2003 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-11-2003

Vukich v. Nationwide Mutl Ins

Precedential or Non-Precedential: Non-Precedential

Docket No. 02-3359

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Recommended Citation

"Vukich v. Nationwide Mutl Ins" (2003). 2003 Decisions. Paper 463.

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NOT PRECEDENTIAL

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

___________

Nos. 02-3359, 02-3360, 02-3361

___________

CRAIG VUKICH,

 Appellant at No. 02-3359

v.

NATIONWIDE MUTUAL INSURANCE COMPANY;

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY;

NATIONWIDE LIFE INSURANCE COMPANY;

NATIONWIDE GENERAL INSURANCE COMPANY;

NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY;

COLONIAL INSURANCE COMPANY OF WISCONSIN, f/k/a

COLONIAL INSURANCE COMPANY OF CALIFORNIA

____________

WILLIS JAMES BRANTHOOVER,

 Appellant at No. 02-3360

v.

NATIONWIDE MUTUAL INSURANCE COMPANY;

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY;

NATIONWIDE LIFE INSURANCE COMPANY;

NATIONWIDE GENERAL INSURANCE COMPANY;

NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY;

COLONIAL INSURANCE COMPANY OF WISCONSIN, f/k/a

COLONIAL INSURANCE COMPANY OF CALIFORNIA

____________
2

TODD ABRAHAM,

 Appellant at No. 02-3361

v.

NATIONWIDE MUTUAL INSURANCE;

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY;

NATIONWIDE LIFE INSURANCE COMPANY;

NATIONWIDE GENERAL INSURANCE COMPANY;

NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY;

COLONIAL INSURANCE COMPANY OF WISCONSIN, f/k/a

COLONIAL INSURANCE COMPANY OF CALIFORNIA

___________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

(D.C. Civil Nos. 01-1510, 01-1511, 01-1509)

District Judge: The Honorable Gustave Diamond

___________

Submitted Under Third Circuit LAR 34.1(a)

May 23, 2003

BEFORE: SCIRICA, Chief Judge, SLOVITER, and NYGAARD, Circuit Judges.

(Filed: June 11, 2003)

___________

OPINION OF THE COURT

___________
1. There are two companion lawsuits, Branthoover v. Nationwide, et al., No. 02-

3360, and Abraham v. Nationwide, et al., No. 02-3361, also on appeal. These cases

raise identical legal issues to Vukich and our discussion applies equally to them.

2. The District Court also found that Vukich’s complaint failed to state a claim

and alternatively dismissed the complaint for that reason. Because we agree with the

District Court’s counterclaim analysis, we need not reach its second justification for

dismissal.

3

NYGAARD, Circuit Judge.

Appellant Craig Vukich appeals the dismissal of his complaint following

the District Court’s determination that his present claims were compulsory counterclaims

to a previous lawsuit, Nationwide Mutual Insurance Co., et al. v. John Fleming, et al.,

Civil No. 99-1417 (W.D. PA 2001)(‘Fleming’).1 On appeal, Vukich argues that his

allegations of breach of contract and fraudulent misrepresentation by Nationwide are not

logically related to the prior action. We exercise plenary review over the grant of a motion

to dismiss. Lorenz v. CSX Corp., 1 F.3d 1406, 1411 (3d Cir.1993). Accordingly, we

review de novo the District Court's determination that Vukich's suit should have been

pursued as a compulsory counterclaim in the Fleming action. See Xerox Corp. v. SCM

Corp., 576 F.2d 1057, 1058 (3d Cir.1978). We will affirm the District Court.2

I.

Appellant’s complaint arises out of the termination of an agency agreement

that governed his services to Nationwide as an exclusive insurance agent. Pursuant to the

terms of that agreement, Vukich accumulated certain deferred earnings as a form of

benefits and was entitled to received those earnings in the event of a disability, death, or
4

“qualified cancellation.” The agreement provides that Vukich’s competition with

Nationwide following employment would preclude consideration as a qualified

cancellation. Based on Vukich’s actions in establishing a competing insurance agency,

Nationwide withheld his deferred compensation benefits and brought the aforementioned

Fleming lawsuit. In this suit, Vukich alleges that Nationwide was contractually permitted

to either withhold his deferred compensation and allow competition, or pay the benefits

and bring a lawsuit—not both. He claims that Nationwide breached his employment

contract by withholding his benefits and then filing the Fleming lawsuit. Additionally, he

claims that Nationwide fraudulently misrepresented the true nature of the deferred

compensation program and that Nationwide never intended to pay the deferred funds,

irrespective of his actions.

