Alexander v. Motorists Mut. Ins. Co.

2012 Ohio 3911

• Court: Ohio Court of Appeals
• Decided: August 29, 2012
• Docket: C-110836
• Status: Published

Opinion

[Cite as Alexander v. Motorists Mut. Ins. Co., 2012-Ohio-3911.] IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

RONALD M. ALEXANDER, : APPEAL NO. C-110836 TRIAL NO. A-0908307 Plaintiff-Appellant, : O P I N I O N. vs. :

MOTORISTS MUTUAL INSURANCE : COMPANY, : Defendant-Appellee. :

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: August 29, 2012

Schwartz Manes Ruby & Slovin and Donald B. Hordes, for Plaintiff-Appellant,

Freund, Freeze & Arnold and Christopher W. Carrigg, for Defendant-Appellee.

Please note: This case has been removed from the accelerated calendar. OHIO FIRST DISTRICT COURT OF APPEALS

D INKELACKER , Judge.

I. Factual Background

{¶1} Plaintiff-appellant Ronald M. Alexander appeals from a decision of

the trial court granting summary judgment in favor of defendant-appellee Motorists

Mutual Insurance Company (“Motorists”) in Alexander’s suit for conversion, unjust

enrichment, tortious interference with a business relationship and tortious

interference with a contract. We find no merit in his single assignment of error, and

we affirm the trial court’s judgment.

{¶2} The record shows that Alexander had been an independent insurance

salesperson for many years. He had been an independent contractor with various

insurance agencies that were licensed by insurance carriers to sell life, health,

automobile, property and casualty, and other insurance policies. While associated

with these agencies, he was authorized or “licensed” to sell the products of those

insurance carriers as long as he was affiliated with an agency that was licensed to sell

those carriers’ products. Depending on the terms of his contract with the

independent agency, the agency paid Alexander a percentage of the commission the

agency received based on a percentage of the premiums paid by Alexander’s clients.

{¶3} Alexander’s list of clients was referred to in the industry as his “book

of business.” He earned his living by generating commissions from his book for his

independent agency, and ultimately for himself. Generally, when an independent

salesperson like Alexander leaves one agency to go to another, he takes his book with

him.

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{¶4} As of early 2005, Alexander had been associated for a number of

years with independent agencies licensed to sell insurance policies through Motorists

Mutual. He had placed the vast majority of his clients into policies underwritten by

Motorists. He was a producer at most of these agencies, meaning that he could sell

Motorists policies by virtue of the agency’s agreement with Motorists. But, he did

not personally have a contract with Motorists, either as an agent or an employee.

{¶5} In February 2005, Alexander transferred his book of business to

Young Insurance Services, an independent agency licensed by Motorists and owned

by Cecil Young. Young and Alexander entered into an “Agent and Manager

Contract,” which was for a three-year term and set forth the manner in which the

parties would divide commissions. It provided that if at the end of three years

Alexander chose not to renew the contract, his book of business belonged to him. It

also stated, “If you break this contract in anyway [sic] you may forfeit all your

remaining commissions that was [sic] generated by you and Young Insurance

Services.”

{¶6} The relationship between Young and Alexander proved to be

contentious. Young advised Alexander that Alexander had breached the contract and

that Young was terminating his services effective September 20, 2005. But Young

also informed Alexander that Young would continue to service Alexander’s clients

until Alexander transferred his book to another agency, obtained a direct agency

contract with Motorists or another company, or sold his book. Though under the

contract Young did not have to pay Alexander any commissions, Young said that he

would pay Alexander any commission that Alexander had earned before the effective

date of the termination.

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{¶7} On October 11, 2011, Young received an email from Motorists district

sales manager Dan Sheeran. It stated:

I talked with Columbus [Motorists’ home office] today. They want to

receive the letter from Cecil stating [that] Mr. Alexander has no

authority with the agency effective Sept. 30 and therefore all binding

authority with MMIC should also be terminated that date. Further, I

need a list of all of Mr. Alexander’s accounts that are to be terminated.

