Court Opinion

ID: 4277728
Source: CourtListenerOpinion
Date Created: 2018-05-23 18:00:28.217039+00
Date Added: 2024-06-11T14:34:11.718854
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                                File Name: 18a0254n.06

                                                  No. 17-6236

                               UNITED STATES COURT OF APPEALS
                                    FOR THE SIXTH CIRCUIT

ROBERT GHIRINGHELLI, COLIN KEITH                         )                                        FILED
HOLLEY, DERROLD NASH, ANTHONY                            )                                May 23, 2018
PETITTI, JR., and HARMON G. PYE, III,                    )                            DEBORAH S. HUNT, Clerk
                                                         )
         Plaintiffs-Appellants,                          )
                                                         )      ON APPEAL FROM THE UNITED
v.                                                       )      STATES DISTRICT COURT FOR THE
                                                         )      MIDDLE DISTRICT OF TENNESSEE
THE ASSURANCE GROUP, INC.,                               )
                                                         )
         Defendant-Appellee.                             )

BEFORE:           DAUGHTREY, STRANCH, and THAPAR, Circuit Judges.

         MARTHA CRAIG DAUGHTREY, Circuit Judge. Plaintiffs Robert Ghiringhelli, Colin

Keith Holley, Derrold Nash, Anthony Petitti, Jr., and Harmon G. Pye, III,1 appeal the district

court’s grant of summary judgment to defendant The Assurance Group, Inc., on the plaintiffs’

claims for breach of contract, conversion, breach of fiduciary duty, statutory and regulatory

violations, and for declaratory judgment. Before this court, the plaintiffs contend that the district

court, exercising its diversity jurisdiction, erred in applying North Carolina’s three-year statute of

limitations to conclude that the claims were time-barred. Specifically, the plaintiffs maintain that

two decisions from the United States Supreme Court, Petrella v. Metro-Goldwyn-Mayer, Inc.,

134 S. Ct. 1962 (2014), and Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar

         1
            The amended complaint in this matter originally listed 24 plaintiffs; however, the claims of all but five
plaintiffs have been settled by other means.
No. 17-6236
Ghiringhelli, et al. v. TAG, Inc.

Corp. of California, Inc., 522 U.S. 192 (1997), mandate that we apply a “separate-accrual rule”

and conclude that the applicable limitations period for the plaintiffs’ claims started anew each

time a commission payment was due to the plaintiffs. In the alternative, the plaintiffs assert that

they had no valid contracts with The Assurance Group. We find no merit to these assertions and

affirm.

                       FACTUAL AND PROCEDURAL BACKGROUND

          The Assurance Group—referred to throughout this litigation by the acronym TAG—“is

an insurance-marketing firm that, among other things, contracts with certain insurance carriers to

market and sell health and life insurance products underwritten by those carriers.” TAG then

“sells these insurance products through both its own licensed insurance agents and through

independent insurance agents engaged by TAG as independent contractors.”

          Each of the plaintiffs in this matter admits that he signed an Independent Agent

Agreement with TAG. Pursuant to that form agreement, the plaintiffs conceded that they were

independent contractors, not employees, of TAG; that the agreement could be terminated “with

or without cause, voluntarily or involuntarily, and for any reason or no reason”; that if the

agreement were terminated prior to “vesting”—which occurred after either three or five years of

selling insurance products pursuant to the agreement—the agent would be entitled to one

month’s commission, with all subsequent commissions “considered unearned and forfeited to

[TAG]”; that “[t]he validity, interpretation, performance and enforcement of [the] Agreement

shall be governed by the laws of the state of North Carolina”; and that the agreement could be

executed by means of an “electronic signature.”

          The plaintiffs nevertheless indicated in affidavits that, shortly after beginning their

business relationships with TAG, they began to notice discrepancies between the commission

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Ghiringhelli, et al. v. TAG, Inc.

payments they received and what they believed they should have received under the terms of the

agent agreements. The plaintiffs thus requested documentation from the company justifying the

payments made to them but did not receive a satisfactory response to their inquiries. As a result,

the plaintiffs filed this lawsuit in the United States District Court for the Middle District of

Tennessee.

