Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00058/USCOURTS-caed-2_06-cv-00058-2/pdf.json

Parties Involved:
Conseco Insurance Company
Counter Claimant
Conseco Marketing, LLC
Counter Claimant
Conseco Services, LLC
Counter Claimant
Victor A. Gonsalves
Counter Defendant
Darin Lucas
Defendant

Document Text:

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There are four named defendants in this action. To 1

avoid confusion the court will use the following abbreviated

names throughout this order to identify the defendants: (1)

defendants (a) Conseco Insurance Company, formerly known as

Conseco Annuity Assurance Company, (b) Conseco Services, LLC, and

(c) Conseco Marketing, LCC, will collectively be referred to as

Conseco; and (2) defendant Darin Lucas will be referred to as

Lucas. 

1

 UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

VICTOR A. GONSALVES,

NO. CIV. S-06-0058 WBS KJM

Plaintiff, ORDER RE: MOTION FOR SUMMARY

JUDGMENT; MOTION FOR 

RECONSIDERATION; AND CROSSMOTION FOR SUMMARY JUDGMENT

 

v.

CONSECO INSURANCE COMPANY,

formerly known as CONSECO

ANNUITY ASSURANCE COMPANY,

CONSECO SERVICES, LLC, CONSECO

MARKETING, LLC, DARIN LUCAS,

and DOES 1 to 200 inclusive,

Defendants.

----oo0oo----

Currently before the court are both defendants’1

motions for summary judgment, defendant Lucas’ motion for

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reconsideration of a previous order of this court, and plaintiff

Victor A. Gonsalves’ cross-motion for summary judgment on his

first cause of action and defendant Conseco’s contractual

counterclaim.

I. Factual and Procedural Background

On or about May 4, 1999, plaintiff entered into a

written contract with defendant Conseco to work as an independent

contractor selling insurance and annuity policies and

certificates. (Compl. ¶ 102; Conseco’s Mot. for Summ. J. Ex. 1.) 

Lucas is an insurance broker under whom plaintiff worked as a

subproducer. (Lucas Decl. ¶ 5.) Plaintiff was terminated from

his employment without cause on or about June 15, 2003. 

(Conseco’s Mot. for Summ. J. Ex. 18.) Defendants contend that

because one of plaintiff’s clients had terminated his policy and

plaintiff did not return the commission, and because defendants

themselves had overpaid plaintiff by entering three payments for

one transaction, plaintiff is in possession of monies that

rightfully belong to defendants. (Wilson Decl.; Lucas Decl. ¶

13.) Conseco subsequently sent plaintiff a demand for payment in

the amount of $13,718.70 for an outstanding debit balance. 

(Compl. ¶ 16; Conseco’s Mot. for Summ. J. Ex. 22; Gonsalves Opp’n

Decl. Ex. 2.) A copy of the demand was sent to Lucas. (Id.) 

Plaintiff responded by disputing the alleged debt, and now

contends that the balance is inflated and that the value of his

“counterclaims” (assumedly, the value of the claims in this suit)

is likely to be in excess of the amount of the debt. (Compl. ¶¶

17, 21.) 

///

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At some point during this dispute, Lucas received

notice from the Debt Management Unit at Conseco Annuity Assurance

that he was required to pay off plaintiff’s debit balance. 

(Lucas Decl. ¶¶ 5, 18; Conseco’s Mot. for Summ. J. Exs. 19, 22) 

On May 27, 2004, Lucas posted plaintiff’s name and social

security number onto a website maintained by Vector One, a

company that permits subscribers to report an insurance agent who

left employment with an outstanding debit balance for

commissions. (Lucas Decl. ¶¶ 21, 19; Lucas Reply Ex. G (Letter

from President of Vector One).) Conseco also posted plaintiff’s

name and social security number onto Vector One around January

19, 2005. (Wilson Decl. ¶ 52.) 

