Kaldi v. FAMERS INS. EXCH.

• Decision Date: 13 April 2001
• Docket Number: No. 32620.,32620.
• Parties: Steven R. KALDI, Appellant, v. FARMERS INSURANCE EXCHANGE, an Inter-Insurance Exchange; Truck Insurance Exchange, an Inter-Insurance Exchange; Fire Insurance Exchange, an Inter-Insurance Exchange; Mid-Century Insurance Company, a Corporation; Farmers New World Life Insurance Co., a Corporation; Farmers Group, Inc., a Corporation; Kyle Wolff, an Individual; Jon Porter, an Individual; Jerry J. Carnahan, an Individual; Respondents.
• Court: Nevada Supreme Court

21 P.3d 16

117 Nev. 273

Steven R. KALDI, Appellant, v. FARMERS INSURANCE EXCHANGE, an Inter-Insurance Exchange; Truck Insurance Exchange, an Inter-Insurance Exchange; Fire Insurance Exchange, an Inter-Insurance Exchange; Mid-Century Insurance Company, a Corporation; Farmers New World Life Insurance Co., a Corporation; Farmers Group, Inc., a Corporation; Kyle Wolff, an Individual; Jon Porter, an Individual; Jerry J. Carnahan, an Individual; Respondents.

No. 32620.

Supreme Court of Nevada.

April 13, 2001.

Edward M. Bernstein & Associates and Justin M. Clouser, Las Vegas; Perona, Langer, Beck & Lallande and Michel F. Mills and E. Todd Trumper, Long Beach, California, for Appellant.

Rawlings Olson Cannon Gormley & Desruisseaux, Las Vegas; Forrest Henderson Sloan & Davis, Pinedale, California, for Respondents.

Before MAUPIN, C.J., YOUNG and BECKER, JJ.

OPINION

PER CURIAM.

The district court dismissed an action brought by appellant, Steven R. Kaldi, against the respondents in this case, Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-century Insurance Company and Farmers New World Life Insurance Company (hereinafter collectively referred to as "Farmers"). The action concerned Farmers' termination of an exclusive agency agreement with Kaldi.¹ In particular, Kaldi asserted that because Farmers did not have good cause to terminate the agreement, Farmers wrongfully terminated it. Because we conclude that the agency agreement did not contain a "for good cause" provision, we affirm.

FACTS

On or about February 16, 1981, Kaldi and Farmers entered into a contract entitled "Agent Appointment Agreement" ("Agreement"). The Agreement provided that Kaldi would be authorized to sell insurance on behalf of Farmers and that he would submit requests or applications for insurance to other insurance companies only in areas where Farmers did not provide coverage or had rejected coverage. In return, Farmers would pay "new business and service" commissions to Kaldi and would provide training, forms and advertising assistance to Kaldi's business. The contract also set forth methods of termination and the basis for calculating the value of the agency upon termination. The provisions of the Agreement relevant to this dispute are as follows:

C. This Agreement terminates upon the death of the Agent and may be terminated by either the Agent or the Companies on three (3) months written notice.

If the provisions of this Agreement are breached by either the Agent or the Companies, the Agreement may be terminated by the other party on thirty (30) days written notice. This Agreement may be terminated immediately by mutual consent or by the Companies for the following reasons:

1. Embezzlement of monies belonging to the companies.

2. Switching insurance from the Companies to another carrier.

3. Abandonment of the Agency.

4. Conviction of a felony.

5. Willful misrepresentation that is material to the operation of the agency.

D. In the event this Agreement is terminated by the Companies, the Agent may within ten (10) days of receiving the notice of termination request a review of the termination by a termination review board.

....

The Review Board will convene within twenty (20) days of the request by the Agent at the Regional Office or such other convenient place selected by the Regional Manager.

The Board will submit a summary of the hearing and its recommendations to the Executive Home Office.

The chief executive officer and staff will review the summary and recommendations, reach a decision and promptly advise the Agent of that decision....

....

G. In the event of termination of this Agreement, the Companies will normally pay "Contract Value" to the Agent or heirs in the manner hereinafter set out. If the Companies do not pay the "Contract Value", the Agent or heirs may, in writing, nominate a successor(s). Such nominee(s) must be acceptable to the Companies, and be ready, willing, and able to operate the Agency within thirty (30) days of termination of this Agreement.

H. The Agent agrees to transfer and assign all of the Agent's interest under this Agreement and Agency (including any interest in the telephone numbers and leased or rented office location) to the Companies or any other purchaser in the event they make payment to the Agent pursuant to Paragraph G of this Agreement.... The Agent acknowledges that all manuals, lists and records of any kind (including information pertaining to policyholders and expirations) are the confidential property of the Companies and agrees they shall not be used or divulged in any way detrimental to the Companies and shall be returned to the Companies upon termination of the Agency.

