# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 4- 21 74

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Am eri can Fam il y

Mu tu al Ins ur an ce Co m

pa ny; Am eri can Fam il y

Life I ns ur an ce

Co m pa ny; Am eri can Sta nd ard Ins ur an ce Co m pa ny, W is co ns in co rp or at io ns

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll ees

v.

St ev en G. Graha m , a Mi nn es ot a res id en t; Ste ve n Gra ha m Agen cy , Inc ., a

Mi nn es ot a co rp or at io n

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el la nt

s

__ __ __ __ __ __

App eal fro m

Uni te d S ta te s Di st ric t Co ur t

fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

__ __ __ __ __ __

Su bm it te d: Feb ru ary 10 , 20 15

Fil ed : J ul y

7, 2 01 5

__ __ __ __ __ __

Befo re GRUENDER, SHEPHERD, and KELLY , Cir cu it Ju dg es

.

__ __ __ __ __ __

KELLY, Cir cu it Ju dg e.

S t e v e n Grah am an d hi s in su ran ce ag en cy

, St ev en Grah am Age nc y

, In c.

(co ll ect iv el y Gr a h a m), ap pe al th e de ni al of Grah am ’s po st -tr ia l m ot io ns an d th edi st ric t co ur t’s en fo rcem en t of a st ip ul at ed -d am ag es cl au se i n G r ah am ’s Age nt 1

Agr eem en t wit h Am eri can Fam il y Mu tu al In su ran ce Co m pa ny (Am eri can Fam il y ).

W e aff irm th e jud gm en t. 2

I. Ba ck gr ou nd

Grah am so ld in su ran ce fo r Am eri can Fam il y fro m 19 88 un ti l 2 0 1 1. On

Ja nu ary 1, 19 96

, Grah am an d Am eri can Fam il y en te red in to an Am eri can Fam il y

Co rp or at e Age nt Agr eem en t (Ag en t Agr eem en t). In 20 10

, a cu st om er co m pl ai nt le d

to a n i n v es ti ga ti on of Grah am

. Am eri can Fam il y co nc lu de d th at Grah am ha d

in crea se d co ve rag e an d ad de d e n d o rs em en ts on cu st om ers ’ in su ran ce wit ho ut

cu sto m er pe rm is si on

, th ereb y in crea si ng pr em iu m s; im pr op erl y ap pl ie d m

ul ti -veh ic le

di sc ou nt s to acco un ts wit h on ly on e car; an d ch an ge d ve hi cl e-ra ti ng sym bo ls us ed to

as si gn ris k an d de te rm in e ap pr op ria te pr em iu m s fo r au to m ob il e in su ran ce. On

Ja nu ary 7, 20 11

, Aus ti n Cav es

, Grah am ’s st at e sa le s di rect or

, m et wit h Grah am an d

te rm in at ed th e Age nt Agre em en t b et ween Grah am an d Am eri can Fam il y

.

Sev eral week s la te r, Grah am f o r med an in de pe nd en t in su ran ce ag en cy

. On

Feb ru ary 24

, 20 11

, Grah am se nt a le tt er to ap pr ox im at el y 1

, 5 0 0 o f hi s fo rm er

Am eri can Fam il y cu st om ers te ll in g th em he no lo ng er rep res en te d Am eri can Fam il y

In su ran ce Co m

pa ny a nd ha d si gn ed an Age nt Agr eem en t no t to so li ci t or in du ce

fo rm er cu st om ers fo r on e y ear. Acco rd i n g t o th e le tt er, ho wev er, th is Age nt

Agr eem en t di d no t pr oh ib it hi m fro m of feri ng po li ci es fo r in su ran ce n e e d s no t

co ve red by an ex is ti ng Am eri can Fam il y po li cy

. In th e le tt er, Grah am st at ed he no w

rep res en te d ov er 50 in su ran ce co m pa ni es an d co ul d of

fer cl ie nt s “ m or e ch oi ces

,

The Hon or ab le Mi ch ael J. Davi s st ep pe d do wn as Chi ef Jud ge of th e Uni te d 1

St at es Dis tri ct Co ur t fo r th e Dis tri ct of Mi nn es ot a at th e cl os e of bu si ne ss on Ju ne 30

, 20 15

.

W e h av e juri sd ic ti on pu rs ua nt to 28 U.S.C. § 1 29 1.

2

-2

-ex pa nd ed co ve rag e, an d ex cel le nt rat es ” th at m ig ht be “ be tt er su it ed fo r y ou r ne ed s.”

The le tt er co nc lu d e d b y i nv it in g cu st om ers to vi ew hi s ne w in su ran ce ag en cy ’s

web si te

. If a fo rm er cu st om er co nt act ed Grah am in res po ns e, th e cu st om er was as ke d

to si gn a “ no n- in du cem en t fo rm ,” whi ch st a t e d t ha t Grah am ha d no t “ so li ci t[e d] or

in du c[ed ]” th em “ to rep la ce, la ps e or can cel an y Am eri can Fam ily In su ran ce po li ci es ”

du rin g t he on e-year, no n- co m pe te pe rio d.

In 20 12

, Am eri can Fam i l y s ue d Grah am in fed eral co ur t. Am eri can Fam il y

al le ge d th at Grah am vi ol at ed th e Age nt Agr eem en t whe n he se nt th e Feb ru ary 20 11

le tt e r t o hi s fo rm er cu st om ers be cau se th e Age nt Agr eem en t ex pr es sl y pr oh ib it ed

Grah am fro m in du ci ng or at te m pt in g to in du ce an y fo rm er Am eri ca n Fa m ily cu st om er

to can cel an Am eri can Fam il y po li cy fo r a y ear a fte r le av in g Am eri can Fam il y

. As

da m ag es

, Am eri can Fam il y so ug ht al l of Grah am ’s ex te nd ed earn in gs

. At the ti m e 3

of hi s te rm ina tio n, G ra

ha m ’ s ex te nde d ea

rn ing s am ount ed to ap pr ox im at el y $9 38 ,00 0.

Am eri can Fam il y

ha d p ai d Gra ha m

$5 23 ,15 3.7 0 p rio r to fil in g s ui t.

