Gen. Assurance of Am., Inc. v. Overby–Seawell Co.

• Decision Date: 14 September 2012
• Docket Number: Case No. 1:11CV483.
• Citation: 893 F.Supp.2d 761
• Court: U.S. District Court — Eastern District of Virginia
• Parties: GENERAL ASSURANCE OF AMERICA, INC., Plaintiff, v. OVERBY–SEAWELL COMPANY, Defendant.

893 F.Supp.2d 761

GENERAL ASSURANCE OF AMERICA, INC., Plaintiff,

v.OVERBY–SEAWELL COMPANY, Defendant.

Case No. 1:11CV483.

United States District Court,

E.D. Virginia,

Alexandria Division.

Sept. 14, 2012.

Shari Lynn Klevens, Jason Nicholas Workmaster, Lora A. Brzezynski, McKenna Long Aldridge LLP, Washington, DC, for Plaintiff.

Erik Mattingly Kosa, Jessica Marie Zetwick, Morgan Lewis & Bockius LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

This dispute between two competing providers of a specialized insurance service arises from a confidentiality and licensing agreement whereby one of the providers agreed to license its proprietary software for administering the service to the other provider. The agreement between the licensor and the licensee further provided that the licensor agreed it would not solicit the licensee's clients and would not disclose the licensee's confidential information concerning those clients. The business relationship between the two providers soured after the successor-in-interest to a major client of the licensee decided to use the licensor, and not the licensee, for the insurance service. Thereafter, the licensee brought the instant action against the licensor alleging breach of contract, breach of fiduciary duty, and tortious interference with contractual relations. The following questions, among others, are presented on the licensor's motion for summary judgment on all of the licensee's claims:

(i) Whether under Georgia law a non-solicitation covenant and a nondisclosure covenant may be enforced notwithstanding that the covenants are not limited in time;

(ii) Whether Virginia choice-of-law rules governing tort claims require application of the law of the place where the plaintiff's injury was suffered, or instead, the place where the wrongful act occurred;

(iii) Whether under applicable state law a fiduciary relationship exists where, as here, the undisputed material facts establish that the parties were equal in sophistication and bargaining power; and,

(iv) Whether under applicable state law a claim of tortious interference with contractual relations may proceed to trial notwithstanding the absence of record evidence that the defendant acted improperly, maliciously, or without justification.

For the reasons that follow, the licensor's summary-judgment motion must be granted in its entirety, as all of the licensee's claims fail as a matter of law.

I.

Plaintiff General Assurance of America, Inc. (“GAA”) is incorporated under the laws of Virginia and has its principal place of business in Richmond, Virginia. Defendant Overby–Seawell Company (“OSC”) is organized under the laws of Georgia and has its principal place of business in Kinnesaw, Georgia. Both companies offer collateral tracking services to banks, which banks use to track the insurance status of collateral in which the bank has a security interest. In particular, these collateral-tracking services provide a participating bank with notice if the holder of any collateral falls behind on paying premiums on the policy insuring the collateral or if the holder ceases insuring the collateral altogether. OSC has its own proprietary software banks can use to administer the collateral-tracking service.

The facts giving rise to the instant action involve three independent insurance agents and three banks. Gil Swaim is an independent insurance agent and a resident of North Carolina. Frank Sutton and John Holmes are principals of Securitas, an insurance agency located in Georgia. Yadkin Valley Bank (“Yadkin Valley”) is located in North Carolina and acquired American Community Bank (“ACB”), which at the time of acquisition was also located in North Carolina. Capital City Bank (“Capital City”) is located in Tallahassee, Florida, and Macon Bank is located in Franklin, North Carolina.

The Agreements

In late 1999, OSC and GAA entered into the two agreements at issue here: (1) the Confidentiality Agreement and (2) the Software License Agreement, that enabled GAA to use OSC's collateral-tracking software for GAA clients that used GAA's collateral-tracking service. On November 22, 1999, the parties executed an agreement governing the information that GAA provided to OSC (the “Confidentiality Agreement”). The Confidentiality Agreement provides that “OSC will not solicit GAA clients for CPI or other services once identified as clients or potential clients of GAA.” (Doc. 1–1). It further provides that “as a condition of GAA furnishing [certain] information, OSC agrees to treat confidentially such information furnished to OSC by GAA or on GAA's behalf.” ( Id.) Less than two weeks after executing the Confidentiality Agreement, the parties signed an agreement describing the conditions under which GAA could use OSC's collateral-tracking software (the “Software License Agreement”). Thereafter, GAA's clients who availed themselves of GAA's collateral-tracking service used OSC's proprietary software to interface with GAA's service.

