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Tort/Negligence – Duty – Special Relationship – Ponzi Schemer’s Widow – LLC Involvement – Employer

Tort/Negligence – Duty – Special Relationship – Ponzi Schemer’s Widow – LLC Involvement – Employer

Since plaintiffs suffered no physical harm, they cannot show that defendants owed them a special duty to protect them from an alleged Ponzi schemer who was defendant Diane Siskey’s husband and the MetLife defendants’ employee.

The court grants the motions to dismiss of defendants Metropolitan Life Insurance Co. and MSI Financial Services, Inc. (the MetLife defendants) and defendant Diane Siskey (Diane).


The late Richard Siskey (Rick) recruited plaintiffs Porter and King to run plaintiff Stone Street Partners, LLC. Despite the fact that Stone Street is a legitimate business, it was damaged by its relationship to Rick when he was revealed to be a Ponzi schemer.

Plaintiffs seek recovery from Diane and from the MetLife defendants.

Special Relationship

In general, there is neither a duty to control the actions of a third party, nor to protect another from a third party; however, there is an exception to this general rule when the defendant has a special relationship to the plaintiff or to the tortfeasor.

North Carolina’s courts have declined to hold that a special relationship exists between spouses as a matter of law.

It does not appear that any North Carolina appellate court has expressly declared that a special relationship for common law negligence purposes only exists where a plaintiff has suffered physical harm or bodily injury. That said, the parties have not cited, and the court’s research has not identified, any North Carolina appellate decisions finding the existence of a special relationship in circumstances other than those in which the plaintiff was alleged to have suffered a physical injury.

North Carolina’s reported decisions examining the special relationship exception derive directly, or rely upon decisions that derive directly, from the Restatement (Second) of Torts § 315 and its related provisions, which recognize that the special relationship exception is in derogation of the general principle that “[t]here is no duty so to control the conduct of a third person so as to prevent him from causing physical harm to another.”

Considering the Restatement together with the Supreme Court’s determination that a defendant’s knowledge of “the third person’s violent propensities” is a necessary finding for application of the exception, Stein v. Asheville City Bd. of Educ., 360 N.C. 321, 626 S.E.2d 263 (2006), it appears that our appellate courts intend the special relationship exception to apply only where the plaintiff has suffered physical harm or bodily injury.

Accordingly, defendants do not fall within the special relationship exception to the general common law negligence rule that there is neither a duty to control the actions of a third party, nor to protect another from a third party.

Even if the special relationship exception could apply in circumstances without physical harm or injury, plaintiffs have failed to allege facts showing that defendants had the “ability to control” Rick sufficient to permit the application of the exception here.

Breach of Fiduciary Duty

Because Diane is not alleged to have been a manager or officer of Stone Street, the language of Stone Street’s operating agreement does not give rise to a fiduciary duty owing from Diane to Stone Street.

Under G.S. Chapter 57D, non-manager “company officials” have the same fiduciary duty as managers. Nevertheless, plaintiffs do not allege facts showing that Diane exercised management authority over Stone Street such that a fact-finder could conclude that she was a “company official” of Stone Street.

Although plaintiffs allege Diane had to “approve . . . virtually all major decisions regarding [Stone Street’s] corporate governance,” they do not allege that Diane made or approved a single decision for Stone Street or that any corporate governance decisions were, in fact, made by the company with (or without) Diane’s approval.

Similarly, that Diane may have “worked hand in glove with [Rick] Siskey in all his business endeavors,” as plaintiffs allege, does not equate to her exercising management authority over Stone Street sufficient to satisfy G.S. § 57D-1-03(5).

Finally, that Diane may have allegedly participated in Rick’s Ponzi schemes provides no support for plaintiffs’ contention that she exercised management authority over Stone Street.

As such, plaintiffs have failed to allege facts showing that Diane owed a legal or fiduciary duty to plaintiffs as a “company official” of Stone Street sufficient to sustain their negligence claim against her.

Other Issues

To the extent plaintiffs seek to advance a negligent retention and supervision claim against the MetLife defendants, plaintiffs’ claim fails because plaintiffs fail to show a nexus between Rick’s relationship with the MetLife defendants – and the MetLife defendants’ alleged failure to act against Rick – and the reputational harm and pecuniary loss plaintiffs seek to recover arising from the public disclosure of Rick’s alleged Ponzi schemes.

While internal corporate policies may be some evidence of alleged negligence, they are irrelevant to the question of whether a legal duty is owed. Accordingly, the MetLife defendants’ corporate codes of conduct do not create a legal duty on which plaintiffs’ negligence claims may be sustained.

Since plaintiffs failed to allege facts showing that Diane owed a fiduciary duty plaintiffs, plaintiffs’ claim for constructive fraud must also be dismissed.

Finally, North Carolina does not recognize a claim of aiding and abetting breach of fiduciary duty.

Motions granted.

Stone Street Partners, LLC v. Williamson (Lawyers Weekly No. 020-052-18, 31 pp.) (Louis Bledsoe III, C.J.) James Smith, Kathleen Burchette, Samantha Lloyd for plaintiffs; Thomas Walker, Matthew McGuire, Caitlin Counts, Charles Raynal IV, Stephen Carey, Amy Greer, John Vassallo III and F. Lane Williamson for defendants. 2018 NCBC 75


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