Grah am co un te rcl ai m ed fo r wro ng fu l te rm in at i o n

. H e al le ge d th e Age nt

Agr eem en t req ui red Am eri can Fam il y to gi v e h i m “ no ti ce in writ in g of an y

un de si rab le pe rfo rm an ce whi ch co ul d cau se t e r mi n at io n of [th e] ag reem en t if no t

co rrec te d” an d to wait si x m on th s aft er su ch no ti ce be fo re te rm in at in g th e ag reem en t.

Am eri can Fam il y ha d gi ve n no no ti ce to Grah am be fo re th e te rm in at io n. Acco rd in g

to th e Age nt Agr eem en t, ho wev er, if Grah am en ga ge d in “ di sh on es t, di sl oyal, or

un la wfu l co nd uc t,” no no ti ce was req ui red

. Am eri can Fam il y as se rte d th at Grah am ’s

co nd uc t qu al ifi ed as “ di sh on e s t,” ob vi at in g th e ne ed fo r no ti ce un de r th e Age nt

Agr eem en t.

Sect io n 6.u of t h e A g en t Agr eem en t pr ov id ed fo r a “ fo rfei tu re of ex te nd ed 3

earn in gs ” if an ag en t fai le d to co m pl y wit h an y cl au se of th e ag reem en t, pa rti cu la rly

th e no n- in du cem en t cl au se

. Ext en de d earn in gs are a fo rm of de ferr ed co m pe ns at io n

pr ov id ed by Am eri can Fam il y to an ag e n t a fte r an Age nt Agr eem en t is te rm in at ed

,

us ua ll y by the ag en t re ti rin g.

-3

-The cas e was tri ed be fo re a ju ry in Octo be r 20 13 . The jur y fou nd in fav or of

Am eri can Fam il y on al l cl ai m s. Grah a m mo v e d fo r jud gm en t as a m at te r of la w

(J MOL) an d a ne w tri al

. The co ur t de ni ed th e m ot io ns an d en te red jud gm en t in fav or

of Am eri can Fam il y

. In ad di ti on

, th e co ur t or de red Grah am to rep ay th e $5 23 ,15 3.7 0

in ex te nd ed earn in g s

, p lu s in te res t, th at Am eri can Fam il y ha d al read y pa id hi m

.

Grah am ti m el y ap pe al ed

.

II . Disc us si on

A. Suffi ci ency of t he Ev id ence

G r a h a m a ss ert s th e di st ric t co ur t erre d in de nyin g JM OL in hi s fav or o n

Am eri c a n F a m il y ’s b reac h- of -co nt ract cl ai m be cau se th e ev id en ce was in su ffi ci en t

to su pp or t th e jury ve rd ic t

. Acco rd in g to Grah am

, th e Age nt Agr eem en t di d no t

pr oh ib it hi m fro m co nt act in g fo rm er cu st om ers or se ll in g in su ran ce po li ci es to th em

so lo ng as th e cu st om ers un de rs to od he was no t “ in du ci ng ” th em to can cel Am eri can

Fam il y po li ci es

.

“ W e rev ie w d e no vo th e di st ric t co ur t’s de ni al of a m ot io n f o r ju dg m en t as a

mat t e r o f la w, us in g th e sa m e st an da rd s as th e di st ric t co ur t.” Howar d v. Mi ss o u r i

Bo ne an d Jo in t Cen te r, In c., 61 5 F.3 d 99 1, 99 5 (8 th Ci r. 20 10 ). In di ve rs it y cas es

, ou r

co ur t h as at t im es ap pl ie d th e fo ru m st at e’s st an da rd of rev ie w t o su ffi ci en cy of th e

ev id en ce ch al le ng es

. See In re Lev aq ui n Pro ds

. Liab

. Li t i g

., 70 0 F.3 d 11 61

, 11 65

(8 th Ci r. 20 12 ) (ap pl y in g Mi nn es ot a Ru le of Ci v i l P r o c e d ur e 50 .01 (a))

. At ot he r

ti m es

, we ha ve ap p l i e d t he fed eral st an da rd of rev ie w. See W ei tz Co

. v. MH

W as hi ng to n, 6 31 F.3d 51 0, 5 19 –2 0 (8 th Cir . 20 11 ) (ap pl y in g Fed eral Ru le of Civ il

Pro ced ur e 50 (a)( 1) ). Here, ho wev er, Mi nn es ot a Ru le of Ci vi l Pro ced ur e 50 .01 (a) an d

Fed eral Ru le of Ci vi l Pro ced ur e 50 (a)( 1) pr ov id e vi rtu al ly id en ti cal st an da rd s, so we

ne ed no t de ci de whi ch st an da rd ap pl ie s fo r pu rp os es of th is cas e. See Carp er v. St at e

Farm Mu t. In s. Co

., 75 8 F.2 d 33 7, 34 0 (8 th Ci r. 19 85 ) (“ Obv io us ly, co ns id erat io n of

-4

-whi ch st an da rd is ap pr op ria te is in si gn ifi can t w h e r e bo th th e st at e an d fed eral

st an da rd s are in fact su bs ta nt ia ll y si m il ar.”)

. In co ns id eri ng a m ot io n fo r JM OL, th e

di st ric t co ur t vi ews th e ev id en ce “ in th e li gh t m os t fav o r a b l e to th e jury ve rd ic t.”

Mo or he ad Eco n. Dev

. Aut h. v. And a, 78 9 N.W .2d 86 0, 88 7 (Mi nn

. 20 10 ) (q uo ta ti on

om it te d) ; see als o Towns en d v. Bayer Co rp

., 77 4 F.3 d 44 6, 45 6 (8 th Ci r. 20 14 ) (th e

di st ric t co ur t m

us t vi ew th e ev id en ce “ in th e li gh t m os t fav or ab l e t o t h e pr ev ai li ng

pa rty an d t he co ur t ca n n ot weig h o r ev al ua te th e ev id en ce o r co ns id er qu es ti on s of

cred ib il it y .” (q uo ta ti on om it te d) ). The di st ric t co ur t sh ou ld no t gr an t JM OL “ un le ss

th e ev id en ce is pr act i c a ll y co nc lu si ve ag ai ns t th e ve rd ic t an d reas on ab le m in ds can

reac h on ly on e co nc lu si on

, (o r) th e jury’ s fin di ng s are co nt rary to th e la w ap pl ic ab le

in th e cas e.” And a 78 9 N.W .2d at 88 7– 88 (q uo ta ti on om it te d) ; se e al so Howar d, 61 5

F.3 d at 99 5 (“ Ju dg m en t as a m at te r o f l a w is ap pr op ria te on ly whe n al l of th e

ev id en ce po in ts on e way an d is su sc ep ti bl e of no reas on ab le in fere nc e su st ai ni ng th e

po si ti on of t he no nm ov in g p art y .” (q uo ta ti on om it te d) ).

