Stephenson v. Allstate Ins. Co.

• Decision Date: 27 March 2003
• Docket Number: No. 01-1708.,01-1708.
• Citation: 328 F.3d 822
• Parties: Karen STEPHENSON, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

328 F.3d 822

Karen STEPHENSON, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.

No. 01-1708.

United States Court of Appeals, Sixth Circuit.

Argued: December 4, 2002.

Decided and Filed: March 27, 2003.^*

David B. Landry (argued and briefed), Nemier, Tolari, Landry, Mazzeo & Johnson, Farmington Hills, MI, for Plaintiff-Appellant.

Roger T. Brice (argued and briefed), Thomas E. Deer (briefed), Sonnenschein Nath & Rosenthal, Chicago, IL, for Defendant-Appellee.

Before KRUPANSKY, SILER, and COLE, Circuit Judges.

KRUPANSKY, J., delivered the opinion of the court, in which SILER, J., joined. COLE, J. (p. 829), delivered a separate opinion concurring in the result.

OPINION

KRUPANSKY, Circuit Judge.

In this appeal, the plaintiff-appellant, Karen Stephenson ("Stephenson") challenged the district court's award of summary judgment to defendant-appellee, Allstate Insurance Company ("Allstate"), alleging that Allstate breached its duty of good faith and fair dealing when it denied her request to purchase another agent's "book of business."¹ As Allstate retained the exclusive and final approval of all agent purchases under the Allstate R3001 Exclusive Agency Agreement, ("R3001 Agreement"), appellant's contention has failed to join a genuine issue of material fact and, for the reasons discussed below, this court affirms the summary judgment granted by the district court.

Stephenson had operated as an "exclusive agent" through contract with Allstate under the R3001 Agreement she executed on June 10, 1996. Appellant's agency was located in Livonia, Ohio in zip code 48152. During September of 1998, Stephenson began negotiations with Alex Yvannou, another R3001 Agent, to purchase his Allstate accounts. Yvannou's agency was located in Canton, Ohio in zip code 48187. The offices were approximately eight miles apart. Upon reaching a purchase agreement, Stephenson and Yvannou notified their immediate agency manager and Allstate's Human Resources department of the proposed sale. Appellant was told that she should prepare a business plan while Human Resources finalized the paperwork for the deal. When Stephenson contacted Allstate to inquire where to send her business plan, she was informed that Allstate had denied the purchase because of the "zip code rule."² Yvannou subsequently sold his book of business to another agent within the same, Canton, zip code.

The "zip code rule" is set forth in Allstate's Agency Relocation Guidelines, under which all agency initiated agent relocations were limited to the agent's "current zip code or immediately contiguous zip code." Nothing in the R3001 Agreement, the Supplemental Agreement, or the Independent Contractor Manuals ("Manuals") references a "zip code rule" however, each of these binding contract documents discusses the restrictions placed upon the appellant when seeking to purchase another agent's book of business.

First, section XV of the R3001 Agreement, entitled "Transfer of Interest in Agreement," addressed the restrictions upon appellant's proposed purchase of another agent's book of business, stating:

This Agreement is personal to you....Accordingly, you may not execute a transfer of your interest in this Agreement without prior written approval of the Company. A transfer of interest is described in the Supplement and includes, but is not limited to, any sale, merger, or assignment, in whole or in part, directly, indirectly, or contingently, of this Agreement or any rights or obligations under it. You have the obligation to notify the Company of a proposed transfer and to request approval. The Company retains the right in its exclusive judgment to approve or disapprove such a transfer.

R3001 Agreement § XV.A (emphasis added). The R3001 Agreement also contained an integration clause that stated: "This Agreement is the sole and entire agency agreement between the Company and you." Id. at § I.C. With regard to modifications, the R3001 Agreement provided that the contract between Stephenson and Allstate "may not be modified except by a written agreement between the Company and you which expressly states that it modifies this Agreement. No other written statements, representations, or agreements ... will be effective to modify this Agreement." Id. at § XX.A.

