Tiberi v. CIGNA Corp., s. 95-2044

• Court: U.S. Court of Appeals — Tenth Circuit
• Writing for the Court: Before TACHA, McKAY, and JONES; NATHANIEL R. JONES; TACHA
• Citation: Tiberi v. CIGNA Corp., 89 F.3d 1423 (10th Cir. 1996)
• Decision Date: 23 July 1996
• Docket Number: Nos. 95-2044,95-2051,s. 95-2044
• Parties: Frederick C. TIBERI, Fred Tiberi Insurance Agency, Inc., and The Kelly Agency, Inc., Plaintiffs-Appellants and Cross-Appellees, v. CIGNA CORPORATION, Cigna Fire Underwriters Insurance Co., Cigna Property and Casualty Insurance Co., Bankers Standard Insurance Co., Century Indemnity Co., Cigna Insurance Co. of Texas, Cigna Insurance Co., Indemnity Insurance Co. of North America, Insurance Co. of North America, Pacific Employers Insurance Company, and INA Credit Corp. a/k/a INAC Corp., Defendants-Appellees and Cross-Appellants.

Page 1423

89 F.3d 1423

Frederick C. TIBERI, Fred Tiberi Insurance Agency, Inc., and The Kelly Agency, Inc., Plaintiffs-Appellants and Cross-Appellees, v. CIGNA CORPORATION, Cigna Fire Underwriters Insurance Co. Cigna Property and Casualty Insurance Co., Bankers Standard Insurance Co., Century Indemnity Co., Cigna Insurance Co. of Texas, Cigna Insurance Co., Indemnity Insurance Co. of North America, Insurance Co. of North America, Pacific Employers Insurance Company, and INA Credit Corp. a/k/a INAC Corp. Defendants-Appellees and Cross-Appellants.

Nos. 95-2044, 95-2051.

United States Court of Appeals Tenth Circuit.

July 23, 1996.

Rehearing Denied Oct. 10, 1996.

Michael J. Condon of Gallegos Law Firm, P.C., Santa Fe, New Mexico (J.E. Gallegos of Gallegos Law Firm, Santa Fe, New Mexico and Steven L. Tucker of Tucker Law Firm, Santa Fe, New Mexico with them, on the brief), for Plaintiffs-Appellants and Cross-Appellees.

William C. Madison, M. Eliza Stewart, and Gregory L. Steinman of Madison, Harbor, Mroz and Puglisi, P.A., Albuquerque, New Mexico, for Defendants-Appellees and Cross-Appellants.

Before TACHA, McKAY, and JONES, Circuit Judges. ^*

NATHANIEL R. JONES, Circuit Judge.

This is a diversity case involving New Mexico contract and tort law. Plaintiffs, ¹ New Mexico residents, sued Defendants, a group of Pennsylvania corporations collectively doing business as "CIGNA." CIGNA filed similar counterclaims against Plaintiffs. Plaintiffs appeal the district court's award of summary judgment to CIGNA on statute of limitations grounds; CIGNA cross-appeals the district court's denial of its motions for attorney's fees and costs. We affirm in part, reverse in part, and vacate in part the ruling of the district court.

I.

Plaintiff Fred C. Tiberi ran the Fred Tiberi Insurance Agency ("Tiberi Agency") in Albuquerque, New Mexico. The Tiberi Agency was independent and free to place its clients with any insurance companies in the market. At that time, a group of insurance companies were operating an enterprise known as the COMPAR program. The COMPAR program was comprised of insurance companies and agencies that did business exclusively with one another. On May 8, 1980, Tiberi joined the COMPAR program by signing a written "Full Service Agency Agreement" with Defendant Insurance Company of North America ("INA"). Shortly thereafter, Defendant INAC Corporation ("INAC") loaned Tiberi money to purchase a majority interest in The Kelly Agency, Inc. ("Kelly Agency") for $1,100,000. In 1982, after INAC and Connecticut General merged with a wholly-owned subsidiary of North American General Corporation (NAGC), CIGNA was formed. COMPAR then became, in essence, an instrumentality of CIGNA. On October 1, 1982, the Kelly Agency signed a similar contract with INA, thus joining the COMPAR ranks. The agencies subsequently signed a new deal which was to take effect on January 1, 1990.

The terms of the contracts were simple: the Kelly and Tiberi Agencies became "independent contractors," and agreed to sell only COMPAR insurance. The agencies could sell insurance from other companies only with the consent of COMPAR. COMPAR, moreover, controlled the agencies' underwriting authority. Consistent with the representations it made to Tiberi during the recruitment process, COMPAR agreed to assist the agencies as it deemed necessary. According to Tiberi, COMPAR agreed to help the agencies persevere through problems such as "uncompetitive pricing, stricter underwriting standards, unreasonable delays in providing potential clients with premium quotes, etc." Tiberi's Br. at 8. The boilerplate language of the contracts indicated that COMPAR--and, impliedly, CIGNA--expected "strict compliance" with the terms. CIGNA's Br. at 5. The 1980 and 1982 contracts required a minimum 5-year commitment; after five years, the agencies had to give COMPAR two years' advance notice of termination.