W e co nc lu de th e di st ric t co ur t pr op erl y de ni ed Grah am ’s m ot i o n f o r JM OL.

Th e no n- in du cem en t cl au se of th e Age nt Agr eem en t pr oh ib it ed Grah am fro m

“ di rect ly or in di rect ly in du c[i ng ], [o r] at te m pt [in g] to in du ce

. . . an y po li cy ho ld er of

[Am eri can Fam il y ]” t o can cel an Am eri can Fa mi l y po li cy

. The jury was pr es en te d

wit h th e Feb ru ary 20 11 le tt er Grah am se nt to fo rm er cu st om ers an d co ul d reas on ab ly

ha ve fo un d th at it am ou nt ed to a br each of th e Age nt Agr eem en t. Tho ug h th e le tt er

sp eci fic al ly in fo rm ed cu st om ers ab ou t Gra ha m ’s “ no n- co m pe te ” ag reem en t and hi s

in te nt to “ ho no r th at ag reem en t,” i t al so in fo rm ed cu st om ers th at th e ag reem en t d id

no t res tri ct hi m fro m of

feri ng a “ br oa de r ran ge of in su ran ce pr od uc ts ” th ro ug h “ ot he r

co m pa ni es th at m ay be be t t e r s u i te d fo r y ou r ne ed s.” Grah am ack no wled ge d th e

le tt er was sen t t o “ as m an y [fo rm er cu st om ers ] as we co ul d fi nd .”

Oth er te st im on y fro m Grah am li ke wis e su pp or ts th e ve rd ic t. W he n as ke d why

he di d no t se n d a le tt er si m pl y te ll in g cu st om ers he ha d m ov ed fir m s an d ha d a

no n- in du cem en t ag reem en t, Grah am te stif ie d the re “ wou ld be no reas on ” to se nd su ch

-5

-a le tt er. Grah am als o tes ti fie d th at he an d hi s em pl oyees sen t “ do zen s” of em ai ls to

fo rm er cu st om ers who ha d res po nd ed to th e Feb ru ary 20 11 le tt er, en co ur ag in g th em

to ret ur n th ei r no n- in du cem en t fo rm s so he co ul d se nd th em fav or ab le in su ran ce

qu ot es

. The jury he ard th e co nt en ts of so m e of th es e em ai ls

, whi ch in cl ud ed la ng ua ge

su ch as “ [w]hen y ou ge t s om e ti m e, jus t co m pl et e an d ret ur n [th e waiv er fo rm ] an d

I can ru n so m e qu ot es whi ch I real ly th in k wil l m ak e y ou sm il e” an d “ [j] us t

won de rin g if y ou go t th e fo rm y ou req ue st ed

. I wou ld lo ve to wor k so m e qu ot es up

fo r y ou if i t wo rk s t o s en d [t he waiv er] bac k.”

Grah am ad m it te d th at m or e th an 10 0 cu st om ers bo ug h t i n s u ran ce fro m hi m

aft er rece iv in g th e le tt er an d can cel le d th ei r po li ci es wit h Am eri can Fam il y

. The jury

was pr es en te d wit h ev id en ce th at Grah am so ld at le as t 59 1 po li ci es th at r ep la ced

can cel le d Am eri can Fam il y po li ci es an d th at th e rat e of Grah am ’s cu st om ers

can cel li ng th ei r Am eri can Fam il y po li ci es was m or e th an do ub le th at of ot he r ag en ts

le av in g Am eri can Fam il y

. A reas on ab le jury co ul d co nc lu de

, ba se d on a l l o f th e

ev id en ce pr es en te d, th at Grah am br each ed hi s Age nt Agr eem en t by in du ci ng fo rm er

cl ie nt s to can cel th ei r Am eri can Fam il y po li ci es wit hi n th e pr oh ib it ed ti m e pe rio d.

B. Mot io n fo r New Tri al Ba se d o n Cav es ’s Tes timony

Grah am arg ue s th e di st ric t co ur t ab use d its dis cr et ion by al lo win g Aus ti n Cav es

to te st ify th at Grah am ha d br eac h e d th e Age nt Agr eem en t. Grah am co nt en ds th is

te st im on y was an in ad m is si bl e le ga l co nc lu si on

. Grah am as se rts Cav es ’s te st im on y

was so pr ejud ic ia l th at he is e n t i t l e d t o a ne w tri al on Am eri can Fam il y ’s

br each -o f-co nt ract cla im

.

At tri al

, Cav es te st ifi e d t h a t

, as an Am eri can Fam il y sa le s m an ag er, he was

res po ns ib le fo r de te rm in in g whe th er fo rm er a g en ts co m pl ie d wit h th ei r Age nt

Agr eem en ts

. Ove r Grah am ’s ob jecti on

, Cav es te st ifi ed th at Am eri can Fam il y

c o n s i d ered Grah am ’s Feb ru ary 20 11 le tt er to be a vi ol at io n of th e no n- in du ce men t

-6

-c l a us e. Grah am m ov ed fo r a ne w tri al

, al le gi ng th e co ur t ab us ed it s di sc ret io n b y

al lo win g Cav es to te st ify ab ou t th e le ga l is su e of whe th er Grah am br each ed th e Age nt

Agr eem en t. Grah am as se rts th is te st im on y was im pr op er be cau se it di d no th in g m or e

th an te ll th e jury wha t ve rd ic t it sh ou ld ret ur n. See Kos te le ck y v. NL Acm e Too l/ NL

In d., In c., 83 7 F.2 d 82 8, 83 0 (8 th Ci r. 1 9 8 8 ) ( “[E]vi de nc e th at m erel y te ll s th e jury

wha t res ul t to reac h is no t su ffi ci en tl y he lp fu l to th e tri er of fact to be ad m is si bl e.”).

