Edwards v. Massachusetts Mut. Life Ins. Co., 89-3772
| Decision Date | 25 June 1991 |
| Docket Number | No. 89-3772,89-3772 |
| Citation | 936 F.2d 289 |
| Parties | 119 Lab.Cas. P 56,712, 6 Indiv.Empl.Rts.Cas. 1046 Stephen W. EDWARDS, Plaintiff-Appellant, v. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Steven R. Hansen, Chicago, Ill., George T. Drost, Arlington Heights, Ill., for plaintiff-appellant.
David J. Novotny, J. Robert Geiman, William A. Chittenden, III, Thomas P. Boylan, Peterson & Ross, David E. Springer, Timothy A. Nelsen, Skadden, Arps, Slate Meagher & Flom, Chicago, Ill., for defendant-appellee.
Before FLAUM, EASTERBROOK and KANNE, Circuit Judges.
Stephen Edwards was a general agent of Massachusetts Mutual Life Insurance Company (the "company"). After serving the company for several years in that capacity, Edwards agreed to early retirement. Now Edwards sues, claiming misrepresentation and breach of contract with regard to his retirement benefits. The district court granted summary judgment for the company. Edwards appeals, and we affirm.
Edwards became a general agent for the company in 1982. The contract he signed to enter into this relationship was terminable at-will by either party. It would also terminate automatically upon Edwards' death, or upon his reaching age 65. Edwards was responsible for overseeing premium sales and for recruiting new agents. There is some question as to how well the agency performed under Edwards, but he did have some successful partial-year periods. In 1983, one of the company's financial consultants met with Edwards, and they agreed the agency needed improvement.
Edwards and the company then began to discuss early retirement. At a meeting on January 27, 1984, Edwards discussed with Joseph Shomsky, a vice-president for the company, Edwards' plan regarding his successor as general agent. Shomsky told Edwards to pursue his idea. Edwards' plan, as discussed more fully in a September meeting with Shomsky, was to make Mike Smith a co-general agent in April 1985 and to retire five years later in April 1990. This idea was accepted and the company hoped the agency would improve.
But apparently the agency did not prosper. The company denied Edwards' request to be allowed to participate in a deferred compensation plan, citing substandard cash flow. Then in January 1986, Kenneth Fry, a senior vice-president with the company, told Edwards that the company would not allow Edwards to become president of the General Agents' Association because the company thought Edwards would project the wrong image.
Fry suggested an early retirement date of April 1, 1988. Fry told Edwards that if Edwards reached a goal of $1 million in first-year commissions for 1987, he could retire with benefits even though he would only be 55 years old. Edwards formed the impression that the company wanted to get rid of him, and that if he did not go along with the plan of early retirement, he would be terminated.
On February 20, 1986, Fry sent Edwards a letter containing the terms discussed at their previous meeting. Edwards accepted the offer by signing the letter and returning it to Fry. On April 18, 1986, a financial consultant for the company sent Edwards a letter setting forth pay-out details of the early retirement plan should Edwards qualify at the end of 1987. The calculations were based on a 25% reduction in certain amounts for early retirement pursuant to the retirement plan, as modified by a board resolution. Edwards disputed this reduction and inquired as to whether he would qualify for full retirement benefits.
The company's General Agents' Retirement Plan provides for a "normal retirement date" of the first day of the month following the agent's 65th birthday. However, the plan also allows for early retirement for general agents who are age 60 and have at least 20 years of service as a general agent with the company, with reduced benefits because of early retirement. A board resolution modified the retirement plan to provide that general agents retiring at age 60 with 20 years of service would not have any reduction in benefits because of early retirement. It also provided that general agents who had not attained age 60 but who had 15 years of service could retire early, but certain benefits would be reduced by at least 25%.
On April 13, 1987, the company waived the requirement that Edwards have first- year commissions in excess of $1 million in order to qualify for early retirement. Edwards elected early retirement on April 23, 1987. Edwards eventually executed documents formally electing early retirement effective April 1, 1988. At the time he executed those documents, his request for waiver of the 25% reduction had been denied two times by the president of the company. Edwards met with the financial consultant to review his estimated retirement benefits, which were based on the 25% reduction for early retirement.
Edwards sued in state court on February 6, 1989, and the company had the case removed to federal court under the authority of 28 U.S.C. Sec. 1441(a), the district court having original jurisdiction based on diversity. The suit was brought in two counts.
The first count was based on breach of contract. Edwards claimed the company breached the implied covenant of good faith and fair dealing that is part of the contract pursuant to Massachusetts law, which governs this agreement. The second count was based on misrepresentation. Edwards alleged that the company concealed the plan to force him into early retirement. If he had known that the company was seeking to get rid of him, he alleged, he would not have made certain expenditures that he ended up making.
The company moved for summary judgment, which was granted by the district court. The district court found that Edwards could not recover under the first count because...
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