Baker v. Penn Mut. Life Ins. Co.
| Decision Date | 02 April 1986 |
| Docket Number | No. 84-1412,84-1412 |
| Citation | 788 F.2d 650 |
| Parties | 121 L.R.R.M. (BNA) 3526 James R. BAKER, Plaintiff-Appellant, v. The PENN MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Jeffrey L. Willis, Minter & Willis, Wichita, Kan. (Frank W. Visciano and Karl J. Geil, Vranesic & Visciano, Denver, Colo., with him also on briefs), for plaintiff-appellant.
Gary L. Ayers, Foulston, Siefkin, Powers & Eberhardt, Wichita, Kan. (Robert L. Howard of Foulston, Siefkin, Powers & Eberhardt, Wichita, Kan., with him also on brief), for defendant-appellee.
Before BARRETT and ANDERSON, Circuit Judges, and COOK, District Judge. *
James R. Baker, a former general agent of the Pennsylvania Mutual Life Insurance Co. ("Penn Mutual" or "company") brought suit against Penn Mutual in federal court, based on diversity jurisdiction, alleging, inter alia, that Penn Mutual wrongfully terminated him as a general agent; deprived him, after termination, of deferred commissions and other sums; and failed to reimburse him for expenditures which he made on behalf of Penn Mutual while serving as its general agent. Two and one-half years after the suit was commenced, and after discovery had been conducted by both parties, the District Court for the District of Kansas granted Penn Mutual's motion for summary judgment, dismissing twelve of the thirteen "causes of action" in plaintiff's complaint, and subsequently denied plaintiff's motion to alter or amend that judgment. Plaintiff appeals from the district court's orders on only five of the twelve causes of action (supplemented by additional theories raised outside the complaint), involving issues of wrongful termination, deferred commissions, rescission of contract, and tortious conversion. For the reasons stated in this opinion, we agree with and affirm the judgment of the district court.
In reviewing the district court's grant of summary judgment, we must view the case in the same manner as did that court. See Gomez v. American Electric Power Service Corp., 726 F.2d 649, 651 (10th Cir.1984); Western Casualty & Surety Co. v. National Union Fire Insurance Co., 677 F.2d 789, 791 n. 1 (10th Cir.1982); Luckett v. Bethlehem Steel Corp., 618 F.2d 1373, 1377 (10th Cir.1980). Thus, we must determine whether any genuine issue of material fact exists and, if not, whether the substantive law was correctly applied. See Fed.R.Civ.P. 56(c); Western Casualty, 677 F.2d at 791 n. 1. In doing so, we must view the record in the light most favorable to the party opposing the motion. Lindley v. Amoco Production Co., 639 F.2d 671, 672 (10th Cir.1981). Conclusory allegations, however, do not establish an issue of fact under Rule 56. Otteson v. United States, 622 F.2d 516, 519 (10th Cir.1980); Bruce v. Martin-Marietta Corp., 544 F.2d 442, 445 (10th Cir.1976); Bumgarner v. Joe Brown Co., 376 F.2d 749, 750 (10th Cir.), cert. denied, 389 U.S. 831, 88 S.Ct. 99, 19 L.Ed.2d 90 (1967).
Prior to the termination of his relationship with Penn Mutual in 1979, plaintiff served that company for more than twenty-one years, and by many standards he was considered a leader and top performer. He began as a soliciting agent on June 6, 1958, and was granted general agent status on June 1, 1965, when he took over the company's general agency in Wichita, Kansas.
Plaintiff rendered his services pursuant to written contracts, the first being his "Soliciting Agent's Contract", then the General Agency Contract dated June 1, 1965, with subsequent written amendments (the "1965 Contract"), and finally, the General Agency Contract, effective July 1, 1975 (the "1975 Contract"), which replaced the 1965 Contract, and which is the subject of this suit. There were two written amendments to the 1975 Contract, "Amendment 76-1 to General Agency Contract", dated December 23, 1975, and the "Premium Finance Plan", dated February 1, 1979.
