United States District Court, E.D. North Carolina, Western Division
DR. JAMES H. JACKSON and JAMES H. JACKSON IRREVOCABLE TRUST, Plaintiffs,
MINNESOTA LIFE INSURANCE COMPANY; FIRST INSURANCE FUNDING CORPORATION; AND BARRINGTON BANK & TRUST COMPANY, N.A., Defendants.
C. DEVER III., Chief United States District Judge
February 8, 2016, Dr. James H. Jackson ("Dr.
Jackson") and the James H. Jackson Irrevocable Trust
("the Trust") (collectively,
"plaintiffs") sued Minnesota Life Insurance Company
("Minnesota Life"), First Insurance Funding
Corporation ("First Insurance Funding"), and
Barrington Bank & Trust Company, N.A.
"defendants") in Wake County Superior Court [D.E.
1-1]. Plaintiffs assert six claims for relief arising under
North Carolina law: fraud in the inducement, negligent
misrepresentation, breach of good faith and fair dealing,
unfair and deceptive trade practices, and two claims for
breach of contract. On March 14, 2016, Minnesota Life timely
removed the action to this court [D.E. 1 ]. On April 20,
2016, Minnesota Life answered [D.E. 17], moved for judgment
on the pleadings under Rule 12(c) of the Federal Rules of
Civil Procedure [D.E. 20], and filed a supporting memorandum
[D.E. 21]. Also on April 20, 2016, First Insurance Funding
and Barrington answered [D.E. 18]. On May 10, 2016, First
Insurance Funding and Barrington moved for judgment on the
pleadings under Rule 12(c) [D.E. 25] and filed a supporting
memorandum [D.E. 26]. On May 11, 2016, plaintiffs responded
in opposition to Minnesota Life's motion for judgment on
the pleadings [D.E. 27]. On May 20, 2016, plaintiffs
responded in opposition to First Insurance Funding and
Barrington's motion for judgment on the pleadings [D.E.
29]. On May 25, 2016, Minnesota Life replied to
plaintiffs' response in opposition [D.E. 30]. On June 3,
2016, First Insurance Funding and Barrington replied to
plaintiffs' response in opposition [D.E. 31 ]. As
explained below, the court grants defendants' motions for
judgment on the pleadings.
around 2009, Dr. Jackson-then 68 years old-received marketing
materials from Minnesota Life regarding one of its products
called the Eclipse Indexed Life Policy ("the
Policy"). See Compl. [D.E. 1-1] ¶¶
15-17. Plaintiffs' complaint does not state whether Dr.
Jackson solicited the materials. Under the Policy, the
insured's annual premiums were invested in specified
market funds and accumulated value based on the
investments' performance. Id. ¶ 18. The
marketing materials also listed lenders who offered a service
known as "premium financing, " including First
Insurance Funding. Id. ¶¶ 19-20. Premium
financing lenders advance the annual premiums due under a
life-insurance policy. Id. ¶ 21. The insured or
beneficiary pays the interest on those advances until the
policy's investment returns can sustain the interest
payments. Id. The policy's cash, or surrender,
value serves as collateral for the loan's repayment.
Id. Upon the insured's death, the policy's
proceeds repay the loan's principal, and the beneficiary
receives any surplus. Id.
August 2009, First Insurance Funding and Minnesota Life
provided Dr. Jackson with a "Plan Overview."
Id. ¶ 22. The Plan Overview included
illustrations (the "August 2009 Illustration")
depicting the Policy's performance assuming $5, 000,
000.00 in coverage for Dr. Jackson, beginning at age 69, and
$513, 261.00 in annual premiums. Id.; Compl. Ex. A.
First Insurance Funding or its agent provided illustrations
for the premium-financing loan based on $513, 261.00 in
annual premiums and a 5.5% interest rate. Compl.¶22;
Compl.Ex. A. The August 2009 Illustration projected the
Policy's accumulated value and interest due under the
premium-financing loan through the Policy's fourth year.
Compl. ¶¶ 24-26.
August 2009 Illustration also depicted index credits, which
are how the Policy accumulates value. See Id. ¶
27. When a policyholder make a premium payment, the insurer
allocates it to an "index segment." See [D.E. 21]
3-4. Each index segment tracks an investment-related market
index and has a one-year life span. Id. At the end
of that year, the insurer calculates an index credit based on
the segment's value multiplied by both the participation
rate and the segment's growth rate. Id. The
product of that calculation-the index credit-is then credited
back to the Policy's total accumulated value.