I. Nothing contained herein is intended or shall be construed to create the relationship of employer and employee; rather, the Agent is an independent contractor for all purposes.

The time to be expended by the Agent is solely within the Agent's discretion, and the persons to be solicited and the area wherein solicitation shall be conducted is at the election of the Agent.

The Agent shall, as an independent contractor, exercise sole right to determine the time, place and manner in which the objectives of this Agreement are carried out, provided only that the Agent conform to normal good business practice, and to all State and Federal laws governing the conduct of the Companies and their Agents.

On September 23, 1996, Kaldi received written notice of termination pursuant to provision "C" of the Agreement. Kaldi requested a termination review, pursuant to provision "D," which was conducted on December 18, 1996. The Termination Review Board unanimously approved Kaldi's termination. The Agreement was terminated on December 26, 1996, and Kaldi was paid the contract value pursuant to provision "G" of the Agreement.

On July 17, 1997, Kaldi filed a complaint in the Clark County District Court, asserting claims for breach of contract, tort, contractual breach of the implied covenant of good faith and fair dealing and misappropriation of trade secrets. In support of these claims, Kaldi argued that the Agreement could be terminated only for cause and that when the Agreement was wrongfully terminated, he became the owner of all information (trade secrets) pertaining to his customers. In addition, Kaldi alleged that the Agreement in reality created an employer/employee relationship. Kaldi asserted that the conduct and practices of Farmers supported a finding of an implied covenant that the employment relationship would not be terminated without good cause. Finally, Kaldi contended that the Termination Review Board's hearing was a "sham" in violation of the implied covenant of good faith and fair dealing inherent in contractual relations.

Farmers moved to dismiss the complaint, arguing that the Agreement was not an employment agreement, and that it was unambiguous and provided for termination without cause upon three months' written notice. Farmers also asserted that the trade secrets belonged to Farmers once the contract value provided for in the Agreement had been paid to Kaldi. As to its alleged breach of the implied covenant of good faith and fair dealing, Farmers noted that as the Agreement was terminable without cause upon proper notice, there was no breach of the contract and therefore no breach of the implied covenant.

Kaldi countered that the "Termination Review Board" provision was ambiguous and that parol evidence was admissible to aid in the Agreement's interpretation. In this connection, Kaldi argued that the custom and practices of Farmers, together with a document entitled "Agent Appointment Agreement Explainer" ("Explainer"), clarified any ambiguity in favor of a construction that three months' notice terminations were only effective upon a showing of good cause.² In the alternative, Kaldi asserted that the Agreement was not a standard agency agreement, but was an employee/employer agreement and that the complaint contained sufficient allegations to support a claim of an implied good cause provision overcoming the normal at-will presumption applicable to employment contracts in Nevada.

The district court dismissed Kaldi's complaint, finding that the Agreement was an unambiguous agency contract, Kaldi was not an employee of Farmers, and the Agreement was terminable at the will of either party upon appropriate notice. The district court further found that the claims relating to good faith and trade secrets could not be maintained if there was no breach of the Agreement. This appeal followed.³

DISCUSSION

When reviewing an order granting a motion to dismiss, this court "considers whether the challenged pleading sets forth allegations sufficient to establish the elements of a right to relief." Madera v. SIIS, 114 Nev. 253, 256, 956 P.2d 117, 119 (1998) (citing Pemberton v. Farmers Ins. Exchange, 109 Nev. 789, 792, 858 P.2d 380, 381 (1993)). In doing so, we are "bound to accept all the factual allegations in the complaint as true." Marcoz v. Summa Corporation, 106 Nev. 737, 739, 801 P.2d 1346, 1347 (1990) (citing Edgar v. Wagner, 101 Nev. 226, 227-28, 699 P.2d 110, 111-12 (1985)).

Kaldi contends that his exclusive agency arrangement with Farmers created an employer-employee relationship between himself and the companies. The plain language of the Agreement does not support Kaldi's assertion. "It has long been the policy in Nevada that absent some countervailing reason, contracts will be construed from the written language and enforced as written." Ellison v. C.S.A.A., 106 Nev. 601, 603, 797 P.2d 975, 977 (1990) (citing Southern Trust v. K & B Door Co., 104 Nev. 564, 568, 763 P.2d 353, 355 (1988) (holding that if a document is facially clear, it will be construed according to its language)). Here, provision "I" of the agreement specifically states that Kaldi is not an employee of Farmers and that nothing in the Agreement is intended to create an employee/employer relationship....