These account [sic] will be transferred into the home office account

effective November 1, 2005 and no further commissions shall be paid.

{¶8} Young was shocked to receive this email. In his experience, no carrier

had ever done anything similar. He immediately contacted Sheeran to protest. He

told Sheeran that the accounts were Alexander’s and that he and Alexander both had

a right to commissions from those accounts. He begged Sheeran to let him service

the accounts as he had promised Alexander, stating that he needed those accounts to

pay those commissions. But Sheeran was adamant that Young had to turn over

Alexander’s accounts.

{¶9} Fearing that his business relationship with Motorists would be

jeopardized, Young reluctantly turned over Alexander’s book of business to Sheeran.

Following Sheeran’s instructions, he sent a letter to Motorists that same day, to

which he attached a list of all of Alexander’s clients, along with all of the details of

their individual policies. From that point, Motorists stopped sending commissions

to Young on premiums it received from Alexander’s clients.

{¶10} The following day, Motorists sent Alexander a letter advising him that

because of his termination from Young’s agency, his license to write business for

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Motorists was cancelled. The letter did not state that Motorists had demanded that

Young transfer Alexander’s book to Motorists’s home office. In fact, Alexander had

been emailing Sheeran asking him for help in placing him in another independent

agency or getting a temporary license from Motorists so that he could service his

clients.

{¶11} On November 15, 2005, over a month later, Sheeran sent an email to

Alexander advising him that effective November 1, his accounts had been transferred

to Motorists at Young’s request and that he was no longer licensed to service his own

clients. Alexander immediately contacted Young, who told him that the transfer was

not his idea and that he had had no choice in the matter.

{¶12} Alexander was also a policyholder with Motorists. On November 21,

2005, he received a notice addressed to him as a policyholder, which stated: “This

letter is to inform you that Ron Alexander is no longer a licensed representative of

our Company, and is no longer servicing the Company in the capacity of an agent for

any or all purposes, including claims service and collection of premiums. Your

policy(ies) have been placed in a company account.”

{¶13} Nobody in the Motorists home office was licensed to service

policyholders in the same way as independent agencies like Young’s agency. In the

next several weeks, Alexander received numerous inquiries from his former clients.

Some were unhappy about the lack of response from the home office when they had

called. Others complained that Motorists could not service their accounts. Many

were angry and a few said that they would take their business elsewhere.

{¶14} Subsequently, Motorists sent out form letters to all of Alexander’s

former clients advising them that their policies were not being renewed, some on

5 OHIO FIRST DISTRICT COURT OF APPEALS

very short notice. The only reason it gave was that the policyholder’s agent was not

licensed to represent Motorists.

{¶15} Alexander eventually entered into his own agency contract with

another insurance company. In March 2006, he began selling that company’s

products. While he was able over time to recover most of his prior customers, he lost

significant business from former clients who elected to stay with Motorists or retain

another insurance agent.

II. Summary Judgment Generally

{¶16} Summary judgment is appropriate if (1) no genuine issue of material

fact exists for trial, (2) the moving party is entitled to judgment as a matter of law,

and (3) reasonable minds can come to but one conclusion and that conclusion is

adverse to the nonmoving party, who is entitled to have the evidence construed most

strongly in his or her favor. Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327,

364 N.E.2d 267 (1977); Greene v. Whiteside, 181 Ohio App.3d 253, 2009-Ohio-741,

908 N.E.2d 975, ¶ 23 (1st Dist.). The trial court has an absolute duty to consider all

pleadings and evidentiary materials when ruling on a motion for summary judgment.

It should not grant summary judgment unless the entire record shows that summary

judgment is appropriate. Greene at ¶ 23.

