Vazirani v. Heitz

• Decision Date: 20 December 2013
• Docket Number: No. 12–3183.,12–3183.
• Citation: 741 F.3d 1104
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: Anil VAZIRANI; Secured Financial Solutions, LLC; Vazirani & Associates Financial, LLC, Plaintiffs–Appellants, v. Mark HEITZ; Jordan Canfield, Defendant–Appellees.

741 F.3d 1104

Anil VAZIRANI; Secured Financial Solutions, LLC; Vazirani & Associates Financial, LLC, Plaintiffs–Appellants,

v.Mark HEITZ; Jordan Canfield, Defendant–Appellees.

No. 12–3183.

United States Court of Appeals, Tenth Circuit.

Dec. 20, 2013.

David G. Bray, Dickinson, Wright, Mariscal, Weeks, Phoenix, AZ (Amy Fellows Cline, Triplett Woolf & Garretson, LLC, Wichita, KS, with him on the briefs), for Plaintiffs–Appellants.

Michael L. Parrish (Sarah K. Langenhuizen, with him on the brief), Stinson Morrison Hecker LLP, Phoenix, AZ, for Defendants–Appellees.

Before HARTZ, BALDOCK, and EBEL, Circuit Judges.

HARTZ, Circuit Judge.

Anil Vazirani is an independent insurance agent, also known as a producer, who contracts with insurance companies to sell life-insurance and annuity products. He owns and manages Vazirani & Associates Financial, LLC and Secured Financial Solutions, LLC. We will refer to both him and his businesses as Vazirani. Vazirani contracted with Aviva Life and Annuity Company, a provider of life-insurance and annuity products. After Defendants Mark Heitz and Jordan Canfield, executives at Aviva, cancelled the contract, Vazirani sued them in federal district court, alleging that they tortiously interfered with the contract. The district court awarded summary judgment to Defendants. It ruled that an officer of a company could be liable for tortious interference with a company contract only if he was motivated by solely personal interests and that Vazirani had failed to produce evidence that Defendants were motivated by solely personal interests in terminating the contract. Vazirani appeals. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

I. BACKGROUND

Aviva usually did not sell its life-insurance and annuity products to consumers directly, but instead contracted with agents who would make the sales to individuals, families, and businesses. Vazirani entered into his contract with Aviva in 2005. The contract allowed either party to terminate the relationship with written notice at any time, with or without cause. While it was in effect, Heitz served as Aviva's President of Sales and Distribution, and Canfield served in a number of executive positions, including Executive Vice President of Sales and Distribution. Both Heitz and Canfield had the authority to terminate Aviva's contracts with producers such as Vazirani.

Vazirani made direct sales of insurance products to consumers, for which he received commissions from Aviva. He could also recommend to Aviva that it contract with other agents, who would then sell Aviva products. If Aviva accepted these agents, they became part of Vazirani's “downline,” and Vazirani would receive commissions on their sales as well. Vazirani's organization thus had several functions: (1) to sell products, (2) to recruit agents, and (3) to provide marketing and sales support to the agents in his downline. The parties refer to organizations that carry out such functions as independent marketing organizations (IMOs). In addition to Vazirani, Aviva worked with a number of other IMOs at the time, including Advisors Excel, LLC, and Financial Independence Group (FIG).

Aviva's annuity products were marketed in a variety of ways. Those in the Annexus product line, which Aviva developed with another insurance company, Annexus Distributors AZ, LLC, were issued by Aviva, but IMOs contracted directly with Annexus Distributors to sell them. Annexus Distributors made the sole decisions over who would be authorized to market and sell these products. Some of Aviva's IMOs, including Advisors Excel and FIG, were authorized, but other IMOs were not. Vazirani did not have a contract with Annexus Distributors to market the products but could sell them as an agent for FIG, which paid Vazirani commissions on the sales. Annexus Distributors also authorized FIG to pay Vazirani commissions on some sales of the products by his downline agents. But Vazirani could not market or advertise the Annexus products to any agent.

In 2008, Vazirani and Aviva began to experience strains in their working relationship. Defendants contended that Vazirani broke four Aviva rules. First, Advisors Excel reported to Aviva in early 2008 that Vazirani had offered Lee Hyder, one of its downline agents, a higher commission if Hyder would work for Vazirani instead. Aviva had a rule that prohibited producers from recruiting agents from other IMOs by offering them a higher commission on sales of the same products. Canfield thought about terminating Vazirani for the violation, but only disciplined him. Vazirani admits that he discussed contracting with Hyder, but he contends that he did not break the rule because he promised only that Hyder might receive a higher commission. He also suggests that somehow in the Hyder interaction he had been “set ... up for termination.” Aplt.App., Vol. III at 344–45 (internal quotation marks omitted). But he fails to explain how he was set up, and he presents no evidence of any inducement by others that he engage in the misconduct.

