LARRY v. NATIONWIDE MUTUAL INSURANCE COMPANY
United States District Court, W.D. North Carolina, Statesville Division.
September 19, 2011.
A. Breach of Contract
Moose contends that he entered into a valid and enforceable contract with Nationwide. According to Moose, in exchange for his early retirement, Rollins, on behalf of Nationwide, promised to help identify a replacement agent willing to enter into a side deal with Moose covering the desired $160,000.00 retirement incentive. The gist of Moose's breach of contract claim is that Nationwide breached this contract by failing to approve Bowman as a replacement agent while enforcing Moose's letter of retirement.
Moose contends that he and Rollins first discussed his financial goals and retirement plans in late 2005 or early 2006, at which time Moose made clear that he would not be able to retire until his house was paid for and his daughter's college education was taken care of. (Moose Dep. 63-72) According to Moose, absent an additional financial incentive to do so (i.e., a "side deal"), there was no reason for him to retire since he could stay on and continue to collect his renewals and new sales commissions. (Moose Dep. 82) According to Moose, he only responded positively to the inquiry about retirement when prompted by Rollins, "Well, I have candidates that I can send to you. And if we can make that happen for you, get those things taken care of, would you retire?" (Moose Dep. 63) (Moose Dep. 63)
Rollins denies ever representing to Moose that he'd find a replacement agent who would pay Moose "some lump sum" of money to cover the financial obligations Moose identified as obstacles to early retirement. (Rollins Dep. 110) Instead, Rollins claims he had in his mind that the replacement agent would permit Moose "to work through a transition," possibly on a part-time basis, and enable him to continue to earn some money. (Rollins Dep. 109) (Rollins Dep. 109-11, 117-18) Nationwide argues that Moose's breach of contract claim fails because 1) no such contract could exist since Rollins lacked the actual and apparent authority to contract on behalf of Nationwide; and 2) that even if Rollins possessed the requisite authority and a contract found to exist, the contract would be unenforceable as a matter of law due to either impossibility of performance or because its terms violate public policy. Taking the facts and inferences in the light most favorable to Moose, genuine issues of material fact exist as to whether Nationwide, through Rollins, entered into a valid and enforceable contract with Moose.
i.
A valid contract may be formed by the agent of the principal where "[1] the agent acts within the scope of his [] authority; [2] when an unauthorized contract has been ratified; or [3] when the agent acts within the scope of his [] apparent authority, unless the third person has notice that the agent is exceeding actual authority." Branch v. High Rock Realty Inc., 565 S.E.2d 248, 252 (N.C. App. 2002). "Actual authority is that authority which the agent reasonably thinks he possesses, conferred either intentionally or by want of ordinary care by the principal." Harris v. Ray Johnson Constr. Co., 534 S.E.2d 653, 655 (N.C. App. 2000). Actual authority may be implied by conduct of the principal amounting to consent or acquiescence. Lucas v. Little General Stores, 221 S.E.2d 257, 262 (1976). Under the doctrine of apparent authority, "the principal's liability is to be determined by what authority a person in the exercise of reasonable care was justified in believing the principal conferred upon his agent." Branch, 565 S.E.2d at 252. "[A]ny apparent authority that might otherwise exist vanishes in the presence of the third person's knowledge, actual or constructive, of what the agent is, and what he is not, empowered to do for his principal." Id.
1. Unless otherwise noted, the facts are presented in the light most favorable to Moose, the party opposing the summary judgment motion.
2. Excerpts from the relevant Nationwide policies and the Agent's Agreement are recited within the body of the Memorandum and Order.
3. McPherson was later displaced during corporate restructuring.
4. Apparently, there was a movement within Nationwide to encourage unproductive agents to retire. (Rollins Dep. 18) McPherson went so far as to provide Rollins with a list of the agents' birthdays so that those agents approaching the age of retirement could be identified and approached. (Dkt. 42-3, Ex. #3, 9).
5. Certain page numbers cited in this section refer to the pages assigned by the CM/ECF docketing system rather than the page numbers from the original transcript of the deposition or document submitted.
6. Moose's original plan contemplated that he would bring on another Nationwide agent, work with that person for five or so years, possibly reduce his own work schedule to a four-day work week, and groom that individual to take over the agency upon Moose's retirement. (8/21/09 Moose Dep. 63)
7. Although Moose refers to the sale of the book of business in the Complaint, for purposes of summary judgment, Moose characterizes the agreement as an "incentive to retire."
8. The business pro forma, which dictated the purchase price, took each product line and renewal premium, made assumptions on new sales, made assumptions on retention, and was given back to the respective candidate for plugging in the numbers of sales, employees, salaries, events, utilities, etc., to represent the pro forma based upon the data of that particular agency. (Rollins Dep. 27-29) Based on the pro forma for the given individual agency, the possibility of three different scenarios then existed for method of payment to Nationwide: 1) the necessity of securing a loan from Nationwide Bank would be completely waived; 2) a portion of the loan would be waived, generally 50%; or 3) maintenance of a contract requiring a certain amount of minimum sales, new sales, new premium overall for a period of two to three years. (Rollins Dep. 28-30) If a prospective agent met certain criteria, the agent would be extended an offer of a loan through Nationwide Bank. (Rollins Dep. 28)
9. Moose concedes, however, that the outgoing or retiring agent is more of a consultant during the replacement process and that Nationwide, in fact, retains the ability to reject any replacement candidate. (Moose Dep. 116)
10. Kirk testified at deposition that submission of a letter of resignation being a "requirement" was not entirely accurate. "We don't need a retirement letter to consider people. We need a retirement letter to approve people." (Dkt. 42-7, 25). He went on to testify that "the only time [a retirement letter is] required is to send the retirement letter to us the day before you retire." (Dkt. 42-7, 25).