Id. In February 2010, Dr. Jackson and the Trust
applied for the Policy and sought $5, 000, 000.00 in coverage
for Dr. Jackson based on an age of 69 with the Trust as the
beneficiary. Id. ¶ 30. At the same time, Dr.
Jackson applied for a premium-financing loan with First
Insurance Funding to finance the Policy's premiums.
Id. ¶ 31. Based on the Plan Overview that
Minnesota Life and First Insurance Funding provided, Dr.
Jackson asked Minnesota Life to add a Surrender Value
Enhancement Agreement ("SVEA") to the Policy.
Id. ¶ 32. The SVEA provided that the
Policy's surrender value would not fall below the total
amount in premiums paid on the Policy in the first three
years. Id. ¶ 33.
March 2010, Minnesota Life approved Dr. Jackson's
application and offered to issue him $5, 000, 000.00 in
coverage with annual premiums of $513, 260.54. Id.
¶ 35. Minnesota Life also confirmed that it would issue
the Policy with an effective date of February, 9, 2010, so
that Dr. Jackson's age under the Policy would be 69.
Id. On March 23, 2010-before the Policy was
issued-Minnesota Life provided Dr. Jackson and the Trust with
a document titled "Life Insurance Policy
Illustration" (the "Minnesota Life March 2010
Illustration"), which contained numerous illustrations.
Id.¶38; Compl.Ex. B. Each illustration in the
Minnesota Life March 2010 Illustration showed that an index
credit had been applied to the Policy's accumulated value
in the Policy's first year. Compl. ¶ 43. The
Minnesota Life March 2010 Illustration also projected the
Policy's accumulated cash value under various scenarios,
ranging from "worst case scenario" to a modest rate
of return. Id. ¶¶ 44-47.
March 24, 2010, Dr. Jackson and the Trust signed the
Minnesota Life March 2010 Illustration and returned it to
Minnesota Life. See id ¶ 48; Compl. Ex. B.
After receiving the signed Illustration, Minnesota Life
issued the Policy for $5, 000, 000 in coverage for Dr.
Jackson effective February 9, 2010, at age 69. Compl. ¶
49. The Policy included the SVEA. Id. Also in March
2010, First Insurance Funding or its agent provided Dr.
Jackson with a separate set of illustrations (the "First
Insurance Funding March 2010 Illustration").
Id. ¶ 50; Compl. Ex. C.The First Insurance Funding
March 2010 Illustration indicated that, based on a 5.6%
interest rate on the premium-financing loan and a 9.26% rate
of return on the Policy, Dr. Jackson or the Trust would need
to post an additional $100, 159 in collateral in the
Policy's fourth year. Compl. Ex. C. Based on the listed
assumptions, the maximum amount of additional collateral
required in any one year would be $ 165, 673. Id.
The First Insurance Funding March 2010 Illustration also
showed that an index credit had been applied to the
Policy's accumulated value in its first year.
Id. ¶ 51.
about March 19, 2010, the Trust executed a promissory note
(the "Loan" or "Note"), Dr. Jackson
executed a personal guaranty, and the Trust executed a
document assigning the Policy to First Insurance Funding as
collateral to secure the Loan. Id. ¶ 53. The
Loan listed defendant Barrington as the "Lender."
Id. ¶ 54. First Insurance Funding took all
actions as Barrington's agent. Id¶55.
Jackson and the Trust believed the August 2009 Illustration,
the Minnesota Life March 2010 Illustration, and the First
Insurance Funding March 2010 Illustration accurately and
completely reflected the contract terms and anticipated
performance for the Policy and Loan. Id. ¶ 5 8.
Over the Policy's first three years, its underlying
investments performed significantly better than the
illustrations projected. Id. ¶¶ 73, 75-87.
Nonetheless, the Policy's actual accumulated value was
significantly less than projected because the
illustrations' projections were based on an index credit
being applied in the first year, when in reality no index
credit was applied in the first year. Id.