       In their Amended and Supplemental Complaint, 24 plaintiffs, including the five plaintiffs

still active in this litigation, raised claims of conversion, breach of fiduciary duty, breach of

contract, and statutory and regulatory violations.      They sought both declaratory relief and

damages for the nonpayment of commissions to which they felt entitled. Prior to the district

court’s ruling on motions for summary judgment and for partial summary judgment filed by the

respective parties, all but six of the plaintiffs were dismissed from the suit. Subsequently, an

additional plaintiff, Eric Tuttobene, settled his claims against TAG, leaving for our review only

that portion of the district court’s order that granted summary judgment to TAG on the claims

brought by plaintiffs Ghiringhelli, Holley, Nash, Petitti, and Pye.

       In granting summary judgment to TAG, the district court determined, based both upon an

express provision in the agent agreements and upon application of Tennessee’s borrowing

statute, Tenn. Code Ann. § 28-1-112, that North Carolina’s three-year statute of limitations on

bringing claims for conversion, breach of contract, breach of fiduciary duty, and for declaratory

judgment arising from a contract dispute should be applied in this case. See N.C. Gen. Stat. Ann.

§ 1-52(1), (4). Quoting the opinion of the North Carolina Court of Appeals in The Assurance

Grp, Inc. v. Bare, 782 S.E.2d 581 (Table), 2016 WL 608098, at *3 (N.C. Ct. App. Feb. 16,

2016), the district court agreed that “once [the plaintiffs] learned that the Assurance Group was

not paying them what they believed they were owed under the contract, the limitations period
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No. 17-6236
Ghiringhelli, et al. v. TAG, Inc.

began to run on these claims.” Because the claims arose more than three years before the

plaintiffs filed suit against TAG, the plaintiffs’ causes of action were time-barred. From that

ruling, the plaintiffs now appeal.

                                          DISCUSSION

       In their brief before this court, the plaintiffs concede that, “[e]xcept for Pye and Nash, the

contract wording compels application of North Carolina law, which provides for a three-year

statute of limitations on basic contract actions.” Nevertheless, the plaintiffs contend that they are

not bound by the Independent Agent Agreements for various reasons. Among those reasons are

the claims that plaintiff Pye’s contract did not contain a choice-of-law provision and that the

record does not contain a copy of a contract between plaintiff Nash and TAG. The plaintiffs

further insist that even if the agreements are valid, and even if the North Carolina three-year

statute of limitations on contract and conversion claims applied generally to such causes of

action, that statute of limitations would not bar all claims made by the plaintiffs here because

some of the claims accrued within the three years prior to the filing of the complaints.

Standard of Review

       In our de novo review of the arguments advanced by the plaintiffs, we employ the same

decisional framework as the district court. In short, we will uphold the district court’s grant of

summary judgment “if the movant shows that there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine

dispute of material fact exists only when, assuming the truth of the non-moving party=s evidence

and construing all inferences from that evidence in the light most favorable to the non-moving

party, there is sufficient evidence for a trier of fact to find for that party. See Ciminillo v.

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Streicher, 434 F.3d 461, 464 (6th Cir. 2006). The party opposing a motion for summary

judgment, however, “must do more than simply show that there is some metaphysical doubt as to

the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586

(1986). A non-moving party cannot withstand summary judgment by introduction of a “mere

scintilla” of evidence in its favor. Ciminillo, 434 F.3d at 464 (quoting Skousen v. Brighton High

Sch., 305 F.3d 520, 526 (6th Cir. 2002)). Indeed, a party asserting that a fact genuinely can be

disputed “must support the assertion by . . . citing to particular parts of materials in the record.”

Fed. R. Civ. P. 56(c)(1)(a). Although “[t]he court need consider only the cited materials, . . . it

may consider other materials in the record.” Fed. R. Civ. P. 56(c)(3).

Validity of the Independent Agent Agreements

         Both before the district court and in their appellate brief, the plaintiffs suggest that, for

various reasons, their contracts with TAG were not valid and were void ab initio. Consequently,

they argue that they are not bound by the language of the agreement that provides that disputes

between the parties would be resolved by reference to North Carolina law and that state’s three-

year statute-of-limitations period. The plaintiffs’ claims for damages, however, are predicated

upon alleged breaches of contractual provisions. If the contracts themselves never existed, the

bases for their claims to unpaid commissions allegedly due under those contracts also do not

exist.   To the extent that the plaintiffs argue that their contract claims are based on oral

agreements, they fail to cite any portion of the record to support their assertion. In any event, the

plaintiffs admitted that their business relationships with TAG “were formalized and governed by

contracts executed by the Plaintiffs.” The plaintiffs cannot advance a contrary position at this

point in the litigation.