11. According to Rollins, Moose submitted a resignation letter again for Sheally's screening process. (Dkt. 39-1, 26). However, Moose testified at his deposition that he believed his resignation letter submitted on August 6, 2006 was for Winn's candidacy, which remained in effect until Sheally was rejected as a replacement candidate, at which time, Moose withdrew his retirement letter. (Dkt. 42-4, 101-102).
12. Sheally already served as a Nationwide employee in a corporate position where he did not answer to McPherson or Kirk.
13. Rollins states that the change in McPherson's position towards Sheally was motivated by a financial interest. Apparently, Sheally had relationships in place that would result in premiums that would regularly be passed on to McPherson, then passed on to Jay Rabon, the Sales director for the Eastern half of North Carolina. (Dkt. 42-3, 22).
14. Although the letter of intent called for payment to be made to Moose by February 29, 2006, it appears to be a typographical error since the letter wasn't reached until December 2006.
15. Rollins told Moose to send the withdrawal letter directly to McPherson "so that there was no question." (Dkt. 42-3, Ex. B, 25). Rollins later met with McPherson concerning the withdrawal letter, at which time, McPherson said that he "wasn't going to send it in" because "he was tired of getting screwed over by agents and he didn't trust Larry. He didn't trust Larry that he would come up and actually resign going forward with [Bowman]. . . ." (Dkt. 42-3, 25). This came as a surprise to Rollins. (Dkt. 42-3, 25).
16. Kirk sent a letter dated December 21, 2006, thanking Moose for his twenty-three years of service to Nationwide and wishing him the best in his years of retirement. (Dkt. 39-9, 2). Moose did not receive this letter until after the first of the year. (Dkt. 42-4, 147).
17. The term "open agency" refers to a Nationwide agency operating without the benefit of a contractor to service the rights of the agency. (Rollins Dep. 81) In that situation, Nationwide would pick up the expenses and manage the agency. (Id.) "Checks and Balances, Inc." refers to an employment or staffing tool utilized by Nationwide in open agency situations as reflected in the project staffing agreement between Checks and Balances and Moose. (Moose Dep. / Exh. M).
18. The liquid assets requirement that was eventually applicable to Bowman entailed $50,000 in liquidity cash.
19. Bowman addresses the discrepancy in the amount to be paid from $160,000.00 to $100,000.00: "I understand that Larry believes the agreed upon amount was $160,000.00 and he may be right, but my recollection is that the amount was $100,000.00." (Dkt. 42-4, 3).
20. There's a discrepancy as to the year of McMahon's retirement within the affidavit. McMahon initially states that he retired in August 2000 yet states immediately below the reference to 2000 that he retired in August, 2006.
21. In fact, according to Tarlton, Rollins instructed him not to report the money to the Internal Revenue Service. (Tarlton Dep. 37)
22. After corporate restructuring, McPherson himself was a proposed party-offeror in one instance where he attempted to purchase the right to service a retiring agent's agency. McPherson offered a deed to his house as collateral for a $100,000.00 payment for Tarlton's agency. (Dkt. 42-8, 61).
23. The method for calculating extended earnings is set forth in detail within Nationwide's Agent's Agreement. (Agent's Agreement, ¶11) Rollins testified that extended earnings for an eligible agent typically amounted to "one times the previous 12 months renewals for all property and casualty products." (Rollins Dep. 101)
24. Nationwide argues that Moose fails to establish a successful tortious interference with contract claim because Moose did not have an enforceable contract with any potential replacement agent. Moose admits that the agreement between him and Bowman was subject to the condition precedent of Bowman being approved as the replacement agent and was likely not binding. (Dkt. 37-2, Moose Dep. 25, 28-29). This condition precedent never occurred; therefore only an executory contract or inchoate set of rights ever existed between Moose and Bowman. See Chemical Realty Corp. v. Home Federal Sav. and Loan Ass'n of Hollywood, 351 S.E.2d 786, 792 (N.C. App. 1987) (quoting Tire Co. v. Morefield, 241 S.E.2d 353 (N.C.App. 1978)) ("A condition precedent is a fact or event, `occurring subsequently to the making of a valid contract, that must exist or occur before there is a right to immediate performance, before there is a breach of contract duty, before the usual judicial remedies are available.").
25. Moose contends that the replacement agent, Saundra Carney, was required to pay Nationwide 150% of the renewal premiums from the previous years for the right to the agency and that the payment was a financial benefit to Nationwide. (Rollins Dep. 25) Nationwide Bank also received business by loaning Carney the money to acquire the agency and charging an interest rate. (Pl.'s Brf. In Opp'n. 20)
26. A fiduciary duty exists "where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence." Abbitt v. Gregory, 160 S.E. 896, 906 (N.C. 1931).
27. As discussed earlier, genuine issues of material fact exist concerning the extent of Rollins' actual and apparent authority.
28. Bowman testified that on one of these occasions, Moose was present when Rollins said the retirement letter could be rescinded.