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COA affirms judgment for defense in annuity fraud suit

September 14, 2017

A woman who claimed sellers of annuities she purchased over the years committed fraud in misrepresenting fees associated with surrendering the investments lost her appeal of judgment in favor of the defense.

The Indiana Court of Appeals affirmed summary judgment for the finance company granted in Monroe Circuit Court. Evelyn Messmer, who was 88 at the time the suit was filed, claimed that KDK Financial Services and its agents, including Fred Kern, failed to properly inform her of fees associated with surrendering multiple annuities she had purchased from the company dating to 2002.

In one instance, she complained in writing to the company about surrender charges in excess of $15,000 when annuities with a remaining value of just over $33,000 were transferred to another company. She claimed she wasn’t informed of what the charge was, and suggested a 10 percent surrender fee would have been fair.

Messmer’s fraud claim was barred by the statute of limitations.

"Messmer now attempts to circumvent the statute of limitations on the Allianz policies by contending that its application was tolled by the continuous representation theory,” Judge Patricia Riley wrote. “Originally developed in the realm of legal malpractice and negligence, the continuous representation doctrine provides that the applicable statute of limitations does not commence until the end of an attorney’s representation of a client in the same matter in which the alleged malpractice occurred.”

The trial court found this doctrine inapplicable in this case, and the COA agreed.

“Messmer fails to cite any case law persuading us to expand the continuous representation doctrine not only to brokers of financial services and fixed annuities, but also, most importantly, to the realm of fraud allegations. In the more than fifty years of the doctrine’s existence, no single state has extended the doctrine as Messmer advocates. The rationale of the application of the continuous representation doctrine in negligence claims — where a client allows an attorney or accountant to correct a good faith mistake without losing the client’s confidence — is simply incompatible with fraud allegations,” the panel held.  

The case is Evelyn Messmer v. KDK Financial Services, Inc., et al., 53A01-1701-PL-139.

 

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