Harvest Insurance Agency, Inc. v. Inter-Ocean Insurance Co.

478 N.E.2d 98, 1985 Ind. App. LEXIS 2435
CourtIndiana Court of Appeals
DecidedMay 22, 1985
Docket4-484A101
StatusPublished
Cited by4 cases

This text of 478 N.E.2d 98 (Harvest Insurance Agency, Inc. v. Inter-Ocean Insurance Co.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harvest Insurance Agency, Inc. v. Inter-Ocean Insurance Co., 478 N.E.2d 98, 1985 Ind. App. LEXIS 2435 (Ind. Ct. App. 1985).

Opinion

MILLER, Presiding Judge.

Plaintiffs-appellants Harvest Insurance Agency, Inc. and Harvest Life Insurance Co. (collectively "Harvest") and defendant appellee Inter-Ocean Insurance Co. ("Inter-Ocean") have compiled a voluminous presentation concerning a preliminary injunetion issuing from Boone Cireuit Court. This injunction in essence prevents Harvest from replacing in-place health and accident insurance policies underwritten by Inter-Ocean in a seven-state area until a trial on the merits, as per a noncompetition covenant between the parties. After reviewing the comprehensive authority cited by both sides and studying the facts, we have reached the conclusion the trial court erred in one very basic respect: Inter-Ocean did not (and very possibly cannot) establish a prima facie case entitling it to relief because the noncompetition clause herein was drafted without limits, particularly geographic and temporal. Order dissolved.

FACTS

Harvest is an insurance agency principally engaged in the sale of various kinds of insurance policies to farm and rural customers. The primary source of such clientele is through subscription lists of magazines targeted for residents of farm communities, such publications in one way or another being directly associated with Har *101 vest either through licensing agreements or as other subsidiaries of Harvest's parent company. - Harvest actually sells insurance in twelve states by approximately three hundred agents.

Inter-Ocean is an insurance company which issues accident and health insurance in 25 states. For over 87 years, Harvest has sold accident and health insurance underwritten by Inter-Ocean, and for the six years from 1978 through 1983, their relationship in the states of Indiana, Ohio, Michigan, Missouri, Nebraska, Colorado, and Kansas was governed by six separate written contracts. Each agreement provided an exclusive dealing arrangement for the respective states (except in eastern Indiana) and were substantially identical in their terms. Specifically, Inter-Ocean designated Harvest as its exclusive general agent for the sale of accident and health insurance policies through Harvest's appointed agents. In the event this relationship were ever terminated, the contracts provided that Inter-Ocean would continue to pay to Harvest renewal commissions for policies purchased during the life of those contracts. However, one provision also restrained Harvest's ability to compete with Inter-Ocean after such termination:

"12. Insurance Sales After Termination of Agreement. After the date of the termination of this Agreement either of the parties hereto, directly or through intermediaries, shall have the right to solicit Inter-Ocean policyholders for sales of additional insurance but neither shall have the right to replace existing coverage. Any such solicitation by [Harvest] for sales of insurance underwritten by other than Inter-Ocean shall not be deemed a violation of this Agreement. Additional insurance shall mean insurance sold to supplement or augment the insured's existing coverage and which does not replace such existing coverage."

In June, 1988, Harvest notified Inter-Ocean in writing that their relationship would be considered at an end at the conclusion of the agreements, in December, 1983. In September, 1988, Harvest found cause to file suit against Inter-Ocean and one Bernard Smit, a former Harvest state manager now employed by Inter-Ocean, for misappropriation of trade secrets and confidential information, for unfair competition, and for breach of certain contractual and fiduciary obligations. (Another former Harvest employee, Jack D. Hicks, was added as a party defendant shortly thereafter.) In early 1984, Inter-Ocean filed a counterclaim to prevent Harvest from continuing its systematic replacement of Inter-Ocean's health and accident policies in contravention of the contractual provision, a practice begun shortly after the six agency agreements terminated at the end of 1983. Hearing was held on this counterclaim for purposes of entering a preliminary injunetion thereon, and on March 19, 1984, the trial court granted such relief. In doing so, the trial court made the following pertinent findings of facts and conclusions of law:

7. Each of the Agreements expressly provides, in Paragraph 12, as follows:
12. Insurance Sales After Termination of Agreement. After the date of the termination of this Agreement, either of the parties hereto, directly or through intermediaries shall have the right to solicit Inter-Ocean policyholders for sales of additional insurance but neither shall have the right to replace existing coverage. Any such solicitation by General Agent [ie., Harvest Agency] for sales of insurance underwritten by other than Inter-Ocean shall not be deemed a violation of this Agreement. Additional insurance shall mean insurance sold to supplement or augment the insured's existing coverage and which does not replace such existing coverage.
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CONCLUSIONS OF LAW
6. The contractual obligation not to replace Inter-Ocean Coverage is not unreasonably overbroad. Agreements prohibiting solicitation of existing customers *102 to protect the goodwill for which one has been paid are enforceable, even though lacking geographical or time limiteo-tions. Because replacement is forbidden only as to a specific and limited class-Inter-Ocean policyholders who purchased their coverage through Harvest Agen-ecy-there is no need for limitations in other terms. Seach v. Richards, Dieterle & Co. (Ind.App.1982), 439 N.E.2d 208; Ebbeskotte v. Tyler (1957), 127 Ind.App. 433, 142 N.E.2d 905.
7. Inter-Ocean has established a pri-ma facie case that Harvest Agency has breached, and intends to continue to breach, Paragraph 12 of the Agreements. State ex rel. Haberkorn v. DeKalb Circuit Court (1968), 251 Ind. 283, 291, 241 N.E.2d 62, 67. See also Tuf-Tread Corp. v. Kilborn (1930), 202 Ind. 154, 172 N.E. 353; Indiana Annual Conference Corp. v. Lemon (1956), 235 Ind. 163, 131 N.E.2d 780.
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Cite This Page — Counsel Stack

Bluebook (online)
478 N.E.2d 98, 1985 Ind. App. LEXIS 2435, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harvest-insurance-agency-inc-v-inter-ocean-insurance-co-indctapp-1985.