“ W e rev ie w th e de ni al of a m ot io n fo r a ne w tri al fo r a ‘cl e a r’ ab us e of

di sc ret io n, wit h th e ke y is su e be in g whe th er a ne w tri a l i s n e ces sa ry to pr ev en t a

m is carr ia ge of jus ti ce.” Hof fm ey er v. Po rte r, 75 8 F.3 d 10 65

, 1 0 68 (8 th Ci r. 20 14 )

(q uo ta ti on om it te d)

. Bec au se Grah am ’s m ot io n fo r a ne w t r i a l is ba se d on an

al le ge dl y erro ne ou s ev id en ti ary ru li ng

, he m us t sh ow th e erro r affe ct ed hi s su bs ta nt ia l

rig ht s an d th at a ne w tri al wou ld li ke ly pr od uc e a di ffer en t res ul t. Po in te r v. DART,

41 7 F.3 d 8 1 9

, 8 2 2 (8 th Ci r. 20 05 ) (q uo ta ti on om it te d) ; se e al so Fed

. R. Evi d. 10 3.

“ The tri al co ur t is in th e be st po si ti on to de te rm in e whe th er th e al le ge d erro r affe ct ed

th e su bs ta nt ia l rig ht s of an y pa rty su ffi ci en t to warra nt a ne w tri al

, an d th e tri al co ur t’s

de ci si on is en ti tl ed to co ns id erab le de fere nc e.” Po in te r, 41 7 F .3d at 8 22

.

Here, we ne ed no t de ci de whe th er th e di st ric t co ur t erre d in ad m it ti ng Cav es ’s

te st im on y be cau se Grah am ha s no t sh own th at an y erro r affe ct ed hi s rig ht s or tha t a

ne w tri al wou ld pr od uc e a di ffer en t res ul t. Id

. Cav es te st ifi ed du rin g two da y s of th e

tri al ; an d Grah am ob

jects on ly to Cav es ’s an swe rs to two qu es ti on s du rin g th os e two

da y s. Ju st be fo re th e ob jecte d- to te st im on y

, Cav es ha d al read y te st ifi ed

, wit ho ut

ob jecti on

, th at Am eri can Fam il y co ns id ered th e le tt er a br each of th e no n- in du cem en t

cl a u s e b ecau se it of

fere d a “ br oa de r ran ge of in su ran ce pr od uc ts ,” “ m or e ch oi ces ,”

an d “ ex pa nd ed co ve rag e an d e xc el le nt rat es .” In ad di ti on , th e Feb ru ary 20 11 let te r

it se lf was st ro ng ev id en ce of th e br each -o f-co nt ract cl ai m

, as was G rah am ’s own

te s t i mo n y a b ou t th e le tt er an d hi s reas on s fo r se nd in g it

. The jury al so he ard

te st im on y ab ou t th e nu m be r of Am eri can Fam il y po li c yh o l d ers who swi tc he d

co m pa ni es aft er rece iv in g th e le tt er. If Cav es ’s te st im on y ha d an y effe ct on th e jury,

-7

-it wou ld ha ve b e e n s l i gh t gi ve n th e na tu re an d sc op e of th e ev id en ce pr es en te d at

tri al

. As Am eri can Fam il y po in ts ou t, a reas on ab le jury wo u l d h a rd ly ha ve be en

su rp ris ed to h e ar, in a br each -o f-co nt ract cas e, th at a rep res en ta ti ve of Am eri can

Fam il y was of th e vi ew th at G r a h am vi ol at ed a te rm of th e Age nt Agr eem en t. W e

co nc lu de th e di st ric t co ur t di d no t cl earl y ab us e it s di sc ret i o n i n de nyin g Grah am ’s

m ot io n fo r a ne w tri al be cau se Cav es ’s te st im on y

, ev en if erro ne ou sl y ad m it te d, was

no t “ so pr ejud ic ia l th at a ne w tri al wou ld li ke ly pr od uc e a di ffer en t res ul t.” Harri so n

v. Pu rd y Bro s. Truc ki ng Co

., In c., 31 2 F.3 d 34 6, 35 1 (8 th Ci r. 20 02 ) (q uo ta ti on

om it te d) ; s ee Po in te r, 41 7 F .3d at 8 22

.

C. Moti on for New Tri al on Gra ha m ’s Coun terc la im

Grah am as se rts th e di st ric t co ur t erre d in de nyin g hi s m ot io n fo r a ne w tri al on

hi s wro ng fu l-t erm in at io n co un te rcl ai m

. Grah am cl ai m s he was en ti tl ed to a ne w tri al

be cau se th e di st ric t co ur t refu se d to gi ve hi s pr op os e d jury in st ru ct io n de fin in g th e

wor d “ di sh on es t.”

Our rev ie w of th e de ni al of a pr o p o s e d ju r y in st ru ct io n is fo r ab us e of

di sc ret io n. Safe ty Nat. Cas

. Co rp

. v. Aus ti n Res ol ut io ns

, In c., 63 9 F.3 d 49 8, 50 1 (8 th

Ci r. 20 11 ). “ [F]ail ur e to gi ve a pr op os ed in st ru ct io n m us t res ul t in pre

jud ic e to th e

req ue st in g pa rty be fo re a ne w tri al wil l be or de red .” Co x v. Dub uq ue Ban k & Trus t

Co

., 16 3 F.3 d 49 2, 49 7 (8 th Ci r. 19 98 ). The co ur t ab us es it s di sc ret io n on ly whe n th e

om it te d in st ru ct io n: “ (1 ) co rrec tl y st at e[s ] th e ap pl ic ab le la w; (2 ) ad dr es s[ es ] m at te rs

no t ad eq ua te ly co v e r e d by th e ch arg e; an d (3 ) in vo lv e[s ] a po in t ‘so im po rta nt th at

fai lu re to gi ve th e in st ru ct io n se rio us ly i mp a i red th e pa rty’ s ab il it y to pr es en t an

effe ct iv e cas e.’” Id

. at 49 6 (q uo ti ng Tho m li so n v. Ci ty of Om ah a, 63 F.3 d 78 6, 79 1

(8 th Ci r. 19 95 )). “Ou r r e v i ew is li m it ed to de te rm in in g whe th er th e in st ru ct io ns

,

whe n ta ke n as a wh o l e a n d in li gh t of th e pa rti cu la r is su es pr es en te d, fai rly an d

ad eq ua te ly pr es en te d t he ev id en ce an d th e ap pl ic ab le la w to a jury.” Am

. Fam il y

-8

-Mu t. In s. Co

. v

. H o l l a nd er, 70 5 F.3 d 33 9, 35 5 (8 th Ci r. 20 13 ) (q uo ta ti on om it te d)

(in te rp ret in g Wis co ns in law)

.

