Don-Rick, Inc. v. Americas

Decision Date03 February 2014
Docket NumberNo. 13–cv–625–slc.,13–cv–625–slc.
PartiesDON–RICK, INC., Plaintiff, v. QBE AMERICAS, Defendant.
CourtU.S. District Court — Western District of Wisconsin


J. Michael Riley, Timothy M. Barber, Axley Brynelson, LLP, Madison, WI, for Plaintiff.

Dustin Brett Brown, Kendall W. Harrison, Godfrey & Kahn, S.C., Madison, WI, for Defendant.


STEPHEN L. CROCKER, United States Magistrate Judge.

In this removal action for breach of contract, plaintiff Don–Rick, Inc. alleges that defendant QBE failed to pay contingent sales commissions for insurance products that Don–Rick sold on behalf of QBE. On September 16, 2013, QBE moved to dismiss the complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a claim, claiming that QBE had no contractual obligation to pay Don–Rick contingent sales commissions and that Don–Rick can not bring a claim of bad faith under Wisconsin law. Dkt. 3. Soon after the briefing was completed on the motion to dismiss, Don–Rick filed an amended complaint adding claims of promissory estoppel and unjust enrichment. Dkt. 14. QBE responded with a second motion to dismiss, arguing that the amended complaint was untimely, and in the alternative, that it also fails to state a claim because QBE never promised to pay Don–Rick the discretionary bonus. Dkt. 15.

In its reply, Don–Rick explained that it was unable to file the amended complaint by the deadline set in the preliminary pretrial conference order because the court's electronic filing system was down. QBE has accepted this explanation. As a result, I find that the amended complaint was timely and becomes the operative pleading in this case. Generally, the filing of an amended complaint would moot QBE's motion to dismiss the original complaint. National Pork Producers Council v. Jackson, 2009 WL 1255557, *1 (W.D.Wis. May 1, 2009); Hypergraphics Press, Inc. v. Cengage Learning, Inc., 2009 WL 972823, *1 n. 1 (N.D.Ill. Apr. 8, 2009). However, QBE properly raised its original challenges to the breach of contract and bad faith claims in its second motion to dismiss, as well as challenges to the newly added claims of promissory estoppel and unjust enrichment.

Because I agree with QBE that the bonus commission program document did not constitute a contract, I am granting QBE's motion to dismiss with respect to the breach of contract and bad faith claims. That, however, is not necessarily the end of it: during the briefing of the motion to dismiss the amended complaint, Don–Rick submitted additional evidence that creates an question of fact as to whether QBE made a promise to pay Don–Rick a bonus commission for sales made in 2012. With this evidence, Don–Rick can at least state a valid claim for promissory estoppel and unjust enrichment; however, Don–Rick did not actually do so: the amended complaint does not reference or include the additional evidence. So, the question is, what does fairness and efficiency require at this juncture? Although we are fairly deep into the schedule, it seems everyone has been treading water while the dismissal motion was pending (a logical decision), so it would not be unfair to allow Don–Rick to file a second- and last-amended complaint that adds the appropriate allegations.

Apart from this, on January 28, 2014, QBE asked to extend the March 10, 2014 deadline to file summary judgment motions, to May 1, 2014. See dkt. 21. I am granting that motion in this order, and I am willing to grant a longer extension (and perhaps change the trial date) if the parties can make a case for actually needing more time in light of the conclusions reached in this order.

From the amended complaint and the documents attached to the motion to dismiss,1 I draw the following facts, solely for the purpose of deciding the motion to dismiss:


Plaintiff Don–Rick, Inc. and defendant QBE Holdings, Inc. are insurance companies. Between January 1, 2009 and March 4, 2013, Don–Rick was an agent of QBE and sold QBE policies pursuant to an agency agreement, which provided that:

As full compensation for services, [QBE] shall pay [Don–Rick] commissions in accordance with the most recent commission schedule made part of this Agreement (“Exhibit B”) on premium reported and paid to [QBE] on business written by [Don–Rick].

Agreement § IV.a, dkt. 5, exh. 1 at p. 5.

Section IX of the agreement provided that either party could terminate the agreement for any reason with at least 90 days notice unless a longer period was required by law.2

As an additional benefit of being a QBE agent, Don–Rick became eligible to participate in the 2012 QBE Premier Partner Contingent Commission Program (or bonus commission program). The overview section of the document describing the bonus commission program states that an agent “can receive a bonus based on the profit You generate during the Bonus Year if You meet the requirements set forth in this Plan.” Dkt. 5, exh. 2 at p. 1. The bonus commission program has three eligibility requirements:

Active Agent You must be an active agent in good standing with Us at the time of payment. We will pay You no bonus if We have terminated Your agency authority, or if We have terminated Your involvement in this Plan, before payment is issued to You.