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No. 17-6236
Ghiringhelli, et al. v. TAG, Inc.

Alleged Problems with the Contracts of Plaintiffs Nash and Pye

        In arguing that North Carolina’s three-year statute of limitations for contract challenges

should not apply in this case, the plaintiffs allege that “[t]here is no Derrold Nash document, and

the Harmon Pye document is incomplete, with no reference to North Carolina.” It is true that the

appellate record does not contain a copy of a contract between Nash and TAG. Furthermore, the

copy of Pye’s contract with TAG that appears in the record does not contain a reference to a

provision requiring application of North Carolina law. Even so, those omissions do nothing to

bolster the plaintiffs’ assertions.

        Although the record on appeal does not contain a copy of a contract between Nash and

TAG, plaintiffs’ counsel admitted in response to TAG’s statement of undisputed material facts

that “Mr. Nash signed a contract with TAG similar to the other Plaintiff contracts in this case.”

Because counsel for the plaintiffs also acknowledged that the business relationships “between

TAG and the Plaintiffs” were formalized by contracts, the only logical conclusion to be drawn

from those concessions is that Nash, too, executed a contract with the defendant containing the

same key provisions that all the other contracts in this case contained..

        Similarly, counsel’s assertion that plaintiff Pye’s contract did not specify that North

Carolina law would govern the resolution of disputes between the parties entitles Pye to no relief.

Although the copy of Pye’s contract included in the appellate record does not contain the same

choice-of-law provision found in the contracts signed by the other plaintiffs, only pages 1, 3, 5,

7, and 9 of the contract have been reproduced. Even so, we are not left to speculate what

contractual language was contained in the missing pages of the agreement between Pye and

TAG. As we have noted, counsel for the plaintiffs conceded that Nash’s agreement was “similar

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Ghiringhelli, et al. v. TAG, Inc.

to the other Plaintiff contracts in this case,” presumably even Pye’s—contracts that did contain

explicit language designating North Carolina law as the law to be applied in resolving disputes

under the agreements. Indeed, the wording on the pages of Pye’s agreement that are included in

the record is identical to that in the contracts of the other plaintiffs, leading to the reasonable

assumption that the remainder of Pye’s contract also was identical to the other contracts. To the

extent that it was not, Pye was responsible for offering evidence disputing the claim of TAG in

the defendant’s motion for summary judgment. See Matsushita Elec. Indus. Co., 475 U.S. at 586

(party opposing summary judgment must offer more than “some metaphysical doubt as to the

material facts”). Nash and Pye thus are not entitled to the relief they seek on these grounds.

Application of North Carolina’s Three-Year Statute of Limitations

       The plaintiffs focus the majority of their appellate argument on their contention that, even

accepting the applicability of North Carolina law, the district court erred in its determination that

their claims were time-barred. In North Carolina, actions based “[u]pon a contract, obligation or

liability arising out of a contract, express or implied,” must be brought within three years of the

time the cause of action accrued. N.C. Gen. Stat. § 1-52(1). Similarly, actions for converting or

injuring any goods or chattel must be brought within three years of the alleged conversion. N.C.

Gen. Stat. Ann. § 1-52(4); Stratton v. Royal Bank of Can., 712 S.E.2d 221, 227 (N.C. Ct. App.

2011). Because the plaintiffs’ claims for breach of fiduciary duty and for declaratory judgment

also arise from the contracts between TAG and the plaintiffs, all of the plaintiffs’ causes of

action were required to have been brought within three years from the date on which those

claims accrued. “[T]he burden is on plaintiffs to show they instituted their actions within this

prescribed period.” Matthieu v. Piedmont Nat. Gas Co., 152 S.E.2d 336, 339 (N.C. 1967).

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No. 17-6236
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        “[I]n order to determine if [the plaintiffs’] lawsuit is barred by the three year statute of

limitations, [we] must first determine when the breach occurred which caused the cause of action

to accrue.” Pearce v. N.C. State Highway Patrol Voluntary Pledge Comm., 312 S.E.2d 421, 424

(N.C. 1984). For more than a century, North Carolina courts have hewed to a consistent

determination of when a cause of action accrues. In Pearce, the North Carolina Supreme Court,

citing Matthieu, which in turn quoted Mast v. Sapp, 53 S.E. 350, 351 (N.C. 1906), reiterated:

        Where there is a breach of an agreement or the invasion of an agreement or the
        invasion of a right, the law infers some damage . . . . The losses thereafter
        resulting from the injury, at least where they flow from it proximately and in
        continuous sequence, are considered in aggravation of damages . . . . The accrual
        of the cause of action must therefore be reckoned from the time when the first
        injury was sustained. . . . When the right of the party is once violated, even in
        ever so small a degree, the injury, in the technical acceptation of that term, at once
        springs into existence and the cause of action is complete.

