389 F.3d 475 (5th Cir. 2004), 03-60801, Robinson v. Guarantee Trust Life Ins. Co.

Docket Nº:03-60801.
Citation:389 F.3d 475
Party Name:Mike ROBINSON, Mark Yoder, Jerry King, Herbert Jones, James Smith, Lee Scott Herron, Keith Fletcher, Diana Smith, Darryl Hassan and Ted Dupin, Plaintiffs-Appellants, v. GUARANTEE TRUST LIFE INSURANCE COMPANY; Doe Defendants A-Z, Defendants-Appellees.
Case Date:October 27, 2004
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 475

389 F.3d 475 (5th Cir. 2004)

Mike ROBINSON, Mark Yoder, Jerry King, Herbert Jones, James Smith, Lee Scott Herron, Keith Fletcher, Diana Smith, Darryl Hassan and Ted Dupin, Plaintiffs-Appellants,


GUARANTEE TRUST LIFE INSURANCE COMPANY; Doe Defendants A-Z, Defendants-Appellees.

No. 03-60801.

United States Court of Appeals, Fifth Circuit

October 27, 2004

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Michael S. Allred (argued), Kathleen Hughes Eiler, The Allred Law Firm, William

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David Ross, Ross Law Firm, Jackson, MS, for Plaintiffs-Appellants.

Jeffrey S. Dilley (argued), Henke-Bufkin, Lyon, MS, for Defendants-Appellees.

Appeal from United States District Court for the Northern District of Mississippi.

Before SMITH, WIENER and PICKERING, Circuit Judges.

PICKERING, Circuit Judge:


Plaintiffs were selling agents for Commonwealth National Life Insurance Company ("Commonwealth") when Commonwealth entered into an Assumption Reinsurance Agreement (the "Reinsurance Agreement") with Guarantee Trust Life Insurance Company ("GTL") on January 1, 1996. Under the Reinsurance Agreement, GTL assumed all of Commonwealth's medicare supplement policies in Mississippi and Commonwealth's obligation to pay continuing commissions on existing policies to the qualifying selling agents. At the time the Reinsurance Agreement was executed, the Appellants were plaintiffs in a state court suit in Mississippi against Commonwealth for alleged improper practices in replacing policies in an effort to cut them out of commissions. This litigation was settled in October 1997, and memorialized in a confidential settlement agreement. GTL was not a party to that litigation or settlement; likewise, Commonwealth is not a party to this litigation. Plaintiffs exempted from the settlement with Commonwealth any claims they might have against GTL or Allen Stevens, a GTL agent and former Commonwealth agent.

GTL contends that it continued to pay commissions due plaintiffs under the commission scheme that was in force at Commonwealth pursuant to a schedule supplied by Commonwealth. Plaintiffs disagreed and commenced this litigation in the Circuit Court for the Second Judicial District of Bolivar County, Mississippi, on September 29, 2000, by each filing a multi-count complaint asserting at least eighteen causes of action including entitlement to an accounting, torts arising out of contract, breach of contract, wilful breach of contract, breach of covenants of good faith and fair dealing, slander of business and commercial disparagement, conversion or civil theft, tortuous or fraudulent conspiracy, common law fraud, fraud of concealment, intentional infliction of emotional distress, twisting, tortuous interference with contractual relations, tortuous interference with prospective business advantage, misappropriation of trade secrets, violation of Mississippi's consumer protection laws/unfair and deceptive trade practices, violation of the Mississippi Uniform Trade Secrets Act and negligence.

GTL removed all of the state court cases to the district court where a joint scheduling order was entered on February 9, 2001. The district court formally consolidated the ten cases for trial on February 26, 2002. On February 28, 2002, GTL moved for summary judgment, which was granted on August 28, 2002. Plaintiffs filed a Motion for Reconsideration under Rule 59(e), Federal Rules of Civil Procedure, which was denied on August 15, 2003. This appeal followed.