Minimum Volume You must produce a minimum of $1,000,000 in combined QBE Personal and Commercial Lines Qualifying Written Premium.

Profit Sharing Ratio Maximum Your Total Profit Sharing Ratio in the Bonus Year must be 64.0% or less

Id. at p. 1.

Under a section entitled “General Program Provisions,” the document also states that

• This program is separate from the Independent Agency Agreement between You and Us....

• This program is not a contract and creates no legally binding rights or obligations for You or Us. We may cancel or amend this Program at any time without advance notification to You. Cancellation or amendment of this Program will be effective immediately and will control Our payment of a bonus to You, if any.

* * *

• The profit sharing bonus payable under the terms and conditions as stated in this document will be determined at the end of each Bonus Year and paid to the agency within 90 days.

Dkt. 5, exh. 2 at 2.

QBE terminated the parties' agency agreement on March 4, 2013. Although Don–Rick was eligible to participate in the 2012 bonus commission program and earned commission payments in the amount of $75,000 that “were payable” prior to the termination of the agency agreement, QBE refused to pay the money owed to Don–Rick. At the time the bonus commissions were due, Don–Rick was an agent in good standing.


QBE moves to dismiss each of Don–Rick's claims under Fed.R.Civ.P. 12(b)(6) for failure to state a claim. In ruling on a Rule 12(b)(6) motion, the court accepts all well-pleaded allegations as true and draws all inferences in favor of the plaintiff. Bielanski v. County of Kane, 550 F.3d 632, 633 (7th Cir.2008) (citations omitted). The complaint must include “enough facts to state a claim to relief that is plausible on its face,” Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir.2009) (citations omitted), meaning that it must allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). As the Court of Appeals for the Seventh Circuit has explained, a complaint “must suggest that the plaintiff has a right to relief ... by providing allegations that ‘raise a right to relief above a speculative level.’ Equal Employment Opportunity Commission v. Concentra Health Servs., Inc., 496 F.3d 773, 777 (2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 561–62, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

I. Breach of Contract

Don–Rick alleges in its amended complaint that QBE failed to pay approximately $75,000 in commissions that it earned “during the period of the Agency Agreement in violation of “that agreement and ... the Premier Partner Contingent Commission Program.” Dkt. 14 at ¶ 10. QBE contends that it did not have a contractual obligation to pay Don–Rick a bonus commission because the contingent commission program is not a contract.

Under Wisconsin law, [t]he burden of establishing the existence of a contract is on the person attempting to recover for its breach.” Household Utilities, Inc. v. The Andrews Co., 71 Wis.2d 17, 236 N.W.2d 663, 669 (1976). According to Don–Rick, the commission program is enforceable as a unilateral contract, which occurs where only one party has made a promise and only that party is subject to a legal obligation. See Paulson v. Olson Implement Co., Inc., 107 Wis.2d 510, 527, 319 N.W.2d 855, 863 (1982) (“This is typified by the law school hypothetical situation where A says to B, ‘If you walk across Brooklyn Bridge, I promise to pay you ten dollars.’ A has made a unilateral contract which arises when-and if-B performs the act.”) (quoting J. Calamari and J. Perillo, The Law of Contracts, 17–18 (2d ed. 1977)). QBE contends, however, that it never made a promise in the first place because the document describing the bonus commission program clearly states that: it is separate from the agency agreement, it is not a contract and it has no legally binding rights or obligations. QBE also points out that it reserved the right to cancel or amend the program at any time without notice.

Don–Rick dismisses the no-contract language as “legally irrelevant,” noting that Wisconsin long has held that parties' characterizations or labels of a document are not controlling. See, e.g., Rice v. Reich, 51 Wis.2d 205, 208, 186 N.W.2d 269, 271 (1971) (document entitled “joint driveway agreement” was actually an easement and not a lease); M & I First Nat'l Bank v. Episcopal Homes Mgmt., Inc., 195 Wis.2d 485, 501, 536 N.W.2d 175 (Ct.App.1995) (statement in residency agreement that “This Agreement is not a lease” did not determine whether agreement was in fact a lease); Clay v. Horton Mfg. Co., Inc., 172...

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