¶¶73. 78. Thus, even though the index segment
created during the first year earned a return of
8.48%-outperforming the assumed returns in the Minnesota Life
March 2010 Illustrations-because an index credit based upon
that segment was not applied in year one, the Policy's
actual accumulated value fell significantly below that shown
in the Minnesota Life March 2010 Illustrations, where an
index credit had been applied. Id. ¶¶
77-78. Because the index segment performed so well, the
underlying index segment's performance did not cause the
deviation between the Policy's actual accumulated value
after the first year and the accumulated value shown in the
illustrations. Id. ¶ 80. Rather, the deviation
resulted from the allegedly false and misleading nature of
the illustrations: specifically, the fact that an index
credit had not been applied during the Policy's first
year. Id. Because the Policy's actual
accumulated value during the first year fell below the value
shown in the some of the illustrations, the actual
accumulated value during the second and third years also fell
below the value shown in the illustrations due to the
compounding nature of the index credits. See id ¶¶
73-87. The Annual Policy Reviews that Minnesota Life issued
at the end of each policy year to Dr. Jackson and the Trust
reflected the actual index credits and accumulated value
during each given year. M. ¶ 74; Compl. Ex. D.
allege that the SVEA hid the effect of these deviations
between the Policy's projected value per the
illustrations and the Policy's actual value. See Compl.
¶¶ 88-96. During the Policy's first three
years, the SVEA ensured that the Policy's surrender value
equaled the total amount in premium payments made.
Id. ¶ 88. The SVEA thus fully secured the Loan
during the Policy's first three years, meaning that First
Insurance Funding did not require any additional interest
payments or collateral above that shown in the illustrations.
Id. ¶ 89. This fact allegedly prevented Dr.
Jackson or the Trust from becoming aware of the discrepancy
between the illustrations and the policy, or the effect of
the deviation between the Policy's actual accumulated
value and that shown in the illustrations. Id.
¶ 90 After the Policy's third year-when the SVEA
lapsed-First Insurance Funding learned of the Policy's
accumulated cash value and demanded that Dr. Jackson or the
Trust pay the required $115, 381 in interest plus
approximately $375, 000 in additional collateral for the
Loan. Id. ¶ 91. This amount exceeded the First
Insurance Funding March 2010 Illustration's projections
that $100, 159 would be due as additional collateral in the
Policy's fourth year and that $165, 673 would be the
maximum additional collateral required in any one year. See
Id. ¶¶ 92, 94; Compl. Ex. C.
First Insurance Funding's demanded additional collateral,
Dr. Jackson and the Trust contacted both Minnesota Life and
First Insurance Funding regarding the disparity between the
illustrations' projected accumulated value and the actual
accumulated value. Compl. ¶ 97. The parties agreed,
without a written agreement, that Dr. Jackson and the Trust
need not post additional collateral until February 22, 2013,
defendants would not cancel the Policy until February 22,
2013, and Minnesota Life would extend the SVEA period until
February 22, 2013. Id. ¶ 98. At that time, the
parties planned to review the newest index segment's
performance and the index credit due, which they would know
on February 15, 2013. Id. First Insurance Funding
would thereafter adjust the additional collateral it
required. Id. On February 12, 2013, plaintiffs
learned that notwithstanding the alleged agreement, First
Insurance Funding had directed Minnesota Life to terminate
the Policy. Id.¶99.
February 8, 2016, Dr. Jackson and the Trust sued Minnesota
Life, First Insurance Funding, and Barrington in Wake County
Superior Court for fraud in the inducement, negligent
misrepresentation, breach of good faith and fair dealing,
unfair and deceptive trade practices, and two claims for
breach of contract. See[D.E. 1-1]. After Minnesota Life
removed the action to this court, defendants filed their
answers and moved for judgment on the pleadings under Rule
12(c) of the Federal Rules of Civil Procedure.
court has subject-matter jurisdiction based on diversity
jurisdiction. Thus, the court applies state substantive
principles and federal procedural rules. See Erie R.R. v.
Tompkins. 304 U.S. 64, 78-80 (1938); Dixon v.
Edwards. 290 F.3d 699, 710 (4th Cir. 2002). Federal Rule
of Civil Procedure 12(c) permits a party to move for judgment
on the pleadings "[a]fter the pleadings are closed-but
early enough not to delay trial." A court ruling on a
Rule 12(c) motion applies the same standard as when deciding
a Rule 12(b)(6) motion to dismiss. See Mayfield v.
Nat'l Ass'n for Stock Car Auto Racing. Inc.. 674
F.3d 369, 375 (4th Cir. 2012).
motion to dismiss under Rule 12(b)(6) tests the legal and
factual sufficiency of the complaint. See Fed.R.Civ.P.
12(b)(6); Ashcroft v.Iqbal. 556 U.S. 662, 678
(2009); Bell Atl. Corp. v. Twomblv. 550 U.S. 544,
570 (2007); Coleman v. Md. Court of Appeals. 626
F.3d 187, 190 (4th Cir. 2010), affd. 132 S.Ct. 1327
(2012); Giarratano v. Johnson. 521 F.3d 298, 302
(4th Cir. 2008); accord Erickson v. Pardus. 551 U.S.
