Smith v. Darouian

2 Mass. L. Rptr. 468
CourtMassachusetts Superior Court
DecidedJuly 7, 1994
DocketNo. 91-673
StatusPublished

This text of 2 Mass. L. Rptr. 468 (Smith v. Darouian) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. Darouian, 2 Mass. L. Rptr. 468 (Mass. Ct. App. 1994).

Opinion

Spina, J.

This matter was tried on several common law (jury waived) and nonjury counts. The defendant withdrew his counterclaim during trial. After trial, I find the following facts.

The plaintiff is an independent insurance agent, having been licensed since April 1, 1984. She has at all times material hereto lived and sold insurance in the Great Barrington, Massachusetts area. She began her insurance career with a husband and wife (Halls) agency in Berkshire County selling life insurance exclusively for Franklin Life Insurance Company (Franklin). Within a few years the plaintiff developed a clientele of over 200 people.

In 1988 the defendant approached the Halls, who he had known through Franklin, and asked them to work through his agency. He had become a general agent for Mutual Trust Insurance Company (Mutual Trust) on February 1, 1988, and his enthusiasm for that company, as well as that company’s product, had attracted the Halls.

[469]*469Mutual Trust is a small life insurance company whose home office is in Illinois. It engages approximately 150 general agents throughout the country, who in turn contract with approximately 500 agents. It enjoys an “A” rating from A.M. Best, a national service that rates firms based on financial stability. Mutual Trust is one of thirteen insurance companies whose dividends recently exceeded projections. Although plaintiff doggedly pursues a finding that Mutual Trust has the best life insurance policy on the market, neither this Court nor the representatives of Mutual Trust who testified are willing, or so foolish, to so conclude. Mutual Trust does offer what is regarded as highly competitive whole life and universal life insurance products.

The Halls were eager to have the plaintiff join them, but they warned the defendant that she was bossy, a cut-throat, and had other personal problems that are not material to this controversy. They were easily able to persuade the defendant to see beyond her flaws and engage the plaintiff for her virtues: the ability to make him money. Moved by the image of a union that afforded such promise, the defendant visited the plaintiff in her hospital room, where he wooed her with flowers. Having put his best foot forward, the defendant next arranged a meeting with the plaintiff in West Springfield which included the Halls, to seal the relationship with a written contract. During that meeting the plaintiff showed the defendant a list of her clients.

A contract between the parties was executed on April 18, 1988. The contract provided, inter alia, the plaintiffs negotiated commission rate, that the contract could be terminated by either pariy on written notice to the other, and an integration clause that included a clause that the contract would be “subject to the rules and regulations of [Mutual Trust] as issued from time to time.” The contract was a form agreement prepared by Mutual Trust, wherein defendant was the general agent and plaintiff was the broker (hereafter, agent). Mutual Trust was not a “captive” company: The plaintiff could write insurance for other companies, would maintain her own office and clients, set her own hours and take vacations as she alone determined.

The relationship indeed proved fruitful, at first. The plaintiff had the fourth highest level of sales nationally for Mutual Trust in 1989 and the ninth highest level of sales in 1990. She was by all accounts a very good life insurance salesperson. The defendant’s contract with Mutual Life provided that his general agency would receive commissions on first year life insurance policy premiums on a descending scale. Beginning in 1988 his agency would receive commissions of 115%, and those rates would decline 5% each year until a 95% commission rate was reached. The plaintiffs contract with the defendant, together with subsequent amendments, provided that she would receive 52.5% of his commissions. There was no disclosure as to his rate of commission. The plaintiffs share of the defendant’s commissions was increased to 65% as of October 1, 1988, then to 70% by May 30, 1990. These step increases were based on predetermined percentage levels of compensation by Mutual Trust. Whether a particular agent progresses to a higher step/level of compensation is a subject of negotiation between the general agent and the agent. The plaintiff was also entitled to receive between 5% to 10% of renewal premiums for the second through tenth years on policies she wrote.

The relationship was not without its difficulties. The plaintiff was not pleased by the defendant’s failure to provide her with all informational and educational bulletins issued by Mutual Trust. He sent her a total of 50 such bulletins. Others were available at his office in Springfield if she chose to drive from Great Barring-ton. She obtained over 400 other bulletins from another general agent. She frequently complained to the defendant about this, as well as his failure to provide ongoing training and educational service, as had been promised. These were the subjects (especially the defendant's failure to provide bulletins) of heated arguments between them, often marked by yelling and screaming. The defendant’s agency was typically one of the top 5 or 10 producers for Mutual Trust, but his management style, described as “laissez-faire,” was not especially complimentary to the plaintiffs needs. His agency grew from 5 to approximately 30 agents between 1988 and 1991.