On or about January 27, 2005, a prospective employer

found plaintiff’s name on the Vector One website and informed

plaintiff that he was listed on the website. (Gonsalves Mot. for

Summ. J. Decl. ¶ 11.) On February 16, 2005, plaintiff filed a

complaint in Placer County Superior Court alleging defamation. 

(Lucas’ Mot. for Summ. J. 4; Gonsalves Decl. ¶ 15.) Plaintiff

voluntarily dismissed his lawsuit without prejudice on September

26, 2005, against Conseco and on October 31, 2005, against Lucas. 

He now asserts that this dismissal was prompted by the trial

court’s erroneous rulings. (Gonsalves Decl. ¶ 19.) Plaintiff

states that the trial court later dismissed the lawsuit with

prejudice for failure to timely file an amended complaint, and

that the trial court’s dismissal with prejudice is currently on

appeal. (Id. ¶ 20.) 

On December 7, 2005, plaintiff filed a new complaint in

California Superior Court for the County of Sacramento against

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defendants. (Compl.) In that complaint, plaintiff alleged the

following causes of action: (1) defamation; (2) intentional

infliction of emotional distress; and (3) breach of contract. 

(Id.) The first two causes of actions action, defamation and

intentional infliction of emotional distress, are filed against

both Conseco and Lucas, and are based on the alleged debit

balance and posting of plaintiff’s information on the Vector One

website. (See id.) The third cause of action is filed only

against Conseco. (Id.) On January 9, 2006, defendants removed

the action to federal court on the basis of diversity

jurisdiction. (Defs.’ Notice of Removal.) On March 17, 2006,

Conseco filed a counterclaim against plaintiff for breach of

contract to recover the alleged debt. (Answer 15-17.) 

On March 31, 2006, defendant Lucas moved for summary

judgment with respect to plaintiff’s claims of defamation and

intentional infliction of emotional distress. Defendant Lucas

argued that plaintiff’s defamation claim was barred by the

statute of limitations, that the allegedly defamatory statement

was true, and that the publication of the statement was protected

under California’s common-interest privilege. Defendant

additionally argued that plaintiff’s intentional infliction of

emotional distress claim should fail because the underlying

defamation claim fails, and also because plaintiff could not

demonstrate all of the elements of the claim as a matter of law. 

On May 22, 2006, this court denied defendant Lucas’ motion. (May

22, 2006 Order.) 

Defendants Conseco and Lucas now move for summary

judgment and defendant Lucas moves for reconsideration of the

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court’s May 22, 2006, Order. Defendants argue that plaintiff’s

defamation claim fails because the alleged defamatory statement

is true, the alleged statement was not defamatory, and plaintiff

cannot prove special damages. Defendants argue that the

intentional infliction of emotional distress claim fails because

the underlying defamation claim fails and even if defamatory, the

statement is not outrageous. Conseco argues that the breach of

contract claim is barred by the statute of limitations,

contradicts prior deposition testimony, is based on inadmissible

hearsay, is based on conduct by an entity that is not a defendant

to this action, is conclusory, is factually unsupported, and

fails to show that plaintiff was prevented from performing his

contract. Lucas moves for reconsideration of the court’s

previous order on the basis of new evidence that shows that Lucas

reported plaintiff to Vector One prior to Conseco’s report. 

Plaintiff moves for summary judgment on his first cause

of action and Conseco’s counterclaim. Plaintiff argues that he

has conclusively proved his defamation because Conseco and Lucas

each reported him to Vector One. Plaintiff argues that Conseco’s

counterclaim is barred by the statute of limitations. 

II. Discussion 

Summary judgment is proper “if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(c). A material fact is one that could affect the outcome of

the suit, and a genuine issue is one that could permit a

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reasonable jury to enter a verdict in the non-moving party’s

favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). The party moving for summary judgment bears the initial

burden of establishing the absence of a genuine issue of material

fact and can satisfy this burden by presenting evidence that

negates an essential element of the non-moving party’s case. 

