An attorney for Stephen Cook, a broker who sued Ohio National to recoup trail commissions, said his client will appeal an Oct. 2 ruling dismissing his lawsuit.
Cook, a Dallas-based advisor affiliated with Triad Advisors, filed a class-action lawsuit filed in March challenging Ohio National's decision to stop paying trail commissions on certain variable annuities.
Ohio National terminated "any and all servicing agreements" on the VAs with a guaranteed minimum income benefit rider on Dec. 12, 2018. The decision is believed to be the first of its kind in the industry.
In making her Oct. 2 ruling, Judge Susan Dlott deviated from a recommendation from Magistrate Judge Stephanie K. Bowman to deny Ohio National's motion to dismiss the lawsuits.
Cook claimed that Ohio National breached the terms of the selling agreement it inked with broker-dealers. Despite not being party to the selling agreements, he argued that brokers were intended third-party beneficiaries. Ohio National countered that brokers lacked standing to bring a claim since they were not party to the agreement.
"We are disappointed with the Court’s decision and intend to appeal," said Nathaniel Garrett of the Cincinnati law firm Helmer, Martins, Rice & Popham. "The Magistrate Judge in this case and a District Court Judge in an earlier case concluded that financial representatives have contractual standing as third-party beneficiaries under Ohio National’s template selling agreement.
"We feel that the Magistrate Judge’s recommendation should have been adopted in full."
A statement from an Ohio National spokesperson said "the Court has reached the right decision as the individual registered representatives who filed these suits are not parties to Ohio National’s selling and servicing agreements."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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