Performance Matters, Assocs. v. Fortune
| Decision Date | 05 June 2012 |
| Docket Number | No. 29A05–1107–PL–361.,29A05–1107–PL–361. |
| Citation | 968 N.E.2d 873 |
| Parties | PERFORMANCE MATTERS, ASSOCIATES and Conseco Marketing, LLC, Appellants–Defendants, v. Patrick A. FORTUNE, Appellee–Plaintiff. |
| Court | Indiana Appellate Court |
OPINION TEXT STARTS HERE
Appeal from the Hamilton Superior Court The Honorable William J. Hughes, Judge Cause No. 29D03–0704–PL–393.
Steven K. Huffer, Joshua F. Brown, S.K. Huffer & Associates, P.C., Carmel, Indiana, Attorneys for Appellants.
James R. Fisher, Debra H. Miller, Miller & Fisher, LLC, Indianapolis, Indiana, Attorneys for Appellee.
Performance Matters Associates, Inc. (“PMA”), and Conseco Marketing, LLC (“Conseco Marketing”) (collectively referred to as the “Defendants”), appeal the trial court's judgment in favor of Patrick Fortune on his complaint for breach of contract and accounting. Defendants raise several issues for our review, of which we find the following dispositive: whether the trial court clearly erred in finding the Defendants breached the parties' Agreement and therefore erred in entering judgment for Fortune. Concluding the trial court did not clearly err, we affirm.
Conseco Marketing is a wholly-owned subsidiary of Conseco, Inc. Conseco Marketing contracts with independent agents who sell Conseco 1 insurance products. PMA is an independent marketing organization that recruits, trains, and provides support to insurance agents. PMA is also a wholly-owned subsidiary of Conseco, Inc.
Fortune, under the PMA umbrella, entered into a Sales Representative Agreement (the “Agreement”) with Conseco Marketing dated September 19, 2004. 2 The Agreement, in relevant part, stated:
II. AGREEMENT DATE
The Agreement Date applies to all Policies issued on or after the Agreement Date, which is specified on the signature page of this Agreement.
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III. DUTIES, OBLIGATIONS, AUTHORIZATION AND LIMITATIONS
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5. So long as this [A]greement is in effect, you will not solicit insurance policies for an insurance company that is not a Conseco company unless the Company has given you prior written authorization to do so.
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16.... You attest that you are familiar with and understand the terms and conditions of the Policies and the supporting marketing literature made available by us in connection with any of the Policies which you sell under this Agreement.
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18. You agree that you will sell Policies and otherwise perform under this Agreement in compliance with all applicable federal and state laws, statutes, regulations and guidelines and within all the Company's rules and procedures which are intended to implement or which are otherwise related to such laws, statutes, and regulation guidelines. You acknowledge the Company's obligation to investigate alleged breaches of such laws, statutes, regulations, guidelines, rules or procedures, as it may deem appropriate, and to act on the findings of such investigations. You further agree to cooperate fully in any investigation.
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22. You agree to conduct your activities in a professional manner and in accordance with all laws and regulations in force in the states in which you market any Conseco Company's products. You agree to comply and cooperate with the Company in any investigations and understand that this Agreement can be terminated for cause for your failure to cooperate or comply with the company's market conduct related rules, procedures or guidelines. You agree to adhere to and subscribe willingly to Conseco's Corporate Code of Conduct, which goes beyond minimum legal requirements....
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VIII. COMPENSATION
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2. Your compensation shall be based on premiums paid on Policies issued by us on applications obtained by you prior to the termination date of this Agreement, at the rates specified in the attached Compensation Schedules.
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7. Compensation payable under this Agreement will continue to be paid after the date of termination for business submitted by you prior to the effective date of such termination of this Agreement according to the vesting terms of the attached Compensation Schedules, unless compensation is forfeited under Section IX, item 2, of this Agreement.3
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X. TERMINATION
a. Either party may terminate this Agreement by giving written notice to the other party at least thirty (30) days prior to such termination date.