Second, the Manuals, which were expressly incorporated into the R3001 Agreement, stated that an R3001 agent may transfer her economic interest in the business by "[s]elling the economic interest to an approved buyer." The Manuals also noted that R3001 Agents may sell their "book of business at any time provided the buyer is approved by the Company." In a section specifically addressing "Agency Sales Between Existing R3001 Agents," the Manuals stated:

An office partner (R3001 only) may be approved as a buyer of your interest in your book of business. The buying agent must have acceptable results in his current agency. The buying agent must also submit an acceptable updated Business Plan which includes a provision for providing a proper level of service for the total book of business after the sale (e.g. adding one or more Sales Producers, maintaining PSA status, etc.). Further, the buying agent must have a satisfactory business relationship with Allstate. This includes acting professionally with all representatives of the Company and demonstrating a willingness to work with Company management to achieve desired business results.

Please note that the buyer is always subject to final Company approval.

Approval may also be given if your location is in close proximity to the buying R3001 Agent's location. The business must be merged into one book in one of the locations. Satellite offices are not permitted. Again, the buying agent must meet all the requirements noted above.

(emphasis added).

Of additional relevance in the case sub judice, the appellee published a news-weekly entitled "Blueprints," to disseminate company information, including company standards, policies and procedures. In the April 23, 1998 publication of "Blueprints" the following passage was included under the section "Human Resources,"

Here are a few questions regarding with [sic] the NOA changes:

Q: Has the contiguous zip code requirements [sic] changed for agents moving from one location to another?

A. No, when an agent makes a request to move his/her office location the requirement of having a contiguous zip code is still in effect.

Q. Has anything changed regarding the location requirement of the sellers book of business and the buyers book of business, when approving a request for purchasing a book?

A. No, the same requirements are still in effect. When purchasing a book of business, the contiguous zip code rule is not a requirement, but the books of business must be within reasonable proximity to one another. This requirement provides for the buying agent to consolidate the two books and still provide the required customer service.

(emphasis in original).

Appellant filed the instant action against Allstate averring breach of contract and tortious interference with Appellant's business relationship or expectancy. On January 16, 2001, Allstate filed a motion for summary judgment asserting that appellant's claims failed as a matter of law because appellee retained the unqualified right to deny the sale based upon its "exclusive judgment."

In a well-reasoned opinion, the district court agreed with Allstate's contentions. The court concluded that § XV.A of the R3001 Agreement reserved to Allstate the unlimited right to make decisions with respect to the transfer sought by Stephenson. Additionally, as the parties had explicitly expressed their respective rights, the contract did not contain an implied covenant of good faith and fair dealing, and the district court found that Stephenson's claim failed as a matter of law. Finally, given Allstate's exclusive right to deny appellant's transfer of another agent's books of business, the court determined that the appellee did not tortiously interfere with Stephenson's business relationship or expectancy.

The instant appeal arose out of Stephenson's timely challenge of the district court's determination regarding only the breach of contract claim. The appellant did not contest the district court's conclusions on her claim of tortious interference.

This court has proper jurisdiction under 28 U.S.C. § 1291, which generally grants appellate jurisdiction to the courts of appeals of all final decisions of the district courts of the United States.

This court reviews a summary judgment order under a de novo standard. Pinney Dock & Transp. v. Penn. Cent. Corp., 838 F.2d 1445, 1472 (6th Cir.), cert. denied, 488 U.S. 880, 109 S.Ct. 196, 102 L.Ed.2d 166 (1988). Summary judgment is proper only if there is no genuine issue as to any material fact, thereby entitling the moving party to judgment as a matter of law. Hunter v. Caliber Sys., Inc., 220 F.3d 702, 709 (6th Cir.2000). There is no genuine issue of material fact for trial unless, by viewing the evidence in a light most favorable to the nonmoving party, a reasonable jury could "return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). On a motion for summary judgment, the moving party bears the initial responsibility of identifying sections of the record that reflect the absence of a material issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and come forward with specific facts to prove that there is a genuine issue for trial. Id. at 322-324, 106 S.Ct. 2548. The nonmoving party must do more than demonstrate that there is some metaphysical doubt as to the material facts. Pierce v. Commonwealth Life Ins. Co., 40 F.3d 796, 800 (6th Cir.1994). The nonmoving party must present significant probative evidence in support of its opposition to...