International Underwriters, Inc. v. Boyle

Decision Date21 October 1976
Docket NumberNo. 9831.,9831.
Citation365 A.2d 779
PartiesINTERNATIONAL UNDERWRITERS, INC., Appellant, v. Maurice A. BOYLE and National Association of Internal Revenue Employees, Appellees.
CourtD.C. Court of Appeals

David L. Cohen, Washington, D. C., with whom Jack L. Lahr, Washington, D. C., was on the brief, for appellant.

David J. Hensler, Washington, D. C., with whom Edward F. Glynn, Jr., Washington D. C., was on the brief, for appellees.

Before KELLY, FICKLING and KERN, Associate Judges.

KELLY, Associate Judge:

International Underwriters, Inc. (hereinafter I.U.) appeals here from orders of summary judgment dismissing its complaint against appellees for breach of fiduciary duty, inducement of the breach, civil conspiracy, interference with corporate opportunities and unfair competition. We reverse the orders in part with respect to each appellee and remand the case for trial.

The following facts are uncontradicted. For a number of years prior to 1972, I.U. served as the broker on three group insurance policies held by the National Association of Internal Revenue Employees1 (hereinafter NAIRE) for the benefit of its members. The coverage included a group life insurance policy underwritten by Connecticut General Life Insurance Co., a long term disability and an accidental death and His dismemberment policy, both underwritten by the Home Insurance Co. On the life insurance policy, I.U. received an agent's commission equal to 3% of premiums,2 while NAIRE received an administrative allowance from Connecticut General of 2% of premiums. In servicing the Home policies, I.U. performed administrative duties such as soliciting NAIRE members to participate in the plans, handling claims and records, and collecting and remitting premiums. Home paid I.U. a commission equal to 25% of premiums. From this sum NAIRE was paid an administrative allowance amounting to 5% of premiums.

The commissions I.U. received from the NAIRE policies constituted its greatest source of income. Between October 1, 1970 and September 30, 1972, these commissions amounted to more than one-third of I.U.'s total commission income.

Some time during the early part of 1972, NAIRE's president, Vincent Connery, determined that the association would benefit by undertaking the complete administration of its group insurance policies. Connery hoped to garner for NAIRE the administrative allowances then being paid to I.U. In addition, he felt that NAIRE would be able to administer the policies more efficiently than I.U. Under Connery's plan, NAIRE would receive a 20% administrative allowance on the Home policies with 5% of premiums left to I.U. as commissions. Connery hoped to obtain the entire share of the commission received by I.U. on the Connecticut General policy.

In July of 1972 Connery met with appellee, Maurice A. Boyle, who was then serving as a corporate officer of I.U. in charge of its group insurance business. Boyle spent a substantial amount of time on the NAIRE accounts serving as the day-to-day contact man between I.U. and NAIRE. His duties included supervising the billing of the NAIRE insureds and he oversaw the conversion of the billing operation from a manual to a computerized system.

At their July meeting, Connery informed Boyle of his plan to take over the administration of the group insurance policies and asked Boyle to come to work for NAIRE as the supervisor of their new operation.3 Boyle accepted Connery's tentative offer the following month while he was still in I.U.'s employ. Shortly thereafter, he surreptitiously copied and removed from I.U.'s offices 14,000 electronic data processing cards used in the billing of NAIRE insureds. Boyle continued working for I.U. until his firing on September 21, 1972. At no time did he inform I.U. of Connery's plan.

On September 21, 1972, the day before his plan was to be submitted to the NAIRE executive board, Connery met with I.U.'s president, Donn Wise. Connery outlined his proposal to Wise and also informed him of Boyle's defection. Wise refused to acquiesce in the proposed arrangement.

