Court Opinion

ID: 2973109
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:58:23.970966+00
Date Added: 2024-06-11T11:43:44.209308
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                                    Pursuant to Sixth Circuit Rule 206
                                          File Name: 05a0486p.06

                        UNITED STATES COURT OF APPEALS
                                      FOR THE SIXTH CIRCUIT
                                        _________________

                                                         X
                                 Plaintiffs-Appellants, -
 TIMOTHY BRAINARD, et al.,
                                                          -
                                                          -
                                                          -
                                                              No. 04-4510
         v.
                                                          ,
                                                           >
 AMERICAN SKANDIA LIFE ASSURANCE CORPORATION,             -
                                 Defendant-Appellee. -
                                                        N
                         Appeal from the United States District Court
                        for the Northern District of Ohio at Cleveland.
                     No. 03-01698—Patricia A. Gaughan, District Judge.
                                       Argued: October 28, 2005
                                Decided and Filed: December 28, 2005
                     Before: MARTIN, GIBBONS, and GRIFFIN, Circuit Judges.
                                          _________________
                                              COUNSEL
ARGUED: Christopher M. DeVito, MORGANSTERN, MacADAMS & DeVITO, Cleveland, Ohio, for
Appellants. Joseph Serino, Jr., KIRKLAND & ELLIS, New York, New York, for Appellee. ON BRIEF:
Christopher M. DeVito, MORGANSTERN, MacADAMS & DeVITO, Cleveland, Ohio, for Appellants.
Joseph Serino, Jr., Matthew Solum, KIRKLAND & ELLIS, New York, New York, Arthur M. Kaufman,
Erica L. Calderas, HAHN, LOESER & PARKS, Cleveland, Ohio, for Appellee.
                                          _________________
                                              OPINION
                                          _________________
         GRIFFIN, Circuit Judge. Plaintiffs-appellants Timothy Brainard, George Chanter, Robert
Domachowski, and James Dovak (collectively “plaintiffs”) appeal from a summary judgment entered in the
district court in favor of defendant-appellee American Skandia Life Assurance Corporation (“ASLAC”).
Plaintiffs’ complaint, filed against ASLAC and Kevin and/or Neil O’Donnell and O’Donnell & Company
(a/k/a O’Donnell Securities Corp.) (hereinafter referred to collectively as “the O’Donnells”), alleges
wrongdoing in connection with the purchase of certain annuity contracts from ASLAC. Plaintiffs’ first
contend that the court erred by finding that no agency relationship existed between the O’Donnells and
ASLAC. Second, plaintiffs assert that the court wrongly termed the opinion of their chosen expert
“conclusory” and thereafter disregarded the expert’s declaration. Third, plaintiffs argue that the court
improperly granted a portion of ASLAC’s motion to dismiss and, fourth, inappropriately disallowed
plaintiffs from amending their complaint to add a “necessary” party. Finally, plaintiffs complain that the

                                                    1
No. 04-4510                 Brainard, et al. v. American Skandia Life Assurance Corp.                                     Page 2

district court erroneously failed to strike a declaration submitted by ASLAC’s attorney in support of its
motion for summary judgment. We disagree and affirm the judgment.
                                                                I.
        Plaintiffs are unsophisticated investors who sought out financial advice from the O’Donnells in
connection with the investment of retirement funds totaling $1,971,314.10.1 In doing so, plaintiffs indicated
to the O’Donnells that they wished to pursue conservative investments. The O’Donnells recommended that
plaintiffs purchase variable annuities offered by ASLAC and, in response, plaintiffs completed an
application for an American Skandia Advisor Plan II (“ASAP II”) variable annuity. By signing that
application, each plaintiff acknowledged (1) receipt of a copy of the Prospectus, and (2) that “ANNUITY
PAYMENTS . . . ARE VARIABLE AND NOT GUARANTEED AS TO A DOLLAR AMOUNT . . . [.]”