A ke y is su e in di sp ut e on Grah am ’s co un te rcl ai m was whe th er Am eri can

Fam il y was en ti tl ed to te rm in at e Grah am ’s Age nt Agr eem en t wit ho ut no ti ce be cau se

he ha d en ga ge d in “ di sh on es t” co nd uc t. The pa rti es di sp ut ed wha t “ di sh on es t” m ean t

in th e co nt ex t o f th e Age nt Agre em en t, an d b ot h par ti es pr op os ed a jury in st ru ct io n

th at of fere d a de fin it io n of “ di sh on es t.” In th e al te rn at iv e, Grah am req ue st ed a co nt ra

pr of e r e n t u m in st ru ct io n, whi ch wou ld in st ru ct th e jury ho w to de te rm in e wha t th e 4

pa rti es in te nd ed by us in g th e wor d “ di sh on es t.” The di st ric t co ur t fo un d th at th e te rm

“ di sh on es t” was am

bi gu ou s an d th us sh ou ld be su bm it te d to th e jury, an d it in st ru ct ed

th e jury on co nt ra pr of

er en tu m . See Ho ll an de r, 70 5 F .3d at 35 5. The co ur t fu rth er

co n c l u d e d t ha t W is co ns in la w do es no t al lo w th e co ur t to in st ru ct bo th on co nt ra

pr of er e n t u m a n d to gi ve an in st ru ct io n de fin in g th e di sp ut ed te rm

. The co ur t th us

de cl in ed to gi ve ei th er of th e pr op os ed in st ru ct io ns d e f i n i n g “ di sh on es t.” See id

. (ci ti ng D’ Ang el o v. Co rn e l l P a p erb oa rd Pro ds

. Co

., 20 7 N.W .2d 84 6, 84 8

(Wis. 1 97 3) ).

Grah am do es no t arg ue th e di st ric t co ur t erre d in gi vi ng th e co nt ra pr of er en tu m

in st ru ct io n. In st ead

, he arg ue s th e di st ric t co ur t erre d in fai li ng to gi ve hi s pr of erre d

in st ru ct io n de fin in g “ di sh o n e s t

. ” W e ag ree wit h th e di st ric t co ur t th at it wou ld be

erro r un de r W is co ns in la w to gi ve a co nt ra pr of er en tu m in st ru ct io n— whi ch req ui res

a f i n d i n g th at a wor d is am bi gu ou s— an d to th en de fin e th e sa m e wor d in an ot he r

“ Co nt ra pr of

eren tu m i s Lati n fo r ‘agai ns t th e of fero r.’” Hirs ch ho rn v. 4

Aut o- Owner s In s. Co

., 80 9 N.W .2d 52 9, 53 5 n. 5 (Wis. 20 12 ) (q uo ti ng Bl ack ’s Law

Dict io na ry 32 8 (7 th ed .19 99 )). The in s t r u c t i on gi ve n was a m od el W is co ns in jury

in st ru ct io n. Bo th pa rti es ag ree Wis co ns in law ap pl ie s.

-9

-in st ru ct io n. The di st ric t co u r t p r o p erl y in st ru ct ed th e jury reg ard in g th e te rm

“ di sh on es ty.” 5

D. Dam ag es Cla us e

Grah am arg u e s t h e di st ric t co ur t erre d in it s ap pl ic at io n of W is co ns in la w in

f i n di ng th at Sect io n 6.u of th e Age nt Agr eem en t was a va li d st ip ul at ed -d am a g e s

cl au se rat he r th an an un en fo rcea bl e pe na lt y

. He as se rts th e Age nt Agr eem en t’s us e 6

of th e wor d “ fo rfei tu re” un am bi gu ou sl y sh ows th e pa rti es in te nd ed it to be a pe na lt y

.

He fu rth er co nt en ds Am eri can Fam il y di d no t pr ov e th at it s da m ag es fro m th e br each

of th e Age nt Agre em en t wer e di ffi cu lt to as cert ai n. Fi na ll y , h e cl ai m s th e as se ss ed

st ip ul at ed da m ag es are d is pr op or ti on at e to Am eri can Fam il y ’s act ua l d am ag es

.

The pa rti es tri ed to th e co ur t th e is su e of whe th er th e st ip ul at ed -d am ag es cl au se

of th e Age nt Agr eem en t was an en fo rcea b le st ip ul at ed -d am ag es cl au se

. Am eri can

Fam il y pr es en te d a fo ren si c acco un ta nt an d ex pe rt on va lu at io n an d da m ag es

, Jo se ph

Ken y on . Kenyon t es ti fie d ab ou t t he di ffi cu lt y of e st im at in g d am ag es at t he ti m e o f

co nt ract in g an d hi s cal cu la ti on of Am eri can Fam il y ’s act ua l d a mag e s cau se d by

Grah am ’s br each

. Grah am di d no t pr es en t an ex pe rt. The tri al co ur t fo un d th e cl au se

to be an en fo rcea bl e st ip ul at ed -d am ag es cla us e.

Grah am arg ue s th e di s t r i ct co ur t co ul d gi ve bo th an in st ru ct io n de fin in g 5

“ di sh on es t” an d a co nt ra pr of er en tu m in st ru ct io n bec au se th ere were ot he r te rm s in

th e ag reem en t t ha t were am bi gu ou s. Grah am as se rts th at th e co nt ra pr of er en tu m

in st ru ct i o n wou ld ap pl y to th es e ot he r te rm s, th us co m pl y in g wit h W is co ns in la w.

Grah am di d no t rai se th is arg um en t to th e di st ric t co ur t, ho wev er

, a n d w e d o no t

co ns id er arg um en ts rai se d fo r th e fir st ti m e o n a pp eal . See Wise r v. W ay ne Farm s,

41 1 F .3d 92 3, 9 26 (8t h C ir. 2 00 5)

.

