Western Reserve Life Assur. Co. of Ohio v. Bratton

Decision Date10 May 2006
Docket NumberNo. C-04-81-LRR.,C-04-81-LRR.
Citation464 F.Supp.2d 814
PartiesWESTERN RESERVE LIFE ASSURANCE COMPANY OF OHIO, Plaintiff/Counterclaim-Defendant, v. G. Randall BRATTON, Gary G. Bratton, Bratton Financial Services Corporation and Bratton International, Inc., Defendants/Counterclaim-Plaintiffs, v. AEGON USA, INC., Counterclaim-Defendant.
CourtU.S. District Court — Northern District of Iowa

Amy L. Reasner, Wilford H. Stone, Jason M Craig, Lynch, Dallas, PC, Cedar Rapids, IA, for Plaintiff/Counterclaim-Defendant.

Bruce S. Kramer, Jason Gregory Wolfkill, Kramer, Horne, Wells & Sheng, PLC, Howard B. Manis, Borod & Kramer, PC, Memphis, TN, Stephen R. Eckley, Belin, Lamson, McCormick, Zumbach & Flynn, PC, Des Moines, IA, for Defendants/Counterclaim-Plaintiffs.

ORDER

READE, District Judge.

                TABLE OF CONTENTS
                I. INTRODUCTION.......................................................820
                 II. PROCEDURAL BACKGROUND..............................................820
                III. JURISDICTION.......................................................821
                 IV. FACTS..............................................................821
                     A. Corporate Structure.............................................821
                     B. The Brattons and tie Appointment Agreements.....................822
                     C. `WRL's Decision Makers..........................................823
                     D. Re-Branding.....................................................823
                     E. The Proposal and Negotiations...................................824
                     F. Kirby's Remarks.................................................826
                     G. The Commission Schedule.........................................827
                     H. Additional Communications Regarding the Brattons' Work...........827
                     I. The Termination...................................................828
                  V. SUMMARY JUDGMENT STANDARD............................................829
                 VI. SUMMARY JUDGMENT ANALYSIS............................................830
                     A. Piercing the Corporate Veil.......................................830
                     B. The Brattons' Breach of Contract Claims...........................831
                        1. Whether the Appointment Agreements are fully-integrated
                agreements....................................................831
                           a. Gary Bratton's Appointment Agreement........................831
                           b. Randy Bratton's Appointment Agreement.......................832
                        2. The oral contract..............................................832
                           a. The statute of frauds.......................................832
                           b. Elements cf breach of contract..............................834
                           c. Whether the oral contract is terminable at will.............836
                     C. The Brattons' Promissory Estoppel Claim...........................838
                        1. Whether Randy Bratton's Appointment Agreement preempts a
                claim of promissory estoppel..................................839
                        2. Whether the Brattons can establish a claim of promissory
                estoppel......................................................839
                     D. The Brattons' Misrepresentation Claims............................840
                        1. Negligent misrepresentation....................................840
                        2. Fraudulent misrepresentation...................................842
                     E. The Brattons' Quantum Meruit and Unjust Enrichment Claim..........843
                        1. Unjust enrichment..............................................844
                        2. Implied-in-fact contract for services (quantum meruit).........845
                VII. CONCLUSION...........................................................846
                
I. INTRODUCTION

The matter before the court is the Motion for Summary Judgment (docket no. 99) ("Motion") filed by Plaintiff/Counterclaim-Defendant Western Reserve Life Assurance Company of Ohio ("WRL") and Counterclaim-Defendant AEGON USA, Inc. ("AEGON").

II. PROCEDURAL BACKGROUND

On June 26, 2004, WRL filed a complaint in this court seeking declaratory judgment. On January 31, 2005, Defendants Randall G. Bratton ("Randy Bratton"), Gary G. Bratton ("Gary Bratton"), Bratton Financial Services Corporation and Bratton International, Inc. (hereinafter collectively referred to as "the Brattons") filed an answer and counterclaims. On April 14, 2005, the Brattons filed an amended answer, counterclaims and a third-party complaint, adding AEGON Financial Partners as a third-party defendant. On April 21, 2005, WRL filed an answer to the counterclaim. On July 27, 2005, the Brattons filed a Second Amended Answer and Counterclaims and Jury Demand ("Second Amended Complaint") against WRL and AEGON.1 On August 1, 2005, WRL and AEGON filed another answer.