        The Prospectus referenced in the ASAP II application revealed the particular features of the annuity
and, in particular, contained sections discussing applicable fees and charges. A particular portion of the
Prospectus allowed plaintiffs to “authorize a financial representative to decide on the allocation of [their]
Account Value and to make financial transactions between investment options, subject to [ASLAC] rules.”
Significantly, the Prospectus goes on to state as follows:
         We or an affiliate of ours may provide administrative support to financial representatives
         who make transfers on your behalf. These financial representatives may be firms or persons
         who are appointed by us as authorized sellers of the Annuity. However, we do not offer you
         advice about how to allocate your Account Value under any circumstance. Any financial
         firm or representative you engage to provide advice and/or make transfers for you is not
         acting on our behalf. We are not responsible for any recommendations such financial
         representatives make, any market timing or asset allocations programs they choose to follow
         or any specific transfers they make on your behalf.
        On the day of signing their ASAP II applications, plaintiffs, acting pursuant to the Prospectus,
appointed the O’Donnells as their “Registered Investment Adviser” by signing a document entitled
“Investment Advisory Contract.” In pertinent part, that document reflected that the O’Donnells would serve
as plaintiffs “attorney-in-fact and as agent with authority to act in the name of [plaintiffs] and/or on behalf
of the [plaintiffs] with respect to the election, implementations, purchase, sale and timing of the Contract
Owner’s mutual fund accounts or sub-accounts.”
        In the days following plaintiffs’ execution of the Investment Advisory Contract (“IAC”), plaintiffs
received the annuities themselves, including a variable annuity contract. On the first page of that document,
it conspicuously cautioned that “[I]N THE ACCUMULATION PERIOD ANY PAYMENTS AND VALUES PROVIDED
UNDER THE VARIABLE INVESTMENT OPTIONS ARE BASED ON THEIR INVESTMENT PERFORMANCE AND ARE,
THEREFORE, NOT GUARANTEED.” That front page likewise provided plaintiffs with a twenty-one day window,
during which Plaintiffs could return the annuity and receive a refund.

    1
      The firm of “O’Donnell & Company” was a retail broker/dealer, and Kevin and Neil O’Donnell were “registered
representatives” for that company. Plaintiffs included the O’Donnells in their original complaint, but could not also name them
in their amended complaint because the O’Donnells had filed for bankruptcy. Apparently, this case represents the O’Donnells’
modus operandi. Indeed, in a case almost identical to this one, the district court for the Northern District of Ohio noted that the
O’Donnells (1) received fees or commissions by investing funds, (2) did not have formal business training and Kevin O’Donnell
did not hold a college degree, (3) the ASLAC investment instruments offered to plaintiffs were subject to a deferred sales charge
if surrendered within seven years of purchase, and (4) “an ASLAC investment instrument suitable for market timing with no
deferred sales charge was available, but it paid no up-front commission to the O’Donnell group.” McNamara v. American Skandia
Life Assurance Corp., No. 2599, slip op. at 2 (N.D. Ohio Apr. 29, 2004). According to plaintiffs, the O’Donnells sold more
ASLAC securities than any other broker in the nation.
No. 04-4510               Brainard, et al. v. American Skandia Life Assurance Corp.                                Page 3