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). 

Alternatively, the movant can demonstrate that the non-moving

party cannot provide evidence to support an essential element

upon which it will bear the burden of proof at trial. Id. 

Once the moving party meets its initial burden, the

non-moving party must “go beyond the pleadings and by her own

affidavits, or by ‘the depositions, answers to interrogatories,

and admissions on file,’ designate ‘specific facts showing that

there is a genuine issue for trial.’” Id. at 324 (quoting Fed.

R. Civ. P. 56(e)). The non-movant “may not rest upon . . . mere

allegations or denials of the adverse party’s pleading . . . .” 

Fed. R. Civ. P. 56(e); Valandingham v. Bojorquez, 866 F.2d 1135,

1137 (9th Cir. 1989). However, any inferences drawn from the

underlying facts must be viewed in a light most favorable to the

party opposing the motion. Matsushita Elec. Indus. Co., Ltd. v.

Zenith Radio Corp., 475 U.S. 574, 587 (1986). Additionally, the

court must not engage in credibility determinations or weigh the

evidence, for these are jury functions. Anderson, 477 U.S. at

255. 

The plaintiff movant “must establish beyond

peradventure all of the essential elements of the claim or

defense to warrant judgment in his favor.” Fontenot v. Upjohn

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Because there is no evidence that the amount of a debt 2

is reported on Vector One, plaintiff’s argument that the amount

of debt owed is disputed is immaterial.

7

Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original);

see also Arnett v. Myers, 281 F.3d 552 (6th Cir. 2002) (“a

substantially higher hurdle must be surpassed, particularly where

. . . the moving party bears the ultimate burden of persuasion .

. . at trial”).

A. Plaintiff’s First Cause of Action: Defamation

1. Defendant Conseco’s Motion

Truth is an absolute defense to a claim for defamation. 

Smith v. Maldonado, 73 Cal. App. 4th 637, 648 (Cal. Ct. App. 1st

Dist. 1999). Conseco admits posting plaintiff’s identifying

information to Vector One around January 19, 2005. (Wilson Decl.

¶ 52.) Conseco’s posting to the website indicated that plaintiff

owed a debt to Conseco Insurance Companies, but the amount was

not specified. Conseco proffers plaintiff’s commission

statements as evidence of the existence and amount of the debt. 

(Wilson Decl.; Conseco’s Mot. for Summ. J. Exs. 3-15.) 

2

Plaintiff argues that the information posted by Conseco

was untruthful for the reasons that (1) plaintiff had a valid

setoff against Conseco which effectively negated the debt, (2)

the statute of limitations had run on the debt, and (3) the

information on the Vector One website falsely indicated that

plaintiff owed a debt to Conseco Insurance Companies and another

to First Annuity and Insurance Marketing, Co. 

///

///

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Specifically, “After termination of this Agreement, any 3

monies owed to the Company or any Conseco Company under the terms

of this Agreement shall immediately be payable to the Company or

Conseco Company. Any debt unpaid within (30) days thereof shall

accrue at the legal rate.” (Conseco’s Mot. for Summ. J. Ex. 1,

6.) 

8

a. Plaintiff’s alleged setoff

Plaintiff has never satisfactorily explained to this

court the nature of his alleged setoff or why it constituted a

valid claim against Conseco. Even if he had a valid setoff, it

would not have changed the fact that he did in fact owe a debit

balance to Conseco for commissions. Conseco’s posting to Vector

One was therefore correct.

b. Statute of Limitations

Plaintiff’s argument that his debt to Conseco was

barred by the statute of limitations is based on the argument

that the date from which the statute should run is the date the

debt accrued. (Pl.’s Mot. for Summ. J. 3-4.) According to the

plaintiff, this date is April 21, 2000, the date the debt of

$13,718.70 first appeared on his statements. However, plaintiff

remained under contract with Conseco until June 15, 2003. 