Following board approval of the plan, NAIRE informed its insurance carriers that it wished to replace I.U. with a new broker, Paul Burke Associates. Connecticut General permitted the substitution of Burke and thereafter paid NAIRE the full 5% that formerly had been divided between I.U. and NAIRE. Because of a separate agreement it had with I.U., the Home Insurance Co. was unable to permit a substitution of brokers. NAIRE cancelled its insurance with Home and placed new policies with the Hartford Insurance Co. and Insurance Co. of North America (INA). Hartford paid NAIRE a 5% promotional allowance plus a 15% commission and fee to Paul Burke Associates. Burke agreed to pay NAIRE up to 14% of this amount as an administrative allowance. INA agreed to pay NAIRE a 20% administrative allowance with no commission fee being paid to Burke.4

In its complaint, I.U. charged Boyle with breaching the fiduciary duty owed it by, among other things, failing to apprise I.U. of the imminent loss of the major portion of its commission income. I.U. alleged that NAIRE was liable for this alleged breach as a third party for inducing Boyle's disloyalty. I.U. maintained that with advance warning of Connery's plan, it would have had time to formulate a counter-proposal or undertake other persuasive efforts that might have preserved for it some share of the allowances sought by Connery for NAIRE.

I.U. conceded that considered alone, NAIRE had a legal right to assume all the administrative duties in relation to its group insurance and to terminate I.U. as its broker.5 It maintains, however, that because NAIRE chose unlawful means (i.e., by inducing Boyle's disloyalty) to facilitate its assumption of administrative duties, it is liable for the actions taken in furtherance of this otherwise lawful goal under a theory of civil conspiracy.

In granting NAIRE's motion for summary judgment the trial court concluded: The claims asserted against NAIRE . . . for unlawful conspiracy . . . and enticement to breach fiduciary duties, are unsupported by any probative evidence and fail to state any cause of action upon which relief could be granted.

With respect to Boyle's motion the judge stated:

. . . I am satisfied that there are no material issues in dispute and I am satisfied that, as a matter of law, there has been no breach of fiduciary obligation by the defendant Boyle.

At the outset we note that in deciding a motion for summary judgment it is not the function of the court to resolve any fact issues but rather merely to determine whether any factual issue pertinent to the controversy exists. Nyhus v. Travel Management Corp., 151 U.S.App.D.C. 269, 271, 466 F.2d 440, 442 (1972), citing Dewey v. Clark, 86 U.S.App.D.C. 137, 143, 180 F.2d 766, 772 (1950). See Super.Ct.Civ.R. 56(c). The moving party on the motion has the burden of showing the absence of a genuine issue as to any material fact and for this reason the material lodged in support of the motion must be viewed in the light most favorable to the opposing party. Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). In order to survive the summary judgment motion, the opposing party need only show that there is sufficient evidence supporting the claimed factual dispute to require a jury or judge to resolve the parties' differing versions of the truth at trial. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968). Summary judgment is appropriate only where "it is quite clear what the truth is . . ." Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 88 L.Ed. 967 (1944). A doubt as to whether or not an issue of fact has been raised is enough to preclude a grant of summary judgment. Washington Post Co. v. Keogh, 125 U.S.App.D.C. 32, 34, 365 F.2d 965, 967 (1966).

This court's function on appeal of a grant of summary judgment is to determine whether there was any issue of fact pertinent to the ruling, Bloomgarden v. Coyer, 156 U.S.App.D.C. 109, 114, 479 F. 2d 201, 206 (1973), and we are not bound by the trial judge's findings. E. P. Hinkel v. Manhattan Co., 165 U.S.App.D.C. 140, 506 F.2d 201 (1974).

We conclude that with respect to the allegations of a breach of fiduciary duty by Boyle, inducement of the breach by NAIRE and civil conspiracy by both parties, issues were raised which require resolution by a fact-finder at trial. Accordingly, the summary judgment orders entered in favor of appellees must be reversed.

I.U.'s contentions regarding Boyle's alleged breach of fiduciary duties were supported by Boyle's admissions that he had failed to disclose Connery's plan to I. U., and that he had duplicated and removed from I.U.'s offices the computerized billing cards used in connection with the NAIRE account. As an agent of I.U., Boyle owed his employer the duty of undivided loyalty. Restifo v. Pastor, D.C. Mun.App., 129 A.2d 533, 536 (1957). Further, he had a duty to disclose to I.U. any knowledge he obtained which was relevant to his agency relationship with I.U. Yelen v. Banks, D.C.Mun.App., 146 A.2d 569, 571 (1958). We believe that Boyle's admissions were sufficient to raise an issue as to whether Boyle breached fiduciary duties owed to I.U.

Appellees urge that even assuming Boyle's acts constituted fiduciary breaches, the damage I.U. complains of (i. e., the loss of commission income) was not a proximate result of these actions. We...

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