Second, Aviva was told by Advisors Excel in the summer of 2008 that Vazirani had paid Matt Rettick and his organization, Covenant Reliance Producers (CRP), a marketing reimbursement for providing training, trips, gift programs, and other expenses for Vazirani's agents. Defendants were concerned that this broke an Aviva rule prohibiting agents from making side deals that allowed payments on Aviva sales to be made to groups, such as CRP, that did not have contracts with Aviva. Aviva terminated its contract with at least one other IMO because the IMO apparently had such a prohibited arrangement with CRP. Vazirani admits that he paid CRP, but claims that the payments related to sales of CRP products, not Aviva products.

Third, Vazirani sent an improper e-mail to his agents on August 19, 2008. Vazirani's contact at FIG, Phil Graham, had drafted an e-mail to encourage agents already in Vazirani's downline to become more familiar with Annexus products and to start selling them. But before Graham had a chance to send the e-mail, Vazirani sent it with his own edits, stating that it was from Graham on behalf of Vazirani. Graham never authorized Vazirani to send the e-mail, and Vazirani admits that he should not have made it seem that the e-mail came from Graham. Annexus Distributors had the sole right to approve agents to market the Annexus products, and their agreement with FIG did not allow Vazirani to market the products to agents. Advisors Excel received a copy of the e-mail from one of its downline agents and forwarded it to Aviva.

Fourth, on October 23, 2008, Vazirani submitted a transfer request to Advisors Excel, asking that one of its agents be transferred to his downline to sell Annexus products. Defendants assert that Vazirani was not allowed to make transfer requests for agents selling Annexus products. Vazirani does not present any evidence or argument to show that the transfer request was not a rule violation.

Vazirani's third and fourth rule violations, which concerned Annexus products, caused problems between Aviva and Annexus Distributors. Ron Shurts, an executive of Annexus Distributors, was upset when he learned of the August 19 e-mail, and Phil Graham at FIG was concerned that the e-mail could cause Annexus Distributors to terminate FIG's contract to sell Annexus products because the e-mail violated FIG's exclusivity agreement with Annexus Distributors. Defendant Canfield heard about the dispute and was also worried about FIG's losing its authority to market the products. Then, when Annexus Distributors received a copy of the October transfer request, Shurts wrote angrily to Canfield, saying that Vazirani should be terminated.

About a week later, on November 6, 2008, Canfield called Vazirani to notify him that Aviva would be terminating Vazirani's contract as well as the downline contracts of his agents. During the phone call Canfield stated that Aviva had concerns about Vazirani's business practices and that it had received complaints from other agents about him. But Canfield also stated that the complaints were “not the overall reasonfor this decision being made,” id., Vol. II at 336, and that Aviva wanted to focus on its “key groups,” id. at 332, or “big core groups,” id. at 338. Aviva sent Vazirani written notice in February 2009 that it was terminating its contract with him, effective April 1, 2009. The notice specified that the termination was not a “with cause” termination. About that time, Aviva also sent written notices to all of Vazirani's downline agents, terminating their contracts as well.

In the meantime, Vazirani's attorneys had sent letters to a law firm representing Aviva to seek an explanation for the termination. The letters had threatened litigation. In March 2009, Aviva's law firm responded in a letter that included the following:

While Aviva certainly has business reasons for terminating Mr. Vazirani's producer contracts, it was not required to. As spelled out below, Mr. Vazirani's contracts were terminated due to a change in Aviva's distribution strategy and as a result of market forces that have caused Aviva to exert control over exponential growth in annuity sales.

* * *

Aviva decided to terminate Mr. Vazirani and his downlines in the initial stages of the deferred annuity sales bubble. His termination was part of Aviva's attempt to focus on core marketing groups and producers in order to exert control on burgeoning annuity sales. As time has progressed over the last two months, however, Aviva has initiated even more significant measures to deemphasize annuity sales and redirect sales focus to the company's life insurance product lines. Aviva's actions to control the flow of new annuity sales has [sic] nothing to do with Mr. Vazirani or his group. Nor does it have anything to do with alleged communications by ... Annexus Group or others.

Id., Vol. III at 379 (emphasis added). To support this...