at Dale co nv in ced th em to i n v e s t in

cert ai n pr od uc ts ; th at th ey in v e s t e d in th os e pr od uc ts be cau se of th ei r imp l i c i t t r u st in Dale ; th at Dale li ed to th em ab ou t ho w sh e wou ld be

pa id

, an d de cei ve d th em reg ard in g th e pe na lt ie s at t ach ed to th ei r

an nu it ie s; an d th at th ey di sc ov ered in May of 20 07

. . . th at D a l e’s
in ve st m en ts were ex tre m el y un su it ab le —b ut un su rp ris in gl y , ex tre m el y

co m m is si on -h eav y

.

Si m il arl y , th e Pl ai nt iff

s’ exp ert op in ed th at Dale ha d b reac he d her fid uc ia ry du ty to

th e Pl ai nt iff

s in th e sa m e way , em ph as iz in g th e Pl ai nt iff

s’ y ou t h

, l ack of

so ph is ti cat i o n , an d su bs ta nt ia l an nu al in co m e an d ne t wor th

. Alt ho ug h Dale m ad e
di ffer en t al le ge d m is st at em en ts , o m is si on s, an d pr om is es on di ffer en t da te s to each

Pl ai nt iff , th ere n on et he le ss ex is ts a lo gi cal co nn ect io n b et ween he r wro ng fu l ac ts

.

W e reco gn iz e th at th is is an un fav or ab le ou tc om e fo r th e Pl ai nt iff s, who tru st ed

Dale an d to who m sh e owe d a fid uc ia ry du ty. W e are no t si tt in g in jud gm en t of Dale

, ho wev er. W e are ch arg ed in st ead wit h in te rp ret in g th e la ng ua ge of Dale ’s

pr of es si on al li ab il it y in su ran ce po li cy , whi ch de fin ed th e te rm “ In te rr el at ed W ro ng fu l

-1 2-Acts ” to m ean act s th at are “ lo gi cal ly .

. . co nn ect ed by re as on o f a n y c om m on fact

[o r] ci rcu m st an ce[.]” Tha t Dale ha rm ed each Pl ai nt iff in di vi du al ly an d un iq ue ly i s

no t en ou gh to ov erco m e th e Po li cy ’s bro ad lan gu ag e.

III. Co nc lu si on

The jud gm en t is rev ers ed

, an d th e cas e is rem an de d to th e di st ric t co ur t fo r

en try of jud gm en t i n fa vo r of Co nt in en ta l.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-1 3-