The general agency contracts imposed numerous obligations upon plaintiff, resulting in the expenditure by him of substantial sums of money (asserted to have totaled $490,660) for office rental, supplies, equipment, clerical salaries, and other items directly related to the promotion of the business. They also conferred benefits in the form of various allowances and, in general, commissions on initial and renewal premiums paid on policies sold by him as well as on those sold through his agency by agents which he recruited and trained. Subject to time periods and conditions set forth in the contracts, the expectation of continuing commissions from renewal premiums, referred to in the industry as "renewals" or "vestings", constituted an important part of plaintiff's compensation, amounting to hundreds of thousands of dollars over the years, and were regarded by plaintiff as a form of retirement plan.
The parties apparently conducted business under their 1965 Contract without complaint material to this action, except for some criticism by the company of occasional cash flow problems in plaintiff's agency. At his deposition, plaintiff testified that to his knowledge Penn Mutual had complied with the terms of the 1965 Contract.
In 1975 the company introduced a new General Agency Contract which in form closely followed the 1965 Contract, but with significant differences in commission schedules. Plaintiff signed the new contract after representatives of the company told him that it was "designed to produce greater income" and "should assist" his business. When increased income did not result within several months plaintiff complained, but was told that if he "continued to follow company policy and sell insurance" he would "prosper in the long run." He apparently expressed no further formal dissatisfaction over his income until after his termination in 1979; and, on December 23, 1975, plaintiff executed a written contract amendment which contained an express ratification and confirmation of the terms of the 1975 Contract, as amended. After the 1975 Contract was in effect, plaintiff relates that he was told on various unspecified occasions by two Penn Mutual officials, George Bennington and James Hance, that: "So long as I performed in the area of sales production that I would be paid for that job and the company would take care of me."
Financial difficulties began to plague plaintiff in 1978 when the cost of building a new house ballooned from original estimates of $227,500 to approximately $400,000, necessitating both refinancing and the assumption of more debt than originally planned. Part of the refinancing, amounting to $245,000, was loaned by Penn Mutual to plaintiff under the company's MAPS program. That loan was made on the recommendation of John Tait, a company official who visited plaintiff in February, 1979, and who encouraged plaintiff to complete the construction of his residence in the cost range estimated by plaintiff at $400,000. By July 1979, it became apparent to plaintiff that an additional $50,000 would still be needed. When the company did not respond to his request for an increased loan, he telephoned Mr. Robert Purcifull, Penn Mutual's President, and among other things requested that he be allowed to use $50,000 of company funds flowing through his agency, to complete his residence. On plaintiff's understanding that such permission was granted, he proceeded to use agency funds in the requested amount and communicated that fact and the substance of his telephone call with Mr. Purcifull to other Penn Mutual officials.
The 1975 Contract between the parties contained a termination clause which permitted either party to terminate the agreement upon sixty days notice to the other, and provided for termination in event of death, incapacity, retirement or resignation. The clause also permitted termination by Penn Mutual at any time for "cause," as defined in the contract. In the event of termination for cause the contract provided for forfeiture of vestings.
The termination provisions were invoked by Penn Mutual on October 16, 1979, when plaintiff was summoned to a meeting at company headquarters and issued the ultimatum that he could either voluntarily terminate his relationship with the company under the sixty day termination provision, or the company would instantly terminate him for cause. Company representatives gave as a reason that plaintiff had violated company rules and bonding company requirements by using for personal purposes $50,000 of company money in the construction of his new home.
Since plaintiff believed he had permission to borrow the $50,000, he disputed the reason given for the termination ultimatum. Nevertheless, he felt coerced into giving his sixty day notice of termination because he faced the possible loss of his accumulated vestings if he was terminated for cause. Plaintiff thereafter handed in his written contract termination notice, effective December 31, 1979.
Two of the counts in plaintiff's complaint concern matters which occurred after his termination. The first arose after Penn Mutual collected $4,802.12 from plaintiff on his guaranty of indebtedness evidenced by certain premium finance agreements executed under the company's Premium Finance Plan. Under that plan the company agreed to finance qualifying premiums if the general agent signed as a guarantor on a specified number of policies. If that guaranty was called upon, the general agent was subrogated to Penn Mutual's rights in the premium finance agreement, and if Penn Mutual received payment in full it agreed to assign and transfer to the general agent all of its rights in that agreement. However, in plaintiff's case no such assignment was made by Penn Mutual, or requested by plaintiff, until after this suit was filed. In the interim, no attempts were made by plaintiff to collect from the principal obligors, and the statute of limitations ran on his right to do so.
The second post-termination occurrence complained of by plaintiff...
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