NOT RECOMMENDED F OR FUL L -TEXT PUB L I CATI ON File Na me: 12a0055n.06 No. 10-2116 UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT

KAREN NEMI ER; KAREN NEMI ER I NSURANCE AGENCY, I

NC., Plaintiffs-Appellants,

v. N A T I O N W I D E M U T U A L I N S U R A N C E COMPANY, an Ohio Corpora tion, Def endant- Appellee

. ) ) ) ) ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNI TED STATES DI STRI CT COUR T FOR T HE EASTERN DI STRI CT OF MI CHI GAN

Be fore : KETHL EDGE a

nd STRANCH, Circuit J udg es; GWI N, District J udg e * KETHL EDGE, Ci rcuit Judge. F ormer N ationwide insuranc e ag ent Kar en Ne mier appe als the district court’s decision to enter summary judgme nt for Nationwide on her fra ud and brea ch-of

contra ct claims. She arg ues that materi al fa ct u al disputes rema in as to whether Nationwide fra udulently induced her to take out loans to open a new insurance ag ency . We disag ree and aff irm. I

. I n 1998, Nationwide g ave Nemier m o n ey t o s tart her own insurance ag ency in Ply mouth, M i ch i g an. Nemier sold Nationwide insurance throug h her ag ency , but ran the ag ency as an independe nt contra ctor starting in 2002. I n 2003, Nationwide announce d its g oal to become the third

The Honora

ble J ames S

. Gw i n, United States District J udg e for the Norther n District of * Ohio, sitti ng by

desig nation.No. 10-2116

Nemier v. Nationwide larg est insurer in the country

. To that end, Nationwide planned to implement a new rating s sy stem in Michig an, called “Class Plan M.” Under Plan M, Nationwide would more prec isely calibra te its insurance rate s acc ording to the risk prese nted by eac h customer, supposedly making the rate s more competitive. Nationwide also encour ag ed age nts like Nemier to open additional sate llite office s. To help open the new office s, Nationwi d e o ff er ed its ag ents “ca

pital acc ess loans” under which Nationwide would wa ive re pay ment of the loan if the ag ent met ce rtain g rowth targ ets. Nemier told a Nationwide sales manag er that she was interested in opening another satellite in Har tland, Michig an. Nemier added that she was “extremely busy ” and “didn’t know when [she] could g et a whole business plan done” for the new office

. The manag er responde d that a Nationwide business consultant “would take car e of the majority ” of the work. Nationwide’ s business consultant prepa red the pro forma with littl e input from Nemier

. He projec ted reve nue incre ases afte r Nemier opened the new office , predic ting that the office would have positive c ash flow in thre e y ear s. The consultant also prepa red a demog raphic summary that classified H artland a s a “ta rg et expansion market.” Another Nationwide employ ee war ned Nemier that there had been problems with the rollout of P lan M in other states. But in J une 2004 Nemier took out a $100,000 capital- acces s loan from Nationwide Fe dera l Credit Union to open a Har tland office

. I n doing so, she alleg edly relied on the consultant’s t wo studies and Nationwide’s promi ses t hat, considering her past succe ss, she would likely achie ve cer

tain g rowth targ ets nece ssary to avoid rep ay i n g the loan. Those g rowth targ ets included a require ment that the sum of her “dire ct written premiums” exceed 150% of Nationwide’ s “state g rowth objectives” for those premiums within three y ear s. The targ ets also require d Nemier -2-No. 10-2116

Nemier v. Nationwide to incre ase her direc t written premiums by $1,005,955 within three y ea rs . Nemier opened her Har tland office in J uly

or Aug ust 2004. I n April 2005, Nemier borrowe d another $10,000 from Nationwide Fe dera l Credit Union to pay for adver

tising. As befor e, she could avoid repa y ment if her direc t written premiums exceede d 150% of Nationwide’ s state-g rowth objective and if she produce d an additional $100,000 in direc t written pre miums, all by

Dec ember

31, 2005. Sometime in 2 0 0 5 , Nemier lear ned that Nationwide was selling insurance direc tly to Michig an resident s , creating competition for ag ents like her. I n at l east one instance, Nationwide

canc elled an insured’s policy with Nemier and rew rote the policy direc tly with Nationwide. Nemier also lear ned that a Nationwide subsidiary called Allied was offe ring simil ar insurance to Michig an residents, but at a

lower pr ice. Nationwide’ s Class M prog ram was unsucce ssful. Rather than making Nationwide’ s rate s

more competitive, its rate s climbed and Nationwide lost policy holders. Nemier closed the Har tland office in October 2006. Her profits dropped from $215,000 in 2006 to $92,157 in 2007. She missed the g rowth targ ets in her loan ag ree ments by 7%. See R. 58, Attach. 1 at 28. Nemier resig ned from Nationwide in 2008. Nemier later s u ed Na t ionwide for fra ud, brea ch of contra ct, and violation of Michig an’s fra nchise-inve stment law. The district court g rante d summary j u d gm en t to Nationwide. Nemier appea ls as to the fra

ud and bre ach- of-c ontrac t claims.

