Parson v. Allstate Ins. Co.
| Docket Number | 22-cv-3962 |
| Decision Date | 04 August 2023 |
| Parties | JENNIFER L. PARSON, individually and as Administrator of the estate of MICHAEL MICHAEL PARSON, deceased, BRANDON C. RONDON, an individual, and CATHERINE HYMEL, an individual, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Plaintiffs Jennifer L. Parson, individually and as Administrator to the Estate of Michael Bradley Parson, her deceased husband Brandon C. Rondon, and Catherine C. Hymel, filed a five-count amended complaint against Defendant Allstate Insurance Company (Allstate) alleging four counts of breach of contract and one count of negligent infliction of emotional distress. Counts I, II, and V of Plaintiffs' amended complaint are breach of contract claims alleging that Allstate violated its agreement with its own agents by interfering in negotiations regarding the sale of their books of business. Jennifer Parson also alleges a claim against Allstate for negligent infliction of emotional distress in Count IV. Count III of the complaint alleges a breach of contract claim premised on Allstate's unjust termination of Rondon.
Allstate moves to dismiss Count IV under Federal Rule of Civil Procedure 12(b)(6). Allstate also moves to sever Plaintiffs' claims as improperly joined under Federal Rules of Civil Procedure 20 and 21. For the reasons outlined below, both of Allstate's motions are granted in full.
The Court accepts all well-pled factual allegations contained in Plaintiffs' amended complaint as true when ruling on this Motion to Dismiss. Exclusive Agency Owners (“Agents”) contract with Allstate under the Exclusive Agency Agreements (“EA Agreement”) to sell insurance on behalf of Allstate in exchange for commissions and the ability to build a book of business. This book of business, or agency, serves as an alienable asset for Agents. (Dkt. 14 ¶¶ 15-26.) Upon termination of their contract with Allstate, Agents can sell their economic interest in the business to an Allstate-approved buyer within 90 days or receive a termination payment from Allstate. (Dkt 14 ¶ 27.) The EA Agreement outlines that Allstate's only involvement in the sales process is to approve a buyer and that Allstate maintains broad discretion in the approval or denial of potential buyers. (Dkt. 14 ¶¶ 28-29.) In making approval decisions, Allstate assesses whether the potential buyer is qualified to be an Agent.
Each plaintiff's claim arises from his or her attempt to sell their book of business. Jennifer Parson met with an Allstate representative in October 2019, after Michael Parson was diagnosed with a terminal illness, to inform Allstate of his condition and to inquire about preserving his estate's interest in his agency. No one informed Jennifer Parson at the meeting that any additional documentation might be needed to ensure she would maintain an interest in Michael Parson's agency after his death. On July 31, 2020 Michael Parson passed away. Michael Parson's will specified that Jennifer Parson was his beneficiary for all stock, accounts, and businesses, including his agency. In the coming months, she began to negotiate sale of the agency with a prospective buyer and kept an Allstate representative apprised of her progress. However, Allstate, after requiring additional documentation from Jennifer Parson, did not confirm that Jennifer Parson was the legal representative of Michael Parson's agency and declined to allow her to enter sales negotiations. At this point, the 90-day time period for the sale of the agency was elapsing, and Allstate did not confirm that Jennifer Parson was able to sell the agency, and repeatedly asked her for additional documentation. Allstate also informed Jennifer Parson that it intended to deny any sale to her first potential buyer, Gigi Stover. Allstate then referred Jennifer Parson to an insurance agency broker to facilitate the sale of the agency. As Jennifer Parson's time to sell the agency was running out, she attempted to contact Allstate numerous times regarding an extension to the 90-day period and about approval of a sale to Gigi Stover. Allstate ghosted[1]Jennifer Parson, returning the contact on October 27 to inform her that her time to sell the agency had elapsed and that they were closing rhe agency. Allstate reassigned the agency and awarded Jennifer Parson a termination payment that she alleges was $257,000 less than the market value of her book of business.