In 1983 and 1984, CIGNA suffered substantial insurance losses. During this time, CIGNA raised its prices and began to downsize COMPAR by selling less insurance, as well as signing fewer renewals with COMPAR agencies. In 1985, CIGNA notified COMPAR agents of reductions in commissions and withdrawal of its subsidy for errors and omissions insurance. At the 1986 COMPAR convention, David Prentiss, president of CIGNA's Agency Division, reiterated these strategies but offered incentives to "profitable" COMPAR members who remained in the program. Tiberi's Br. at 11-12. Tiberi decided to keep the Kelly and Tiberi Agencies under the program. Although he received occasional assistance from CIGNA and/or COMPAR, Tiberi incurred significant losses as a result of this decision. Consequently, Tiberi's agencies submitted a letter to CIGNA, dated March 3, 1986, expressing their dissatisfaction with the program. CIGNA received similar letters from other COMPAR members in New Mexico and other states. In June of that year, at the COMPAR National Advisory Council meeting, the Council resolved to make "changes ... to improve [the members'] position in the marketplace," and to "work hard to prove our commitment to COMPAR." Appendix, Vol. III at 725.

After 1986, however, it became apparent to CIGNA that it could not sustain COMPAR. In an internal document dated April 15, 1987, CIGNA stated that its worsening relationship with its smaller COMPAR agents required "fundamental changes in the COMPAR program and its strategic direction." Appendix, Vol. III at 708. The document lists the abandonment of COMPAR as a viable option. Id. at 709. CIGNA, however, chose to restrict further its coverage and raise its prices, despite warnings from COMPAR President Spike McKeeta that such actions would cause "serious ramifications." Appendix, Vol. III at 786. ² CIGNA never notified Tiberi of these developments.

Throughout 1988 and 1989, CIGNA attempted to allay the concerns of its agents with statements such as the following:

Through the COMPAR program we can give you what you need--

the products, the capacity, the technology, the capital ... the commitment ... Count on it. Count on us. Statement of Ray Thomas, Jan. 8, 1988.

...

I can tell you without the least reservation that we'll always be in a position to support the capacity needs of our COMPAR producers ... you can feel secure with CIGNA ... CIGNA is financially solid ... CIGNA and COMPAR together have the technology, the support services and financial resources to survive and flourish in the present market. Statement of David Prentiss, Jan. 19, 1988.

...

COMPAR requires a new and deeper level of cooperation ... for those who make the commitment the future will be exceptionally rewarding. Statement of David Prentiss, Jan. 8, 1989.

...

Every aspect of business will be examined during 1989 to improve operating efficiencies and COMPAR agents will be informed of progress. Ray Thomas, COMPAR News, March 1989.

...

While [the] changes [to reduce COMPAR expenses] may cause some degree of pain in the short-term, we feel that the long-term outlook remains extremely positive for both parties ... we can work together to minimize significant impact to your agency. Letter from Wanda Tackett to Frederick Tiberi, June 1, 1989.

...

Recent actions have been difficult for many of you to accept. Let me assure you that they are vital in the short term and will help to position COMPAR for the future. [I remain] fully committed to the program and intend to see to it that COMPAR is alive and flourishing long after all of us have retired from the field of battle. Letter from David Prentiss to COMPAR Agents, July 27, 1989.

See Appendix, Vol. I at 225.19-225.25. These statements, Tiberi argues, led Tiberi to believe that CIGNA would provide him support and reward him handsomely if he remained in the program. In his words, he thought that "the whole concept of this contractual relationship was built upon trust." Appendix, Vol. III at 888 (Tiberi's Deposition). Moreover, Tiberi asserts that remaining in the program was the only reasonable alternative in light of his agencies' financial straits.

In February 1990, CIGNA announced that it was changing the COMPAR program to make it " 'a non-exclusive distribution network.' " Appendix, Vol. III at 886 (emphasis added). This amendment ended the COMPAR program as it had previously existed. Because of the new arrangement, COMPAR agents were asked to seek other insurers and "roll over" to new carriers the business of clients whom CIGNA no longer wanted. Tiberi thus ended his relationship with CIGNA after having lost 686 policies and nearly $1,500,000 in premiums from 1982 to 1989. CIGNA's Br. at 11.

On March 11, 1993, Tiberi brought suit against CIGNA in state court for breach of contract, breach of covenant, fraud, misrepresentation, and violations of the New Mexico Unfair Trade Practices Act (NMUTPA). Upon removal to the United States District Court for the District of New Mexico, CIGNA brought a Counterclaim and a Third-Party Complaint against Tiberi for breach of contract and tortious interference with contract during the COMPAR venture. Thereafter, Tiberi twice moved to amend his complaint to add claims for breach of fiduciary duty and promissory estoppel. Tiberi's Br. at 28.

On August 16, 1994, after Tiberi had filed his Motions to Amend, CIGNA Corp. moved to dismiss for lack of personal jurisdiction. On October 12, 1994, that motion was granted. On October 17, 1994, the district court granted the other Defendants' Motion for Summary Judgment on the grounds that the statute of limitations had run. On October 29, 1994, the district court dismissed CIGNA's actions without prejudice. On February 16, 1995, the district court denied Tiberi's Motion to Alter or Amend his Complaint to address the statute of limitations issue and further denied CIGNA's Motions for costs and attorney's fees under Federal Rule of Civil Procedure 54 and/or NMUTPA. Tiberi appeals the February 16, 1995 judgment; CIGNA cross-appeals that same...