        Shortly after finalizing execution of the Investment Advisory Contract, plaintiffs entered into an
Investment Allocation Services Agreement (“IASA”) with the O’Donnells. In pertinent part, that document
noted that ASLAC “will accept on behalf of [plaintiffs], instructions from [the O’Donnells] to reallocate
Cash Value among the investment options provided under the Annuity based upon the Advisor’s investment
expertise in order to take advantage of changes in the market[.]” Significantly, the IASA expressly warned
that ASLAC “has no responsibility or liability with respect to the transactions contemplated by this
Agreement.”
        Despite plaintiffs requests to the contrary, the O’Donnells apparently made a series of high-risk
investments which were unsuitable for plaintiffs given their ages and investment objectives. Those
decisions led to precipitous market losses starting in 2000. Plaintiffs thereafter filed suit against ASLAC,
Kevin P. O’Donnell individually, and O’Donnell & Company in Cuyahoga County Court of Common Pleas
on June 30, 2003. Defendant ASLAC filed a Notice of Removal to the Northern District of Ohio on
August 11, 2003. Plaintiffs’ complaint originally alleged fifteen claims, which ASLAC moved to dismiss
on September 19, 2003. By order dated April 8, 2004, the court dismissed all but four of plaintiffs’ claims.
Plaintiffs then asked the court to reconsider its ruling or, alternatively, to allow plaintiffs to amend their
complaint to cure certain pleading deficiencies.
        Although the court denied plaintiffs’ motion to reconsider, it granted in part plaintiffs’ motion to
amend, thereby allowing plaintiffs to amend six of their claims. Rather than simply amending those claims,
plaintiffs re-pled all fifteen counts and added Prudential Financial, Inc. as a new party defendant. After
reviewing the amended complaint, the court issued an order striking, sua sponte, Prudential as a party
defendant, noting that (1) the deadline to add new parties2had long since passed, and (2) plaintiffs failed
even to seek leave to add Prudential as a party defendant.
        ASLAC then filed its motion for summary judgment on July 30, 2004, which plaintiffs opposed.
Plaintiffs also filed a “Motion to Strike Declaration of Matthew Solum in support of Motion for Summary
Judgment and Attached Exhibits from the Record” on September 7, 2004 (hereinafter “Solum Declaration”).
By order dated November 5, 2004, the court granted summary judgment in favor of ASLAC. In doing so,
the court agreed with ASLAC that plaintiffs had failed to come forward with any evidence whatever
reflecting an agency relationship between the O’Donnells and ASLAC. As for plaintiffs’ motion to strike
the Solomon Declaration, the court stated in a footnote at the conclusion of its opinion as follows:
        The grounds for plaintiffs’ Motion is that Mr. Solum is simply an attorney for the defendant
        and has no personal knowledge regarding any of the facts alleged in his Declaration or any
        of the Exhibits attached thereto. Further, plaintiffs argue that Mr. Solum’s Declaration
        improperly sets forth legal arguments and attempts to authenticate exhibits. The Court rules
        as follows. The Court (1) grants plaintiffs’ Motion to the extent Mr. Solum’s Declaration
        contains any legal argument or unsupported factual assertions; (2) grants plaintiffs’ Motion
        with regard to any Exhibits which are not independently authenticated by deposition
        testimony; and (3) denies plaintiffs’ Motion with regard to any exhibits which are
        independently authenticated by deposition testimony.
This timely appeal followed.
                                                            II.
       We review the district court’s entry of summary judgment de novo. McWane, Inc. v. Fid. & Deposit
Co. of Md., 372 F.3d 798, 802 (6th Cir. 2004). A district court’s interpretation of state law is likewise

    2
     Plaintiffs subsequently filed a motion to allow an additional party defendant on July 9, 2004, which was denied on
August 10, 2004, by non-document minute order. That order denied plaintiffs’ motion “for the reasons stated in the brief in
opposition. Plaintiffs’ request is both untimely and prejudicial.”
No. 04-4510                 Brainard, et al. v. American Skandia Life Assurance Corp.                 Page 4

governed by the de novo standard. Ferro v. Garrison Ind., Inc., 142 F.3d 926, 931 (6th Cir. 1998).
Summary judgment is proper when there are no genuine issues of material fact in dispute and the moving
party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). A genuine issue for trial exists only
when there is sufficient “evidence on which the jury could reasonably find for the plaintiff.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986) (noting that, in deciding a motion for summary judgment, the court must view the
evidence and draw all reasonable inferences in favor of the non-moving party).
       We review a district court’s decision to disallow the addition of a new party to a complaint for an
abuse of discretion. Benzon v. Morgan Stanley Distribs., 420 F.3d 598, 605 (6th Cir. 2005); see Cox v.
Treadway, 75 F.3d 230, 240 (6th Cir. 1996) (noting addition of a party constitutes an amendment to the
complaint).
                                                              III.
        Plaintiffs first assert that the district court erred as a matter of law in holding that no agency
relationship existed between ASLAC and the O’Donnells for the purpose of investment decisions. For
support, plaintiffs highlight deposition testimony given by ASLAC’s experts who both indicated that an
agency relationship existed between ASLAC and the O’Donnells. Plaintiffs likewise direct this Court to
Kevin O’Donnell’s insurance license with the state of Ohio, which ASLAC signed and, in doing so, agreed
to “accept the responsibility for the management and supervision of the applicant while engaged in the
business of insurance.”
        An agency relationship may arise pursuant to several theories. First, actual agency occurs where
a consensual relationship exists between the agent and principal. Funk v. Hancock, 498 N.E.2d 490, 493-94
(Ohio. Ct. App. 1985). Agency relationships may also arise from apparent agency or agency by estoppel.
Agosto v. Leisure World Travel, 304 N.E.2d 910, 913 (Ohio Ct. App. 1973). The principal’s ratification
of the unauthorized acts of another may also establish  an agency relationship. Eske Prop., Inc. v. Sucher,
Montgomery App., 2003-Ohio-6520, at ¶ 97.3 Given that the existence of an agency relationship is a
question of fact, rather than one of law, McSweeney v. Jackson, 691 N.E.2d 303, 307 (Ohio Ct. App. 1996),
the court should have denied ASLAC’s motion if any conflicting evidence of an agency relationship
between plaintiffs and ASLAC was presented. In this case, plaintiffs argue that the instant facts potentially
raise all three types of agency discussed above.
          1.       Actual Authority.
        Ohio law reflects that actual agency occurs where there is a consensual relationship between the
agent and principal. Flick v. Westfield Nat’l Ins. Co., No. 91-CO-45, 2002 Ohio App. LEXIS 5250, at *27
(Ohio Ct. App. Sept. 26, 2002). “Such actual agency may be informally created and the assent of the parties
thereto may be either express or implied.” Wisor v. Zimmerman, No. 1304, 1987 Ohio App. LEXIS 6042,
at *7 (Ohio Ct. App. March 3, 1987) (citation omitted); see Damon’s Missouri, Inc. v. Davis, 590 N.E.2d
254, 257 (Ohio 1992) (noting “an agent, acting within the scope of his actual authority, expressly or
impliedly conferred, can bind the principal”). Simply stated, “express authority is that authority which is
directly granted to or conferred upon the agent or employee in express terms by the principal, and it extends
only to such powers as the principal gives the agent in direct terms[.]” Davis, 590 N.E.2d at 257. In
contrast, an agent’s implied authority may “arise from the express delegation of actual authority and unless
its extent is otherwise expressly limited, implied authority carries with it the power to do all that which is
reasonably necessary to carry into effect the power actually conferred.” Id. (citing Spengler v. Sonnenberg,
102 N.E. 737, 739 (Ohio 1913)).