89, 93-94 (2007) (per curiam). The court "accepts all
well-pled facts as true and construes these facts in the
light most favorable to the plaintiff in weighing the legal
sufficiency of the complaint." Nemet Chevrolet. Ltd.
v. Consumeraffairs.com. Inc.. 591 F.3d 250, 255 (4th
Cir. 2009); see Burbach Broad. Co. of Del-
v. F.lkins Kadio Corp.. 278 F.3d 401,
405-06 (4th Cir. 2002). The court need not, however, accept
as true a complaint's "legal conclusions, elements
of a cause of action, and bare assertions devoid of further
factual enhancement." Nemet Chevrolet Ltd.. 591
F.3d at 255. Moreover, this court can consider documents
relied on by the parties in their briefing if they are
integral to and explicitly relied on in the complaint, and
their authenticity is undisputed. See Occupy Columbia v.
Halev. 738 F.3d 107, 117 n.7 (4th Cir. 2013).
contend that the relevant statutes of limitation bar
plaintiffs' claims for fraud in the inducement, negligent
misrepresentation, unfair and deceptive trade practices, and
one of their claims for breach of contract. Under the Rule
12(b)(6) standard applicable to Rule 12(c) motions, a Rule
12(c) motion "generally cannot reach the merits of an
affirmative defense, such as the defense that the plaintiffs
claim is time-barred." Goodman v. Praxair.
Inc.. 494 F.3d 458, 464 (4th Cir.2007) (en banc).
Nonetheless, a district court may reach the merits of an
affirmative defense "if all facts necessary to the
affirmative defense clearly appear on the face of the
complaint." Id. (emphasis omitted). "A
complaint showing that the statute of limitations has run on
the claim is the most common situation in which the
affirmative defense appears on the face of the pleading,
rendering dismissal appropriate." Brooks v. City of
Winston-Salem. N.C. . 85 F.3d 178, 181 (4th Cir. 1996)
(quotation omitted). Failure to comply with the statute of
limitations is therefore "a recognized basis for
dismissal on the pleadings" under Rule 12(c). Evans
v. Trinity Indus.. Inc.. 137 F.Supp.3d 877, 881 (E.D.
Va. 2015); see West v. ITT Cont'l Baking Co..
683 F.2d 845, 846 (4th Cir. 1982).
statute of limitations bars plaintiffs' claim for fraud
in the inducement. Plaintiffs allege that defendants
presented plaintiffs with the illustrations knowing they were
false and intending to deceive plaintiffs into believing they
accurately reflected the Policy's terms, the manner in
which index credits would be applied, and the future
additional collateral payments required. Compl. ¶¶
108-14. Although plaintiffs' complaint makes a fleeting
reference to information regarding the additional collateral
payments, their complaint primarily alleges that each of the
illustrations contained one "critical omission":
showing that an index credit had been applied to the Policy
in the first year. Id. ¶¶ 61-72. The court
therefore analyzes plaintiffs' claims based on the
allegation that the illustrations misrepresented that an
index credit would be applied in the Policy's first year.
three-year statute of limitations governs North Carolina
fraud claims. N.C. Gen. Stat. § 1 -52(9); Usserv v.
Branch Ranking & Trust Co.. 368 N.C. 325,
333 n.5, 777 S.E.2d 272, 277 n.5 (2015). The limitations
period for civil actions starts running whenever the
plaintiff's cause of action accrues. N.C. Gen. Stat.
§ 1-15; McCutchen v. McCutchen. 360 N.C. 280,
283, 624 S.E.2d 620, 623 (2006). A cause of action for fraud
accrues on the date the plaintiff actually discovered the
alleged fraud, or reasonably should have discovered it in the
exercise of due diligence. Vail v. Vail. 233 N.C.
109, 116, 63 S.E.2d 202, 207 (1951); Carlisle v.
Keith. 169 N.C.App. 674, 683, 614 S.E.2d 542, 548
(2005). A plaintiff discovers fraud when he becomes
"aware of facts and circumstances which, in the exercise
of due care, would enable him or her to learn of or discover
the fraud." Jennings v. Tindsey. 69 N.C.App.
710, 715, 318 S.E.2d 318, 321 (19841: see Newton v.
Barth. 788 S.E.2d 653, 662 ( N.C. Ct. App. 2016):
Spoor v. Barth. 781 S.E.2d 627, 633 ( N.C. Ct.