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Nemier v. Nationwide I I

. I n Ne m i er ’s view, a g enuine issue of materia l fac t exis ts beca use a rea sonable jury coul d conclude , by clea

r and convincing evidenc e, that Nationwide committed fra ud under any one of three theories. 1. Nemier ’s first theory of fra ud is that Nationwide fra

udulently induced her to borrow money to open the Har

tland office by promising to lower its rate s in Har tland to encour ag e g rowth. See generally Elliott v. Therrien , No. 288235, 2010 WL 293071, at *5 (Mich. Ct. App. J an. 26, 2010). To support this alleg ation, Nemier points to a single sentenc e in the 2004 demog raphic study , say ing that Har tland was a “tar g et expansion marke t.” She also points t o testimony by Nationwide employ ee Renelle Smit h that Nationwide’ s agen t s believed that Plan M would g ener ally result in

more “compe titive” rate s. But these statements ar e n o t p rom ises to lower Nationwide’ s rate s in Har tland. Moreove r, Nationwide’ s alleg ed promise to lower rate s could only have been fra udulent if Nationwide intended to brea k that promise from the outset. See Diamond Computer Sys., Inc. v. SBC Comm c’n, Inc. , 424 F. Supp. 2d 970, 981 (E.D. Mich. 2006). Nemier has no evidenc e of any such intent. Her

false- promise theory

there fore fails. 2. Nemier ’s second theory of fra ud is that Nationwide induced her to take out the capital- acc ess loans by making two projec tions rela ting to her business that wer e so optimis tic as to be dishonest. She alleg es that Na tionwide told her that Plan M would be an e ng ine for g rowth. She also asser ts that Nationwide told he r that her business was very likely to g row enoug h to me et her loan-wa iver -4-No. 10-2116

Nemier v. Nationwide targ ets afte r opening the Har tland office

. Financ ial projec tions can be fra udulent if the projec tions are based on misrepre sentations about past or prese nt fac ts. See Mesh v. Citri n , 300 N.W. 870, 534 (Mich. 1941). For example, the Mesh court held that a jury could conclude that a g as station seller’ s projec tion that his station would

ear n $50 a wee k was fra

udulent beca

use the station was in poor condition at the time of sale. Id. at 534, 537. But Ne mier’s a lleg ations fall outside that rule. Nemier points to two piece s of evidenc e that purportedly show that Nationwide made overly optimis tic projec tions that Plan M would dri v e growth. She cites Nationwide’ s g ener alized statements that Class M wo u ld succe ed, including an email say ing the company is “excited and optimis tic” about Plan M. B ut such statements ar e puff ery , not fra

ud. See W

ebb v. First of Mich. Corp. , 491 N.W.2d 851, 853 (Mich. C t

. Ap p . 1992). Nemier also cites a Nationwide employ ee’ s deposition testimony , afte r the fac t, that it would have b ee n “i nacc urate ” for Nationwide to tell ag ents that Plan M would make them more competitive without supporting documentation. See R. 60, Attach. 4 at 6. But that employ ee was only say ing that chang es in r ates do not alwa y s result in g rowth, not that Nationwide knew that Plan M was likely to fa i l b as ed on data available when Nationwide was projec ting succe ss. Id. Even more to the point, Ne mier admits tha t a Nationwide employ ee actua lly war

ned her about Plan M’s possible problems when she was deciding whether to open the new office. That admiss ion fata lly undermines her assertion that Nationwide misled her about Plan M’s prospec ts for succ ess. Concerning Nationwide’ s predic tions that Nemier ’s business would g ro w enoug h to meet the loan-wa iver targ ets, Nemier relies on three piece s of evidenc e to show fra ud. First, she notes that -5-No. 10-2116

Nemier v. Nationwide Nationwide’ s pro forma for the Har tland office projec ted that her business would see positive cash flow within three y ear s, y et a Nationwide employ ee later testified in a deposition that it “take s five to seven y ear s for a

satellite or any

storefr ont to be cash f

low positive.” See R. 60, Attach. 3 a t 9. But the employ ee was not talking about Nemier specific ally , who undisputedly was an unusually

s u ccessful ag ent. Moreove r, Nemier admits that Nationwide war ned Nemier that she “could no t compete in the sta

ndard ma rket in [Hartland] and that her win rate would be ver

y low.” Second, Nemier contends that Renelle Smit h, who revie wed pro b lems with the capitalacc ess-loan prog ram, said that Smit h “knew ” (Ne mier’s word) in 2004 that “a loan waiver was not likely to happen” and that Nationwide was sprea ding “misinformation” about the prog ram to ag ents. But Smit h mere ly said that she had a “hunch” about the loan-wa ivers in g ener al, not about Nemier ’s l o an s i n particula

r. And Nemier takes Smit h’s statement about “misinformation” out of context: Smit h did not say

that Nationwide wa s delibera tely misleading ag ents about the prog ram; instead, she said that the Nationwide employ ees who pushed t he loans did not fully understand the m. See R. 60, Attach. 3 at 1 3

