Lewelling v. Farmers Ins. of Columbus, Inc.

• Decision Date: 10 July 1989
• Docket Number: No. 88-3025,88-3025
• Citation: 879 F.2d 212
• Parties: Bill LEWELLING, et al., Plaintiffs-Appellants, v. FARMERS INSURANCE OF COLUMBUS, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 212

879 F.2d 212

Bill LEWELLING, et al., Plaintiffs-Appellants, v. FARMERS INSURANCE OF COLUMBUS, INC., et al., Defendants-Appellees.

No. 88-3025.

United States Court of Appeals Sixth Circuit.

Argued May 15, 1989.

Decided July 10, 1989.

Melvin D. Weinstein (argued), Shelby M. Steger, John C. McDonald, Emens, Hurd, Kegler & Ritter, Columbus, Ohio, for Farmers Ins. of Columbus, Inc.

Melvin D. Weinstein (argued), Emens, Hurd, Kegler & Ritter, Columbus, Ohio, for The Ohio State Life Ins. Co., Farmers Ins. Exchange, Truck Ins. Exchange, Fire Ins. Exchange, Mid-Century Ins. Co. and Farmers Ins. Co.

Louis G. Fazzi (argued), Fazzi & Fazzi, Rancho Cucamonga, Cal., Donald J. Parrish, Ventura, Cal., for Bill Lewelling, Steve Petrillo, Donald Huddleston and Roy White.

Before MARTIN and MILBURN, Circuit Judges, and PECK, Senior Circuit Judge.

MILBURN, Circuit Judge.

Plaintiffs-appellants Bill Lewelling, Steve Petrillo, Don Huddleston, and Roy White (collectively, "plaintiffs") appeal the summary judgment of the district court in favor of defendants-appellees Farmers Insurance of Columbus, Inc., Ohio State Life Insurance Company, Farmers Insurance Exchange, and Mid-Century Insurance Company (collectively, "Farmers") on plaintiffs' claims against Farmers for breach of contract and fraud. For the reasons that follow, we affirm.

I.

A.

The present action was commenced on August 23, 1983, when Farmers filed a complaint against Lewelling in the Common Pleas Court in Franklin County, Ohio. Farmers sought repayment from Lewelling for monies Farmers had paid him while he was a district manager for Farmers in Ohio. Lewelling removed this action to the United States District Court for the Southern District of Ohio on October 14, 1983, based on diversity of citizenship. Lewelling alleged that he is a resident of Oklahoma and that Farmers is incorporated and has its principal place of business in both California and Ohio.

Meanwhile, on October 6, 1983, Lewelling, along with plaintiffs Petrillo, Huddleston, and White (and two other plaintiffs who have since dismissed their claims) filed an action against Farmers in the United States District Court for the Central District of California. Plaintiff's complaint contained two counts. Count I alleged that plaintiffs had been agents and district managers for Farmers in states other than Ohio and that around October 1, 1979, Farmers made oral promises to plaintiffs to induce them to become district managers for Farmers in Ohio. Count I further alleged that all four plaintiffs decided to move to Ohio and become district managers in reliance upon these promises, and that plaintiffs all began serving as district managers in Ohio following Farmers' commencement of operations in that state. Plaintiffs alleged that these promises made to them were not true and that Farmers failed to perform the matters that it had promised in breach of its oral promises.

Count II alleged a cause of action for promissory fraud based upon the same facts relied upon in Count I. Plaintiffs alleged in Count II that they were induced, encouraged, and coerced by Farmers into moving to Ohio to establish district managerial areas as a result of a scheme between the individual companies comprising Farmers. Plaintiffs further alleged that Farmers intended to defraud them and to induce them falsely and fraudulently to terminate their previous employment with Farmers in other states and to move to Ohio and become district managers for Farmers in a new state where Farmers had not previously sold insurance.

On November 28, 1983, Farmers answered plaintiffs' complaint denying that any oral promises had been made to induce plaintiffs to move to Ohio. Additionally, Farmers asserted counterclaims against all plaintiffs seeking repayment of monies Farmers paid to plaintiffs, pursuant to written contracts, while plaintiffs served Farmers as district managers in Ohio.

On February 14, 1984, the United States District Court for the Central District of California entered an order to show cause why plaintiffs' action should not be transferred to the United States District Court for the Southern District of Ohio since Farmers' claim against Lewelling (which was essentially identical to its counterclaim in the California action) was already pending before the district court in the Southern District of Ohio. Although plaintiffs opposed the transfer, on June 20, 1984, for "the convenience of the parties and the interest of justice," the District Court for the Central District of California transferred the action to the District Court for the Southern District of Ohio pursuant to 28 U.S.C. Sec. 1404(a). ¹ On October 22, 1984, plaintiffs' claims against Farmers were consolidated with Farmers' claim against Lewelling.

