A. John Cohen Ins. Agency, Inc. v. Middlesex Ins. Co.

• Decision Date: 30 July 1979
• Parties: A. JOHN COHEN INSURANCE AGENCY, INC. v. MIDDLESEX INSURANCE COMPANY et al.
• Court: Appeals Court of Massachusetts

Page 862

392 N.E.2d 862

8 Mass.App.Ct. 178

A. JOHN COHEN INSURANCE AGENCY, INC. v. MIDDLESEX INSURANCE COMPANY et al.

Appeals Court of Massachusetts, Suffolk.

Argued March 13, 1979.

Decided July 30, 1979.

Edward T. Dangel, III, Boston, for plaintiff.

Roberta L. Paris, Framingham, for defendants.

Before HALE, C. J., and ROSE and PERRETTA, JJ.

PERRETTA, Justice.

The plaintiff, A. John Cohen Insurance Agency, Inc. (agency), brought this action in the Superior Court against the defendants, Middlesex Insurance Company and Patriot General Insurance Company (companies), alleging that the companies had terminated their insurance agency contract with it in bad faith. The agency sought a declaration that the contract, which was terminable at will by either the agency or the companies, impliedly required termination for just cause. It also sought specific performance of the contract or, in the alternative, damages. The companies moved for summary judgment, and the trial judge allowed the motion, and entered summary judgment for the companies. We affirm the judgment.

An insurance agency relationship had existed among the parties since 1969. ¹ In February of 1975 the agency intended to discontinue its business with the companies due to their "unstable financial condition." The companies then launched a campaign of persuasion against the agency, urging it not to withdraw its business because the companies were reorganizing, and they desired to preserve the relationship. The companies were rewarded for their intensive efforts, and in March of 1975 they and the agency entered into a contract. The contract entitled the agency "to receive and accept proposals of insurance" based upon "classes of risk and terms" designated by the companies. It also contained a terminable-at-will provision. ² The parties thus continued their relationship, all performing amicably, until the beginning of May, 1976, when the companies' field representative orally informed the agency's president that the companies would not write any more "personal lines business" with the agency. The agency made numerous requests of the companies for a conference in order that their decision could be discussed or explained, but the companies denied all these requests. About a week after the agency first heard of the impending contract modification, it received a letter from the companies which stated that "the Company feels it is no longer in a position to entertain (p)ersonal (l)ines business for your agency." The only new or renewable "personal lines" policies that the companies intended to consider were those which had "(c)ommercial support." The letter, dated May 13, 1976, also advised the agency that these changes were to be effective as of June 1, 1976. The agency regarded this change as a drastic and unexpected reduction of its business with the companies, and it sought, but did not receive, an explanation from them. Within a month the field representative again informally advised the agency that they were about to terminate the entire agency agreement. In response to this information the agency decided that it should minimize any adverse publicity that could result from the termination by taking the initiative and striking the first blow. Accordingly, it sent the companies a thirty days' written notice of termination ³ (see note 2, Supra ). However, the impact of this maneuver was somewhat diminished by the fact that on the same day that it sent its letter, the companies sent to the agency written notice of termination, ⁴ and the letters crossed in the mail. When the agency's repeated requests for an explanation were ignored by the companies, it commenced this action which has as its basis the allegation of bad faith termination of the agency contract. See Fortune v. National Cash Register Co., 373 Mass. 96, 364 N.E.2d 1251 (1977).

Our review of the granting of the motion for summary judgment is controlled by the standard most recently repeated in Noyes v. Quincy Mut. Fire Ins. Co., --- Mass.App. ---, ---, ^A 389 N.E.2d 1046, 1048 (1979): "If the moving party by his supporting materials satisfies the burden of showing that there is no genuine issue of material fact and that he is entitled, as matter of law, to a judgment (Community Natl. Bank v. Dawes, 369 Mass. 550 at 554 (1976, 340 N.E.2d 877) . . . ), the opposing party may not rest on his pleadings, but must allege specific facts which establish a triable issue in order to avoid entry of a summary judgment . . ." The companies' motion and affidavit are based upon the agency's notice of termination. The agency does not dispute that it sent the notice; rather, it asserts in its opposing affidavit (Mass.R.Civ.P. 56(e), 365 Mass. 825 (1974)) that the letter was prompted by and was the result of the companies' wrongful acts. See e. g., Restatement (Second) of Agency § 455, and Comment a (1958). The companies did not contradict the facts which were set out in the agency's affidavit. The issue thus before us is whether the agency's affidavit recites facts sufficient to raise a genuine issue of material fact as to the legality of the companies' termination of the contract. "(G)ranting summary judgment is error when the party opposing the motion has alleged facts relating to the transaction on which suit has been brought which raise issues entitling him to a trial. See McMahon v. M&D Builders, Inc., 360 Mass. 54, 57-58, 271 N.E.2d 649 (1971)." Dawes, supra at 556, 340 N.E.2d at 880.

The agency argues that the acts described in its affidavit, when viewed in their totality, create an inference of bad faith, and, consequently, a question of fact exists based upon Fortune, supra, 373 Mass. at 104, 364 N.E.2d at 1257: "We believe that the holding in (Monge v. Beebe Rubber Co., 114 N.H. 130, 133, 316 A.2d 549 (1974)) merely extends to employment contracts the rule that ' "in Every contract there is an implied covenant that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract, which means that in Every contract there exists an implied covenant of good faith and fair dealing" (emphasis supplied). Uproar Co. v. National Broadcasting Co., 81 F.2d 373, 377 (1st Cir.), cert. denied, 298 U.S. 670, 56 S.Ct. 835, 80 L.Ed. 1393 (1936), quoting from Kirke La Shelle Co. v. Paul Armstrong Co., 263 N.Y. 79, 87, 188 N.E. 163 (1933).' Druker v. Roland Wm. Jutras Assocs., 370 Mass. 383, 385, 348 N.E.2d 763, 765 (1976). Restatement (Second) of Contracts § 231 (Tent. Drafts. Nos. 1-7 1973). 5 S. Williston, Contracts § 670 (3d ed. 1961)." Even assuming, without deciding, that Fortune is applicable to the present agency contract, ⁵ the agency's opposing affidavit is insufficient. It does not describe conduct by the companies which is either contrary to the notion of "good faith" or consistent with the description of "bad faith," as set out in Restatement (Second) of Contracts § 231, Comments a and d (Tent. Draft No. 5 1970). There is no allegation of conduct of the type found indicative of bad faith in Fortune, termination to avoid payment of bonus credits. The affidavit is silent as to any act by the companies which constitutes an aspect of fraud, deceit, or misrepresentation. See Kilroy v Barron, 326 Mass. 464, 465, 95 N.E.2d 190 (1950); Barrett Assoc., Inc. v. Aronson, 346 Mass. 150, 152, 190 N.E.2d 867 (1963); DUNN V. HOLLADAY, --- MASS.APP. ---, 372 N.E.2D 286 (1978)^B. It gives no intimation that the companies acted for a reason which "contrasts" with "cause," as discussed in Amoco Oil Co. v. Dickson, --- Mass. ---, --- - ---, ^C 389 N.E.2d 406 (1979). We are not unmindful of the fact that summary judgment on a matter dealing with motive, intent, or subjective feelings requires "great circumspection." Nonetheless, "(t)here must be some indication that (the agency) can produce the requisite quantum of evidence to enable (it) to reach the jury with (its) claim." Hahn v. Sargent, 523 F.2d 461, 468 (1st Cir. 1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 54 (1976).

The agency cannot complain that its failure to provide...