Each of the plaintiffs was appointed as a selling agent for Commonwealth at different times, from the late 1980's to the early 1990's. Commonwealth offered a range of insurance products, including medicare supplement policies, all of which these agents were authorized to sell. The agents derived their commissions from

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premiums paid on policies they sold which remained in force. They also derived some commissions as overrides on policies sold by subagents operating under each of them.

At some point in the early to mid-1990's, Commonwealth appointed Allen Stevens as a selling agent and provided him a list of all of its medicare supplement policyholders with the express purpose of canceling the existing policies and converting them to new standardized medicare supplement policies. Stevens and his subagents were then receiving the commissions and overrides on the new policies to the exclusion of the agents who had sold the original (replaced) policies. This resulted in the state court litigation against Commonwealth by many of its agents, including at least nine of the ten here, which settled in October 1997. 1

The district court found that only Paragraph 4.07 of the Reinsurance Agreement addressed the commission issue. After reviewing the Reinsurance Agreement and the evidence adduced in support of and in opposition to summary judgment, the district court concluded that "There is no evidence that GTL was obligated to pay plaintiffs commissions on inactive or replaced Commonwealth policies or on replacement policies. Further, there is no evidence that GTL was contractually restricted from offering replacement coverage to its insureds."

The district court found that subsequent to the Reinsurance Agreement, Stevens was also appointed a selling agent for GTL, and that he was encouraged to continue to contact Commonwealth policyholders in an effort to replace those policies with newer GTL policies. The court found that 561 policies were ultimately converted out of the more than 5,100 issued by Commonwealth. Some of these policies were converted by Commonwealth before the Reinsurance Agreement and some of them were converted by GTL after the Reinsurance Agreement.


Plaintiffs argue that the exception from the 1997 settlement with Commonwealth covered all claims they had against GTL for commissions on Commonwealth policies converted by Stevens while he was with Commonwealth as well as for his continued efforts after becoming an agent for GTL. Therefore, one of their claims is for commissions wrongfully paid to Stevens on the policies he (Stevens) converted prior to and after consummation of the GTL/Commonwealth Reinsurance Agreement. They also assert that they were not paid commissions by GTL after the Reinsurance Agreement in accordance with their agency contracts with Commonwealth and further that they did not receive commission increases commensurate with the premium increases on Commonwealth policies which remained in force.

Plaintiffs also contend that GTL began increasing premiums on the assumed Commonwealth policies in order to induce policyholders to replace them and began conspiring with Stevens and other unnamed Doe Defendants to continue to contact and persuade Commonwealth policyholders to replace their old Commonwealth policies with new GTL policies. Further, as to the fraud and malicious interference claims, plaintiffs assert that GTL made misleading and fraudulent statements to Commonwealth policyholders and artificially deflated GTL premiums to induce the policyholders to convert to GTL policies while at the same time inflating the premiums on

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the Commonwealth policies. Indeed, the district court concluded that GTL did increase the premiums on the Commonwealth policies and offered new policies at lower premiums.

The district court concluded that the parties seemed to agree on the basic facts surrounding the Commonwealth/GTL contract and the replacement of policies by GTL. It therefore ruled, as a matter of law, that the facts thus established did not create liability on the part of GTL. The court ruled that there was no genuine issue of material fact on the question of whether all three of the parties agreed that GTL would replace Commonwealth as to the agency agreements entered into between Commonwealth and plaintiffs. In other words, the court held as a matter of law that there was no novation. The court noted, in a footnote, that some of plaintiffs were appointed selling agents for GTL after the assumption agreement took effect but that they did not assert any claims arising from that appointment.


Review of the district court's grant of summary judgment is de novo applying the same standards as the district court. Performance Autoplex II Ltd. v. Mid-Continent Casualty Co., 322 F.3d 847, 853 (5th Cir. 2003). Summary judgment should be granted only when there is "no genuine issue as to any material fact[.]" Fed.R.Civ.P. 56(c); Wyatt v. Hunt Plywood Co., 297 F.3d 405, 408-09 (5th Cir. 2002). The summary judgment standard calls for the court to review the evidence and the inferences to...

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