There was a problem that arose from the location of plaintiffs office 50 miles from the defendant’s agency. All applications for life insurance prepared by a Mutual Trust agent must be submitted to the home office over the approval of the general agent. An exception was made in the case of the plaintiff due to the delays caused by having to send all paperwork to Springfield which were then compounded by the delays caused by a reverse flow of paperwork. Similar delays in commission payments were similarly resolved. Otherwise, the defendant had always approved plaintiffs applications as appropriate to her clients’ needs and finances.

The plaintiffs disillusion with the defendant’s ability to be a resourceful general agent festered, and that became a breeding ground for her growing resentment and a belief that the defendant was profiting handsomely from her efforts. The plaintiffs monthly overhead was $1,500 and she began consulting other general agents about her “problems." She learned that other agents were earning higher rates of commission than she. They began having arguments over compensation that became increasingly intense, to the point where third parties were being drawn in. The plaintiff sought the intervention of Horace Polglaze, a vice-president and regional supervisor of Mutual Trust, in early 1991, but defendant’s reaction was that they were trying to “steal his agency.” On March 26, 1991 [470]*470the defendant offered to increase her compensation to 75% of his commissions on her sales but she never accepted the offer and instead proposed a counter offer on or about May 7, 1991. Another senior agent in defendant’s general agency, James Scully, offered to provide plaintiff with the services she desired, and defendant agreed. Scully had a financial stake in the general agency’s overall productivity, and appreciated the financial impact the agency would sustain if plaintiff left. He was able to get along with the plaintiff, who by then, May 1991, could not get along at all with the defendant, and to whom she was openly hostile. She subjected him to ethnic slurs. A meeting was held on May 14, 1991 between the plaintiff, Scully and the defendant.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

V.S.H. Realty, Inc. v. Texaco, Inc.
757 F.2d 411 (First Circuit, 1985)
Mitchelson v. Aviation Simulation Technology, Inc.
582 F. Supp. 1 (D. Massachusetts, 1983)
PMP Associates, Inc. v. Globe Newspaper Co.
321 N.E.2d 915 (Massachusetts Supreme Judicial Court, 1975)
Makino, U.S.A., Inc. v. Metlife Capital Credit Corp.
518 N.E.2d 519 (Massachusetts Appeals Court, 1988)
Kroeger v. Stop & Shop Companies, Inc.
432 N.E.2d 566 (Massachusetts Appeals Court, 1982)
Manning v. Zuckerman
444 N.E.2d 1262 (Massachusetts Supreme Judicial Court, 1983)
Alexander & Alexander. Inc. v. Danahy
488 N.E.2d 22 (Massachusetts Appeals Court, 1986)
Dodd v. Commercial Union Insurance
365 N.E.2d 802 (Massachusetts Supreme Judicial Court, 1977)
United Truck Leasing Corp. v. Geltman
551 N.E.2d 20 (Massachusetts Supreme Judicial Court, 1990)
Comey v. Hill
438 N.E.2d 811 (Massachusetts Supreme Judicial Court, 1982)
Anthony's Pier Four, Inc. v. HBC ASSOCIATES
583 N.E.2d 806 (Massachusetts Supreme Judicial Court, 1991)
Weeks v. Harbor National Bank
445 N.E.2d 605 (Massachusetts Supreme Judicial Court, 1983)
Waters v. Min Ltd.
587 N.E.2d 231 (Massachusetts Supreme Judicial Court, 1992)
Schwanbeck v. Federal-Mogul Corp.
592 N.E.2d 1289 (Massachusetts Supreme Judicial Court, 1992)
Levings v. Forbes & Wallace, Inc.
396 N.E.2d 149 (Massachusetts Appeals Court, 1979)
Zapatha v. Dairy Mart, Inc.
408 N.E.2d 1370 (Massachusetts Supreme Judicial Court, 1980)
Owen v. Williams
77 N.E.2d 318 (Massachusetts Supreme Judicial Court, 1948)
Benoit v. Landry, Lyons & Whyte Co.
580 N.E.2d 1053 (Massachusetts Appeals Court, 1991)

Cite This Page — Counsel Stack

Bluebook (online)
2 Mass. L. Rptr. 468, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-darouian-masssuperct-1994.