Bogan v. Northwestern Mut. Life Ins. Co., 91 Civ. 2221 (WCC).
| Decision Date | 05 February 1997 |
| Docket Number | No. 91 Civ. 2221 (WCC).,91 Civ. 2221 (WCC). |
| Citation | 953 F.Supp. 532 |
| Parties | Robert M. BOGAN and Scott M. Bogan, Plaintiffs, v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY and Austin E. Hodgkins, Jr., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Doar Devorkin & Rieck, New York City (Michael S. Devorkin, of counsel), for Plaintiffs.
Schnader, Harrison, Segal & Lewis, New York City (Peter Jason, of counsel), for Defendant Northwestern Mutual Life Insurance Company.
Bleakley, Platt & Schmidt, White Plains, NY (Timothy P. Coon, of counsel), for Defendant Austin E. Hodgkins, Jr.
Plaintiffs Robert M. Bogan ("Bogan" or "Robert") and Scott M. Bogan ("Scott"), jointly and separately, have brought various claims against defendants Northwestern Mutual Life Insurance Company ("NML") and Austin E. Hodgkins, Jr. ("Hodgkins") on sixteen separate causes of action arising out of Robert Bogan's termination as an insurance agent.1
The only federal claim in this case is brought by both Robert and Scott Bogan against Hodgkins for federal antitrust violations (1st cause of action). Together they have also brought claims against Hodgkins for state antitrust violations (2nd) and tortious interference with prospective contractual relations with other General and Sales Agents (7th). Against NML they have brought a joint claim for tortious interference with existing contractual relations with Hodgkins (5th). They have also brought a claim for fraud against both Hodgkins and NML (11th).
Robert Bogan alone has brought claims against Hodgkins for: breach of contract (3rd), conspiracy to violate fiduciary duty (10th) and four claims for defamation (causes 14-17). He has brought claims against NML for: breach of written contract (4th), breach of implied contract (8th), and unjust enrichment (9th). Finally, he has brought claims against both defendants for conversion (13th), and tortious interference with his contracts with his Sales Agents (6th).
The asserted basis for jurisdiction in this case is a federal claim under the antitrust laws, with pendent jurisdiction over the state claims. While there would be diversity jurisdiction over the claims of Scott Bogan, a Connecticut resident, complete diversity does not exist because Hodgkins and Robert Bogan are both New York Residents. Before the Court are Defendant Hodgkins' and Defendant NML's motions for summary judgment on all counts pursuant to FED.R.CIV.P. 56(c).
Defendant NML insurance is a mutual insurance company that sells life insurance through a system of General Agents, District Agents, Sales Agents and Special Agents. NML contracts with its General Agents and generally assigns them each an exclusive territory. In the New York Metropolitan area, however, five General Agents share the same territory. General Agents, in turn, contract directly with District and Special Agents who are approved by NML. The District Agents in turn contract directly with Sales Agents. On the policies they sell, District, Special and Sales Agents are compensated by commissions on the initial premium and renewal premiums for the next nine years; General Agents receive an override commission on the commissions paid to the District, Special and Sales Agents.
Defendant Hodgkins, a New York resident, was during all times relevant to this dispute, a General Agent for NML in the New York Metropolitan Area. Robert Bogan started with NML as a Sales Agent in 1976. From 1982 to 1987, he managed a District Agency under Hodgkins and in 1987 became a District Agent under Hodgkins' General Agency. On May 29, 1990, he was terminated by Hodgkins with 30 days notice effective June 30, 1990. On June 4, after a dispute involving Bogan's failure to turn over his records to Hodgkins, he was terminated for cause.
Robert's brother Scott joined NML in 1985 as a Special Agent under Hodgkins' predecessor, Hamilton; he later became a Special Agent under Hodgkins. In 1987 he signed a Special Agent's contract under Robert. All of the contracts of the Special Agents in Bogan's District Agency, including that of Scott, were terminated when Robert was terminated. As discussed above, Scott joins Robert in five of Robert's sixteen claims.2
As Robert Bogan presents them, the pertinent events leading up to his termination are as follows:
In 1990, Bogan was a highly successful District Agent for NML, ranked approximately fourth out of 300. Up until that point, he had invested over $1.5 million in the development and improvement of his District Agency. During his tenure as District Agent, the District Office size had increased from three to eleven agents, while annual sales had increased from $11 to $120 million. Bog.Aff. ¶¶ 141-149.