Pearce, 312 S.E.2d at 424 (alterations in original).

        The plaintiffs do not dispute that they first were made aware of inconsistencies or

improprieties in the calculation of their commissions more than three years before they filed suit.

They contend, however, that after their departure from the company, TAG continued to receive

“sizable and significant monthly payments from the various insurance carriers for whom [they]

had written policies during [their] association with TAG,” but for which they were never

compensated. From this circumstance, they argue that each month the company failed to account

for these missing commissions, a new cause of action accrued, bringing the case within the

statute of limitations.

        Although the plaintiffs do not cite any North Carolina authority in support of their

contention, at least two such decisions of the North Carolina Court of Appeals lend some

credence to an argument that “the continuing wrong doctrine [is] an exception to the general rule

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No. 17-6236
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that a claim accrues when the right to maintain a suit arises.” Babb v. Graham, 660 S.E.2d 626,

637 (N.C. Ct. App. 2008). “For the continuing wrong doctrine to apply, the plaintiff must show

[a] continuing violation by the defendant that is occasioned by continual unlawful acts, not by

continual ill effects from an original violation.” Marzec v. Nye, 690 S.E.2d 537, 542 (N.C. Ct.

App. 2010) (alterations in the original) (citations and internal quotation marks omitted). In

Babb, for example, the state intermediate court applied the continuing-wrong doctrine to save

claims for breach of fiduciary duty in a case in which a trustee continuously refused to make

required distributions under the terms of a trust agreement. Babb, 660 S.E.2d at 637. Similarly,

in Marzec, the same court found the continuing-wrong doctrine applicable, ruling that “a cause

of action for breach of fiduciary duty for failure to pay Marzec’s salary accrued each time Nye

failed to pay Marzec his monthly salary.” Marzec, 690 S.E.2d at 542.

       Rather than rely on state law, however, the plaintiffs strategically argue that two cases

from the United States Supreme Court—Petrella and Bay Area Laundry—mandate application

of a separate-accrual rule that would render many of the plaintiffs’ claims timely. In Petrella,

the Court sought “to resolve a conflict among the Circuits on the application of the equitable

defense of laches to copyright infringement claims brought within the three-year look-back

period prescribed by Congress.” Petrella, 134 S. Ct. at 1972 (emphasis added). Thus, in

Petrella, the Court dealt with a situation unlike the one in the present case—in fact, with a

scenario in which all claims brought by the plaintiff were brought within the applicable

limitations period. Nevertheless, the Court did include in its decision the following language that

the plaintiffs here find helpful, by analogy, to their case:

       It is widely recognized that the separate-accrual rule attends the copyright statute
       of limitations. Under that rule, when a defendant commits successive violations,
       the statute of limitations runs separately from each violation. Each time an

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No. 17-6236
Ghiringhelli, et al. v. TAG, Inc.

       infringing work is reproduced or distributed, the infringer commits a new wrong.
       Each wrong gives rise to a discrete “claim” that “accrue[s]” at the time the wrong
       occurs.
Id. at 1969 (alteration in original) (footnotes omitted).

       In Bay Area Laundry, the Court resolved a dispute over when a cause of action ripens

under the Multiemployer Pension Plan Amendments Act (MPPAA) to the Employee Retirement

Income Security Act (ERISA). Bay Area Laundry, 522 U.S. at 195. Because the MPPAA

imposed upon employers an obligation to make installment payments to pension funds, the Court

concluded that “each missed payment creates a separate cause of action with its

own . . . limitations period.” Id.

       According to the plaintiffs, the principles espoused in Petrella and Bay Area Laundry

require us to conclude that all of their claims are timely under North Carolina’s three-year statute

of limitations on contract and conversion actions, because those cases stand for the proposition

that each time TAG failed to account for or pay a commission to the plaintiffs, a new three-year

limitations period began. The plaintiffs’ position holds some appeal, regardless of whether the

causes of action listed in the complaint are based upon federal statutes or state law.