App.), review denied, cert, denied. 787
S.E.2d 38 ( N.C. 2016V and review denied, cert,
denied. 789 S.E.2d 4 ( N.C. 2016). When fraud should
have been discovered in the exercise of reasonable diligence
is ordinarily a question for the jury. Forbis v.
Neal. 361 N.C. 519. 524. 649 S.E.2d 382. 386 (2007V But
the absence of reasonable diligence is established as a
matter of law "where the evidence is clear and shows
without conflict that the claimant had both the capacity and
opportunity to discover the fraud but failed to do so."
State Farm Fire & Cas. Co. v. Darsie. 161 N.C.
App.542, 548, 589S.E.2d391, 396-7 (2003). Defendants
contend that plaintiffs had both the capacity and opportunity
to discover the fraud at three alternative dates, all of
which are more than three years before plaintiffs filed suit.
defendants argue that plaintiffs' receipt of the Policy
in late March 2010 triggered the three-year statute of
limitations because the Policy contained the terms by which
index credits would be applied, which plaintiffs allege
defendants misrepresented in the illustrations. In support,
defendants note that the policyholder's net premium
payments are held in an interim account. [D.E. 21] 3. The
amount in the interim account is then transferred to the
indexed account on the transfer date, which is "[t]he
3rd Friday of each month." Id.; see Policy
[D.E. 17-1] 6. Each transfer from the interim account to
the indexed account on the transfer date created an index
segment. [D.E. 21] 4; Policy [D.E. 17-1] 9. Each index
segment had a life span of one year, which began on the
transfer date. [D.E. 21] 4; Policy [D.E. 17-1] 5. After one
year, an index credit would be calculated based on the growth
in the segment's underlying index and then credited to
the Policy's accumulated value. [D.E. 21] 4; Policy [D.E.
17-1] 18. Taken together, the Policy shows that index credits
would be applied one year from each transfer date, which is
the 3rd Friday of the month following the policyholder's
Policy put plaintiffs on notice that an index credit would
not be applied during the Policy's first year. Per
plaintiffs' request, the Policy's effective date was
February 9, 2010, so that Dr. Jackson's age at issuance
would be 69. Thus, the Policy's first year ran from
February 9, 2010, to February 9, 2011, but Minnesota Life did
not actually issue the Policy until sometime after March 23,
2010. See Compl. ¶¶ 38, 48-49. The complaint does
not state the date when Minnesota Life received the first
premium payment, but Minnesota Life must have received
plaintiffs' first premium some time after the Policy was
issued in late March 2010. Based on the Policy's
explanation of how index credits would be applied, plaintiffs
were able to see that the premium would be transferred from
the interim account to the indexed account on the third
Friday of the month following receipt of the premium, or
April 16, 2010. [D.E. 17-1] 6. The Policy also explained that
an index credit would not be applied until roughly one year
from the transfer date, when the index segment created from
the transfer completed its one-year term. Id. at 18.
Because this event would not occur until April 15, 2011, the
Policy made clear that no index credit would be applied
during the Policy's nominal first year, which plaintiffs
knew would end on February 9, 2011, one year from its
in the exercise of due diligence, plaintiffs should have
discovered the alleged fraud relating to index-credit
application when they received the Policy in late March 2010.
At that time they were "aware of facts and circumstances
which, in the exercise of due care, would enable [them] to
learn of or discover the fraud." Jennings. 69
N.C.App. at 715, 318 S.E.2d at 321; see Newton. 788
S.E.2d at 662; Spoor. 781 S.E.2d at 633. Even if
plaintiffs failed to grasp how and when index credits would
be applied, "one who signs a paper-writing is under a
duty to ascertain its contents, and in the absence of a
showing that he was willingly misled or misinformed by the
defendant as to its contents ... he is held to have signed
with full knowledge and assent as to what is therein
contained." Williams v. Williams. 220 N.C. 806,
809-10, 18 S.E.2d 364, 366 (1942). Thus, when plaintiffs
received the Policy, they had both the capacity and
opportunity to discover the fraud, and the court can as a
matter of law determine whether plaintiffs exercised due
diligence. See Shepard. 172 N.C.App. at 480.617
S.E.2d at 65: Faircloth. 87 F.App'x 314 at 319: see
also Gavlor. 190 N.C.App. at 451, 660 S.E.2d at 106;
Darsie. 161 N.C.App. at 548, 589 S.E.2d at 397;
Piedmont Inst, of Pain Mgmt.157 N.C.App. at 585, 581
S.E.2d at 73-74; Spears.145 N.C.App. at 708-09, 551
S.E.2d at 485. On this record, plaintiffs did not exercise
due diligence. Because plaintiffs did not file their
complaint until February 8, 2016-nearly six years after they
should have discovered the fraud-their fraud claim is
opposition, plaintiffs discuss Hunter v. Guardian Life
Insurance Company of America. 162 N.C.App. 477, 593
S.E.2d 595 (2004). In Hunter, plaintiffs alleged
that defendants sold them a life-insurance policy using
illustrations showing that the policy would become
self-sustaining after plaintiffs paid annual premiums for
eleven years if dividends remained at the levels shown in the
illustrations. 162 N.C.App. at 480, 593 S.E.2d at 598.