   3
       Ohio has adopted a public domain citation format for cases decided after April 30, 2002.
No. 04-4510             Brainard, et al. v. American Skandia Life Assurance Corp.                     Page 5

        In this case, no actual agency relationship, be it express or implied, was created between the
O’Donnells and ASLAC. Although, as noted, plaintiffs suggest that the deposition testimony given by
ASLAC’s experts indicates the presence of an agency relationship between ASLAC and the O’Donnells,
the district court rejected this argument. In doing so, the court properly noted that although the experts
recognized that an actual agency relationship existed between ASLAC and the O’Donnells, that relationship
was limited solely to the selling of ASLAC insurance products. As the district court observed, “agency for
the purpose of selling defendant’s products is far different from agency for the purpose of providing
investment advice[.]” Accord Aluminum Line Prods. Co. v. Rolls-Royce Motors, 649 N.E.2d 887, 894 (Ohio
Ct. App. 1994) (“‘[A]gency for the one purpose does not necessarily imply agency for the other.’”) (quoting
Funk, 586 N.E.2d at 1117).
        Plaintiffs further argue that an Insurance Product Sales Agreement (“IPSA”) creates an issue of
material fact with regard to whether an agency relationship existed between ASLAC and the O’Donnells
for the purpose of giving/soliciting investment advice. That document, however, reflects an agreement
whereby ASLAC “authorize[d] Broker-Dealer [the O’Donnells] to solicit sales of Contracts identified in
the attached schedule[s].” Pursuant to the IPSA, that authorization was limited solely “to the extent
expressly granted in this Agreement. No further authority is granted or implied.” Thus, as the district court
found, “[a] grant of authority to solicit sales and payments cannot be equated to a grant of authority to
provide investment advice on behalf of American Skandia . . . .”
        Contrary to plaintiffs’ contentions, no implicit agency relationship existed between ASLAC and the
O’Donnells. Plaintiffs rely chiefly on their own deposition testimony, which generally reflects their belief
that ASLAC would “watch over” their retirement monies. Pursuant to Ohio law, however, plaintiffs’
subjective beliefs are irrelevant to the inquiry governing the existence of actual authority. See Chevrolet
v. Calhoun, 2004 Ohio 1006, at ¶ 11 (Ohio Ct. App. 2004) (“[A]n implied agency exists by reason of actual
authority given implicitly by the principal to the agent and does not depend upon what a third party may
believe to be the agency relationship.”) (citing Rubbo v. Hughes Provision Co., 36 N.E.2d 144 (Ohio Ct.
App. 1940)). Thus, the district court properly held that plaintiffs’ subjective beliefs regarding the
relationship between the O’Donnells and ASLAC “is simply not relevant to the issue of actual authority.”
Accordingly, no agency relationship was created by a grant of actual authority from ASLAC to the
O’Donnells for the purpose of giving investment advice.
       2.      Apparent Authority.
        For similar reasons, no apparent authority agency relationship existed between ASLAC and the
O’Donnells. For an agent to bind the principal in the context of apparent authority, the presented evidence
must reflect “(1) that the principal held the agent out to the public as possessing sufficient authority to
embrace the particular act in question, or knowingly permitted him to act as having such authority, and
(2) that the person dealing with the agent knew of the facts and acting in good faith had reason to believe
and did believe that the agent possessed the necessary authority.” Master Consol. Corp. v. BancOhio Nat’l
Bank, 575 N.E.2d 817, 822 (Ohio 1991). In this regard, “[t]he apparent power of an agent is to be
determined by the act of the principal and not by the acts of the agent . . . [.]” Id.; accord Logsdon v.
Main-Nottingham Inv. Co., 141 N.E.2d 216, 223 (Ohio Ct. App. 1956).
        Plaintiffs again offer their deposition testimony in support of their apparent authority claim. Again,
however, a court’s focus during an inquiry into the existence of apparent authority must be on the acts of
the principal and whether those actions manifested a conveyance of authority to the agent. See Cupac, Inc.
v. Mid-West Ins. Agency, Inc., 626 F. Supp. 559, 561 (S.D. Ohio 1985) (noting the “touchstone of apparent
authority is the principal’s conduct toward a third party and not the agent’s”) (citing Logsdon, 141 N.E.2d
No. 04-4510                Brainard, et al. v. American Skandia Life Assurance Corp.                                 Page 6

