Bularz v. Prudential Ins. Co. of America, 95-3092

• Decision Date: 19 August 1996
• Docket Number: No. 95-3092,95-3092
• Citation: 93 F.3d 372
• Parties: 132 Lab.Cas. P 58,144, 35 Fed.R.Serv.3d 832 John R. BULARZ, Plaintiff-Appellant, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 372

93 F.3d 372

132 Lab.Cas. P 58,144, 35 Fed.R.Serv.3d 832

John R. BULARZ, Plaintiff-Appellant, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellee.

No. 95-3092.

United States Court of Appeals Seventh Circuit.

Argued March 26, 1996.

Decided Aug. 19, 1996.

Allan D. Krezminski (argued), Milwaukee, WI, for Plaintiff-Appellant.

Daniel E. Conley, Patricia K. McDowell (argued), Quarles & Brady, Milwaukee, WI, for Defendant-Appellee.

Before ESCHBACH, MANION and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

John R. Bularz brought this defamation action against his former employer, Prudential Insurance Company of America (Prudential), in Wisconsin state court, alleging that several employees of Prudential had made defamatory statements about his business practices. Prudential removed the suit to federal district court on the basis of diversity of citizenship, and asserted a counterclaim alleging that Bularz had made misrepresentations to customers of Prudential in breach of his duties as their employee. At the close of trial, the jury returned a special verdict indicating that neither Prudential nor Bularz were liable on the respective claims against them. The district court entered judgment pursuant to the jury's special verdict and denied Bularz's motion for a new trial. Bularz appeals, asserting that the district court erred in its formulation of the special verdict questions, and in admitting certain items of evidence that pertained to Bularz's character and reputation. Bularz further maintains that the court misapplied the statute of limitations in refusing to permit him to amend his complaint to include a tortious interference with contract claim against Prudential. For the reasons that follow, we affirm.

I. BACKGROUND

Bularz was hired as an insurance salesman by Prudential in March 1987. At the time, Bularz sold life insurance policies from a regional office located in Waukesha, Wisconsin. Bularz primarily dealt in policies having both insurance and investment features, which he sold to senior citizens. Although Bularz was generally successful in selling life insurance and was promoted to sales manager approximately two years after joining Prudential, a number of customers were dissatisfied, and complained to Prudential that Bularz had engaged in deceptive marketing practices. Most of the complaints asserted that Bularz had provided misleading information to customers about the actual cost of the insurance policies he sold. Some customers also asserted that Bularz had sold them policies that they neither wanted nor needed. As a result of these complaints, Prudential gave Bularz two written warnings in October 1990 and January 1991, and required Bularz to submit to a disciplinary compliance review in March of 1991. By the late summer of 1991, Prudential had received thirteen separate complaints from its customers regarding Bularz's alleged misrepresentations. As a result of these complaints, Prudential began an internal investigation of Bularz's selling practices. Soon after the investigation was completed, Bularz was demoted from sales manager to sales agent, and was placed on probation on November 8, 1991. Harry Axford, a regional vice president at Prudential, participated in the decision to demote Bularz and to place him on probation. Within days of being placed on probation, Bularz tendered his resignation to Prudential and started his own financial services business, K.T. Financial Services.

K.T. Financial Services was comprised of Bularz and eight other insurance agents, several of whom were also former employees of Prudential. These included Bularz's son, John S. Bularz, his sister, Joan Masters, and a friend, Roger Staude. In December 1991, Bularz signed a contract to sell life insurance policies as a general agent with the Midland National Life Insurance Company of Sioux Falls, South Dakota (Midland). During the period between December 1991 and March 1992, Bularz and the other members of K.T. Financial Services submitted 133 applications to Midland from prospective customers seeking life insurance policies. In response to these applications, however, only ten insurance policies were issued. During the same time frame, the rate of acceptance of applications for life insurance policies presented to Midland by other insurance agents was approximately seventy-five percent. In order to uncover the reason behind his poor rate of acceptance, Bularz requested a meeting in late March 1992 with Mark Stone, a Midland sales manager. Joan Masters was also present at the meeting, as were several other K.T. Financial Services members. At the close of the meeting, Bularz formed the opinion that the only reason his company had been unsuccessful in selling insurance for Midland was because certain persons at Prudential had made defamatory statements to Midland about his business practices, and that Midland had therefore been reluctant to issue insurance policies pursuant to the applications it had received through agents at K.T. Financial Services. On November 8, 1992, Midland finally terminated its contract with Bularz.