{¶17} Before we begin our analysis of Alexander’s assignment of error, we

note that Motorists argues that the trial court should not have considered Young’s

depositions because they were not timely filed. See Civ. 56(E); Waldeck v. N. College

Hill, 24 Ohio App.3d 189, 190, 493 N.E.2d 1375 (1st Dist.1985). The record does not

show whether the trial court considered the depositions. But we need not decide the

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issue. We review decisions on summary-judgment motions de novo. Grafton v.

Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996); Riverhills

Healthcare, Inc. v. Guo, 1st Dist. No. C-100781, 2011-Ohio-4359, ¶ 12. Even if we

consider Young’s depositions, we find no material issues of fact.

{¶18} Further, Alexander also cites to the Sheeran’s deposition. While the

record contains a notice of the filing of the deposition, the deposition itself was never

actually filed in the trial court. Since it is not part of the record, we cannot consider

it. See Waldeck at 190.

III. Conversion

{¶19} In his sole assignment of error, Alexander contends that the trial

court erred in granting Motorists’s motion for summary judgment. Alexander first

argues that the trial court erred in granting summary judgment on his claim for

conversion because genuine issues of fact exist as to whether Motorists converted

Alexander’s book of business.

{¶20} Conversion is the wrongful exercise of dominion or control over

property in exclusion of the owner’s right, or the withholding of property from the

owner’s possession under a claim inconsistent with the owner’s rights. Zacchini v.

Scripps Howard Broadcasting Co., 47 Ohio St.2d 224, 226, 351 N.E.2d 454 (1976),

reversed on other grounds, 433 U.S. 562, 92 S.Ct. 2849, 53 L.Ed.2d 965 (1977);

Eysoldt v. Proscan Imaging, 194 Ohio App.3d 630, 2011-Ohio-2359, 957 N.E.2d

780, ¶ 26 (1st Dist.). To prevail on a conversion claim, a plaintiff must demonstrate:

(1) the plaintiff’s ownership or right to possession of the property at the time of the

conversion; (2) defendant’s conversion by a wrongful act or disposition of the

7 OHIO FIRST DISTRICT COURT OF APPEALS

plaintiff’s property right, and (3) damages. Miller v. Cass, 3d Dist. No. 3-09-15,

2010-Ohio-1930, ¶ 32; Dice v. White Family Cos., Inc., 173 Ohio App.3d 472, 2007-

Ohio-5755, 878 N.E.2d 1105, ¶ 17 (2d Dist.). If the defendant came into possession of

the property lawfully, the plaintiff must prove two additional elements to establish

conversion: (1) that the plaintiff demanded the return of the property after the

defendant exercised dominion or control over the property; and (2) that the

defendant refused to deliver the property to the plaintiff. R&S Distrib., Inc. v.

Hartge Smith Nonwovens, LLC, 1st Dist. No. C-090100, 2010-Ohio-3992, ¶ 23.

{¶21} Once Young terminated Alexander’s contract, he was not authorized

to act as an agent on behalf of Motorists. He had no license with Motorists and he

could not service the accounts in question. Regardless of whether Young had agreed

to service the accounts, Motorists was within its rights to transfer the accounts to its

home office. Even though its claim that it had no alternative but to accept the

transfer of the accounts is disingenuous, it lawfully came into possession of the book

of business. See Chuparkoff v. Farmers Ins. of Columbus, Inc., 9th Dist No. 22712,

2006-Ohio-3281, ¶ 39-40.

{¶22} Therefore, the record had to show that Alexander had demanded the

return of the property and that Motorists had refused to deliver it to him. But it did

not. To the contrary, Sheeran specifically told Alexander that “If you were to be

licensed at another agency, we could transfer those accounts back to you for

servicing.” Therefore, Alexander could not prove all of the elements of conversion,

and no genuine issue of fact existed for trial on Alexander’s conversion claim.

8 OHIO FIRST DISTRICT COURT OF APPEALS

IV. Unjust Enrichment

{¶23} Next, Alexander argues that issues of fact exist for trial on his claim

for unjust enrichment. Unjust enrichment occurs when a party retains money or

benefits that in justice or equity belong to another. Liberty Mut. Ins. Co. v. Indus.

