Am. Family Mut. Ins. Co. v. Hollander
Decision Date | 01 February 2013 |
Docket Number | No. 11–2719.,11–2719. |
Citation | 705 F.3d 339 |
Parties | AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff–Appellant, v. Richard N. HOLLANDER, Defendant–Appellee. |
Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
John Michael Weston, argued, Gregory M. Lederer, Brenda K. Wallrichs, Benjamin M. Weston, on the brief, Cedar Rapids, IA, for Appellant.
Kevin James Visser, argued, Abbe M. Stensland, on the brief, Cedar Rapids, IA, for Appellee.
Before BYE, BEAM, and BENTON, Circuit Judges.
American Family Mutual Insurance Company (“American Family”) appeals the district court's 1 order denying its motion for judgment as a matter of law or, in the alternative, for a new trial and awarding Richard N. Hollander $261,781.53 in attorney's fees pursuant to section 91A.8 of the Iowa Wage Payment Collection Law (“IWPCL”). We affirm.
American Family is a mutual insurance company selling a broad range of commercial and personal lines of insurance. In 1982, Hollander began serving as a licensed insurance agent for American Family, with an office in Dubuque, Iowa. On January 1, 1993, Hollander and American Family entered into an American Family Agent Agreement (“the Agreement”), which was to serve as the governing document for the parties' relationship.
On July 31, 2008, after serving as an insurance agent for American Family for twenty-six years, Hollander terminated his relationship with the company. The next day, he sent a letter to some 1,200 “valued clients,” informing them he had decided to end his affiliation with American Family and open his own independent insurance agency. Hollander further informed his “valued clients” he could no longer service any policies issued by American Family and advised them to contact the company directly with any questions about their existing policies. Hollander noted his letter was not intended to “induce or attempt to induce any current policyholder to cancel, lapse or surrender any policy in force” with American Family.
The termination took effect on August 1, 2008. Under section 6( l ) of the Agreement,2 American Family was to begin making “extended earnings” payments to Hollander. Based on a specified formula, Hollander was to receive a total of $331,955 in extended earnings payments and the sum was to be paid in equal monthly installments over a thirty-six month period.
Initially, American Family began making the extended earnings payments in the intervals specified by the Agreement. After making four such payments, however, American Family informed Hollander of its decision to discontinue “the payment of any and all extended earnings” pursuant to section 6(u) of the Agreement, which provides an agent forfeits his right to extended earnings if he does not comply with the after-termination provisions of section 6(k). Section 6(k), entitled “Your Activity After Termination,” does not allow an agent “[f]or a period of one year following termination” of the Agreement to
either personally or through any other person, agency, company or organization directly or indirectly induce, attempt to induce or assist anyone else in inducing or attempting to induce any policyholder of the Companies credited to [the agent's] account at the time of termination to lapse, cancel, replace or surrender any insurance policy in force with the Companies.
JA at 1189. Asserting Hollander was in violation of section 6(k), American Family stopped making extended earnings payments as of November 2008.
On November 24, 2008, American Family filed suit against Hollander, seeking compensatory damages, punitive damages, injunctive relief, and a declaratory judgment. In a five-count complaint, American Family alleged computer fraud, misappropriation of trade secrets, breach of contract, intentional interference with contractual obligations, and a request for a declaratory judgment the company had no obligation under the Agreement to pay Hollander extended earnings. American Family also filed a motion for a preliminary injunction, seeking to enjoin Hollander from engaging in activities violative of section 6(k) inasmuch as he was inducing or attempting to induce his former clients to “lapse, cancel, replace or surrender” their existing policies with American Family and purchase insurance through his new agency. Hollander resisted the preliminary injunction motion and filed a partialmotion to dismiss for failure to state a claim. The district court, adopting the report and recommendations of the magistrate judge, 3 granted American Family's request for injunctive relief and denied Hollander's motion to dismiss.