Bularz filed a complaint against Prudential on March 7, 1994, in the Circuit Court of Milwaukee County, Wisconsin. In that complaint, he alleged that Prudential, through its agents, had made false statements to third persons indicating that Bularz was "dishonest and untrustworthy and unsafe to trade with," and specifically named Prudential employees Greg Ormund, Doris Oestacher, Bonnie Duffrin and Lisa Nagel as the individuals who had made these defamatory statements. Bularz further alleged that as a result of being defamed, persons who had previously dealt with him had ceased to do so, causing him to be deprived of the ability to pursue his profession. Prudential removed the complaint to federal district court on the basis of diversity jurisdiction and filed a counterclaim alleging that during his employment with Prudential, Bularz's deceptive business practices had damaged Prudential's reputation. Bularz then filed an amended complaint on June 1, 1994, in which he added several new allegations in support of his defamation claim, including one that on or about April 6, 1992, Harry Axford had told Midland senior vice president Alan H. Spencer that Spencer "should run, not walk, to get away from John Bularz and his son, because they are crooks, and that is why Prudential got rid of them." On the basis of that incident, as well as the other facts alleged, Bularz also asserted a new claim against Prudential for tortious interference with contract.

Prior to trial, the district court ruled that Bularz would be allowed to proceed on his defamation claim, but that his tortious interference with contract claim was time-barred. The court also ruled that it would allow Bularz to present evidence regarding Axford's alleged defamatory statement. With respect to Axford's statement, and over defense counsel's hearsay objection, Bularz presented the testimony of Joan Masters, who recounted the following conversation that was alleged to have occurred at the March 1992 meeting between Mark Stone and members of K.T. Financial Services:

Q. What did Mr. Stone say?

[Objection overruled.]

THE WITNESS: [...] He said that Alan Spencer called Cathy McDowell--MacDonald--McDowell-Cathy--and she said that, well, the Bularzes are really being--they're under suspicion right now and they're being investigated by the NASD.

And so Mr. Spencer said then--I mean, said that then Mr. Spencer called--Allen Stone [sic] said--Mr. Stone said Mr. Spencer called Mr. Axford and he said run don't walk from the Bularzes because they're crooks and that's why Prudential got rid of them.

Q. And when did this conversation take place?

A. About the 20th of March, 23rd of March, something right around there.

Q. Near the end of March?

A. Uh-huh.

Q. Was that of 1992?

A. Yes, it was.

(Trial Tr. Vol. 3 at 465-66.) On cross examination, Masters conceded that she never personally spoke with Alan Spencer concerning this alleged conversation between Spencer and Axford, and that she never actually heard Spencer speak with any employee of Prudential at any time. (Id. at 490.)

Bularz also presented three additional items of evidence pertaining to Axford's statement: (1) the testimony of Mark Stone of Midland concerning a conversation he had with Bularz in March or April of 1992, which was secretly tape-recorded by Bularz, (2) a letter from Spencer to Prudential's counsel, in which Spencer stated that he vaguely remembered speaking with someone at Prudential concerning Bularz, but that he could no longer recall whether that person was Harry Axford or someone else, and (3) a telephone message slip, dated "4/14," showing that a telephone call from Spencer, who was seeking information about Bularz, had been directed to Axford's secretary, Cathy MacDonald.

In the tape-recorded conversation with Bularz, Stone made the following remarks concerning Axford's alleged defamatory statement: "... when he [Alan Spencer] called and asked for Harry Axelford [sic] and says, well, who's this in reference to, and Allen [sic] says John Bularz. And she says he's not handling that investigation. They switched him to somebody else. It was a big investigation on, or something." (Appellant's App. at 139; Ex. 55A.) After the tape-recording was played at trial, Stone testified that although he remembered overhearing someone at Midland say that a Prudential employee had referred to Bularz and his son as "flimflam men," or something to that effect, he could no longer recall who at Midland had made that statement. (Trial Tr. Vol. 1 at 151-52.) Stone further testified that he did not remember Spencer ever stating that he had discussed this matter with Axford, and that he, Stone, did not personally speak with anyone at Prudential regarding Bularz. (Id. at 153-54).

With respect to the letter from Spencer to Prudential's counsel, Bularz...