Legacy Group of America, Inc. v. North American Company For Life And Health Insurance (2d Cir. July 8, 2009)
In an action successfully handled by the authors, the Second Circuit affirmed the district court's decision granting summary judgment in favor of the insurer together with awarding legal fees and expenses. The action centered on a solicitation agreement executed by the parties in October of 1993 in which the plaintiffs were granted the authority to solicit applications for insurance policies as well as place application with the insurer pursuant to some conditions. In exchange, the insurer agreed to compensate the plaintiffs with commissions earned on premiums paid on actual policies issued by the insurer. The agreement contained a provision stating that it could be terminated by either party without cause.
In June of 1998, the insurer terminated the agreement and assigned another to service the policies the plaintiffs had placed. The plaintiffs commenced an action against the insurer for breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment as well as made mention of a conversion claim based on the assignment.
The insurer moved for summary judgment based on its rights under the terms and conditions of the agreement to terminate the relationship. The district court agreed and granted summary judgment in its favor. In addition, the insurer was also awarded attorneys fees as against one of the plaintiffs.
The Second Circuit determined that pursuant to the terms and conditions of the agreement, summary judgment was proper as the agreement clearly provided each party with the ability to terminate the relationship at any time and without cause. In addition, the Second Circuit determined that the plaintiffs were unable to assert proprietary rights with respect any "book of business." The Second Circuit concluded that plaintiff "could not prevent [the insurer] from assigning policies [the insurer] owned to protect [the plaintiffs] relationships or customer lists."
For a copy of the decision click here
By Richard J. Cohen and Sarah J. Delaney
https://www.goldbergsegalla.com/attorneys/Cohen.html
https://www.goldbergsegalla.com/attorneys/Delaney.html