### IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE September 2000

Session
RHEA E. BURNS, JR. v. NEW YORK LIFE INSURANCE COMPANY

Appeal from the Circuit Court for Knox County No. 2-238-95 Hon. Harold Wimberly, Jr., Judge

FILED SEPTEMBER 26, 2000 No. E2000-00158-COA-R3-CV

Plaintiff, an insurance sa

les agent for N

ew York Lif

e Ins urance Company, alleged that he entered into an oral agreement with another Ne w York Life I

nsurance agent for the two agents to sell life insurance policies to

a particular fa

mily and shar

e the sales commiss

ions. Some time later

, a dispute arose between Plaintiff and the second New Yor k Life Insura

nce agent over

who was entitled to receivecertain sales commissions. After Plaintiff did not receive a share of those sales commissions, he sought the assistance of New York Life in resolving his dispute with the second agent. New York Life accepted statements from both agents a nd then declined to intervene on Plaintiff’s behalf. Plaintiff brought suit against the second agent and New York Life , but later non-suited

the claim against the agent. Plaintiff

alleged that New York Life was contractually required to make a decision in a commission dispute

between its agents, and that if it had made a decision, the industry standard practicewould have requir ed the company

to decide in his fa

vor. He sought da

mages fr om New York Life for breach of contract and under a quantum meruit theory

. The Trial Court granted New York Life’s Motion

for Summary Judgment. Plaintiff appeals. We affirm the Judgment of the Trial Court. Tenn. R. App. P. 3; Ju dgment of the Trial

Court Affirmed; C

ase Remanded. D. M ICHAEL S WINEY , J., delivered the opinionof the court, in which H OUSTON M. G ODDARD , P.J. and H ERSCHEL P. F RANKS , J., joined. Douglas C. Weinstein, Knoxville, Tennessee, for the Appellant, Rhea E. Burns, Jr. RichardJ. McAfee, Chattanooga, Tennessee, for the Appellee, New Yor k Lif e Ins uran ce C omp any.

OPINION-2- Background Rhea E. Burns, Jr. ( Plaintiff), became an insurance s ale s agent for New York Life Insurance Company (Defendant),on December 2, 1986, by entering into an “Agent’s Contra

ct” with Defendant. That contract provides that Plaintiff receives sales commissions on policies of insurance which he sells, subject to the terms of the contract and to the rul es relating to commissions as containedin the Agent’s Handbook. The Agent’s Handbook provides, at paragraph 13(a)(ii), that “if there is any

question or contro

versy betw

een agents as t

o who is entit

led to a particular commission, the Company’s decision thereon shall be final.”

Robert H. Noe, a former Defendant in this suit but not a party i

n this appeal, is also a New York

Life Ins uranc e sale s agent . In late 1989, Plaintiff learned of an upcoming auction which would be attended by

several wealthy

families, includin

g members of the

Mindle Col lie r fam ily. Plaintiff desired to secure the insurance business of the Collier family. He

contacted Noe and asked N oe t o attend the auction with him and to introduce him to Noe’s client, Z Buda, who might then intr oduce Pla intiff to the Collier family. Noe agreed to assist Plaintiff in his efforts, and the two insurance agents agreed

orally to share the commissions from the sales of the insurance po

licies to the Collier family. Through the substan tial efforts of both Plaintiff and Noe, term life insurance policies were sold to the Collier family in March 1990. The commissions from the sales were shared betweenPlaintiff and Noe, withPlaintiff receiving 30% and Noe receiving 70%. Plaintiff says he andNoe originally agreed to a 50/50 split of the commissions, but Noe then asked Plaint iff to designate 70% as Noe’s shar

e so th at he coul d qualify for company rec ognition (Chairman’s Council) based on sales. Pla intiff says N

oe agreed to pa

y Plaintiff th

e rema ining 2 0% from a particular future commission.

In April 1991, Plaintiff received notification from New York Life that a change had been made in the Collier term life insurance policies which resulted in a deduction of $1,147.50 from his sales commissions. Plaintiff attempted to discover what change had been made, and e

ventually learned that Noe had met with the Colliers on several occasions and had converted the Collier term policies to whole

life insurance policies. This conversion resulted in a new sales commission which Noe did not sh are with Pl aintiff. In Au gust 1991, w hen Plaint iff complai ned to Noe, N oe ga v e Plaintiff a persona l check for $1,147.50, representing the reduction in Plaintiff’s commissions occasioned

by the conversion. However,Noe did not share with Plaintiff his new commissions for the conversion of

the Collier policie

s. Plaintiff compla

ined to Noe, but to no

avail. Plaintiff contacted

New York Life supervisors and asked for assistance in resolving his commission dispute with Noe. On the advice of a supervisor, he wrote a memo to Bill Reid, New York Life Compliance Officer in Atlanta, on January 6, 1992. In this

memo, Plaintiff detailed the events which led to his dispute with Noe, and asked Reid to investigate and “assure that I receive the commissions due me.” Two weeks later, Plaintiff resigned from his employment with New York Life, ef fec tive February 28, 1992. On February 13, 1992, Mr. Reid responded to Plaintiff’s complaint by

letter, which we

reproduce ver

batim:-3-

Dear Mr. Burns : This is in reply to your letter of January 6, 1992 concerning a conflict between you andAgent