Comm., 40 Ohio St.3d 109, 110-11, 532 N.E.2d 124 (1988); Brose v. Bartlemay, 1st

Dist. No. C-960423, 1997 Ohio App. LEXIS 1478, *12 (Apr. 16, 1997). To establish

unjust enrichment, the plaintiff must demonstrate: (1) a benefit conferred by the

plaintiff on the defendant; (2) knowledge by the defendant of the benefit; and (3)

retention of the benefit by the defendant under circumstances where it would be

unjust to do so without payment. Morequity, Inc. v. Fifth Third Bank, 1st Dist. No.

C-080824, 2009-Ohio-2735, ¶ 22.

{¶24} In determining whether an unjust benefit has been received by a

defendant, a court must consider whether the defendant was the party responsible

for the plaintiff’s detrimental position. U.S. Health Practices, Inc. v. Blake, 10th

Dist. No. 00AP-1002, 2001 Ohio App. LEXIS 1291, *6 (Mar. 22, 2001). Damages for

unjust enrichment are the amount of the benefit received. Directory Servs. Group v.

Staff Builders Internatl., Inc., 8th Dist. No. 78611, 2001 Ohio App. LEXIS 3108, *3-4

(July 12, 2001); U.S. Health Practices at *5.

{¶25} In this case, the record does not show that Motorists retained the

accounts under circumstances where it would be unjust to do so without payment.

First, Motorists would have received premiums on the accounts regardless of which

agent was servicing them. Second, Motorists did not directly pay commissions to

Alexander. It only owed commissions to Young. Whether Young paid them to

Alexander was determined by the contract between them, not by any action of

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Motorists. When Young terminated Alexander’s contract, Alexander lost the

authority to provide the services on which the commissions were based.

Consequently, the record does not show that Motorists was unjustly enriched.

Additionally, the record does not contain any evidence of the amount of benefits that

were conferred upon Motorists.

V. Third-Party Beneficiary

{¶26} Alexander also argues that genuine issues of fact exist as to whether

he was a third-party beneficiary of the contract between Young and Motorists. Only

a party to a contract or an intended third-party beneficiary may claim rights under a

contract. Grant Thornton v. Windsor House, Inc., 57 Ohio St.3d 158, 161, 566

N.E.2d 1220 (1991); Caruso v. Natl. City Mort. Co., 187 Ohio App.3d 329, 2010-

Ohio-1878, 931 N.E.2d 1167, ¶ 23 (1st Dist.).

{¶27} For a person to be a third-party beneficiary, the contract must have

been entered into directly or primarily for the benefit of that person, although that

person need not be directly named. Nevertheless, an incidental or indirect benefit to

a third party is not sufficient to provide the third party with a cause of action. Grant

Thornton at 161; Caruso at ¶ 23; Brewer v. H & R Concrete, Inc., 2d Dist. No. 17254,

1999 Ohio App. LEXIS 277, *8 (Feb. 5, 1999).

{¶28} Nothing in the language of the contract between Young and Motorists

indicates that Alexander or any producer was an intended beneficiary. See Brewer at

*8; Lin v. Gatehouse Constr. Co., 84 Ohio App.3d 96, 100, 616 N.E.2d 519 (8th

Dist.1992). In fact, the contract specifically states that “The Agent shall not appoint

any subagent, solicitor or broker to act for or on behalf of the Company nor shall the

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Agent assign any part of this Agreement or any interest or rights therein or any sum

due or to become due the Agent hereunder, without the written consent of the

Company.”

{¶29} Alexander argues that the contract refers to “parties who possess

vested rights.” But Motorists correctly points out that that phrase only appears in

the section concerning retirement of the agent or termination of the agency

relationship. That one reference does not indicate that the parties to the contract

intended to benefit Alexander or any other producer.