. Moreove r, the “misinformation” that Smit h mentioned was about the “interpr etation” of the loan prog ram, not the prospec ts for g rowth. Id. Smit h’s testimony there fore would not support a finding of fr aud. Third, Nemier contends that Nationwide should have known that she would fail to meet the g rowth targ ets in her loan a g ree ments beca use interna l rec ords showed tha t the fre quencyof loanwaiver s was rapidly declining betwee n 2002 and 2004. But that decline does not tell the whole story : Be tween 2002 and 2003, the number of full loan waiver s doubled. And there wer e still more loan waiver s in 2004 than in 2002. Moreove r, waiver was not unrea listi c in Nemier ’s case : She -6-No. 10-2116

Nemier v. Nationwide ad m i ts that she met 93% of her g oals. Thus, this data does not show that Nationwide lied in it s predic tions that Nemier would meet her g rowth targ ets. Nemier has failed to support her alleg ation that Nationwide fra

udulently induced her to take out loans by offe ring overly optimis tic projec tions of g rowth. 3. Nemier ’s third theory of fra ud is that Nationw i d e committed “silent fra ud” by failing to disclose (i) the data about declining waiver rate s and (ii) Nationwide ’s p l an s t o compete with its ag ents direc tly an d t h ro u gh Allied. See generally U.S. Fidelity and Guaranty Co. v. Black , 313 N.W.2d 77, 87–88 (Mich. 1 9 8 1 ). She notes that Michig an law require s a party to disclose i ts own “spec ial knowledg e” when another party is “without the means of g etting it” an d the parties “ther efor e[] do n o t s t an d o n equal terms.” Haye s Constr. Co. v. Silverthorn , 72 N.W.2d 190, 193 (Mich. 1955). But the “spec ial knowledg e” must be knowledg e on which the ignor ant party “would natura lly rely .” See In re Allied Supermarke ts, Inc. , 951 F.2d 718, 725 (6th Cir. 1991). As explained above, the data about declining waiver rate s does not t el l t he whole story

. Moreove r, Nemier s ay s littl e about the sc ope of the competition from Alli ed and Nationwide; and tha t makes it impossi ble to gaug e whether that competition constituted a chang e in Nationwide’ s business plan upon which Nemier would have “natur ally relied” when deciding whether to open the Har tland store. More importantly , the “spec ial knowledg e” rule ty pically does not apply wher e, as here , the parties are both sophisticated, knowledg eable business people or wher e there is no evidenc e one party actively soug ht to conce al information. Compare Haye s Constr. Co. , 72 N.W

. 2 d at 193 with In re Allied Supermarke ts , 951 F.2d at 725. Finally , N e mi e r k n ew that Nationwide could make business decisions -7-No. 10-2116

Nemier v. Nationwide adver se t o her interests, wi thout war ning, beca

use she signe d a contract authorizi ng Nationwide to do prec isely

that. See R. 53, Attach. 4 (“I t is understood and ag ree d that . . . eac h Company reta ins the rig ht to chang e, alter or ame nd terms under which it will insure risks, and [can] cha ng e, alter or amend such rules, reg ulations, price s, and terms, including the rig ht to limit , restric t, or discontinue entirely the acc eptanc e or writing of any policies, cover ag es, lines or kinds of insurance , at any time it deems it advisable to do so, and without notice to or c onsent of the Ag ent”)

. Nemier points to no other “leg al or equitable duty ” on Nationwide’ s part to disclose its internal statistics and plans to compete w ith its ag ents. Black , 313 N.W.2d at 88. Thus the district court wa s corr ect to re

ject Ne mier’s silent-fr aud theor y . 4. Nemier also seeks to revive one of her brea ch-of -contra ct theories. (She mentions an o t her theory only in passing , so she has waived it.) She alleg es that Nationwide promised to use money it owed her upon her retire ment to pay off her loans imme d i at ely rathe r than in allotments. She compl ai n s t h at the failure to pay off her loans at once incre ases her interest pay ments. But the “contr act” she relies upo n i s an ag ree ment betwee n Nemier and Nationwide Fe dera l Credit Union—which is not a party to this case . Nemier acknow ledg es that the cre dit union is a subsidiary of Nationwid e Mutual I nsuranc e and points to no exception to the usual rule in Ohio (whose law g overns the ag ree ment) that pare nt corpor ations are not liable for the obliga tions of their subsidiaries. Cf. Belve dere Condo. Unit Owners’ Ass’n v. R.E. Roark Cos., Inc. , 617 N.E.2d 1 0 75, 1086 (Ohio 1993) (stating Ohio rule for pierc ing the corpor ate veil); Pottschmidt v. Klosterman , 865 N.E.2d 111, 1 2 0

– 2 1 (Ohio Ct. App. Dec

. 29, 2006) (“We initially acknow ledg e . . . that a simpl e b re ac h o f -8-No. 10-2116

Nemier v. Nationwide contra ct is not sufficie nt to pierc e the corpor ate ve il”). Moreove r, Nemier does not dispute that the “contr act” is actua lly a promissory note to the cre dit union—as it is labeled—a nd that she, as the promisor, there fore has no powe r to enfor ce it. See O.R.C. § 1303.31. * * * The district cour

t’s judgme nt is affirmed.

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