The pa rti es ag ree Wis co ns in law ap pl ie s t o t hi s i ss ue

. 6

-1 0-Bo th pa rti es rel y on th e te st se t fo rth in W as se na ar v. Pan os

, 33 1 N.W .2d 35 7,

362– 63 (W is. 198 3)

, to su pp or t th ei r arg um en ts ab ou t whe th er th e st ip ula te d- da m ag es

cl au se in th e Age nt Agr eem en t sh ou l d b e e nf or ced

. Und er W as se na ar, whe th er a

st ip ul at ed -d am ag es c l a u s e s h o ul d be en fo rced is a qu es ti on of la w fo r th e di st ric t

co ur t. Id

. at 36 0. W e rev ie w th e di st ric t co ur t’s res ol ut io n of di sp ut ed fact s an d

in fer e n c e s u n d er a cl earl y erro ne ou s st an da rd

. Id

. at 36 1. W he th er th os e fact s

de m on st rat e th at th e cl au se is reas on ab le is a qu es ti on of la w. Id

. Tho ug h ou r rev ie w

of th at de te rm in at io n is de no vo

, we gi ve so m e de fere nc e to th e di st ric t co ur t be cau se

the de te rm in at io n of reas on ab le ne ss is so cl os el y in te rtwi ne d wit h the fa ct s supp or tin g

th e ru li ng

. Id

. The pa rty co nt es ti ng a st ip ul at ed -d am ag es cl au se be ars th e bu rd en of

sh owi ng it sh ou ld no t b e en fo rced . Id. at 36 1, 3 67

.

“ The ov eral l si ng le te st of va li di ty is whe th er th e cl au se is reas on ab le un de r th e

to ta li ty of th e ci rcu m st an ces .” W as se na ar, 33 1 N.W .2d at 36 1– 62

. To de te rm in e

whe th er th e cl au se sh ou ld be en fo rced

, W is co ns in co ur ts co ns id er whe th er th e pa rti es

in te nd ed to pr ov id e fo r da m ag es or a pe na lt y ; th e di ffi cu lt y of accu rat el y es ti m at in g

or pr ov in g da m ag es ; an d whe th er th e st ip ul at ed da m ag es are a reas on ab le fo reca st of

th e ha rm act ua ll y cau se d by th e br each

. Id

. at 36 2– 63

. Of th es e fact or s, th e pa rti es ’

su bjec ti ve in t e nt is ge ne ral ly co ns id ered th e le as t im po rta nt in de te rm in in g if a

st ip ul at ed -d am ag es cl au se is ob jecti ve ly reas on ab le

. Id

. at 36 3. The se co nd fact or

,

th e “ di ffi cu lt y

of a sc ert ai nm en t” tes t, h el ps ass es s t he reas on ab le ne ss of t he cla us e;

th e ha rd er it is to es ti m at e or pr ov e da m ag es

, th e m or e li ke ly a st ip ul at ed -d am ag es

cl au se wil l be co ns id ered reas on ab le

. Id

. The th i r d fact or co nc ern s whe th er th e

st ip ul at ed -d am ag es cl au se reas on ab ly fo reca s t act ua l da m ag es ; st ip ul at ed da m ag es

th at are pr op or ti on al to act ua l da m ag e s a r e mo re li ke ly t o be fo un d reas on ab le

. Id

.

a t 36 4. In de te rm in in g whe th er a st ip ul at ed -d am ag es cl au se is reas on ab le

, co u r t s

m us t l o o k a t b o th “ th e ha rm an ti ci pa te d at th e ti m e of co nt ract fo rm at io n an d th e

act ua l h arm

at t he ti m e o f br each (or tri al ).” Id . at 3 64

.

-1 1-On ap pe al

, Grah am arg ue s th at th e us e of th e wor d “ fo rfei t” in th e Age nt

Agr eem en t sh ows th e pa rti es in te nd ed th e cl au se to be a pe na lt y rat he r th an a va li d

st ip ul at ed -d am ag es cl au se

. W hi le Grah am ’s a rg um en t h a s so m e m eri t, “ [t]he la be l

th e pa rti es ap pl y to th e [s ti p u l a t e d

- d am ag es ] cl au se

. . . is no t co nc lu si ve .”

W as se na ar, 33 1 N.W .2d at 36 3. The refo re, th e wor d “ fo rfei t” is no t de te rm in at iv e, 7

an d we m us t al so lo ok at whe th er th e in jury cau se d by th e b r e a c h w a s di ffi cu lt to

es ti m at e at th e ti m e of th e co nt ract an d whe th er th e st ip ul at ed da m ag es reas on ab ly

fo reca st ed th e h arm

cau se d b y

th e b reac h.

To de te rm in e if th e in

jury cau se d by Grah am ’s br each is di ffi cu lt to as cert ai n,

we co ns id er

[T]he di ffi cu lt y of pr od uc in g pr oo f of da m ag es at tri al ; th e di ffi cu lt y of

de te rm in in g wha t d a mag e s th e br each cau se d; th e di ffi cu lt y of

as cert ai ni ng wha t da m ag es th e pa rti e s co nt em pl at ed whe n th ey

c o nt ract ed ; th e ab se nc e of a st an da rd iz ed m eas ur e of da m ag es f o r t h e

br each ; an d th e di ffi cu lt y of fo reca st in g, whe n th e co nt ract is m ad e, al l

th e po ss ib le da m ag es whi ch m ay be cau se d or oc cas io ne d by th e va rio us

po ss ib le bre ach es

.

Was se na ar, 33 1 N.W .2d at 36 3– 64

. Jo se ph Ken y on te st ifi ed th at

, at t h e t i me t h e

Age nt Agr eem en t was si gn ed

, it wou ld ha ve be en “ ne arl y im po ss ib le ” to es ti m at e th e

da m ag es Am eri can Fam il y m ig ht su ffer as a res ul t of a br each of th e no n- in du cem en t

cl au se

. Ken y on te st ifi ed th at th ere are m an y fact or s th at can a f fect th e da m ag es

cau se d by th e br each

, su ch as th e nu m be r of cu st om ers an ag en t ha s, th e m ix of po li cy

types

, th e ch an ge s in pr em iu m le ve ls

, an d “ whe th er th os e po li ci es cam e fro m th e

pe rs on al it y of Mr. Grah am ve rs us th e Am eri can Fam il y na m e.” The se va ria bl es

, he

sa id , can va ry

wid el y ov er a p eri od of years

.