(Conseco’s Mot. for Summ. J. Ex. 18.) The contract specifically

required that upon its termination, that all sums due to Conseco

would be immediately paid. The fact that the debt was incurred 3

in April, 2000 does not commence the running of the statute of

limitations for breach of contract since the contract between

plaintiff and Conseco was still in force. 

Conseco’s attempts to collect the debt by sending

threatening notes in August and October 2001 did not accelerate 

the date the statute of limitations began to run. (Id. Exs. 16,

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Although Article XII of the contract explicitly states 4

that “this agreement and any amendments hereto shall be governed

by and construed accordance with the laws of the State of

Indiana,” all parties agree that the California statute of

limitations applies. See Ashland Chemical Company v. Provence,

129 Cal. App. 3d 790, 795 (1982).

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17.) Conseco threatened to terminate the contract if the debt

was not repaid within 30 days, which was Conseco’s prerogative

under Article IX(1)(a) of the contract. Conseco, however, did

not exercise this right until May, 2003. (Id. Ex. 18.) The

applicable period of limitations was four years. CAL CIV. PROC.

CODE § 337(1) (2001). Conseco’s posting on January 19, 2005, 4

was less than four years from the date its claim would have

accrued. Therefore, plaintiff’s debt to Conseco had not been

extinguished by the statute of limitations at the time it was

posted to Vector One.

c. Posting of debt to two different entities

Lucas has now made it clear that its posting to Vector

One preceded Conseco’s posting. Plaintiff’s argument is that by

posting the debt to Conseco after the alleged debt to First

Annuity had already been posted, Conseco made it appear that

plaintiff actually owed two separate debts, which was false. 

Whether Conseco’s posting would have created that impression in a

reasonable reader is a question of fact that must be resolved by

the trier of fact. Hughes v. Hughes, 122 Cal. App. 4th 931, 936

(Cal. Ct. App. 2d Dist. 2004)(“Whether a statement is true or

substantially true may depend on how the statement is

understood.”); Maidman v. Jewish Publicans, Inc., 54 Cal. 2d 643,

651 (Cal. 1960)(if a statement can reasonably have been

understood to make a defamatory charge, which is a legal issue,

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“it is for the trier of fact to determine if the readers did so

understand it.”). 

For that reason, Conseco’s motion for summary judgment

on plaintiff’s First Cause of Action for defamation must be

denied.

2. Defendant Lucas’ Motions

This court previously denied Lucas’ motion for summary

judgment because “neither the plaintiff nor the defendant has

provided evidence to show conclusively whether the debt was

listed twice on the website in error, or whether a debt with

Conseco Insurance Companies had already been listed on the Vector

One website at the time defendant posted a debt owed to First

Annuity and Ins. Marketing, Co.” (May 22, 2006 Order.) Lucas

has now shown that he was the one who first reported plaintiff to

Vector One. (Lucas’ Mot. for Recons. & Summ. J. 3-4). However,

that does not change the court’s previous ruling because there is

still a disputed issue of material fact concerning the

truthfulness of Lucas’ statement to Vector One.

Lucas’ report to Vector One indicates that plaintiff

owed a debt to First Annuity and Ins. Marketing, Co. (Hurricane

Decl. ¶ 7; Pl.’s Response to Def. Lucas’ Statement of Undisputed

Facts No. 1.) However, the evidence proffered by Conseco shows

that plaintiff owed a debt to Conseco, not Lucas. Lucas argues

that the fact that plaintiff’s debt was transferred by Conseco to

Lucas per Lucas’ contractual obligations with Conseco justifies

his report to Vector One. (Lucas’ Reply 3-4.) However, Lucas

does not conclusively prove that contractually obligates

plaintiff to pay the debt to him rather than to Conseco, nor does

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Plaintiff is not required to prove special damages on 5