On July 16, 1986, defendants filed a motion, which was granted, for leave to assert a statute of limitations defense. See J.A. at 319. Then, with discovery completed, on July 18, 1986, Farmers moved for summary judgment as to plaintiffs' claims. On December 7, 1987, Farmers moved for summary judgment as to its counterclaims against plaintiffs.

On December 7, 1987, the district court granted Farmers' motion for summary judgment as to plaintiffs' claims, holding that: (1) plaintiffs Petrillo, White, and Huddleston were aware of the facts constituting the alleged fraud more than three years before filing their claims and such claims were thus barred by the three-year statute of limitations provided in Cal.Civ.Proc.Code Sec. 338(4); ² (2) all four plaintiffs' breach of contract claims were based upon oral promises allegedly made by Farmers before plaintiffs entered into integrated, written contracts that did not reflect the alleged promises, and that those claims were thus barred by the Ohio parol evidence rule; and (3) that all four of the plaintiffs' fraud claims were based upon the same alleged oral promises of future performance, not reflected in the subsequent, integrated contract, and were thus barred by the parol evidence rule under this court's holding in Coal Resources, Inc. v. Gulf & Western Indus., Inc., 756 F.2d 443 (6th Cir.1985) (applying Ohio law). The district court, however, denied Farmers' summary judgment motion on its counterclaims against plaintiffs. J.A. at 1378-94.

Plaintiffs timely appealed. Although the counterclaims are still pending, on February 19, 1988, the district court in an amended order nunc pro tunc entered a proper certification pursuant to Fed.R.Civ.P. 54(b), determining that there was no just reason for delay and directed the clerk to enter final judgment in favor of Farmers on plaintiffs' claims.

B.

All four plaintiffs in this case raise common allegations. They each maintain that they were Farmers' agents in other states (White and Petrillo in California, Huddleston in New Mexico, and Lewelling in Oklahoma) and were induced to move to Ohio to become district managers for Farmers in reliance upon certain oral representations regarding Farmers' activities in Ohio. Essentially, they all claim that they were told that Farmers would: (1) conduct extensive advertising in Ohio, (2) sell insurance at rates below Farmers' competitors' rates in Ohio, (3) provide the district managers with authority to hire experienced agents from other insurance companies in Ohio, and (4) provide the district managers with the files of "orphan policyholders" from which they could expect to derive business.

All plaintiffs in the present case signed Farmers' form "District Managers' Appointment Agreement" which contained, among other things, an integration clause stating that the agreement "supersedes and takes the place of any and all prior agreements, written or otherwise...." The appointment agreement contains no mention of the prior oral representations allegedly made to plaintiffs. All plaintiffs testified when deposed that they read the agreement, understood its terms, yet failed to suggest alterations or additions.

Upon moving to Ohio, all plaintiffs discovered that the alleged oral representations made to them around October 1, 1979, were false. Specifically, it soon became apparent to all plaintiffs that Farmers would not conduct any "media blitz," and that Farmers' rates were higher than their competitors' rates. Moreover, in time, the plaintiffs all concluded that they would not be able to employ experienced agents from other insurance companies, nor be provided the files of "orphan policyholders." As earlier stated, plaintiffs filed their complaint on October 6, 1983.

II.

A.

The plaintiffs' claims were dismissed pursuant to Fed.R.Civ.P. 56(c) on Farmers' motion for summary judgment. "On summary judgment the inferences to be drawn from the underlying facts ... must be viewed in the light most favorable to the party opposing the motion." Matsushita Electric Industry Co. v. Zenith Radio, 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)). Thus, "summary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). However, "[w]here the moving party has carried its burden of showing that the pleadings, depositions, answers to interrogatories, admissions and affidavits in the record, construed favorably to the nonmoving party, do not raise a genuine issue of material fact for trial, entry of summary judgment is appropriate." Gutierrez v. Lynch, 826 F.2d 1534 (6th Cir.1987).

B.

As indicated, the present case was commenced by plaintiffs in the United States District Court for the Central District of California. The California district court, however, transferred this action to the Southern District of Ohio under 28 U.S.C. Sec. 1404(a). Accordingly, under Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 820, 11 L.Ed.2d 945 (1964)...