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This Agreement will be immediately terminated for cause:
a. Upon failure to perform any of its material obligations or covenants and failure to conform to the rules and regulations of the Company....
b. Upon reason of fraud or willful or negligent violation of any federal or state statute or other directive affecting policies or the solicitation of policies issued by any Conseco Company, or misappropriation or withholding of funds, or any action taken or sanctioned by you without our prior knowledge and approval which results in the cancellation or surrender of policies issued by any Conseco Company.
c. If your license to act as an insurance agent or broker is revoked for cause after an opportunity for a hearing by the insurance department of any state or territory.
d. If you, while this Agreement is in force or within two years following its termination, endeavor to induce representatives to discontinue their contracts or appointments with the Company or the Conseco Companies or if you at any time, before or after termination of this Agreement, replace or attempt to replace the business of the Company with that of any other insurance carrier....
e. If you fail to pay an indebtedness to the Company on Demand.
f. If you otherwise acted to prejudice materially the interests of
Company in breach of this Agreement.
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5. Upon termination for cause, all rights to vested compensation will be forfeited. You agree that this provision will survive the termination of this Agreement, and that the Company is entitled to divest you of your compensation should you engage in activities described in Section IX (2)(c) or Section IX (2)(e) 4 after this Agreement is terminated.
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Forbearance or neglect of the Company to insist upon the performance of any of the terms of this Agreement or to declare a forfeiture or termination against you shall not constitute a waiver of such rights and privileges.
XII.ENTIRE AGREEMENT AND PRIOR AGREEMENTS This Agreement is the sole and entire agreement between the parties. Any understandings, negotiations, representations, statements, promises and agreements, oral or otherwise, not included in this Agreement shall have no force and effect in the construction of the rights and obligations of the parties except as provided in this Section XI [sic]. Compensation Schedules for this Agreement and any subsequent changes to such Compensation Schedules shall apply only to new applications submitted by and through you after such become effective. Any compensation payable under a prior Agreement shall continue to accrue in accordance with the rates specified in the Compensation Schedules in force at time of policy issue. Payment of such accrued compensation is subject to any liens, indebtedness or assignments, and is subject to forfeiture under Section IX of this Agreement.
Appellants' Appendix at 236–41. Fortune described his compensation as comprised of a first-year commission when he sold a new policy that was a percentage of the yearly premium and then a commission each year thereafter that the policy was renewed that was a smaller percentage of the yearly premium. After a certain number of years, the renewal commissions on a policy were vested, and he would continue to receive the renewal commissions even after the Agreement was terminated, provided it was not terminated for cause.
Fortune sold products for a predecessor of Conseco and for Conseco for several years prior to the effective date of the Agreement. During this time, Fortune was “flagged” for four instances in which he wrote the wrong birthdate for a customer on an application. Id. at 283. Notwithstanding these errors, Conseco Marketing thereafter entered into the Agreement with Fortune. In late 2004 and early 2005, Conseco received three complaints about Fortune, including a complaint that he failed to terminate a policy as the policyholder requested (the “Swank complaint”), a complaint that he convinced policyholders to convert and upgrade a policy by giving them erroneous information about their return of premium benefits (the “Bish complaint”), and a complaint that he entered the birthdate of a policyholder incorrectly on an application which appeared to make her eligible for coverage for which she was not actually eligible due to her age (the “Nelson complaint”). Conseco investigated each complaint, including requesting information from Fortune, which he did provide. Conseco ultimately determined the Swank and Bish complaints had no merit.
As for the Nelson complaint, Fortune sold to a customer a Heart Care policy which required the insured be under the age of seventy-five. The customer's date of birth is November 15, 1924, which meant that when Fortune called on her in January of 2004, she was seventy-nine. Fortune, however, wrote her date of birth as November 19, 1928, on the application, making it appear that she was seventy-four. Fortune testified he obtained the birthdate information from Conseco's agent call center, that he wrote it on the application and showed it to the customer, and that she affirmed the information was correct before she signed the application. Conseco determined this was a material misrepresentation requiring the policy be cancelled. The customer's premiums were returned to her.
On April 8, 2005, Conseco terminated the Agreement with Fortune for cause:
This letter is written notification that under the Termination for Cause provision of your contract with Conseco Companies, your contract will be...
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