Grah am arg ue s th at th e di st ric t cou rt erred in co ns id eri ng Cav es ’s te st im on y 7

on th e is su e of in te nt

. W he th er th is was erro r do es no t affe ct ou r an al y si s be cau se we

do no t re ly on C av es ’s tes ti m on y

.

-1 2-G r a h a m do es no t as se rt th at th e pa rti es co ul d ha ve as cert ai ne d at th e ti m e of

co nt ract wha t da m ag es a fu tu re br each m ig ht cau se

. In st ead

, he arg ue s th at Am eri can

Fam il y ’s da m ag es were eas y to pr ov e at th e ti m e of th e br each

. As su pp or t, Grah am

po in ts ou t th at Am eri can Fam il y co nf irmed it lo st 59 1 po li ci es an d be li ev ed it lo st an

ad di ti on al 40 6 po li ci es du e to hi s in du cem en t. He a s s e r ts it is a si m pl e ta sk to

cal cu la te th e pr of

it Am eri can Fam il y wou ld ha ve m ad e fro m th es e 99 7 po li ci es

. Tha t

m ay be tru e. Bu t Grah am of fere d t he co ur t n o way to cal cu la te Am eri can Fam il y ’s

lo st pr of it fro m th os e 99 7 po li ci es

. And Grah am ov erl oo ks th e fact th at Am er i c a n

Fam il y di d pr es en t ev id en ce of th e es ti m at ed act ua l da m ag es su st ai ne d as a res ul t of

Grah am ’s bre ach

.

Ken y on te st ifi ed he ha d d e t e r mine d Am eri can Fam il y ’s da m ag es to be

so m ewh ere wit hi n a ran ge of $8 00 ,00 0 an d $1 ,35 0,0 00

. He es ti m at ed Am eri can

Fam il y lo st p r e mi u m p ro fit s of $1 35 ,00 0 in th e y ear 20 11 fo r th e 59 1 po li ci es it

co nf irmed act ua ll y wen t to Grah am du rin g 20 11

, th e no n- in du cem en t y ear. He th en

cal c u l a t ed Am eri can Fam il y ’s lo st pr em iu m pr of it s fo r th os e 59 1 po li ci es ou t to

Grah am ’s li ke ly r e t i rem en t ag e, ta ki ng in to acco un t th e no rm al po li cy at tri ti on

rat e—t ha t is

, th e nu m

be r of po li ci es us ua ll y can cel le d ev ery y ear. Afte r di sc ou nt in g

th at nu m be r ba ck to pr es en t do ll ars

, he de te rm in ed Am eri can Fam il y ’s da m ag es fo r

th os e 5 91 po li ci es to be $8 00 ,00 0.

Ken y on ne xt co m

pa red th e 20 11 at tri ti on rat e of Gr a h a m’s fo rm er

po li cy ho ld ers wit h Am eri can Fam il y ’s no rm al at tri ti on rat e. Ken y on e s t i mat ed

an ot he r 40 6 p ol ic ie s Am eri can Fam il y lo st in 20 11 pr ob ab ly t ran sf erre d t o Gra ha m

be cau se Grah am ’s fo rm er po li cy ho ld ers ha d “ hi gh er th an no rm al ” at tri ti on rat es

. He

cal cu la te d Am eri can Fam il y ’s lo st pr em iu m pr of it s fo r 20 11 fro m th os e 40 6 po li ci es

was $9 3,0 00

. Ken y on es ti m at ed th is cau se d an add it io na l $5 50 ,00 0 in lo st pr of it s, 8

Ken y on te st ifi ed he us ed th e sa m e m et h o d ol og y to es ti m at e th is hi gh er 8

be nc hm ark

. He fir st es ti m at ed wha t Am eri can Fam il y ’s lo st pr em iu m pr of it s were fo r

-1 3-gi vi ng hi m th e hi gh er be nc hm ark of $ 1 ,35 0,0 00

. Grah am ’s ex te nd ed earn in gs

,

$9 38 ,00 0, was wit hi n Ken y on ’s ran ge

.

Grah am arg ue s th e fact ua l reco rd do es no t su pp or t Ken y on ’s es ti m at ed ran ge

.

He as se rts th ere is no pr oo f th e 59 1 po li ci es tra n s f e rred du rin g 20 11 wen t to hi s

ag en cy be cau se of im

pr op er in du cem en t rat he r th an fo r so m e ot he r reas on

. Grah am

fu rth er co nt en ds it was pu re sp ecu la ti on t o as su m e an ad di ti on al 40 6 po li ci es wen t

to hi s ag en cy ba se d so le ly o n th e “ hi gh er th an no rm al ” po li cy at tri ti on r a t es du rin g

20 11

. He cl ai m s Ken y on ’s hi gh er es ti m at e is fla wed be cau se it co m pa red hi s at tri ti on

rat e wit h at tri ti on rat es ex pe ct ed whe n an ag en t ret ire s, rat he r th an whe n an ag en t is

te rm in at ed an d st a r t s a ne w ag en cy

. He al so co nt en ds Am eri can Fam il y is on ly

e nt it le d to da m ag es fo r 20 11 be cau se aft er 20 11 he co ul d ha ve pu rs ue d h i s f o r mer

cu st om ers an y way

. G r ah am as se rts th at on ce Ken y on ’s “ ov erl y sp ecu la ti ve an d

un su pp or te d po st -in du cem en t pr ojec ti on s are se t as id e”— th at is

, Ken y on ’s pr ojec te d

lo ss es fo r 20 12 an d be y on d— Am eri can Fam il y ’s da m ag es were no m or e t ha n

$2 28 ,00 0. Grah am as se rts th is is gr os sl y di sp ro po rti on at e to th e st ip ul at ed da m ag es

of $9 38 ,00 0.

Grah am ’s po in ts are well -ta ke n. Bu t he of fere d no ev id en ce to su pp or t th em

.

