961 F.3d 850
6th Cir.2020Background
- Stephen Cook, a Triad securities representative, sold Ohio National variable annuities; Triad (broker-dealer) had a Selling Agreement with Ohio National.
- Section 9 of the Selling Agreement required Ohio National to pay commissions to Triad (or its affiliated agency) and stated that compensation to Triad’s representatives would be governed by a separate agreement between Triad and its representatives.
- After Ohio National terminated the Selling Agreement, it ceased paying "trail commissions" on previously sold annuities; Cook sued Ohio National individually and on behalf of a class.
- Cook was not a signatory to the Selling Agreement and sought to sue Ohio National as an intended third-party beneficiary to enforce Section 9; he also asserted unjust enrichment.
- The district court dismissed for failure to state a claim, holding Cook was only an incidental beneficiary and that unjust enrichment was barred by the express contract; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a non‑signatory representative can enforce the Selling Agreement as an intended third‑party beneficiary | Cook: Selling Agreement and Schedule reference representatives and commission options, so reps were intended beneficiaries who can enforce Section 9 | Ohio Natl: Agreement pays commissions to Triad only; payment to reps is governed by separate Triad–rep contracts; reps are incidental beneficiaries | Cook is not an intended third‑party beneficiary; no standing to enforce the Selling Agreement |
| Whether Cook may recover under unjust enrichment | Cook: Ohio Natl received and retained commissions that in equity belong to reps | Ohio Natl: An express contract (Section 9) governs commission payments; unjust enrichment is precluded where an express contract covers the subject | Unjust enrichment claim barred because the express Selling Agreement covers commission payments |
Key Cases Cited
- TRINOVA Corp. v. Pilkington Bros., P.L.C., 638 N.E.2d 572 (Ohio 1994) (only intended third‑party beneficiaries may enforce contracts)
- Hill v. Sonitrol of SW Ohio, Inc., 521 N.E.2d 780 (Ohio 1988) (adopts Restatement §302 test for intended vs. incidental beneficiaries)
- Huff v. FirstEnergy Corp., 957 N.E.2d 3 (Ohio 2011) (look first to contract language to determine intent to benefit third party)
- Norfolk & W. Ry. Co. v. United States, 641 F.2d 1201 (6th Cir. 1980) (benefit alone insufficient; must show performance satisfies promisee’s duty to beneficiary)
- Reisenfeld & Co. v. Network Grp., Inc., 277 F.3d 856 (6th Cir. 2002) (quasi‑contract recovery from third party in limited circumstances)
- Hambleton v. R.G. Barry Corp., 465 N.E.2d 1298 (Ohio 1984) (elements of unjust enrichment)
- Liberty Mut. Ins. Co. v. Indus. Comm’n of Ohio, 532 N.E.2d 124 (Ohio 1988) (unjust enrichment defined)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (Rule 12(b)(6) pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard clarified)