McClure v. American Family Mutual Insurance

223 F.3d 845
CourtCourt of Appeals for the Eighth Circuit
DecidedAugust 21, 2000
Docket99-3482
StatusPublished
Cited by1 cases

This text of 223 F.3d 845 (McClure v. American Family Mutual Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McClure v. American Family Mutual Insurance, 223 F.3d 845 (8th Cir. 2000).

Opinions

MURPHY, Circuit Judge.

This case grows out of the termination of Mary McClure and Gary Kemp as agents for American Family Mutual Insurance Company after they lobbied for insurance legislation which the company opposed. McClure and Kemp sued American Family, related companies, and company officers for breach of contract, defamation, and other torts. The district court1 granted summary judgment to the defendants on all claims except for McClure’s breach of contract claim which was tried to a jury. That trial resulted in a defense verdict, and judgments were entered in favor of the defendants. McClure and Kemp appeal, and we affirm.

I.

Defendants American Family Mutual Insuranee Company, American Standard Insurance Company of Wisconsin, and the American Family Life Insurance Company (together, American Family) are affiliated Wisconsin corporations operating under common management. David Krueger, Daniel DeSalvo, Harvey Pierce, and Dale Mathwieh are officers of American Family. American Family is licensed to sell insurance in Minnesota, and it sells a full line of insurance products, including property, casualty, life, auto, and commercial insurance. American Family markets its insurance through exclusive agents whose relationships with it are governed by written contracts which state that they supersede all prior agreements.2 Its exclusive agents are required to sell all types of insurance offered by American Family.

McClure and Kemp were both exclusive agents under contract with American Family. Kemp first entered into an agency agreement with American Family in 1967 and McClure in 1986. Both agents sold the full line of American Family insurance products and were prohibited by contract from selling the products of any other insurance company. See Appellants’ App., 110, 121. McClure worked out of Mankato and Kemp out of West St. Paul, Minnesota. Between them they had approximately 2600 clients.

The contracts that defined agents’ relationship with American Family had identical provisions regarding termination. Under the agreements both the agent and American Family had the right to terminate without cause:

h.l) Except as provided in paragraph 2) below, this agreement may be terminated by either [American Family] or the [850]*850Agent with or without cause by giving written notice to the other and shall be deemed terminated as of the date specified in that notice....

Appellants’ App., 113, 123-24. A six month notice period would be required for termination for cause after the agreements had been in effect for two years, however:

[h.]2) After two years from the Effective Date of this agreement, [American Family] will give the Agent notice in writing of any undesirable performance which could cause termination of this agreement if not corrected. [American Family] will not terminate this agreement for those reasons for a period of six months after that written notice....

Id. at 113; see also id. at 123-24. American Family retained the right to terminate without notice under certain circumstances, however.

Section h.2 also had other language similar to some of the wording in the termination letters from American Family to the agents. It provided: “In no case shall notice of undesirable performance be required prior to termination if the performance in question involves a violation of See. 4.i or any other dishonest, disloyal or unlawful eonduct[.]” Id. Section 4.i required agents under contract with American Family

[t]o maintain a good reputation in the Agent’s community and to direct Agent’s efforts toward advancing the interests and business of [American Family] to the best of Agent’s ability, to refrain from any practices competitive with or prejudicial to [American Family] and to abide by and comply with all applicable insurance laws and regulations.

Id. at 111; see also id. at 122.

Both Kemp and McClure were active in the American Family Agents Association, a group organized by agents but never formally recognized by the company. Kemp was the president of the National Association, and McClure was a board member of the Minnesota Association and chair of the National Association Legislative Committee. The Association was involved in legislative lobbying, and in 1995 it lobbied for a bill in the Minnesota legislature to prevent insurance companies from requiring agents to sell a certain number or a certain dollar amount of life or health insurance policies in order to be able to sell property and casualty insurance. The agents preferred to sell property and casualty insurance policies because they were more profitable. The legislation they supported, known as the quota bill, applied only to independent agents as originally introduced. Independent agents are those insurance agents not bound to exclusive contracts.

An amendment was introduced to extend the scope of the bill to include exclusive agents, and American Family opposed it and made its opposition known to its agents. In an email sent to Gary Kemp in March 1995, the company stated that “American Family opposes the application of [the quota bill] to exclusive agents and employee agents .... American Family is opposed to this legislative effort to interfere with the contractual rights and obligations of the insurance companies and agents under exclusive agents contracts.” Appellants’ App., 148 (emphasis removed).

Kemp and McClure nonetheless retained lobbyist Dominic Sposeto on behalf of the Agents Association to encourage the legislature to expand the scope of the quota bill to include exclusive agents and such a bill was passed during the 1996 session. Spo-seto met with lobbyists for American Family in December 1995 to discuss the bill, and one of those lobbyists, Vicky Rizzolo, reported on this in a memorandum delivered in January 1996 to David Krueger, American Family’s Northwest Regional Vice-President. The memo indicated that McClure and Kemp had retained Sposeto. Krueger discussed the matter with American Family’s Minnesota State Director, Gary Hammer, and they decided that Kemp and McClure had violated their contracts by lobbying for legislation that [851]*851American Family had opposed. They decided that termination was appropriate. Termination letters were delivered to McClure and Kemp on January 11, 1996, informing them that their contracts with American Family were “being terminated immediately for conduct prejudicial to the company.” Section 4.i of the agent contracts required them “to refrain from any practice competitive with or prejudicial” to the company.

The terminations were reported in the press, and American Family made statements about them to the former customers of McClure and Kemp, to American Family agents, and to the public. In a January 1996 letter to the former customers of McClure and Kemp, American Family stated that these agents were no longer selling insurance for the company. American Family also distributed an email to its agents in February 1996 that read in part, “[McClure and Kemp] retained a lobbyist to introduce legislation that would severely restrict American Family’s ability to market certain types of insurance products .... The efforts of the two agents involved in this legislative activity were in direct violation of the agreements they made in the contracts, and directly against the best interests of the insurance buying public.” Appellants’ App., 145.

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Related

McClure v. American Family Mut. Ins. Co.
223 F.3d 845 (Eighth Circuit, 2000)

Cite This Page — Counsel Stack

Bluebook (online)
223 F.3d 845, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcclure-v-american-family-mutual-insurance-ca8-2000.