Rondon operated an Allstate agency in Oklahoma. Allstate terminated his contract on March 1, 2021 without stating a reason for the termination. Because he had been an agent for less than five years, Rondon was not eligible for a termination payment for his book of business. Allstate gave him 90 days to sell the agency. Rondon began negotiating a sale to Daniel Arnette, but alleges that Allstate representatives talked Arnette out of purchasing Rondon's agency. Rondon then learned that he was being investigated by the Oklahoma Department of Insurance because Allstate flagged his license for fraud. After he contacted the Department, they resolved the allegation and his license was reinstated, and Allstate was fined $15,000 for a frivolous claim. Rondon ultimately found another Allstate Agent, Tracy Martino, to purchase the agency, but alleges that the purchase price was far less than the book of business was worth.
Hymel began working as an Allstate Agent in Louisiana in 1989. In 2018, an Allstate representative contacted Hymel and attempted to convince her to sell her agency to another agent, Glenn Liuza; Hymel, then 61, declined, indicating that she did not plan to retire until she was 65. In 2019, Hymel's field sales leader, Doug Caminita[2], began repeated attempted to convince her to sell her agency to another agent, Gina Molinar. Hymel was skeptical of this, as Molinar was not a licensed agent and was Caminita's girlfriend. In February 2020, Hymel listed her agency for sale. Hymel found a willing buyer, but Caminita refused to approve the sale. Hymel contacted Allstate directly. Neither Allstate nor Caminita followed up to approve the sale, and the potential buyer backed out. Hymel found another potential buyer, but Allstate denied the buyer because she failed a required Series 6 licensing test. Hymel alleges, however, that that Allstate later dropped that requirement and allowed the same potential buyer to purchase a different agency. In December 2020, Allstate informed Hymel it was terminating the contract for her agency because she had not sold policies in 2020, triggering a 90-day period to sell her agency. Caminita then denied approval of a sale to at least four potential buyers. When Hymel found a fifth potential buyer, Caminita called the buyer to say Allstate would not approve sale of the agency unless the buyer agreed to maintain the physical office location, and the buyer backed out. Allstate then told another potential buyer that Hymel's contract with Allstate had been terminated by Allstate, causing him to back out. Hymel then began negotiating with Allstate Agent Adam Levenway regarding the sale of her agency. Hymel alleges that, three weeks before her 90-day window elapsed, Allstate informed Levenway that it would provide him with her agency for free. Levenway ended negotiations with Hymel and ultimately, Allstate did provide Levenway with Hymel's agency for free after Hymel's 90-day period to sell the agency elapsed.
A plaintiff must “state a claim to relief that is plausible on its face” in a complaint. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A plausible complaint exists when the plaintiff alleges enough “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court will “accept all well-pleaded facts as true and draw reasonable inferences in the plaintiffs' favor.” Roberts v. City of Chicago, 817 F.3d 561, 564 (7th Cir. 2016).
Under Federal Rule of Civil Procedure 20(a), plaintiffs may combine separate claims into the same lawsuit if: (1) their claims arise out of the of the same transaction or occurrence; and (2) there is a question of law or fact that is common to all plaintiffs. FED. R. CIV. P. 20(a). Federal Rule of Civil Procedure 21 dictates that when these parties are improperly joined in a complaint, the Court may sever claims as it deems necessary. FED. R. CIV. P. 21.
The Court will address, in turn, the motions to dismiss and sever.
Allstate moves to dismiss Jennifer Parson's negligent infliction of emotional distress (“NIED”) claim, arguing that the symptoms she experienced do not suffice to show that she suffered damages from which she can recover. A claim for negligent of infliction of emotional distress must include the traditional elements of a negligence claim including duty, breach, causation, and damages. Schweihs v. Chase Home Fin., LLC, 41 N.E.3d 1011, 1018 (Ill. 2016); Benton v. Little League Baseball, Inc., 450 Ill.Dec 550, 578-79, 181 N.E.3d 902 (1st Dist. 2020). For negligent infliction of emotional distress claims, Illinois law allows recovery for direct victims as well as bystanders, but imposes different rules based on that distinction. Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 702 (7th Cir. 2009). A direct victim “is someone who suffers harm as a direct consequence of someone's negligence.” Schweihs, 41 N.E.3d at 1018. “[P]hysical contact of some sort is absolutely necessary to sustain a direct victim negligent infliction of...
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