F o r ex am pl e, he arg ue s th at Ken y on ’s rel ia nc e on th e “ hi gh er th an no rm al ” po li c y

at tri ti on rat es to es ti m at e th at an ad di ti on al 40 6 po li ci es wen t to Grah am ’s ag en cy

du rin g 20 11 was im

pr op er; bu t he fai le d to pr es en t ev id en ce to sh ow ho w, why, or

to wha t ex te nt th at es ti m at e is in accu rat e. Si m il a r l y, whe th er po st -2 01 1 da m ag es

sh ou ld ha ve be en in cl ud ed (b ecau se Grah am was al lo wed to pu rs ue h i s fo rm er

cu st om ers aft er 20 11 ) is a fact -in te ns i v e i ss ue

. Yet th e on ly ev id en ce th e di st ric t

co ur t he ard on th is is su e was fro m Ken y on

, who sa id th at po st -2 01 1 da m ag es ha d to

20 11 an d th en pr ojec te d th at nu m be r ou t to Grah am ’s li ke ly ret ire m en t ag e, red uc in g

th e pr of it s each y ear fo r th e typic al po li cy at tri ti on rat e. He th en di sc ou nt e d th at

am ou nt ba ck to pre se nt do ll ars

.

-1 4-be in cl ud ed be cau se it was u nl ik el y th at all of t he cu st om ers who swi tc he d p ol ic ie s

fro m Am eri can Fam il y to Grah am ’s ne w ag en cy in 20 11 wou ld ha ve do ne so in 20 12

or la te r ab se nt Grah am ’s in du cem en t du rin g 20 11

. Acco rd i n g t o K en y on

, “ m os t

pe op le hi st or ic al ly ke ep th ei r i ns ur an ce wit h th e sa m e co m pa ny.” In ad di ti on

,

Ken y on te st ifi ed

, cu st om er lo y al ty pl ay s an im po rta nt ro le in th e in su ran ce in du st ry ;

ha d a no th er Am eri can Fam il y ag en t be en gi ve n an op po rtu ni ty to de ve lo p a

rel at io ns hi p wit h th os e cu st om ers in 20 11

, it is li ke ly a cert ai n pe rcen ta ge of th em

wou ld ha ve st ay ed wit h Am eri can Fam il y

. And Grah am of fere d no ev id en ce at al l

to su pp or t hi s as se rti on th at ret ire m en t is mat eri al ly di ffer en t th an te rm in at io n fo r

pu rp os es of an al y zi ng at tri ti on rat es

. As th e pa rty tryin g to se t as id e th e

st ip ul at ed -d am ag es cl au se

, it was Grah am ’s bu rd en

, no t A mer ic an Fam il y ’s, to

“ pr ov [e] fact s whi ch wou ld jus ti fy th e tri al co ur t’s co nc lu di ng th at th e cl au se sh ou ld

no t b e en fo rced .” W as se na ar, 3 31 N.W .2d at 3 61

.

Fi na ll y

, Grah am arg ue s th e di st ric t co ur t erre d as a m at te r of la w in fin di ng th at

t h e s t ip ul at ed -d am ag es cl au se was a reas on ab le fo reca st of Am eri can Fam il y ’s

da m ag es be cau se th e am ou nt of da m ag es in th e cl au se is no t co nn ect ed to an y act ua l

ha rm th at res ul ts fro m a br each

. H e a s s e r t s th at

, reg ard le ss of th e ci rcu m st an ces

trigg er in g ap pl ic at io n of th e st ip ul at ed -d am ag es cl au se

, th e pe na lt y rem ai ns th e sa m e:

fo rfei tu re of th e en ti re am ou nt of ex te nd ed earn in gs as of th e da te of th e br each

. As

a res ul t, Grah am arg ue s, th e cl au se do es no t, an d c a n n o t

, pr ov id e a reas on ab le

fo reca st of co m

pe ns at or y da m ag es

. W he th er Am eri can Fam il y su ffer ed no da m ag es

,

few da m ag es

, or su bs ta nt ia l da m ag es fro m a br each of an A g e nt Agr eem en t, th e

st ip ul at ed da m ag es are t he same.

Viewe d in th is way

, th e st ip ul at ed -d am ag es cl au se in A m eri can Fam il y ’s Age nt

Agr eem en t gi ve s us si gn ifi can t pa us e. The lo ss of an ag en t’s en ti re ex te nd ed

earn in gs

, reg ard le ss of th e na tu re or ti m in g of the br each

, se em s a pe na lt y

. Und er a

di ffer en t se t of ci rcu m st an ces

, wit h di ffer en t ev id en ce pr es en te d to th e di st ric t co ur t,

su ch a cl au se m ig ht ve ry well be un en fo rcea bl e. W e al so su sp ect th at a “ st an da rd iz ed

-1 5-m eas ur e of da m ag es ” co ul d be fo rm ul at ed fo r cal cu la ti ng st ip ul at ed da m ag es in cas es

li ke th is on e. It is di ffi cu lt to im ag in e th at th e am ou nt of m on ey th at ha pp en s t o b e

in an ag en t’s ex te nd ed earn in gs acco un t at th e ti m e of a br each is a reas on ab le am ou nt

of st ip ul at ed da m ag es in ev ery cas e. A s e t f o r mu la th at ta ke s in to co ns id erat io n

fact or s t ha t af

fect th e am ou nt of

da m ag es ba se d o n t he na tu re an d c irc um st an ces of

th e b r e a c h wou ld li ke ly m or e accu rat el y li nk th e am ou nt of st ip ul at ed da m ag es to

act ua l d am ag es

.

Bu t he re, th e di st ric t co ur t he ard ev id en ce th at it was di ff i c ul t to es ti m at e

da m ag es at th e t i me o f th e co nt ract an d th at th e am ou nt of st ip ul at ed da m ag es was

pr op or ti on al to th e act u a l d a mag es res ul ti ng fro m Grah am ’s b reac h. Bas ed on th at

ev id en ce, th e di st ric t co ur t fo un d th e st ip ul at ed -d am ag es cl au se of th e Age nt

Agr ee m en t was a reas on ab le st ip ul at ed -d am ag es cl au se

. See W as se na ar, 33 1 N.W .2d

at 36 1 (th e de te rm in at io n of whe th er a da m ag es cl au se is en fo rcea bl e i n v o lv es

de te rm in at io ns of fact an d law). On th e reco rd be fo re us, we c an no t s ay th e di st ric t

co ur t er red in it s fi nd in g.

II I. Co ncl us io n

W e aff irm th e jud gm en t o f th e d is tri ct co ur t.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-1 6-