at 223). Plaintiffs’ reliance on their own testimony sheds no light on this inquiry and, accordingly, their
arguments must fail.4
       For the totality of the foregoing reasons, no agency theory supports the conclusion that ASLAC
should somehow be held liable for the consequences of the O’Donnells investment advice. Significantly,
each plaintiff testified that his financial damages arose from the O’Donnells’ investment decisions.
Moreover, as discussed above, ASLAC expressly distanced itself from any investment decisions via a
number of binding documents, such as the Prospectus, the IAC, and the IASA. As the district court properly
found, the record is devoid of evidence reflecting the existence of such a relationship. Accordingly,
summary judgment was appropriate.
                                                             IV.
        Plaintiffs next assign error to the district court’s decision to reject the opinions of their expert, John
J. Duval, Sr. Specifically, they argue that Duval based his expert opinion that ASLAC had full knowledge
of the O’Donnells’ actions in part on the following: (1) Kevin O’Donnell once gave ASLAC ideas for
subaccounts; (2) an ASLAC employee attended one of the O’Donnells’ financial planning seminars; (3) the
O’Donnells supplied marketing materials that including information about ASLAC annuities; (4) certain
employees at ASLAC knew about the O’Donnells’ seminars; and (5) the O’Donnells were the nation’s
largest distributor of ASLAC annuities. Thus, plaintiffs conclude, the district court erroneously disregarded
the Duval affidavit as “conclusory.”
        As a baseline premise, “[i]n rulings on the admissibility of expert opinion evidence[,] the trial court
has broad discretion and its rulings must be sustained unless manifestly erroneous.” Viterbo v. Dow Chem.
Co., 826 F.2d 420, 422 (5th Cir. 1987) (citation omitted). An expert opinion submitted in the context of a
summary judgment motion “‘must be more than a conclusory assertion about ultimate legal issues.’” Id.
(quoting Hayes v. Douglas Dynamics, 8 F.3d 88, 92 (1st Cir. 1993)); see FED. R. CIV. P. 56(e). Moreover,
an expert opinion must “set forth facts” and, in doing so, outline a line of reasoning arising from a logical
foundation. Am. Key Corp. v. Cole Nat’l Corp., 762 F.2d 1569, 1579-80 (11th Cir. 1985). Thus, “[a]n
expert who supplies nothing but a bottom line supplies nothing of value to the judicial process.” Mid-State
Fertilizer Co. v. Exch. Nat’l Bank, 877 F.2d 1333, 1339 (7th Cir. 1989) (citing Richardson v.
Richardson-Merrell, Inc., 857 F.2d 823, 829-32 (D.C.Cir. 1988)).
        The district court did not err by disregarding Duval’s opinion on the ultimate issue of whether the
O’Donnells were ASLAC’s agents for investment advice purposes. First, the Duval report and affidavit
(collectively “the Duval materials”) were substantially different. Duval’s affidavit opined that a document
from the Ohio Commission of Insurance Commissioners appointing the O’Donnells as broker-dealers
reflects ASLAC’s assumption of responsibility for the management and supervision of the O’Donnells. In
contrast, his expert report neither mentions, nor relies on that document. As a result, the district court
properly possessed the discretion to exclude those materials from consideration. Indeed, FED. R. CIV. P.
26(a)(2)(B) states, in part, that, “[t]he [expert] report shall contain a complete statement of all opinions to
be expressed and the basis and reasons therefor . . . [,]” while Rule 26(e)(1) requires that the expert’s
disclosure be supplemented if there are any additions or changes to the information previously disclosed.
Plaintiffs did not supplement the Duval report. Thus, given the court’s broad discretion to supervise
discovery, the court properly excluded the Duval affivdavit. Crawford-El v. Britton, 523 U.S. 574, 598