On June 2, 2009, Hollander filed his answer to American Family's complaint. In his answer, Hollander included counterclaims for breach of contract, intentional interference with contractual relations, injurious falsehood, and a violation of ERISA. The case was set to proceed to trial on May 2, 2011, and the final pretrial conference was held on April 4, 2011, before the magistrate judge. On April 15, 2011, the district court held a status conference to discuss the upcoming trial. During this conference, Hollander orally advised American Family and the district court of his intention to pursue a claim for unpaid wages under the IWPCL,4 and subsequently filed a motion to amend pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. American Family resisted the motion and conditionally moved to continue trial in the event the Rule 15(a) motion was granted.
The trial court denied Hollander's motion to amend, explaining:
In considering whether leave should be granted for amendments to pleadings before trial, [Rule] 15(a)(2) provides in part that “the court should freely give leave when justice so requires.” However, [Rule] 16(b)(4) [ ] provides that the scheduling order limiting time for amendment of pleadings “may be modified only for good cause.” The deadline to amend pleadings was July 1, 2009, approximately twenty-one months ago, and trial in this matter is scheduled to begin on Monday, May 2, 2011.... [T]he primary measure for good cause is the movant's diligence in attempting to meet the scheduling order's requirements.
Order Denying Mot. to Amend, April 21, 2011, at 2–3. Finding Hollander's proposed amendment was not based on a change in the law or the emergence of new facts, the district court concluded Hollander has failed to show good cause warranting modification of the schedule. Thus, the case proceeded to trial on the original claims and counterclaims.
At the close of American Family's evidence, Hollander again moved, this time under Rule 15(b)(2) of the Federal Rules of Civil Procedure, to amend his pleadings to conform to the evidence adduced at trial and add the IWPCL claim. American Family resisted, and the court took the issue under advisement. At the close of all the evidence, the district court orally granted Hollander's Rule 15(b)(2) motion and submitted the case to the jury. 5 The jury returned a verdict in favor of Hollander, finding American Family failed to prove its breach of contract, trade secrets misappropriation, and computer fraud claims. In accordance with the verdict form, which specified that a finding AmericanFamily did not prove Hollander breached the Agreement would result in a verdict for Hollander in the amount of $343,000 (the stipulated amount of Hollander's unpaid extended earnings under the Agreement), the district court entered a judgment in favor of Hollander for $343,000.
Hollander subsequently filed a motion for attorney's fees pursuant to section 91A.8 of the IWPCL. American Family resisted, arguing the jury's finding American Family failed to prove Hollander breached the Agreement was not a finding of liability for purposes of awarding wages under the IWPCL. American Family also moved for judgment as a matter of law or, in the alternative, for a new trial. In support of its motion, American Family asserted the evidence presented at trial established Hollander did in fact breach the Agreement and further asserted it was entitled to a new trial because the district court erred in instructing the jury on the meaning of the term “induce,” in granting Hollander's Rule 15(b)(2) motion to amend to add the IWPCL claim, and in admitting irrelevant and prejudicial evidence.
The district court granted Hollander's motion for attorney's fees in the amount of $261,781.53 and explained:
[American Family] having failed to prove its breach of contract claim, it is undisputed that the extended earnings were owing, and the amount thereof was undisputed. The matter of whether defendant's wage claim satisfied § 91A.3 [of the IWPCL] is a legal question for the court, and not for the jury. Defendant's extended earnings are a function of his commission sales, and they are wages within the meaning of the applicable law.... The court is satisfied that defendant's extended earnings claim is a claim of wages under [IWPCL] § 91A, arising out of the same conduct set out in the original pleadings, was substantively the same claim pressed by the defendant throughout the case, and was inextricably intertwined with the defense of [American Family's] contention that defendant was not entitled to extended earnings.
Order Granting Mot. for Att'y Fees & Den. Mot. for J. as a Matter of Law, July 8, 2011, at 2–3, 5. The court denied American Family's motion for judgment as a matter of law or, in the alternative, for a new trial, concluding the jury's verdict for Hollander is not against the clear weight of the evidence presented at trial. This appeal follows.
On appeal, American Family argues it is entitled to a new trial because the district court abused its discretion in: (1) granting Hollander's Rule 15(b)(2) motion to amend to add the IWPCL claim; (2) awarding Hollander attorney's fees; and (3) instructing the jury on contract interpretation principles and the meaning of the term “induce.”
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