CHARLESTON – A Kanawha Circuit Court judge has denied a motion for summary judgment in a class action alleging fraud, misrepresentation and more on the part of The Variable Annuity Life Insurance Company, its agents and the West Virginia Consolidated Public Retirement Board.
In 2008, plaintiff Cheryl Dougherty initiated the lawsuit against VALIC, its agents and the CPRB. She claimed that she, and other teachers, were duped into selecting the VALIC annuity over their existing retirement plan by the agents.
The annuity produced less and had fewer benefits than the teachers’ traditional pension.
Among the plaintiffs’ claims: fraud, misrepresentation, joint venture, civil conspiracy and unconscionability.
The named defendants are Ramona Cerra, John Cook, Greg Garrett, Clarence Burdette, Luther Cope, all VALIC agents; Texas-based VALIC; and the state CPRB.
The CPRB, the plaintiffs claim, breached its fiduciary duty to them.
The defendants filed a motion for summary judgment in 2011; Kanawha Circuit Judge Carrie Webster denied the motion on Oct. 16.
Summary judgment is only appropriate when a case contains no genuine issue of material fact for a jury to decide, meaning that even if everything the plaintiffs alleged was true, a jury still could not return a verdict in their favor under the law.
The basis for the summary judgment motion was the defendants’ belief that the teachers’ cases were past the two-year statute of limitations for fraud claims.
They argued the teachers should have discovered evidence of their claims against VALIC based on several events that occurred between 1992 and 2006.
Lawyers for the plaintiffs argued that if that were the case, the statute of limitations would have expired long before the plaintiffs filed their case in 2008, and the teachers’ cases would have to be dismissed as a matter of law.
In her 15-page order, Webster sided with the plaintiffs. She said the facts did not require her to find that the teachers’ claims were past the statute of limitations.
“In this case, the Court must continue to be cognizant, despite the argument of Defendants’ counsel, of the fact that this case deals with teachers and school employees, not financial experts,” the judge wrote.
“Thus, whether (Dougherty’s) level of knowledge and sophistication, or lack thereof, should have reasonably caused her to know of the wrongdoing she alleges in her complaint on or before any of the triggering dates identified by the Defendants, is a material fact that is reasonably in dispute, and thus a question of fact for a jury.”
Dougherty is being represented by The Bell Law Firm in Charleston.
The firm has been investigating the VALIC scam for several years.
“Our research has concluded that VALIC engaged in a systematic scheme of hiring agents, with whom the teachers, school service personnel and professional staff were familiar with as former colleagues, prominent local citizens and/or apparently-credible retirement consultants whom they could trust,” the firm said in a statement last week.
“We stand behind Judge Webster’s most recent ruling and look forward to progressing with the remainder of the litigation.”
Until 1991, public school employees in West Virginia participated in the Teachers’ Retirement System, a defined benefit pension plan wholly managed by the state.
By the early 1990s, the TRS had unfunded liabilities of more than $3 billion.
In 1992, state lawmakers passed legislation creating the state Teachers’ Defined Contribution Plan, which the CPRB administers.
Pursuant to the statute, teachers who were employed as of July 1991 could either remain in the TRS or transfer to the DCP. Those hired after July 1991, and before the DCP closed to new participants on July 1, 2005, automatically became participants in the DCP.
The DCP offered a number of investment options, including the VALIC annuity.