NML's agency contracts contain strict limitations on its agents' writing business with other carriers (exclusive agency clauses). Prior to his termination, some of Bogan's agents were violating their exclusivity clauses and when Bogan attempted to enforce the clauses, they complained to Hodgkins who "told him [Bogan] not to interfere with what his Soliciting Agents were doing and began to plan to take away Bogan's District Agency and give it to two of Bogan's Soliciting Agents who were friends of Hodgkins." Pl. Br. p. 4-5. On May 29, Hodgkins terminated Bogan without cause "even after NML had repeatedly promised in writing that it would not permit such terminations." Id. In a June 1 phone conference, Bogan told Dennis Tamscin, NML Senior Vice President — Agencies, some "very, very serious violations of the law have been committed by Hodgkins," that his agents were receiving checks from other insurers, and that "research needs to be done." Hdgk.Exh. J p. 6-8. Tamscin told Bogan to give Hodgkins access to the files or he would support Hodgkins' termination of Bogan for cause. Tamscin added that, if Hodgkins so terminated him, he would not be able to take his District Agency with him when he left. Id.
On June 4th at 8:00 a.m., Hodgkins went to Bogan's offices and demanded that he turn over "all of [his] records" and "refused to give him time to consult with his attorney as to his rights and to coordinate with his attorney an orderly transfer." Pl.Br. p. 4. Bogan asserts that there were legitimate questions regarding which records belonged to NML and which were his personal files and that he asked Hodgkins to wait an hour until 9:00 a.m. when Bogan's attorney would be available. Hodgkins refused and notified him that he would be terminated for cause effective at 5:30 that day. Bog. 3(g) stmt. ¶ 24. Scott Bogan's contract was also terminated (as were all of Bogan's Soliciting Agent's contracts), and he was told he could only recontract with the Hodgkins agency. Id. at ¶ 29.
Bogan alleges that Hodgkins terminated him wrongfully and that pursuant to an agreement amongst the General Agents he calls the "Metropolitan Agreement,"3 once he was terminated for cause, he was prevented from either transferring as an active agent, or recontracting after his termination. It is this termination, the events that surrounded it and the alleged Metropolitan Agreement that give rise to the sixteen separate causes of action Bogan has brought before this Court.
Defendants' version, though largely in agreement, puts a different slant on the facts. They assert that there were numerous problems in Bogan's district agency, evidenced by the multiple complaints Bogan's Agents had made to NML. According to Tamscin, Bogan's Agents considered him "dictatorial", Tamscin Reply Aff. for NML, ¶ 41, and complained about his policy regarding expense reimbursement and outside business. For example, Bogan allegedly charged his agents $3.50 per page for faxes, and demanded 20% of any commissions on outside business done through his office. Id. at ¶¶ 14, 15. Tamscin testified that in January of 1990 representatives of the Special Agent's association (SAI — Special Agents, Inc.) had talked to Bogan about the complaints they had received from his agents; in February 1990, Kent Beebe of NML visited Bogan's agency because of the "problems there;" and in April, Richard Storatz, one of Bogan's agents, wrote a letter to Tamscin in which he described Bogan as "a district agent run amok, subverting the values of the company from within." Id. at ¶¶ 41, 45, 48.
Hodgkins testified that prior to his termination of Bogan, he and Bogan had attempted to "resolve some myriad of issues, and were making some progress, certainly in some areas, and other areas we weren't." Hdgk.Depo. p. 21. He states that Bogan offered to step down as District Agent if the difficulties could not be resolved. Id. at 189.4 He adds that only then did he terminate Bogan without cause and that "Bogan's response ... was to lock out two agents [Bob Slocum and Paul Wintrich]," Hdgk.Br. p. 1., and deny them access to their records including "one-card files" essential to an agent's ability to conduct day-to-day business. NML 3(g) stmt. ¶ 2. Hodgkins asserts that at that point, the Metropolitan Policy did not apply to Bogan as a former agent terminated without cause, and that he was free to transfer (alone, without his Soliciting Agents). Hodgkins states that only after Bogan refused his and Tamscin's demands to turn over the records did he fire Bogan for cause, thus rendering him unable to transfer to another General Agency.5
Hodgkins asserts that he was justified in firing Bogan and that his termination was neither a breach of contract nor part of an antitrust conspiracy, but part of a strategy to improve the management of his General Agency. He has brought a motion for summary judgment on all counts of the Bogans' complaint. Because Bogan's antitrust claim is the asserted basis for federal jurisdiction, we discuss it first.
Summary judgment should be granted when "there is no genuine issue as to any material fact and ... the movant is entitled to...
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