Yadkin Valley

In early 2009, Yadkin Valley began expressing an interest in outsourcing its collateral tracking requirements to an interested provider. Swaim Dep. 70:1–9. Yadkin Valley had a longstanding relationship with Swaim,¹ who in early 2009 submitted proposals to Yadkin Valley on behalf of three collateral tracking service providers (none of which was GAA or OSC). Swam Dep. 71:15–72:8. Around that time, GAA also pitched its collateral-tracking services to Yadkin Valley. Levan Dep. 61:11–65:4. Yadkin Valley became the successor-in-interest to ACB, which had previously relied on GAA for collateral tracking services. Yadkin Valley was impressed with GAA's proposal and, on April 1, 2009, told GAA that Yadkin Valley had selected GAA as its collateral tracking service provider. Levan Dep. 71:19–72:16.

In the following months, however, representatives at Yadkin Valley began looking to companies other than GAA for collateral-tracking services. Levan Dep. 134:22–135:3. It appears that Yadkin Valley considered GAA's apparent SAS–70 certification ² to be an important factor in awardingGAA the collateral-tracking contract, but in March or April of 2009, Yadkin Valley discovered that GAA's SAS–70 certification actually belonged to OSC. Levan Dep. 76:18–22, 214:5–217:14. Moreover, Kathy Durham at Yadkin Valley stated that she “wish[ed] we could just lease ... [OSC's] software,” to which Martha Levan at Yadkin Valley responded that “maybe we need to find out about that.” Levan Dep. 79:9–80:2.

At some point before June 2009, Levan told Swaim that Yadkin Valley wanted the “TC Software,” which is a reference to the proprietary software that OSC licensed to GAA. Swaim Dep. 77:14–78:10. Swaim testified that he was unsure when or how he first learned that GAA leased OSC's software. Swaim Dep. 53:3–11. Nonetheless, at that time, before June 2009, Swaim knew that OSC had this particular software. Swaim Dep. 78:6–10.³ After Levan mentioned to Swaim that Yadkin Valley was interested in the TC Software, Swaim offered to contact OSC. Levan Dep. 79:9–80:2. Specifically, Swaim asked Yadkin Valley whether Swaim should contact Kistler and Yadkin Valley answered yes. Swaim Dep. 81:4–15. As Levan described the events, “Mr. Swaim didn't reach out to Yadkin Valley and ask Yadkin to purchase Overby–Seawell products,” but instead Yadkin Valley “reached out to Mr. Swaim.” Levan Dep. 135:13–17.

Pursuant to an invitation by Yadkin Valley, Kistler presented a proposal on behalf of OSC at Yadkin Valley's offices in North Carolina in June 2009. Levan Dep. 75:19–76:13. See also Swaim Dep. 77:4–10 (estimating that this presentation took place in May 2009). Swaim denies that OSC provided him with any information regarding the specifics of OSC's presentation to Yadkin Valley prior to that presentation. Swaim Dep. 45:19–46:9. In his presentation to Yadkin Valley, Kistler told Yadkin Valley that “[w]hatever they wanted ... they could get as far as functionality with the web-based services.” Swaim Dep. 67:18–68:6. Afterward, Swaim spoke with representatives from Yadkin Valley, who expressed their “perception once they saw the OSC proposal that there was more that would suit their needs with OSC than with GAA.” Swaim Dep. 68:11–19. Indeed, Yadkin Valley later told Swaim that “there was some functionality that they either received or perceived through OSC that was one of the reasons that they picked OSC over GAA.” Swaim Dep. 67:10–17.

On September 1, 2009, Yadkin Valley signed a contract with OSC for collateral tracking services. During negotiations among Swaim, Yadkin Valley, and OSC, Yadkin Valley sent OSC the contract that GAA had with ACB. Swaim Dep. 122:5–123:1. According to Swaim, OSC received this contract before giving a pricing quote to Yadkin Valley. Id. OSC proposed a rate of $.24 per tracked loan, one cent per loan less than provided for in the contract between GAA and ACB. Levan Dep. 234:1–22. Prior to signing the contract, Swaim and Yadkin Valley representatives attended an onsite meeting at OSC's headquarters in Kinnesaw, Georgia. Swaim Dep. 42:5–19 (Doc. 166–1).

Capital City

Sometime in early 2010, Sutton at Securitas contacted Cynthia Pyburn of Capital City regarding collateral-tracking service. Sutton Dep. 111:8–12. Securitas had been pursuing Capital City's business since 2001 and had made at least one sales pitch to Capital City, which considered Securitas to be a “trusted partner.” Pyburn Dep. 49:13–50:7. At the time of the contact with Capital City, Securitas had a sub-agent agreement with OSC. During the conversation with Sutton, Pyburn learned that “there was a company out there that [Securitas] could bring to me.” Pyburn Dep. 49:19–50:20.

In January 2011, Pyburn “began the process of her thinking about cancelling [GAA] because [GAA] didn't have certain services.” GAA Dep. 121:1–4. Indeed, Capital City began exploring OSC because of Capital City's “long-standing issues” with GAA. Pyburn Dep....