Cory v. Allstate Ins.

• Decision Date: 09 September 2009
• Docket Number: No. 08-2168.,08-2168.
• Citation: 583 F.3d 1240
• Parties: R. Greg CORY, Plaintiff-Appellant, v. ALLSTATE INSURANCE; Allstate Financial Services, LLC; Luke Yang, individually and as agent or employee of Allstate Insurance, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

583 F.3d 1240

R. Greg CORY, Plaintiff-Appellant, v. ALLSTATE INSURANCE; Allstate Financial Services, LLC; Luke Yang, individually and as agent or employee of Allstate Insurance, Defendants-Appellees.

No. 08-2168.

United States Court of Appeals, Tenth Circuit.

September 9, 2009.

Timothy L. White, Valdez and White Law Firm, Albuquerque, NM, appearing for Appellant.

M. Scott Barnard (John V. Jansonius and Patrick G. O'Brien, with him on the brief), Akin Gump Strauss Hauer & Feld LLP, Dallas, TX, appearing for Appellees.

Before TACHA, TYMKOVICH, and GORSUCH, Circuit Judges.

TACHA, Circuit Judge.

Plaintiff-appellant R. Greg Cory filed suit against Allstate Insurance Company and Allstate Financial Services, LLC (collectively, "Allstate") for, among other claims, breach of implied contract and defamation. The district court dismissed the implied contract claim under Fed.R.Civ.P. 12(b)(6) and entered summary judgment against him on the defamation claim. Mr. Cory appeals. We have jurisdiction under 28 U.S.C. § 1291 and AFFIRM.

I. BACKGROUND

In September 2000, Mr. Cory entered into an Independent Contractor Agreement (the "Agreement") with Allstate that authorized him to sell and service Allstate life insurance policies and other financial services products. The Agreement expressly provided that Mr. Cory was an independent contractor and not an Allstate employee; it gave him sole and exclusive responsibility for operating his own agency, including hiring, training, and supervising his own employees. The Agreement stated that it could "not be modified, except by a written agreement" and specifically explained that "no oral statements, representations, or agreements will be effective to modify this Agreement." It also gave Allstate the right to terminate it for cause at any time and without notice to Mr. Cory.

In addition, the Agreement expressly incorporated two other documents: Allstate's Exclusive Financial Specialist Independent Contractor Manual (the "EFS Manual") and the Exclusive Financial Specialist Agency Standards (the "Agency Standards"). Relevant to this case, the EFS Manual states: "you may never falsify any state insurance department or [Allstate] documents, including applications, and you may never forge signatures. . . . [C]ooperating with others to defraud, or any other illegal or criminal acts will not be tolerated." Relatedly, the Agency Standards provide that "[n]o one is allowed to sign on behalf of another person, even if it is done to accommodate a customer. . . . The unauthorized signing of a document is a forgery." Allstate policies also prohibit an independent contractor from certifying in writing that he has witnessed a customer's signature unless he has actually witnessed the signature. An important purpose of this policy is to prevent forgery.

In August 2004, an Allstate affiliate notified Allstate that two documents submitted by Mr. Cory's office contained possible signature forgeries. Allstate assigned one of its corporate security investigators, Luke Yang, to investigate the situation. During the course of Mr. Yang's investigation, Mr. Cory discussed the forgery allegations with his immediate supervisor and another management-level employee. In separate conversations, both employees told Mr. Cory that "if he didn't do it, he'd be fine, nothing bad would happen."

After discovering suspect signatures on four documents submitted by Mr. Cory's office and purportedly signed by customer Edward Dominguez, Mr. Yang interviewed Mr. Dominguez, Mr. Cory, and Mr. Cory's assistant, Kathy Logan. Mr. Dominguez stated that he did not remember signing any of the four documents and did not recognize the signatures on those documents as his own. Mr. Cory stated that although he did not forge Mr. Dominguez's signature on any of the documents, Ms. Logan had admitted to him that she had forged both Mr. Dominguez's and Mr. Cory's signature on at least two of the documents. Mr. Cory also stated that he was responsible for supervising Ms. Logan's activities. Ms. Logan admitted that she had forged Mr. Dominguez's name on two of the documents and that she had forged Mr. Cory's name on one of them.