his defamation claim because as a statement which tends to injure

him in his occupation it is a claim for defamation per se. CAL

CIV. CODE § 45 (2001).

11

he cite any authority for the proposition that he, rather than

Conseco, had a legal right to collect the debt and report

plaintiff to Vector One. Because Lucas has not conclusively

established that plaintiff owed a debt to First Annuity, a

material disputed fact still remains as to the truth of Lucas’

statement.5

3. Plaintiff’s Motion

Plaintiff also moves for summary judgment on his

defamation claim. (Pl.’s Mot. for Summ. J. 5.) Plaintiff argues

that because the defendants twice reported plaintiff for the same

debt, defendants’ publications are “clearly” defamatory. (Id.) 

As discussed above, a dispute of a material fact remains as to

whether Lucas’ report to Vector One was truthful and whether

Conseco’s statement created the misleading impression that

plaintiff owed two separate debts instead of one. Plaintiff does

not meet his heightened burden to prove that defendants’

statements were false and, if false, rose to the level of libel. 

Fontenot, 780 F.2d at 1194. Accordingly, the court will deny

plaintiff’s motion for summary judgment on the defamation claim. 

B. Plaintiff’s Second Cause of Action: Intentional

Infliction of Emotional Distress

The elements of a claim for intentional infliction of

emotional distress are: “(1) extreme and outrageous conduct by

the defendant with the intention of causing, or reckless

disregard of the probability of causing, emotional distress; (2)

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the plaintiff’s suffering severe or extreme emotional distress;

and (3) actual and proximate causation of the emotional distress

by the defendant’s outrageous conduct.” Ess v. Eskaton Props.,

Inc., 97 Cal. App. 4th 120, 129 (Cal. Ct. App. 3d Dist. 2002)

(quoting Cervantez v. J.C. Penney Co., 24 Cal. 3d 579, 593, 156

(Cal. 1979)). 

Conseco, with whom Lucas joins, also argues for summary

judgment on the ground that plaintiff’s claim cannot reasonably

be construed to meet the outrageousness required for an

actionable claim. (Conseco’s Mot. for Summ. J. 15-16.) 

Defendants cite two cases in the employment context in which

former employee’s claims for intentional infliction of emotion

distress were dismissed for not rising to the level of

outrageousness to make an actionable claim. (Id., (citing

Schneider v. TRW, Inc., 938 F.2d 986, 992 (9th Cir. 1991.); King

v. AC&R Advertising, 65 F.3d 764, 769 (9th Cir. 1995).) However,

in both those cases, the employee’s other claims were also

dismissed on the basis of a summary judgment motion, none of

which involved defamation. Here, the court will not dismiss the

defamation claim. The court cannot say as a matter of law that

no reasonable juror could find defendants’ conduct to be extreme

or outrageous, or that no reasonable juror could find that

plaintiff suffered severe or extreme emotional distress as result

of defendants’ actions.

C. Plaintiff’s Third Cause of Action: Breach of Contract

Plaintiff’s third cause of action, for breach of

contract, is filed only against Conseco. Conseco argues that

this claim for breach of contract is barred by the statute of

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limitations. The relevant statute of limitations for a breach of

contract suit is four years. Plaintiff argues that Conseco

breached its contract because it prevented him from performing

his contract when Conseco took on debt from its parent

corporation. (Compl. ¶¶ 99-111.) Plaintiff’s allegation of

specific harm is that one of his clients returned a policy,

sometime between August 13 and October 13, 1999, citing Conseco’s

financial difficulties. (Pl.’s Opp’n 4-5.) 

