Reginald Martin Agency v. Conseco Medical Ins.

Decision Date26 August 2005
Docket NumberNo. 1:04-cv-1587-TAB-RLY.,1:04-cv-1587-TAB-RLY.
Citation388 F.Supp.2d 919
PartiesREGINALD MARTIN AGENCY, INC., et al., Plaintiffs, v. CONSECO MEDICAL INSURANCE COMPANY, et al., Defendants.
CourtU.S. District Court — Southern District of Indiana

Lawrence Lee Bennett, Jr., Office of L. Lee Bennett, Jr., Mark Van Spix, Spencer J. Krupp, Spix & Krupp, Atlanta, GA, for Plaintiffs.

Bruce Harvey Beerman, Burr & Forman, Atlanta, GA, David Brian O'Dell, Gary Lane Howard, Jamie Lee Moore, Paul Peter Bolus, Burr & Forman LLP, Birmingham, AL, Scott A. Weathers, Huffer & Weathers, Indianapolis, IN, for Defendants.


BAKER, United States Magistrate Judge.

I. Introduction.

Effective April 15, 2002, Defendant Conseco Medical Insurance Company ("CMIC")2 terminated its relationship with several insurance agents/brokers as a result of its decision to withdraw from the major medical insurance market in various states. The insurance agents/brokers (collectively "the Plaintiffs") filed suit alleging a variety of claims, including breach of contract, breach of fiduciary duty, and tortious interference with a prospective business advantage.3 CMIC seeks summary judgment on these claims arguing, among other things, that it had a contractual right to terminate its relationship with the Plaintiffs. In addition, CMIC contends that it did not owe a fiduciary duty to the Plaintiffs because no special relationship existed between the parties. As explained more fully below, the Court agrees that CMIC did not breach its contract — or contracts, as the case may be — with the Plaintiffs. Accordingly, CMIC is entitled to summary judgment on the Plaintiffs' breach of contract claim. However, questions of material fact remain regarding the Plaintiffs' claim for breach of fiduciary duty and tortious interference with a prospective business advantage. CMIC's motion for summary judgment is denied on those claims.

II. Standard.

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Illinois Cent. R. Co. v. South Tec Development Warehouse, Inc., 337 F.3d 813, 816 (7th Cir.2003). "`Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.' "Fritcher v. Health Care Service Corp., 301 F.3d 811, 815 (7th Cir.2002), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court construes all facts and draws all reasonable inferences in the light most favorable to the non-moving party. Butera v. Cottey, 285 F.3d 601, 605 (7th Cir.2002). Because the purpose of summary judgment is to isolate and dispose of factually unsupported claims, the non-movant must respond to the motion with evidence setting forth specific facts showing that there is a genuine issue for trial. See Michael v. St. Joseph County, 259 F.3d 842, 845 (7th Cir.2001).

III. Background.4

The Plaintiffs were high-volume health insurance agents/brokers doing business across various states in the South and in the Midwest from Ohio to Montana. [2 nd Amend. Compl. ("Compl."), ¶¶ 1-10, 20].5 By 1997, each Plaintiff had entered into a Field Marketing Organization ("FMO") agreement with Connecticut National Life Insurance Company ("Connecticut National"). [Compl., ¶ 21]. The FMO was a non-exclusive business relationship that permitted the Plaintiffs to offer other lines of similar coverage. [Compl., ¶ 21].

CMIC sold individual major medical health insurance policies throughout the United States through insurance agents like Plaintiffs. [Compl., ¶ 11]. In 1997, CMIC purchased Connecticut National. [Compl., ¶ 22]. After the acquisition, CMIC, in conjunction with a related and affiliated company, Conseco Marketing, LLC, developed a new, exclusive FMO agreement that replaced the previous FMO agreements between Plaintiffs and Connecticut National. [Compl., ¶ 22; Docket No. 60, Ex. C, p. 2]. The agreements were mandatory for those who wished to continue to do business with CMIC. By 1999, each of the Plaintiffs had entered a Sales Representative Agreement ("the 1999 agreement") with Conseco Marketing, authorizing the Plaintiffs to sell CMIC's policies. [Compl., ¶¶ 22-23; Docket No. 54, Ex. A; Docket No. 59, pp. 12-14].

In 2000, news spread regarding the financial distress of CMIC's parent, Conseco, Inc., and as a result, the Plaintiffs began to inquire into the viability of CMIC's business, its financial stability and its present commitment to continue offering individual major medical insurance. [Compl., ¶ 29]. CMIC provided information to the Plaintiffs during the year 2000 concerning its viability, financial stability, and unwavering commitment to the major medical insurance business. This information was critical to the Plaintiffs as they negotiated, weighed their options and considered whether to contract with CMIC for the year 2001 or to seek other insurance carriers with which to do business so as to best maintain their client relationships. [Compl., ¶ 30]. From 2000 through 2002, CMIC, through its agents, employees, officers and related affiliated Conseco companies, represented that it was financially stable and profitable, and that CMIC was firmly committed to staying in the major medical insurance business. [Compl., ¶¶ 32-48].