Following the interviews, Mr. Yang submitted the documents containing suspect signatures—along with handwriting exemplars of Mr. Dominguez, Mr. Cory, and Ms. Logan—to a certified forensic document examiner. The examiner concluded that Mr. Cory had forged Mr. Dominguez's signature on one of the documents. Thereafter, Mr. Yang drafted a summary of the evidence acquired during his investigation and e-mailed it to an Allstate regional vice president. The summary stated in pertinent part that "[t]he weight of the evidence uncovered during our investigation was sufficient to support the conclusion that Cory forged customer Dominguez's signature on [one document]. . . . Further, former Support Staff Employee Logan admitted to signing Cory's name and forging Dominguez's signature on [two other documents]." The summary concluded that evidence was sufficient "to support the conclusion that Cory breached [the Agreement]." Based on Mr. Yang's investigation, Allstate determined that Mr. Cory had violated its policies and procedures by submitting documents containing forged signatures. Allstate therefore terminated the Agreement, which ended Mr. Cory's relationship with Allstate.

The National Association of Securities Dealers ("NASD")¹ requires securities dealers such as Allstate to submit a Form U5 Uniform Termination Notice for Securities Industry Registration ("Form U5") within thirty days of the termination of a registered representative like Mr. Cory. In response to the section on the Form U5 which asked for the "reason for termination," Allstate stated: "failure to follow firms [sic] policy and procedures due to non genuine customer signatures on account documents." Allstate also responded "yes" to the following question: "Did the individual voluntarily resign from your firm, or was the individual discharged or permitted to resign from your firm, after allegations were made that accused the individual of violating investment-related statutes, regulations, rules or industry standards of conduct?"

After reviewing the Form U5, the NASD submitted several questions to Mr. Cory to determine whether he had violated federal securities laws or NASD rules. In response, Mr. Cory admitted that he had signed as a witness to Mr. Dominguez's signature on a form without actually witnessing Mr. Dominguez sign the form and that he was "guilty of sloppy supervision on the Dominguez case." Mr. Cory has also acknowledged under oath that his signing as a witness to Mr. Dominguez's signature was wrong, that it constituted a violation of Allstate's policies, and that he was responsible for his employees. Although the NASD ultimately did not find any violations of federal securities laws or NASD rules, Mr. Cory is required to self-report the NASD investigation to prospective employers.

In June 2006, Mr. Cory filed suit against Allstate in New Mexico state court for, among other claims, breach of implied contract and defamation.² After successfully removing the case to federal district court, Allstate filed a motion to dismiss all claims, except the defamation claim, under Fed. R.Civ.P. 12(b)(6). The district court granted the motion. After discovery, Allstate moved for summary judgment on Mr. Cory's remaining defamation claim. The district court ruled that Allstate was entitled to summary judgment because the statements Allstate made in the Form U5 were true—and thus not defamatory—and no genuine issue of material fact remained for trial.³

On appeal, Mr. Cory argues that the district court's grant of summary judgment was improper because the "substance, gist or sting" of Allstate's statements in Form U5 is false. He also asserts that the court erred in dismissing his claim for implied breach of contract by failing to regard the statements made to him by his supervisors in the light most favorable to him.

II. DISCUSSION

A. Summary Judgment: Defamation Claim

"We review summary judgment decisions de novo, applying the same legal standard as the district court." Sanders v. Sw. Bell Tel., L.P., 544 F.3d 1101, 1104 (10th Cir.2008). Summary judgment is appropriate when "there is no genuine issue as to any material fact" and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). "When applying this standard, we view the evidence and draw reasonable inferences therefrom in the light most favorable to the nonmoving party." Simms v. Okla. ex rel. Dep't of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir.1999).

Under New Mexico law, the elements of a defamation action include: "a defamatory communication, published by the defendant, to a third person, of an asserted fact, of and concerning the plaintiff, and proximately causing actual injury to the plaintiff." Newberry v. Allied Stores, Inc., 108 N.M. 424, 773 P.2d 1231, 1236 (1989); see also N.M. Civ. UJI 13-1002 (listing all nine elements of defamation). "Defamatory communications are those which tend to expose a person to contempt, to harm the person's reputation, or to discourage others from associating or dealing with [him or her]." N.M. Civ. UJI 13-1007.

When a private-party plaintiff files suit for defamation, "[t]he traditional rule in New Mexico is that truth is an affirmative defense," Newberry, 773 P.2d at 1237, and substantial...