Even if that action constituted a breach of plaintiff’s

contract with Conseco, the action would seemingly be barred by

the statute of limitations. Although the contract was in force

between plaintiff and Conseco until June 15, 2003, if the actions

of plaintiff’s client constituted a breach, the action would

accrue at that time the policy was returned. (Conseco’s Mot. for

Summ. J. Ex. 18.) Plaintiff did not file his complaint until

December 7, 2005. However, Conseco counterclaimed. For the

reasons discussed, Conseco’s counterclaim accrued on June 15,

2003. Because the statute of limitations is four years, the two

claims co-existed and plaintiff’s breach of contract claim

survives as an offset to Conseco’s contract counterclaim. CAL

CIV. PROC. CODE § 431.70 (2001); Davis & Cox v. Summa Corp., 751

F.2d 1507, 1521-22 (9th Cir. 1985).

However, plaintiff’s breach of contract claim against

Conseco must fail for a different reason. All of plaintiff’s

arguments, which center around poor fiscal management, do not

involve the conduct of any of the defendants in this action. 

(Conseco’s Reply & Opp’n 11-14.) None of the named defendants

engaged in activities that forced them to file bankruptcy, or

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A “chargeback” occurs when an agent sells a policy, 6

receives a commission, and the customer to whom the agent sold

the policy subsequently returns the policy within the appropriate

14

“took on” any debt of its parent corporation. (Kindig Decl.) 

Plaintiff’s contentions concern the conduct of Conseco, Inc.,

which is a separate corporation from any of the Conseco

defendants named in this action. (Conseco’s Reply & Opp’n 12.) 

Plaintiff presents no contrary evidence or evidence indicating

that any of the named defendants engaged in any of the improper

fiscal activities of which he complains. Therefore, the court

will grant defendants’ motion for summary judgment on plaintiff’s

third cause of action. 

D. Defendant Conseco’s Counterclaim: Monies Owed Under the

Contract 

For the reasons discussed about, Conseco’s counterclaim

against plaintiff for monies owed is not barred by the statute of

limitations. The date of accrual for Conseco’s counterclaim was

June 15, 2003, which is the date Conseco terminated the agreement

with plaintiff. Because Conseco filed its counterclaim within

four years of that date, the court rejects plaintiff’s argument

that Conseco’s contract counterclaim is barred by the applicable

statute of limitations. Accordingly, the court will deny

plaintiff’s motion for summary judgment. 

Conseco also moves for summary judgement with respect

to its counterclaim. As noted above, plaintiff disputes the

amount of the debt. Plaintiff’s complaint with Conseco’s record

of his account concerns whether the “chargeback” in April 2001

was legitimate. (Gonsalves Opp’n Decl. ¶ 4.) Plaintiff disputes 6

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time period. The agent must surrender the commission that s/he

received. 

15

defendants’ explanations and denied the return of any of the

polices that he sold in 2000 and 2001. (Id. ¶¶ 5-6). Plaintiff

specifically argues that a letter sent by a Conseco debt

management officer in August, 2003 does mention that his debt

results from any “chargebacks.” (Id. citing Ex. 2.) This

creates a disputed material fact; however, the material dispute

is not whether Gonsalves owes a debt, but rather the amount of

the debt. Accordingly, the court will grant partial summary

judgment for Conseco as to the fact that a debt was owed, but the

amount is a disputed question of material fact, which will have

to await jury determination.

IT IS THEREFORE ORDERED that:

(1) the motions of Conseco and Lucas for summary

judgment on the first and second causes of action of plaintiff’s

complaint be, and the same hereby are, DENIED;

(2) Conseco’s motion for summary judgment on the third

cause of action of plaintiff’s complaint be, and the same hereby

is GRANTED;

(3) Conseco’s motion for summary judgment on its

counterclaim be, and the same hereby is, GRANTED, as to the fact

of the debt, but the exact amount of the debt remains a triable

issue of fact; 

(4) Lucas’ motion for reconsideration of the court’s

previous denial of Lucas’ motion for summary judgment be, and the

same hereby is, DENIED; and

(5) plaintiff’s motions for summary judgment on

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Conseco’s counterclaim and the first cause of action of

plaintiff’s complaint be, and the same hereby are, DENIED.

DATED: November 29, 2006

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