James H. Washington Insurance Agency v. Nationwide Mutual Insurance

643 N.E.2d 143, 95 Ohio App. 3d 577, 1993 Ohio App. LEXIS 1996
CourtOhio Court of Appeals
DecidedApril 8, 1993
DocketNos. 62347, 62392.
StatusPublished
Cited by16 cases

This text of 643 N.E.2d 143 (James H. Washington Insurance Agency v. Nationwide Mutual Insurance) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
James H. Washington Insurance Agency v. Nationwide Mutual Insurance, 643 N.E.2d 143, 95 Ohio App. 3d 577, 1993 Ohio App. LEXIS 1996 (Ohio Ct. App. 1993).

Opinion

Porter, Judge.

Plaintiff-appellant, James H. Washington Insurance Agency, appeals from the partial summary judgment (on five counts) and directed verdict (on four counts) in favor of defendant-appellee, Nationwide Mutual Insurance Company (“Nationwide”), entered in the common pleas court below.

The issues in this case arise out of the interpretation of Washington’s exclusive Agent’s Agreement (“Agreement”) with Nationwide, effective January 1, 1987; Letters of Authority; and Nationwide’s Agent Brokerage Policy. Specifically, the appeal involves Nationwide’s right to cancel the Agreement any time, with or without cause, following written notice to Washington, and Nationwide’s right to cancel deferred compensation and incentive credits (“DCIC”) and extended earnings for breach of a noncompetition condition after Washington’s termination. The termination occurred after Washington refused to cancel two licenses for other insurance companies, contrary to the exclusivity provision of his Agent’s Agreement with Nationwide.

Washington also claimed he was owed commissions on the Cleveland School Board and Garfield Heights Board of Education insurance business in 1985 and 1986, and was forced to accept high-risk fire insurance policies in 1979 to his detriment. For the reasons stated below, we affirm the lower court’s decisions.

*579 Washington had been an independent agent with Nationwide since 1971. The January 1, 1987 Agent’s Agreement provided that “[t]his Agreement shall be in force until cancelled by either party.” Paragraph 9 of the Agent’s Agreement. The cancellation clause continued:

“Further, due to the personal nature of our relationship you or the Companies [Nationwide] have the right to cancel this Agreement at any time after written notice has been delivered to the other or mailed to the other’s last known address.”

There was no requirement that either Nationwide or Washington could cancel the Agent’s Agreement only for good cause.

Nationwide also required its agents to represent Nationwide exclusively, i.e., not to “solicit or write policies of insurance in [other] companies * * * either directly or indirectly without the written consent of [Nationwide].” Paragraph 4 of the Agent’s Agreement. In 1989, Nationwide discovered that Washington had obtained licenses with Blue Cross & Blue Shield (“BC & BS”) and Medical Life Insurance Company (“Medical Life”). On January 4, 1990, Nationwide sent a letter to Washington advising him that his two licenses with BC & BS and Medical Life violated the terms of his Agent’s Agreement. Failure to cancel those licenses in thirty days, Nationwide wrote, would give Nationwide no alternative but to terminate his contract. Washington failed to cancel the licenses. On May 24, 1990, Nationwide sent Washington written notice that his Agent’s Agreement with Nationwide was canceled.

The exclusive representation clause states in pertinent part:

“It is agreed and understood that you will represent us exclusively in the sale and service of insurance. Such exclusive representation shall mean that you will not solicit or write policies of insurance in companies other than those parties to this agreement, either directly or indirectly, without the written consent of these companies * * *.” (Emphasis added.) Paragraph 9 of the Agent’s Agreement.

However, Washington claims he had obtained written consent from Nationwide to be licensed with BC & BS and Medical Life, when he obtained signed Letters of Authority in 1981 and 1988. Thus, Washington argues that he did not violate the exclusivity feature of the Agreement and was not competing with Nationwide directly or indirectly within a twenty-five-mile radius of his Nationwide location during the first year following termination.

Nationwide does not dispute that the Letters of Authority gave Washington permission to broker, through other agents or brokers, business Nationwide would not write. Nor does Nationwide contend that Washington could not accept commissions through these other agents. However, contrary to Washington’s assertions, Nationwide argues that the Letters of Authority, which are governed *580 by Nationwide’s Agent Brokerage Policy, reinforce Nationwide’s policy of exclusive representation and expressly prohibit Nationwide agents from being licensed with other companies.

Paragraph A of Nationwide’s Agent .Brokerage' Policy is entitled “DIRECTION-EXCLUSIVE NATIONWIDE AGENT,” and provides:

“The continuing and long-range intent is for the Nationwide agent to be an exclusive representative supported by the key products necessary to serve our policyholders and to significantly penetrate Nationwide markets for market share growth.”

Paragraph B, entitled “CONTRACT,” quotes verbatim the exclusive representation clauses set forth in paragraph 4 of the Agent’s Agreement and concludes that “all violations of the Agent’s Agreement or Letter of Authority are a breach of contract.”

Paragraph C, entitled “BROKERAGE POLICY,” defines the scope of an agent’s authority to place coverage outside Nationwide. It permits the placement of business only “through other agents or brokers.” There is no authorization to obtain a license with another company.

“Career agents will be given written authority upon request to place through other agents or brokers that business which is unacceptable to, declined by, or canceled by the company.”

Nationwide contends that paragraphs A, B and C, construed as a whole together with paragraph 4 of the Agent’s Agreement, clearly express the policy and intent that Nationwide agents who have obtained a Letter of Authority may place through other agents or brokers business Nationwide will not write, but these agents must remain exclusive Nationwide agents. To resolve any possible ambiguity Nationwide points to paragraph D, “PROHIBITED PRACTICES,” of the Brokerage Policy, which states that Nationwide’s Agents will be prohibited from:

“1. Being licensed with another company unless required by law and with written approval.” (Emphasis added.)

Washington argues he comes within the exception because (1) he was required by law to be licensed to accept commissions from BC & BS and Medical Life, and (2) his Letters of Authority constitute Nationwide’s written approval. Nationwide contends that the exception does not apply and that Washington misconstrues the regulations governing the licensure of insurance agents in Ohio. Pursuant to Ohio Adm.Code 3901 — 1—10(H)(1), an agent must be licensed with an insurer to receive direct payment and one hundred percent of his commissions. However, the very next section, Ohio Adm.Code 3901-1-1-(H)(2), 1 permits a *581 licensed agent to split commissions with agents duly licensed with other companies. Thus, according to Nationwide, Washington was not required by law to be licensed to accept commissions from BC & BS and Medical Life.

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643 N.E.2d 143, 95 Ohio App. 3d 577, 1993 Ohio App. LEXIS 1996, Counsel Stack Legal Research, https://law.counselstack.com/opinion/james-h-washington-insurance-agency-v-nationwide-mutual-insurance-ohioctapp-1993.