Bob Noe. I am unable to assist you in your efforts due to the fo llowing: 1. The C ompany is not a party to ag

reements betwee

n Agents a

nd ha s no basis for enfor

cing said agr

eements. 2. Any

agreement y

ou may have

had with Agent N oe was verbal and, ther efore, prohibits the Company from even giving effective guidanc e or direction. 3. You indicate that the initial share of 70/30 w as based on Counci l Qualification and not on each Agent’s invol vem ent. Even if Numbers 1 and 2 abo v e were not appropriate, the Company prohibits sharing of commi ssions for the purpose of qualifying for Council or othe r benefits. This fact alone discourages my consider ation of your request. 4. Receiving 30% of the or igi nal Termpolicy does n ot entitle you

to com mis sio ns o n th e Co nve rte d pe rma nen t po lic y. I am sorry that I do not have better new s; but, based on the information, no other conclusion is possible. Sin cere ly, William C. Reid Compliance Officer Not satisfied with this r

esult, Plaintiff fil

ed this suit again

st Noe and New York Life on April 12, 1995. New York Life filed a Motion for Summary Judgment on July 20, 1999. On September

21, 1999, Plaintiff filed “Plaintiff’s Opposition to Defendant New York Life’s Motion for Summary Judgment and Motion for Partial Summary Judgment Aga inst Defendant New York Life.” On October 5, 1999 , three day s before the hea

ring of Defend

ant’s Motion by

the Trial Court, Plaintiff submitte d a “Supple mental Mem orandum,” a ccompanied by the Affidavi t of Morga n G. Brenner, Certified Life Underwriter, of Havertown, Pennsylvania. Mr. Brenner averr ed that he has over 25 years’ experience in sales, management and administration of insurance. Hestated that he hadreviewed Pl aintiff’s agent contra ct with New Y ork Life and th e Age nt Handbook , the correspondence

between Plaintiff and

New York Lif

e, and various ple

adings in this

case. He opined1 As previously state d, that parag raph pro vides: “if ther e is any questio n or contro versy betwee n agents as to

who is entitled to a particular co mmission, the Comp any’s decision thereon sha ll be final.” -4- that “the contract la

nguage conta

ined at paragr

aph 13(a)(ii)

of the Agent’s Handbook 1 requires New York Life to make a decision

to resolve the question or controversy as to the split of commissions between plaintiff and defendant Noe.” He further opined: 6. It is my op

inion that the Febr

uary 13, 199

2 letter from Mr. Re

id to the plaint iff constituted notification from New York Life to the plaintiff that New York Life would notmake the decision to resolve the commission dispute between these two agents. Based on my review of the above-refer enced d ocuments, no decision resolving this question or controversy was ever made by New York Life. 7. I am quite familiar with the standards of practice relative to t he splitting of commissions, which are industry-wide. I am also quite familiar with the scenario of term life insuran

ce policies that a

re subsequently

converted to whol

e life policies. 8. It is my opinion that it is standard in the life insurance industry that, where commissions are split on the init ial sale of term lif

e policies,commissions on whole life conversions and any subsequent sales to those policyholde rs are also split on the same basis. 9. It is my opinion that it is standard -- even co mmo nplace -- in the life insurance industry for agents to en

ter into verbal a

greements or c

ontracts to split co

mmissions. 10. It is my opinion that New York Life’ s failure and/or re fusal to resolve the commission dispute between plaintiff and defendant Noe was a breach of its contract with the plaintiff. 11. It is my opinion that had New York Life abided by its contract with the plaintiff, that it would have beencompelled by industry standard practice to decide in favor of the plaintiff’s position, andto enforce a commission split beneficial to the plaintiff, relative to the Col

lier whole life c

onversions. 12. It is my opinion that New York Life refused to make the decision in resolution of the commission dispute

because it wished defendant Noe to receive the whole life conversion commissions, and to formally decide the matter would have compelled New York Life to decide in plaintiff’s favor. O n October 8, 1999, t

he Trial Court hea

rd Defendant’s

Motion for Summa

r y Judgment. Based on the briefs of the parties, the evidence of record and arg uments of counsel, the Trial Court granted Defendant’s Motion. The Court further ordered that Plaintiff’s Motion for Partial Summary

Judgment with respect to his claim for breach of contract against New York Life-5-

was therefore moot,

and entered final judgment in favor of New York Life pursuant to Tenn. R. Civ. P. 54.02. Plaintiff took a volu ntary non-s

uit of his claim against Noe. Plaintiff appeals the Summary Jud gmen t gra nte d to New Y ork Life on h is b reac h of con tra ct c lai m on ly. Discussion Plaintiff argues on appeal that the Trial Court erred in failing to grant partial summary judgment in his favor since

no factual dispute

exist s, and that Defendant, as a matter of law, breached its contract with h

im

. Alternatively, he argues that the Trial Court erred in g ranting summary judgment to Defendant, as there are disputed material facts which create a genuine issue within the meaning of Tenn. R. Civ. P. Rule 56. Defendant responds that Plaintiff has improperly raised the issue of whether the Tr ial Court erred in

failing to grant summary judgment to Plaintiff, since the Trial Court did not take that action.