    4
      Plaintiffs’ separate agency by estoppel argument must likewise fail. The totality of plaintiffs’ argument on this point
essentially consists of the assertion that “it would simply be unjust to allow American Skandia to deny the truths of its
manifestations through the O’Donnells.” Like a claim of apparent authority, courts considering agency by estoppel focus on the
words or conduct of the principal. Info. Leasing Corp. v. Chambers, 2003 Ohio 2670, ¶ 83 (Ohio Ct. App. 2003) (“[A] finding
of agency by apparent authority or agency by estoppel must be based upon words or conduct by the principal.”). Plaintiffs’
argument fails to direct this Court to any evidence reflecting an intent on the part of ASLAC to make the O’Donnells its agent
for the purpose of giving investment advice.
No. 04-4510                Brainard, et al. v. American Skandia Life Assurance Corp.                                  Page 7

(1998) (“Rule 26 vests the trial judge with broad discretion to tailor discovery narrowly and to dictate the
sequence of discovery.”).
        As a secondary matter, the court was correct in concluding that the Duval affidavit is, itself,
conclusory. The Duval affidavit employs broad and dramatic language without substance or analysis. At
one point, for example, the Duval affidavit summarily concludes that “the O’Donnells were express agents
working on behalf and under the supervision of ASLAC and ASM and with full knowledge of American
Skandia, Inc. and its subsidiary entities, ASLAC, and ASM.” It further elaborates by stating that “ASLAC
was aware that most of the O’Donnell clientele were retirees and ignored the fact that the O’Donnells were
investing their clients in the highest category of commission investments.” Finally, the affidavit posits that
“ASLAC condoned the O’Donnell’s[sic] actions.” Given the absence of meaningful analysis or reasoning,
the district court acted well within its discretion by discarding the Duval affidavit. See Viterbo, 826 F.2d
at 422; Mid-State Fertilizer Co., 877 F.2d at 1339.
                                                              V.
        Plaintiffs next criticize the district court’s April 8, 2004, order, which in part granted ASLAC’s
motion to dismiss. Citing our decision in Greenburg v. The Life Insurance Company of Virginia, 177 F.3d
507 (6th Cir. 1999), plaintiffs specifically contend that the court improperly applied the “economic loss”
doctrine to dismiss certain of their negligence causes of action. Plaintiffs also assert that the court
improperly dismissed their breach of contract claim because ASLAC breached the implied covenant of good
faith and fair dealing. Moreover, plaintiffs argue, the court inappropriately dismissed their claim for
negligent infliction of emotional distress.
         Contrary to plaintiffs’ arguments, the district court acted within its discretion in dismissing plaintiffs’
negligence claims. Plaintiffs readily admit that they lost monies as a result of the O’Donnells’ poor
investment decisions. Based on that admission, the district court properly quoted Floor Craft Floor
Covering, Inc. v. Parma Community General Hospital Ass’n, 560 N.E.2d 206, 208 (Ohio 1990), for the
proposition that “for claims sounding in negligence, the well established rule is that a plaintiff who has
suffered only economic loss due to another’s negligence has not been injured in a manner which is legally
cognizable or compensable,” id. at 208. As ASLAC notes, plaintiffs’ arguments do not address this general
rule and, thus, fail to dispute the firmly established premise that “tort liability may not be imposed for purely
economic damages.” Id. (“In the absence of privity of contract between two disputing parties the general
rule is ‘there is no . . . duty to exercise reasonable care to avoid intangible economic loss or losses to others
that do not arise from tangible physical     harm to persons and tangible things.’”) (quoting Prosser & Keeton,
Law of Torts 657 (5th Ed. 1984)).5
         Moreover, the court acted well within its discretion in dismissing plaintiffs’ claim for negligent
infliction of emotional distress.6 Although plaintiffs contend that a decision by the Ohio Supreme Court
permits recovery of emotional damages suffered as a result of a contractual breach, the district court rejected
that identical argument. Citing Kishmarton v. William Bailey Construction, Inc., 754 N.E.2d 785 (Ohio
2001), plaintiffs argue that Ohio courts allow for the recovery of emotional damages absent a showing of
physical injury or threat of physical harm. As the district court observed, however, Kishmarton did not
involve a claim for negligent infliction of emotional distress.

