Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Wittrock v. First National Bank In Sioux Falls

United States District Court, D. South Dakota, Southern Division

May 11, 2018

HAROLD WITTROCK, Plaintiff,
v.
FIRST NATIONAL BANK IN SIOUX FALLS and JACKSON NATIONAL LIFE INSURANCE COMPANY, Defendants, CETERA INVESTMENT SERVICES, LLC, f/k/a Primevest Financial Services, Defendant and Third-Party Plaintiff,
v.
ROGER KAPPEL, Third-Party Defendant.

          ORDER DENYING MOTION TO DISMISS

          KAREN E. SCHREIER UNITED STATES DISTRICT JUDGE.

         Defendant First National Bank in Sioux Falls moves to dismiss the amended complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Docket 16. Plaintiff, Harold Wittrock, opposes First National's motion. Docket 19. For the reasons that follow, the court denies First National's motion to dismiss.

         BACKGROUND[1]

         The facts alleged in the amended complaint, accepted as true, are as follows:

         Harold Wittrock is a 94 year old retired farmer from Rock Rapids, Iowa. In November 2007, Wittrock purchased an annuity from Jackson National Life Insurance Company with an initial value of approximately $654, 000. Wittrock made a $5, 000 withdrawal from the annuity at the beginning of each 2008 and 2009.

         As part of its business practice, First National advertises to the public that it offers insurance, investment, and securities products and services. In order to offer these products and services, First National uses Cetera Investment Services to serve as a broker and dealer. First National uses its own employees, however, to work as investment advisors, investment representatives, and servicers of insurance and securities products, including annuities. Because these First National employees also work as investment representatives for Cetera, they are dual agents for both companies.

         Roger Kappel, Wittrock's son-in-law, is a customer of First National and lives in Dell Rapids, South Dakota. In June 2009, Kappel approached Margarita Bent and Jon Frick at First National's Dell Rapids branch about opening an investment account at First National for Wittrock's Jackson National annuity. On behalf of First National, Bent prepared a new account application and gave it to Kappel so Wittrock could sign the application. Kappel returned the application to First National but Wittrock's signature on the application was forged. Kappel also had Bent complete a request to change the servicing producer and representative for Wittrock's Jackson National annuity. Wittrock's signature on this form was also forged. Bent also served as the investment advisor, investment representative, and servicing producer for Wittrock's Jackson National annuity.

         In order to hide the changes made to Wittrock's new First National account, Kappel changed the address on Wittrock's account so from that point forward all financial statements were sent to Kappel's address in Dell Rapids, South Dakota, and not to Wittrock's address in Rock Rapids, Iowa. No employee or representative from First National ever met with or contacted Wittrock to determine whether he actually desired to open an investment account or have First National represent him in his dealings with the Jackson National annuity. Further, no one from First National ever requested any documentation from Kappel, such as a power of attorney or other authorization from Wittrock, to demonstrate that Kappel had authority to open an investment account or to handle Wittrock's Jackson National annuity.

         Beginning on June 9, 2009, Kappel began withdrawing funds from Wittrock's Jackson National annuity. Between June 9, 2009, and December 20, 2016, Kappel made 43 withdrawals from Wittrock's annuity in amounts ranging from $4, 800 to $41, 000. Each of these withdrawals was accomplished by Kappel forging Wittrock's signature on variable annuity partial withdrawal requests that First National processed. Once the partial annuity withdrawals were processed, the funds were dispersed in the form of checks that contained Wittrock's name. The checks were sent to Kappel's address in Dell Rapids, South Dakota, and Kappel would forge Wittrock's signature on the endorsement lines of these checks before depositing the checks into one of Kappel's personal accounts at First National. Through the use of these forged endorsements, Kappel was able to withdraw more than $639, 000 from Wittrock's Jackson National annuity.

         First National's employees were aware, through alerts issued by Jackson National, of the excess withdrawals made from Wittrock's annuity. First National's employees were also aware of the withdrawals and benefit changes made to Wittrock's annuity during the time when Kappel was forging the requests for withdrawal and was depositing the proceeds of the withdrawals from Wittrock's annuity into Kappel's personal account at First National. Yet between June 2009 and December 2016, no agent or employee from First National ever contacted Wittrock to determine whether he wanted to make the withdrawals from his Jackson National annuity or to determine whether the signatures on the withdrawal requests were actually those of Wittrock.

         When Wittrock would inquire to Kappel about the status of his Jackson National annuity, Kappel would provide Wittrock with doctored statements showing funds in the annuity that were above the amounts that actually existed in the annuity. In February 2017, Wittrock began to suspect that there may be a problem with his Jackson National annuity so he contacted another representative to look into the matter. On March 6, 2017, Wittrock discovered that he had only about $5, 000 remaining in his Jackson National annuity and was told that the rest of the money was gone. Wittrock never received the actual statements showing the status of his annuity because First National sent the statement to Kappel's address.

         After discovering that his Jackson National annuity had been drained, Wittrock changed his account representative. Wittrock also contacted First National about the loss. First National replaced approximately $310, 000 of the funds that had been paid to Kappel over Wittrock's forged endorsements. But for the unauthorized withdrawals from Wittrock's annuity, his annuity with Jackson National would have grown to have a value exceeding $800, 000.

         LEGAL STANDARD

         A court may dismiss a complaint “for failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “The ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.