Plaintiff filed his motion for

summary judg

ment only after New York

Life moved for summaryjud gment. The hearing on October 8, 1999 was to consider New York L ife’s first-fi le d motion only. The trial court did not consider Plaintiff’s motion at that time or at any othe r time. Indeed, when the trial court ruled in favor of NewYork Life on i ts motion for summar

y judgment, the court determ

ined that Plaintiff

’s motion was moot. Whilethe Trial Court’s Judgment does contain

language finding Plaintiff’s Motion to be moot rather than denying the Motion, implicit in the Trial Court’s Judgment, which was based on the record as a whole, including Plaintiff’sMotion and accomp anying Af fidavit, is a

finding that Plaintiff’s Motion is without merit.

When evaluating a motion for summary judgment, the Trial Court should consider “(1) whether a factualdispute exists; (2) wh ether the dispute

d fact is materialto the outcome of the case; and (3) whether the disputed fact creates a genuine issue for trial.” Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn. 1993).

A fact is “mater

ial” for summary

judgment purposes, if it must be decided in order to

resolve the substantive claim or defense at which the motion is directed. Tenn. R. Civ. P. 56.01; Lut he r v. Compton, 5 S.W.3d 635 (Tenn. 1999). The Court of Appeals must view the evidencein the light most favorable to the opponent of the motion and all

legitimate conclusions of fact must be drawn in favor of the opponent. Gray v. Amos, 869 S.W.2d 925 (Tenn. Ct. App. 1993). No presumption of correctness attaches to decisions granting summary judgment when they involve only questions of law. Hembree v. State, 925 S.W.2d 513 (Tenn. 1996); Tenn.R.App.P. 13(d).

As stated, Plaintiff contends that no factual dispute exists and if Defendant refused to make a decision w

hich it was requir

ed by contr

act tomake, then as a matter of law, Defendant has breached it employment

contract with Plaintiff. He contends, alternatively, that there is a material disputed fact, wh

ich he describes

as: whether, what New York Life in fact did, was a decision or instead an abrogation of its contractual duti

es. In other words, the question of whether there is a duty is for-6-

the Court; the question of the scope of

that duty and whether New York Life f ailed in that duty is one for the jury. Defendant

responds that New York Life had no contractual duty to make a decision, but once New York Life made a decision, that decision was final. We agree.

We have caref

ully reviewed the record in this case, and find no genuine issue of material fact in dispute. Th ere is no dispute a

bout what New Yor

k Life did in response to Plaintiff’s request for assistanc e. The resolution of the case turns on the interpretation of the employment contract between Plaintiff and Defendant and whether Defendant’s undisputed resp onse, i.e., Mr. Reid’s letter to Plaintiff, satisfied the terms of that contract. The interpretat io n of a contract is

a que stion of law, for which our standard of r

eview is de novo with no presumption o f correctness. Tenn. R. App. P. 13(d); Eyring v. East Tennessee Baptist Hosp., 950 S.W.2d 354 , 358 ( Tenn. Ct. App. 1997). In construing contracts, the words expressing the parties’ intention should be given the usual, natural and ordinary meaning. Where

there isno ambiguity

, it is the duty o

f the court to appl

y to the words used their or di nary meaning and neither party is to be favored in their construction. Allstate Ins. Co. v. Jordan, 16 S.W.3d 777, 779 (Tenn. Ct. App. 1999).

The employment contract between Plaintiff and Defendant requires Plaintiff to abide by the terms of the Agent’s Handbook. The Handbook states at paragraph 13(a) (ii), that “if thereis any qu estion or con troversy between agents as to who is entitled to a particular commission, the Company’s decision thereon shall be final.” T

he Handbook, by

its p la in language, obligates the agent to accept the Company’s decision as final. It is undisputed that the Company determined that Plaintiff’s receipt of 30% of the original Collier Term policy did not entitle him to commissions on the Collier Converted permanent policy. Mr. Brenner ’s Affidavit states that “industry standard practice” mandates a different result than the one reached by D e fend ant. While we have serious reservations whether Mr. Brenner’s Affidavit and opinionsare admissible, Mr. Brenner’s opinion, even taken as true, wo

uld not change th

e result in this case. Defendant’s decision was that Plaintiff is not entitled to a commission on the conve rsion of th e term life insurance policies to whole life insurance policies. Defen dant’s decision is

final, and there the matter ends. Defendant rendered a decision, just not the one Plaintiff wanted. As a matter of law, there was no breach of contract by Defendant. Accordingly , t he Trial Court properly found that Defendant is entitled to Summary Judgment. CONCLUSION

The judgment of the Trial Court is affirmed and this cause is remanded to the Trial Courtfor such further

proceedings a

s may be req

uired, if any, consis

tent with this Opinion, and for collection of the costs below. The costs on appeal are assessed against the Appellant, Rhea E. Burns, Jr. , an d hi s su ret y.-7- ___________________________________ D. MICHAEL SWINEY, JUDGE