    5
     Our decision in Greenburg v. The Life Insurance Company of Virginia, 177 F.3d 507 (6th Cir. 1999), is not to the contrary.
That decision, as ASLAC notes, does not examine the economic loss doctrine.
    6
      Plaintiffs failed below to argue ASLAC breached the implied covenant of good faith and fair dealing. Accordingly, we
decline to address it on appeal. See Brickner v. Voinovich, 977 F.2d 235, 238 (6th Cir. 1992) (observing that certain appellate
arguments were waived because of litigant’s failure to adequately raise or preserve them in district court).
No. 04-4510                 Brainard, et al. v. American Skandia Life Assurance Corp.                                   Page 8

        The Ohio Supreme Court’s decision in Kishmarton is indeed limited; the court’s holding is expressly
limited to allowing emotional distress damages in contract cases involving transactions between vendees
and builder-vendors. 754 N.E.2d at 788 (“We are confident that allowing emotional distress damages in
breach-of-contract actions involving vendees and builder-vendors will not open the floodgates.”). Given
that Kishmarton does not support plaintiffs’ assertions, the district court properly noted that plaintiffs’ cause
of action for negligent infliction of emotional distress must fail because they did not “allege that they have
either witnessed or experienced a dangerous accident or appreciated actual physical peril.” Accord
Walkosky v. Valley Mem’ls, 765 N.E.2d 429, 432 (Ohio Ct. App. 2001) (“[T]his court has noted that an
essential element is that the distress is caused by the plaintiff's fear of an actual physical peril.”) (citations
omitted). Accordingly, the district court properly granted a portion of ASLAC’s motion to dismiss without
permitting plaintiffs to re-plead certain of their causes of action.
                                                              VI.
         Plaintiffs next contend that the district court improperly denied their motion to add Prudential as a
“necessary party.” Without relying on supporting legal authority, plaintiffs assert that ASLAC’s apparent
affiliation to or with Prudential Financial Company exposes Prudential to civil liability. ASLAC asserts that
the court below properly denied plaintiffs’ attempts to add Prudential as a party, noting in particular that
(1) the deadline to add new parties had long since expired before plaintiffs sought to add Prudential, and
(2) the addition of Prudential to the proceedings would have been highly prejudicial.
       Federal Rule of Civil Procedure 15(a) governs amendments to pleadings. Although a party may
amend a pleading once as a matter of right if it is done before a responsive pleading is served, a party may
otherwise amend the party’s pleading only by leave of the court or by written consent of the adverse party.
FED. R. CIV. P. 15(a). Although leave shall be freely given when justice so requires, id., the ultimate
decision of whether to permit amendments rests within the court’s discretion, see Duchon v. Cajon Co., 791
F.2d 43, 48 (6th Cir. 1986).
        In this case, the district court did not abuse its discretion by denying plaintiffs request to add
Prudential as a party to these proceedings. First, plaintiffs did not seek leave to amend to add a new party.7
FED. R. CIV. P. 15(a). Second, despite the fact that the deadline for adding new parties had passed,
plaintiffs failed to demonstrate “good cause” when seeking to add Prudential at such a late date. FED. R.
CIV. P. 16 (noting “district judge . . . shall, after receiving the report from the parties under Rule 26(f) . . .
enter a scheduling order that limits the time (1) to join other parties and to amend the pleadings. . . .”); see
Leary v. Daeschner, 349 F.3d 888, 907 (6th Cir. 2003) (noting existence of “significant prejudice” to a
defendant if plaintiff were allowed to amend a complaint when discovery would have to be reopened and
a new defense would be necessary    to defeat the new claim) (citing Duggins v. Steak ‘N Shake, Inc., 195 F.3d
828, 834 (6th Cir. 1999)).8 Finally, plaintiffs failed to allege how Prudential was allegedly liable to
plaintiffs. Longo v. Glime, No. 73842, 1987 U.S. Dist. LEXIS 15548, *2 (S.D. Mich. Dec. 17, 1987) (“If
no factual allegations are made as to how additional parties are liable, allowing an amended complaint
adding those parties may be an abuse of discretion.”) (citing Nat’l Indep. Theatre Exhib. v. Charter Fin.
Group, 747 F.2d 1396, 1404 (11th Cir. 1984)). Thus, the district court neither erred nor abused its
discretion by preventing plaintiffs from amending their complaint to add Prudential as a party defendant.