VI. Tortious Interference with a Business Relationship

{¶30} Alexander contends that genuine issues of fact exist for trial on his

claim that Motorists tortiously interfered with his business relationships with his

clients. To prevail on a claim for tortious interference with a business relationship,

the plaintiff must show that the defendant intentionally and improperly interfered

with the plaintiff’s prospective business relations by either (1) inducing or otherwise

causing a third person not to enter into or continue the prospective relation, or (2)

preventing the plaintiff from acquiring or continuing the prospective relation.

Norwell v. Cincinnati, 133 Ohio App.3d 790, 810-811, 729 N.E.2d 1223 (1st

Dist.1999). A showing of malice, such as ill will, spite or hatred is not required. Id.

at 811; Elwert v. Pilot Life Ins. Co., 77 Ohio App.3d 529, 540, 602 N.E.2d 1219 (1st

Dist.1991).

{¶31} The interference must be without justification or privilege. Licul v.

Swagelok Co., 8th Dist. No. 86322, 2006-Ohio-711, ¶ 28; Norwell at 811. The

plaintiff bears the burden of showing that the defendant’s interference lacked

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justification. Licul at ¶ 29. Courts have refused to allow claims on the grounds that

the defendant was privileged to protect its own business relationships or that the

plaintiff presented no evidence of the defendant’s intent to interfere. Elwert at 537.

{¶32} Motorists contends that it had no alternative but to accept the

transfer of files in order to service the accounts of its insureds. The evidence does

not support this statement. Nevertheless, the record does not contain any evidence

showing that the taking of the accounts was improper. See Chuparkoff, 2006-Ohio-

3281, at ¶ 36-37. Motorists was justified in doing so under its contract with Young.

Further, the catalyst for all of Alexander’s problems was Young’s termination of the

contract between them. Alexander could not service the accounts after Young

terminated the contract until he obtained a license with another agent. Motorists

indicated that it would return the accounts to him for servicing when he obtained a

license. Consequently, it did not induce or cause any of Alexander’s clients not to

continue their relationship with him.

VII. Tortious Interference with Contract

{¶33} Alexander next argues that genuine issues of material fact exist on his

claim that Motorists tortiously interfered with the contract between him and Young

Insurance Services. The elements of tortious interference with contract are (1) the

existence of a contract, (2) the wrongdoer’s knowledge of the contract, (3) the

wrongdoer’s intentional procurement of the contract’s breach, (4) lack of

justification, and (5) resulting damages. Kenty v. Transamerica Premium Ins. Co.,

72 Ohio St.3d 415, 650 N.E.2d 863 (1995), paragraph two of the syllabus. The fourth

element, lack of justification, requires proof that the defendant’s interference with

12 OHIO FIRST DISTRICT COURT OF APPEALS

the contract was improper. Fred Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d

171, 707 N.E.2d 853 (1999), paragraph two of the syllabus. Ohio law places the

burden of proving a lack of privilege or justification upon the plaintiff. Andrews v.

Carmody, 145 Ohio App.3d 27, 33, 761 N.E.2d 1076 (11th Dist.2001).

{¶34} The record shows that Young terminated the contract with Alexander

due to disputes between them, not due to any action by Motorists. Arguably, Young

and Alexander had an oral contract that Young would service Alexander’s accounts

until he could handle them himself. But, again, the evidence does not show that

Motorists’s decision to service the accounts itself was improper even if it was

detrimental to Alexander’s interests.

VIII. Summary

{¶35} In sum, we find no issues of material fact. Construing the evidence

most strongly in Alexander’s favor, reasonable minds can come to but one

conclusion—that Alexander could not prevail on any of his claims. Motorists was

entitled to judgment as a matter of law, and the trial court did not err in granting

summary judgment in its favor. Consequently, we overrule Alexander’s assignment

of error and affirm the trial court’s judgment.

Judgment affirmed.

S UNDERMANN , P.J., and H ENDON , J., concur.

Please note:

The court has recorded its own entry this date.