1. The Fleming Lawsuit

On August 27, 1999, Nationwide brought a diversity action against several

former insurance agents for lost premium income, corporate opportunities, and customer

goodwill allegedly arising from the agents’ implementation of a plan to transfer

Nationwide’s policyholders to direct competitors. The agents, including Vukich, created

a separate insurance company while still under contract to Nationwide and utilized certain

policyholder information gleaned from their Nationwide employment to establish a

customer base with the new agency. Nationwide brought suit for breach of the agents’

respective employment agreements, breach of fiduciary duty, and breach of a covenant
5

not to compete with respect to a particular agent. On cross-motions for summary

judgment, the District Court granted summary judgment to the defendants on several

counts, but allowed the case to proceed to trial on several other counts, including the

breach of contract claims against the defendants.

II.

It is clear that both the Fleming lawsuit and this case arise from the same

factual predicate and relate to the proper interpretation of the employment agreement. 

Federal Rule of Civil Procedure 13(a) provides that:

A pleading shall state as a counterclaim any claim

which at the time of serving the pleading the pleader

has against any opposing party, if it arises out of the

transaction or occurrence that is the subject matter of

the opposing party’s claim and does not require for its

adjudication the presence of third parties of whom the

court cannot acquire jurisdiction.

We have said that “[f]or a claim to qualify as a compulsory counterclaim, there need not

be precise identity of issues and facts between the claim and the counterclaim; rather, the

relevant inquiry is whether the counterclaim ‘bears a logical relationship to an opposing

party's claim.’” Transamerica Occidental Life Ins. Co. v. Aviation Office of America, Inc.,

292 F.3d 384, 389 (3d Cir. 2002) (quoting Xerox Corp., 576 F.2d at 1059). In turn, we

have found that “a counterclaim is logically related to the opposing party's claim where

separate trials on each of their respective claims would involve a substantial duplication
6

of effort and time by the parties and the courts.” Great Lakes Rubber Corp. v. Herbert

Cooper Co., 286 F.2d 631, 634 (3d Cir. 1961).

A comparison of the two lawsuits quickly yields the conclusion that the

claims made in this suit are logically related to the claims made by Nationwide in

Fleming. “Where multiple claims involve many of the same factual issues, or the same

factual and legal issues, or where they are offshoots of the same basic controversy

between the parties,” a compulsory counterclaim exists. Great Lakes Rubber Corp., 286

F.2d at 631. Both lawsuits are primarily concerned with the scope of the parties’

permissible actions under the same employment agreement during the same time period

and are interconnected. In Fleming, Nationwide sued Vukich for breach of the

employment agreement for actions taken during his tenure and post-employment

competition. Here, the primary argument put forth by Vukich is that Nationwide had a

choice under the employment agreement to either withhold deferred compensation or

bring a lawsuit to prevent competition. Once Nationwide filed its claim in Fleming, it

purportedly triggered Vukich’s claim. In each lawsuit, the respective claims focus on the

actions of the other party within the same factual paradigm and share the common legal

question of the proper interpretation of the employment agreement with respect to

competition.

We have construed compulsory counterclaims liberally in supporting the

notions of judicial economy, and we see no reason to circumscribe that interpretation
here. Vukich’s claims of breach of contract and fraudulent misrepresentation arise from

his interpretation of Nationwide’s duties under the employment agreement and are

logically related to the Fleming lawsuit. Thus, the District Court properly dismissed

Vukich’s complaint as a compulsory counterclaim.

III.

For the foregoing reasons, we will affirm the orders of the District Court.

/s/ Richard L. Nygaard 

Circuit Judge