In 2001, each of the Plaintiffs entered several agreements with CMIC. [Compl., ¶¶ 49-52; Compl., Ex. K]. These agreements included Field Marketing Organization Marketing Partnership Guidelines, 2001 Field Marketing Organization Minimum Production Requirements, 2001 Field Marketing Organization Bonus agreement, and 2001 Field Marketing Organization Bonus Advance Agreement ("the 2001 agreements"). [Compl., Ex. K]. CMIC presented the 2001 agreements to the Plaintiffs with a cover letter that described the 2001 agreements as "new Conseco Sales Representative Addendums for your agency." [Compl., Ex. J]. CMIC drafted the 2001 agreements and did not invite or permit negotiation regarding the terms of the 2001 agreements. [Martin Aff., ¶ 6; Noell Aff., ¶ 6; Smith Aff., ¶ 6; Jasnoski Aff., ¶ 6; Froug Aff., ¶ 6; Reichley Aff., ¶ 6; Kanatzar Aff., ¶ 6; Sepulveda Aff., ¶ 6; Vandersnick Aff., ¶ 6; Schwenkner Aff., ¶ 6].

In August 2001, CMIC exited the major medical insurance market in the following states: Arizona, Arkansas, Delaware, Georgia, Hawaii, Illinois, Indiana, Kansas, Missouri, Montana, Oklahoma, South Dakota, Tennessee, Utah, and Wyoming. [Compl., ¶ 58]. According to the 1999 agreement, Conseco Marketing "reserve[d] the right at any time to withdraw from any territory, and to discontinue or withdraw or amend any Policies used in a territory without prejudice to its right to operate in any other territory." [Docket No. 54, Ex. A, p. 6]. The 2001 agreements with CMIC contain no such language. [Compl., Ex. K]. Thereafter, on March 8, 2002, CMIC terminated the Plaintiffs'"Field Office Agreements/Sales Representative Agreements" effective April 15, 2002. [Compl., ¶ 60; Docket No. 45, Ex. 1].

IV. Discussion.
A. Breach of Contract.

The parties agree that Indiana law governs this dispute.6 In Indiana, "[t]he essential elements of a breach of contract action are the existence of a contract, the defendant's breach thereof, and damages." Berkel & Co. Contractors, Inc. v. Palm & Associates, Inc., 814 N.E.2d 649, 655 (Ind.Ct.App.2004). Here, the dispute is not so much whether a contract exists, but what contract governs the relationship between the parties. "Construction of written contracts is generally a question of law for which summary judgment is particularly appropriate." Forty-One Associates, LLC v. Bluefield Associates, L.P., 809 N.E.2d 422, 427 (Ind.Ct.App.2004). Moreover, when the terms of a contract are clear and unambiguous, they are conclusive and the Court will not consider extrinsic evidence. Id. "When interpreting a contract, a court must ascertain and effectuate the intent of the parties." Stelko Elec., Inc. v. Taylor Community Schools Building Corp., 826 N.E.2d 152, 156 (Ind.Ct.App.2005).

As noted above, two agreements are at issue: the 1999 agreement between the Plaintiffs and Conseco Marketing; and the 2001 agreements between the Plaintiffs and CMIC. According to the Plaintiffs, the 1999 agreement has nothing to do with the current dispute because Conseco Marketing and CMIC are separate and independent legal entities. Moreover, the Plaintiffs argue that the 2001 agreements make no reference to Conseco Marketing or otherwise incorporate the 1999 agreement in any way. Finally, the Plaintiffs contend that CMIC improperly relies on allegations from the Plaintiffs' first amended complaint. According to the Plaintiffs, "[t]he allegations in the Second Amended Complaint supporting Plaintiffs' breach of contract claim are solely based on a contract between Plaintiffs and CMIC." [Docket No. 52, p. 26].

In large part, the Plaintiffs are correct. CMIC does not dispute that Conseco Marketing and CMIC are separate and distinct legal entities. [See Compl., Exs. B, C, D]. In addition, the 2001 agreements do not mention Conseco Marketing or the 1999 agreement. The Plaintiffs are also correct that the second amended complaint supercedes all previous complaints and "[a] court cannot resuscitate ... facts [from a prior complaint] when assessing whether the amended complaint states a viable claim." Kelley v. Crosfield Catalysts, 135 F.3d 1202, 1205 (7th Cir.1998).7 Nonetheless, for the reasons set forth below, the Court finds that the 1999 agreement controls and the...

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