Prudential Insurance Co. v. Van Matre

511 N.E.2d 740, 158 Ill. App. 3d 298, 110 Ill. Dec. 563, 1987 Ill. App. LEXIS 2842
CourtAppellate Court of Illinois
DecidedJuly 9, 1987
Docket5-85-0767
StatusPublished
Cited by41 cases

This text of 511 N.E.2d 740 (Prudential Insurance Co. v. Van Matre) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prudential Insurance Co. v. Van Matre, 511 N.E.2d 740, 158 Ill. App. 3d 298, 110 Ill. Dec. 563, 1987 Ill. App. LEXIS 2842 (Ill. Ct. App. 1987).

Opinion

JUSTICE HARRISON

delivered the opinion of the court:

Plaintiff, Prudential Insurance Company of America (Prudential), filed an action in the circuit court of Effingham County seeking damages and an injunction to prevent defendant, Michael D. Van Matre, one of its former agents, from inducing Prudential whole-life insurance policyholders to terminate policies which Van Matre had sold or serviced while in Prudential’s employ and to replace them with whole-life policies of a different company. Prudential’s complaint contained three counts. Count I alleged tortious interference with contract, count II alleged breach of an implied covenant of good faith and fair dealing, and count III alleged breach of fiduciary duty. On Van Matre’s motion, the circuit court dismissed all three counts pursuant to section 2 — 615 of our Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2 — 615) as being substantially insufficient in law. Although the circuit court granted Prudential leave to file an amended complaint, Prudential elected to stand on its original pleadings. This appeal followed. We affirm.

A motion to dismiss a complaint pursuant to section 2 — 615 (Ill. Rev. Stat. 1985, ch. 110, par. 2 — 615) requires the appellate court, as well as the trial court, to accept all facts well pleaded as true and to draw all reasonable inferences therefrom in favor of the plaintiff. (Towne v. Cole (1985), 133 Ill. App. 3d 380, 382, 478 N.E.2d 895, 897.) Prudential, the plaintiff in this case, alleged that on or about April 7, 1975, Van Matre entered into an “Agent’s Agreement” with it. According to the agreement, which was attached as an exhibit to plaintiff’s complaint, Van Matre was obligated to “promote the success and welfare of [Prudential]; conform to and abide by its instructions, rules and requirements; and refrain from engaging in any other pursuit or calling from which [he would] receive financial remuneration while this Agreement is in force.” Agreement sec. 1.

As part of this general obligation, Van Matre agreed to “canvas regularly for applications for insurance contracts of the kinds and upon the plans sold by [Prudential],” to “advocate the class of insurance most suitable to the applicant’s position,” to “not press for a larger amount of insurance than the applicant is able to maintain,” to “endeavor to keep in force the existing insurance of [Prudential], to secure the reinstatement of insurance which is lapsed and to perform all the duties, incident to the care and conservation of [Prudential’s] business, that may be assigned to [him] from time to time by [Prudential].” Agreement sec. 2.

The agreement provided that Van Matre’s “appointment as Agent and this Agreement may be terminated either by [Van Matre] or [Prudential] at any time.” (Agreement sec. 13.) Upon termination of the agreement, Van Matre was required:

1) to “immediately submit [books and records of accounts indicating money received by Van Matre on Prudential’s behalf] for an inspection and accounting” (Agreement sec. 7(a));
2) to “hand over” to a proper representative of Prudential “all books, records, and supplies furnished” to Van Matre by Prudential (Agreement sec. 7(b));
3) to grant a “prior lien” to Prudential “upon any amounts due [Van Matre], [his] executors, administrators or assigns, by the terms of the Agreement, until the amount of such indebtedness is fully paid” (Agreement sec. 14); and
4) to authorize Prudential to release to third parties, upon inquiry, information regarding his record with the company, his “personal character, habits, ability, and cause for leaving the service” and to “release [Prudential] from all liability for damages in connection with the furnishing of such information,” (Agreement sec. 15).

This agreement thus appears to have been identical to one recently considered by the United States Court of Appeals for the Seventh Circuit in Prudential Insurance Co. v. Sipula (7th Cir. 1985), 776 F.2d 157. As in that case, no further post-termination obligations were expressly imposed, and “[n]o mention was made of the confidential nature of policyholder information.” 776 F.2d 157,159.

From approximately April 1975 to June 1983, Van Matre was employed by Prudential pursuant to the agent’s agreement and was assigned to Prudential’s Decatur District Office in Decatur, Illinois. During his employment, Van Matre sold several types of Prudential whole-life insurance policies to various customers throughout the central Illinois area. He also “serviced” those policyholders, as well as other policyholders assigned to him by Prudential.

A Prudential whole-life insurance policy is a contract between Prudential and a policyholder that is, in the words of the policy, “insurance for the whole of life.” Under the policy, Prudential agrees to pay a specified sum to the policyholder or beneficiary upon the death of the insured, and to pay dividends and other benefits during the life of the policy. The policies are based on actuarial assumptions which contemplate a long-term contractual relationship. Prudential’s premium rates, estimates of expected dividends, cash surrender value accumulations, mortality assumptions and other economic terms of the policy are premised upon the policy’s remaining in force for a number of years. Prudential’s experience has been that whole-life policies remain in effect for more than 15 years. Policyholders, however, have the right to cancel the policies at any time.

When he sold a whole-life policy, Van Matre received a first-year commission on the sale from Prudential equal to approximately 40% to 55% of the first-year premium paid by the policyholder. Van Matre also received commissions on policies he was assigned to service, but had not sold. The amount and rate of first-year commissions paid to Van Matre was predicated upon the expectation that the policies would remain in force for a long term. Nevertheless, Prudential did not expressly condition receipt of the commissions by Van Matre upon the policies’ remaining in force for any minimum period of time. Rather, the payment of commissions by Prudential was dependent only upon its receipt of corresponding premiums from the policyholders.

In the course of his employment with Prudential, Van Matre was given access to information on each of the policyholders with whom he dealt. Prudential alleges that the information was compiled by it “at considerable effort and expense and is not readily available from other industry sources.” (Complaint par. 17.) The information included, inter alia, “the identity of Prudential policyholders, policy amounts, premium rates, ages, condition of health, available life insurance premium ratings, policy anniversary dates, premium payment dates, beneficiary names, settlement options chosen, dividend options chosen, dividend accumulations, annual increases in cash surrender values and accumulated cash surrender values.” (Complaint par.

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Bluebook (online)
511 N.E.2d 740, 158 Ill. App. 3d 298, 110 Ill. Dec. 563, 1987 Ill. App. LEXIS 2842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prudential-insurance-co-v-van-matre-illappct-1987.