Nevertheless, even if the plaintiffs’ complaints were filed within three years of any later non-

payment of commissions due them, the district court properly concluded that the claims were

time-barred. That is because the district court, sitting in diversity, was bound to apply North

Carolina law as interpreted by the courts of that state, and because the North Carolina Court of

Appeals has decided the question now before us in an unambiguous, definitive manner.

       In Bare, one of the original plaintiffs in the lawsuit now before this court brought a

counterclaim in a North Carolina state court action against TAG, alleging, as the plaintiffs in this

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Ghiringhelli, et al. v. TAG, Inc.

matter do, that TAG “failed to properly account for funds received from the sale of . . . insurance

products and to pay . . . the commissions and other funds owed under the parties’ contracts.”

2016 WL 608098, at *1. In response to TAG’s assertion that Bare’s claims were barred by the

applicable three-year statute of limitations, Bare cited Petrella and argued that “each commission

payment under the contract is a new violation with a separate statute of limitations period, like

the separate-accrual rule applied to federal copyright claims.” Id. The North Carolina Court of

Appeals disagreed, finding that Bare’s claims were untimely. As the court explained:

        The heart of this dispute is a disagreement about what the Assurance Group owes
        [Bare] under the terms of [his] contract[ ]. Although the contract may require the
        Assurance Group to periodically make payments to [Bare], the underlying
        contract dispute remains the same. Thus, once [Bare] learned that the Assurance
        Group was not paying [him] what [he] believed [he was] owed under the contract,
        the limitations period began to run on [his] claim.
Id. at *3.2

        Sitting in diversity, our task is to predict how North Carolina’s highest court would

decide this question. In Bare, the North Carolina Court of Appeals decided the same issue on

identical facts. As such, it is the best guidance on this question. Consequently, as in Bare, the

defendants here were required to file suit within three years of the date on which they first

learned “that the Assurance Group was not paying them what they believed they were owed

under the contract.”

        Plaintiff Ghiringhelli began his contractual relationship with TAG in 2003, first noticed

discrepancies in the receipt of payments “[n]ear the beginning of [that] business relationship,”

and ended his employment with the defendant in 2008. However, because he did not file suit

        2
           The North Carolina Supreme Court denied review in The Assurance Grp v. Bare, 793 S.E.2d 225 (N.C.
2016), and the United States Supreme Court denied Bare’s petition for a writ of certiorari. Bare v. The Assurance
Grp, Inc., 137 S. Ct. 837 (2017).

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Ghiringhelli, et al. v. TAG, Inc.

until 2012, more than three years after first becoming aware that he had not received the

commissions to which he felt entitled, his claims are time-barred.

          Plaintiff Holley first noted discrepancies in the payments he received from the defendant

in 2007. Because he also did not file suit against TAG until January 2012, his claims are time-

barred.

          Plaintiff Nash ended his business relationship with the defendant on September 12, 2006,

but did not file suit against TAG until October 2010. As a result, his claims are time-barred.

          Plaintiff Petitti admitted that he first “began to observe discrepancies on receiving

payments from TAG at the end of 2006.” Because Petitti nevertheless did not file suit against

the defendant until October 2010, his claims are time-barred.

          Finally, plaintiff Pye conceded that his problems with TAG first manifested themselves

in the fall of 2005. Although Pye ended his employment with the defendant in April 2006, he

did not file suit against TAG until January 2012. His claims thus also are barred by application

of North Carolina’s three-year statute-of-limitations period.

                                          CONCLUSION

          On appeal, the plaintiffs have offered two rationales in support of their contention that

their claims against TAG were not barred by North Carolina’s three-year statute of limitations on

causes of action based on conversion or arising from a contract. First, recognizing that the

contracts between the plaintiffs and the defendant explicitly called for the application of North

Carolina law, the plaintiffs offered various challenges to the validity of those contracts

themselves, implying that if the contracts were void ab initio, the choice-of-law provision in

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them cannot stand. The plaintiffs’ challenges to the validity of the contracts are without merit,

however.

       Second, the plaintiffs argue that even if the North Carolina three-year statute-of-

limitations period does apply in this case, the separate-accrual doctrine employed in Supreme

Court cases involving copyright claims and claims under ERISA should be invoked to save the

plaintiffs’ causes of action. Despite any appeal such a position might have, the courts of North

Carolina are the final arbiters of North Carolina tort and contract law. Consequently, we are

bound to follow the decision in Bare and hold that the claims of the plaintiffs here also are barred

by North Carolina’s three-year statute-of-limitations period.

       We thus AFFIRM the judgment of the district court.

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