    7
     The deadline for joining additional parties in this case reflected a date of January 9, 2004. Plaintiffs filed their amended
pleading on June 22, 2004, naming Prudential as a party defendant.
    8
      Moreover, there is no tenable reason for plaintiffs’ attempted addition of Prudential as a defendant. Although plaintiffs
highlight a public announcement dated December 20, 2002, which they claim was the first notice that Prudential was acquiring
ASLAC, the manner of plaintiffs’ reliance on that announcement is entirely unclear. Indeed the announcement date suggests, as
ASLAC notes, that Prudential could have been named in plaintiffs’ original complaint filed on June 30, 2003.
No. 04-4510                Brainard, et al. v. American Skandia Life Assurance Corp.                                 Page 9

                                                            VII.
        Plaintiffs finally assert that the district court erred by failing to strike the affidavit of Matthew
Solum, ASLAC’s attorney. Plaintiffs specifically argue that because Solum was not a party to the case, his
affidavit could not be a medium through which exhibits could be introduced. ASLAC contends that
Solum’s affidavit was created as a matter of convenience for the district court. In particular, it argues that
the affidavit merely collected various forms of previously authenticated evidence for the court’s benefit.
Moreover, to the extent that such a document was inappropriate, ASLAC highlights FED. R. CIV. P. 56(b),
which notes that a party moving for summary judgment need not present supporting affidavits in support
of its motion. Thus, ASLAC tacitly concludes, other than assembling properly authenticated materials, the
Solum affidavit carries no independent significance.
        Plaintiffs are correct that the district court should have ruled on their motion to strike the Solum
affidavit before granting summary judgment to ASLAC. Generally, a district court should dispose of
motions that affect the record on summary judgment before ruling on the parties’ summary judgment
motions. E.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5 (1986). Indeed, such an approach
makes sense given that a court cannot determine the scope of materials properly before it without first ruling
on any pending evidentiary or other discovery motions.
        In this case, the district court’s footnote ruling fails to precisely identify the excluded portions of the
Solum affidavit. The court granted plaintiffs’ motion “to the extent Mr. Solum’s Declaration contains any
legal argument or unsupported factual assertions” and further granted their motion “with regard to any
Exhibits which are not independently authenticated by deposition testimony.” Yet, confusingly, the court
also denied plaintiffs’ motion “with regard to any exhibits which are independently authenticated by
deposition testimony.” Such a ruling hardly clarifies the scope of materials properly considered by the court
before ruling on a summary judgment motion.
        All affidavits, regardless of the author, must be made on personal knowledge and set forth facts that
would be admissible in evidence. FED. R. CIV. P. 56(e); accord Beyah v. Coughlin, 789 F.2d 986, 989 (2d
Cir. 1986) (noting attorney affidavit was improper because it was not based on a personal knowledge of the
events giving rise to the underlying litigation). Thus, to the extent that the Solum affidavit was not based
on personal knowledge, the district court improperly considered it.
        Any error by the district court in considering the Solum affidavit was, however, harmless. Even
assuming the contents of the Solum affidavit improperly state facts not based on personal knowledge,
plaintiffs were not prejudiced by the court’s ruling. See FED. R. CIV. P. 61 (stating “[t]he court at every
stage of the proceeding must disregard any error or defect in the proceeding which does not affect the
substantial rights of the parties”). Indeed, regardless of the contents of the Solum declaration itself, a review
of the attachments    to that declaration reflects that it only contained properly authenticated discovery
materials.9 Thus, as ASLAC argues, the materials underlying the Solum affidavit were properly considered
by the district court. FED. R. CIV. P. 56(e).
        Although the better course would have been for the district court to specifically delineate the
excluded portions of the Solum affidavit, any error was harmless given that the materials attached to the
affidavit were properly authenticated and could therefore be considered by the court pursuant to Rule 56(e).
        Affirmed.

    9
      ASLAC included an “Authentication Chart for Declaration of Matthew Solum.” That chart organizes the totality of exhibits
attached to the Solum declaration and explains how each are properly authenticated for summary judgment purposes.