On January 13, 2006, WRL and AEGON filed the instant Motion. On February 13, 2006, the Brattons filed a Resistance to the Motion. On February 22, 2003, and AEGON filed a Reply to the Brattons' Resistance.

A hearing on the Motion was held on April 20, 2006. Attorneys Amy L. Reasner and Wilford H. Stone represented WRL and AEGON. Attorney Jason Gregory Wolfkill represented the Brattons. Finding the Motion to be fully submitted and ready for decision, the court turns to consider it.

III. JURISDICTION

WRL claims there is diversity jurisdiction, pursuant to 28 U.S.C. § 1332. On January 10, 2005, this court adopted a November 17, 2004 Report and Recommendation in which Chief Magistrate Judge John A. Jarvey determined that the court has diversity subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1382(a)(1). The court found that the amount in controversy exceeds $75,000. Moreover, the court found that the parties are diverse because Gary Bratton and Randy Bratton reside in Tennessee; Bratton Financial Service Corporation and Bratton International, Inc. are Delaware corporations with their principal places of business in Memphis, Tennessee; and WRL is incorporated in Ohio with its principal place of business in Cedar Rapids, Iowa. Therefore, the court is satisfied that it has jurisdiction over this matter.

IV. FACTS
A. Corporate Structure

WRL is an insurance company that is qualified and licensed to transact business in Iowa. AEGON is a holding company, not an insurance company. AEGON owns WRL. AEGON does not have agents who are licensed to sell insurance or annuities, it does not recruit agents and it does not sell or offer insurance, annuities or any other products.

In late 2002 or 2003, the administrative, actuarial and legal activities of several AEGON-affiliated companies, including WRL, Life Investors Insurance Company of America ("Life Investors"), Peoples Benefit Life Insurance ("Peoples Benefit"), Transamerica Occidental ("Transamerica") and Monumental were consolidated under the name "AEGON Financial Partners." Pursuant to the formation of AEGON Financial Partners, one person is responsible for the administrative activities of the five affiliated companies, one person is responsible for the actuarial activities the companies and one person is responsible for the legal activities of the companies.

AEGON is affiliated with several companies, including: WRL, Life Investors, Transamerica and Peoples Benefit. Each AEGON-affiliated company issues identical insurance products under their respective names to build more distribution networks for AEGON insurance product sales. Employees from each of these AEGON-affiliated companies sell insurance products from each of the other AEGON-affiliated company brands.

B. The Brattons and the Appointment Agreements

Gary Bratton and his son, Randy Bratton, own equal shares of Bratton Financial Services Corporation and Bratton International, Inc.2 Gary Bratton is the chief executive officer of both companies and both are brokerage general agencies. Randy Bratton and Gary Bratton have fifty-three years of collective experience in the insurance business.

On November 1, 2002, Randy Bratton entered into a four-page "Appointment Agreement" ("Randy Bratton's Appointment Agreement") with "the life insurance company which is an affiliate of the AEGON Insurance Group (the `Company')," namely, WRL. Randy Bratton also received a signed commission schedule for fixed annuities entitled "Field Marketing Organization Commission Schedule for Fixed Annuity Contracts: WRL Freedom Multi-Year Guarantee." This schedule was signed by Randy Bratton on November 1, 2002. On March 20, 2003, a WRL representative signed a "Schedule for Appointment Agreement, Pattern I," which Randy Bratton received from WRL. This additional schedule also lists only annuity products.

Randy Bratton's Appointment Agreement has a "Termination Without Cause" section which, in pertinent part, reads:

This Agreement will terminate on the earliest occurrence of any of the following events: (a) Termination without cause ... This Agreement will be terminated without cause as follows: (1) By either party giving a written notice mailed or delivered to the last address of the other party, at least thirty (30) days prior to the date termination or earlier upon mutual agreement[.]

It further provides: "This Agreement and Schedule form the entire agreement between the Company and yourself. This Agreement terminates and replaces any prior agreement between the Company and yourself."

On July 2, 2003, Gary Bratton signed a two-page appointment agreement with "the Member of the AEGON Insurance Group (the `Company') that signs a schedule ..." ("Gary Bratton's Appointment Agreement"). Gary Bratton's Appointment Agreement was a form used by WRL in its Cedar Rapids, Iowa, office. The appointment agreement, in part, reads:

This Appointment Agreement will terminate on the earliest occurrence of the following events: ... the 30th day after the date of a written notice of termination ... that Company may send to you ... for a reason other than one described elsewhere in this section 6 or for no reason; ...

This Appointment Agreement...

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