Defendants allegedly knew when they sold plaintiffs the
policy that the dividend projections were in fact
unsustainable and would decrease over time. Id.
Defendants asserted that the statutes of limitation barred
plaintiffs' claims for fraud and negligent
misrepresentation because plaintiffs should have discovered
the misrepresentations upon receiving the policy based on the
information about payments contained in the policy.
Id. at 48 5.593 S.E.2d at 601. The North Carolina
Court or Appeals rejected this argument because "[i]n
their complaint, plaintiffs allege[d] they only recently
discovered the acts of defendants and could not have
discovered, with reasonable diligence, such acts until
then." Id. at 486, 593 S.E.2d at 601.
is distinguishable. First, North Carolina state courts do not
employ the plausibility standard set forth in
Twombly. instead applying a more lenient
notice-pleading standard. See, e.g.. Fussell v.
N.C. Farm Bureau Mut. Ins. Co.. 364 N.C. 222, 227, 695
S.E.2d 437, 441 (2010). The barebones claim in
Hunter that plaintiffs could not have discovered the
misrepresentations upon receiving the policy sufficed in
North Carolina state court, but does not suffice in federal
court. Second, unlike the plaintiffs in Hunter,
plaintiffs here do not allege that they could not have
discovered the misrepresentations upon receiving the Policy.
Instead, they allege that they did not discover the
effects of the fraud upon receiving the Policy.
[D.E. 27] 11. North Carolina law, however, does not focus on
discovering the fraud's effects. Rather, it focuses on
discovering the facts constituting the fraud. See N.C. Gen.
Stat. § 1-52(9); see also Forbis. 361 N.C. at
524, 649 S.E.2d at 386; Jenninps. 69 N.C.App. at 715, 318
S.E.2d at 321. Here that fact was that an index credit would
not necessarily be applied during the Policy's first
year, which the Policy made clear given its explanation of
when index credits would be applied and plaintiffs'
knowledge of the Policy's backdated effective date.
Finally, in Hunter, plaintiffs alleged that the
illustrations were based on dividend projections defendants
knew were unsustainable, and defendants responded that
plaintiffs should have discovered the alleged
misrepresentations based upon provisions in the policy that
apparently dealt with the number of premium payments
required. Here, in contrast, plaintiffs allege that the
illustrations misrepresented when index credits would be
applied, but the relevant Policy provisions explained that
concept directly. The Policy explicitly explained that the
timing of index credits turned not on the Policy's
effective date, but on when plaintiffs paid the premium.
Thus, Hunter does not help plaintiffs.
defendants argue that if plaintiffs did not discover the
alleged fraud upon receiving the Policy in late March 2010,
they reasonably should have discovered it by February 9,
2011. On that date plaintiffs received the Annual Policy
Review ("APR") for the Policy's first year. The
APRs "reflected the actual index credits and accumulated
value of the Policy in each year." Compl. ¶ 74.
Plaintiffs received the APRs at the end of each Policy year,
including the Policy's first year. See Id.
¶¶ 75, 77. The APR issued at the end of the
Policy's first year disclosed that no index credit was
applied during that year. Compl. Ex. D at 46-47. That
APR's first page lists the accumulated value as of
February 9, 2011, along with an itemized list of all credits
and charges to the accumulated value, and no index credit is
listed. Id. at 46. The APR's second page
explicitly shows "$0.00 " under "Index
Credit." Id. at 47.
plaintiffs received the first APR in February 2011, at that
time they were "aware of facts and circumstances which,
in the exercise of due care, would enable [them] to learn of
or discover the fraud." Tenninps, 69 N.C.App. at 715,
318 S.E.2d at 321. Plaintiffs had both the capacity and
opportunity to review this APR and notice that an index
credit had not been applied during the Policy's first
year. Thus, plaintiffs reasonably should have ...