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Cehula v. Janus Distributors

July 23, 2008

STEPHEN E. CEHULA. JR., ET AL., PLAINTIFFS,
v.
JANUS DISTRIBUTORS, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM OPINION

Plaintiffs Stephen Cehula Jr., Ann Marie Cehula, Julie Dean Cehula, and Ann Marie Cehula (hereinafter "Plaintiffs") filed the instant civil action against Defendant Janus Distributors, LLC (hereinafter "Defendant" or "Janus"), alleging violations of the Pennsylvania Unfair Trade Practice/Consumer Protection Law ("UTP/CPL") stemming from Plaintiffs' investments with Defendant.*fn1 Pending before the court is Defendant Janus Distributors LLC's Motion for Summary Judgment [50].

At the outset, the Court notes Plaintiffs' violation of Rule 56.1(c) of the Local Rules of this Court ("L.R. 56.1(c)").*fn2 Plaintiff did not respond to Defendant's Statement of Material Facts and failed to file a separate statement of material facts as required by Local Rule 56.1(c)(1). Instead, Plaintiffs have included a brief factual background section in the beginning of their Opposing Response Brief.*fn3 (Docket No. 54). Thus, the facts, as set forth in Defendant's Statement of Material Facts ("SMF") (Docket No. 51), are deemed to be admitted by Plaintiff for the purpose of the instant motion, in accordance with Local Rule 56.1(e). See Jankowski v. Demand, 2008 WL 190134, at *1 (W.D.Pa 2008); GNC Franchising LLC v. Kahn, 2008 WL 612749, at *1 (W.D. Pa 2008); Ferace v. Hawley, 2007 WL 2823477, at *1 (W.D. Pa 2007) (citing Benko v. Portage Area School Dist., 2006 WL 1698317 (W.D. Pa 2006); Smith v. Burrows Corp., 2005 WL 2106594 (W.D. Pa 2005); Loving v. Borough of East McKeesport, 2005 WL 3560661 (W.D. Pa 2005). After careful consideration and for the reasons that follow, the Court grants Defendant's motion for summary judgment.

FACTS*fn4

Defendant is a broker-dealer that facilitates the distribution of shares of mutual funds managed by Janus Capital Management LLC, a subsidiary of Janus Capital Group Inc. Defendant's Facts at ¶1. On or about March 26, 1992, Mr. Cehula*fn5 opened an Individual Retirement Account ("IRA") with Defendant with a total investment of $6,846.00.*fn6 Defendant's Facts at ¶15-16. On or about July 11, 1995, Mr. and Mrs. Cehula*fn7 opened a Joint Tenant Account with Right of Survivorship with Defendant investing $10,000.00.*fn8 Defendant's Facts at ¶20-21. Prior to opening this account, Plaintiffs had no problems or complaints associated with any product or service provided by Defendant. Defendant's Facts at ¶24. On or about March 23, 1999, Mrs. Cehula opened her own IRA with Defendant investing $77,906.15.*fn9 Defendant's Facts at ¶25-26. Finally, on or about December 7, 1999, Mr. Cehula opened a Uniform Gift to Minors Account, as a custodian of his daughter, Julie Dean, with an initial investment of $20,000.00.*fn10 Defendant's Facts at ¶29-30. Prior to opening their daughter's account, Plaintiffs had no problems or complaints associated with Defendant. Defendant's Facts at ¶32.

Throughout the Plaintiffs' relationship with Defendant, Mr. Cehula dealt exclusively with Defendant and was solely responsible for the selection of mutual funds which he purchased.*fn11

Defendant's Facts at ¶33-38. When selecting funds associated with an account in Mrs. Cehula's name, Mr. Cehula acted with his wife's consent. Defendant's Facts ¶33-38. Before investing in any fund with Defendant, Mr. Cehula would call a Janus phone representative to ask questions about a particular fund and receive that fund's corresponding prospectus.*fn12 Defendant's Facts at ¶51. Janus phone representatives would "select" a majority of the funds "following what [he] was asking for," and inform Mr. Cehula if the fund conformed to what he desired or if the fund purchased stocks from a company in which he expressed interest. Defendant's Facts at ¶54. If satisfied with the answers or information received from the Defendant's phone representative(s) and the information contained in a fund's prospectus, Mr. Cehula would then send Defendant a check to purchase shares in the fund.*fn13 Defendant's Facts at ¶51-52. According to Mr. Cehula, Defendant's phone representatives were always "very good" at explaining the mutual funds he was interested in purchasing.*fn14 Defendant's Facts at ¶55; S. Cehula Deposition, at 36:24-25; 37:1-5. Defendant made no misrepresentations of fact with respect to any of the mutual funds which Plaintiffs purchased. Defendant's Facts at ¶56, S. Cehula Deposition, at 94:11-25; 95:1-24. Mr. Cehula admits the same. Id.

On January 24, 2003, pursuant to a telephone directive given by Mr. Cehula, Plaintiffs liquidated all four of their accounts with Defendant.*fn15 Defendant's Facts at ¶57-58. According to Mr. Cehula, he chose to liquidate the accounts at this time because the market was "stagnant." Defendant's Facts at ¶60, S. Cehula Deposition at 152:10-20.

PROCEDURAL HISTORY

On January 30, 2007, the Plaintiffs commenced the instant action by filing a Complaint in which they alleged common law fraud and deceit, violations of the UTP/CPL, 73 Pa. C.S.A. 201-1, et. seq., and breach of contract. (Docket No. 1). On April 10, 2007, before Defendant filed a responsive pleading, Plaintiffs filed an Unopposed Motion for Leave to Amend Complaint, which the Court granted. (Docket No. 6). On May 3, 2007, Plaintiffs filed an Amended Complaint, to which they attached copies of applications allegedly entered into between Plaintiffs and Defendant. (Docket No. 8).

On June 6, 2007, Defendant filed a Motion to Dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6).*fn16 (Docket No. 12). On November 2, 2007, the Court granted Defendant's Motion to Dismiss the Amended Complaint and granted Plaintiffs leave to amend their Amended Complaint. (Docket No. 29). On December 6, 2007, Plaintiffs filed a Second Amended Complaint. (Docket No. 32). On December 24, 2007, Defendant filed its Motion to Dismiss the Plaintiffs' Second Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6).*fn17 (Docket No. 33). On February 19, 2008, the Court denied Defendant's Motion to Dismiss, concluding that the instant dispute should proceed through discovery in order to shed light on the specifics of Plaintiffs' claims. (Docket No. 39).

On March 10, 2008, Defendant filed its Answer and Affirmative Defenses to the Second Amended Complaint. (Docket No. 40). On April 25, 2008, the Court granted the parties' stipulation of dismissal of Count I (common law fraud and deceit) and Count III (breach of contract) of the Second Amended Complaint, with prejudice. (Docket No. 44). On May 13, 2008, the Court confirmed the parties' stipulation as to the waiver of the right to a jury trial. (Docket No. 47).

On May 27, 2008, Defendant filed the instant motion for summary judgment. (Docket No. 50). On June 22, 2008, Plaintiffs filed Plaintiffs' Opposition to Defendant's Motion for Summary Judgment. (Docket No. 54). On July 7, 2008 Defendant filed Defendant's Reply Memorandum ...


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