Opinion ID: 197358
Heading Depth: 3
Heading Rank: 1

Heading: The Agency Agreement

Text: 20 The relevant provisions of the agency agreement provide: 21 The Agent shall be entitled to commissions equal to 20% of the written premiums paid on policies issued by the Company to policyholders obtained by the Agent. If a conflict exists as to which producer is authorized to represent a policyholder, the policyholder's written statement designating his agent or broker shall be binding upon the Agent and the Company. 22 . . . . . 23 The Agent's right to commissions shall cease upon cancellation of a policy in accordance with the cancellation provisions in the policy. 24 The district court found the relevant terms of the agency agreement unambiguous, and held that as a matter of law Shawmut's designation of its in-house agency as broker of record disposed of Miniter's claim to commissions on the second policy. 25 On appeal Miniter asserts that the language in the agreement allows for more than one interpretation, and therefore, should have precluded summary judgment. Specifically, Miniter asserts that an issue of fact exists whether it obtained Shawmut for purposes of the agency agreement. Miniter also contends that the term producer does not apply in this situation between an agent and the insured client. Instead, Miniter contends, the term should only apply in situations involving two competing insurance agents. Finally, Miniter avers that it produced the second policy. We disagree. 26 Neither the parties' nor our own examination of Ohio law has uncovered any cases construing the disputed terms of the agency agreement. We turn, therefore, to general principles of contract construction. In Ohio, construction of written contracts is a matter of law, with the underlying purpose of discovering and effectuating the intent of the parties. See Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 667 N.E.2d 949, 952 (1996). We must give common words appearing in written contracts their plain and ordinary meaning unless manifest absurdity results or unless some other meaning is clearly intended from the face or overall contents of the contract. Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146, 150 (1978). We may consider extrinsic evidence to ascertain the parties' intent either when faced with unclear or ambiguous language, or when circumstances surrounding the agreement give the plain language special meaning. See Graham, 667 N.E.2d at 952. [W]here the terms in an existing contract are clear and unambiguous, however, we cannot in effect create a new contract by finding an intent not expressed in the clear language employed by the parties. Alexander, 374 N.E.2d at 150. 27 We agree with the district court that the language of the agency agreement is clear and unambiguous, and provides without caveat that the policyholder's written statement designating its agent binds Miniter and Ohio. The agency agreement provides that the agent's right to commissions shall cease upon cancellation of a policy. The parties do not dispute that Shawmut cancelled the first policy, terminating Miniter's right to commissions. The agency agreement further provides that the policyholder's designation of its agent or broker shall be binding on Miniter and Ohio. Shawmut's written statement designating its in-house agency as its agent, therefore, controls disbursement of commissions under the second policy. 28 Miniter's contention that it obtained Shawmut for purposes of the second policy fails to find support either in the agreement or the record. Miniter asserts that by introducing Shawmut to Ohio and brokering the first policy, Miniter obtained Shawmut for the second policy. On that basis, Miniter contends, the agency agreement requires Ohio to remit commissions to Miniter, and not Shawmut. The most obvious flaw in this argument is that it ignores the sentence immediately following the obtained sentence, which, as we have pointed out, provides that in the event of a conflict, the policyholder's written statement designating its agent shall bind Miniter and Ohio. 29 The record further belies Miniter's assertion. Shawmut cancelled the first policy, initiated discussions with Ohio as well as other carriers, and ultimately made a deal with Ohio. Shawmut's decision to work in-house rather than through an independent agency fatally undermines Miniter's contention that it obtained Shawmut for Ohio for purposes of the second policy. Further, as we discuss in greater detail below, Miniter tried to steer Shawmut away from Ohio toward another carrier rather than maintain Shawmut as a policyholder of Ohio. 30 Miniter ominously argues that to interpret the agency agreement in this fashion would eviscerate the independent agency practice and arm insurers with a lethal weapon for eliminating and compromising the intermediary agent after the account has been brought to it. Miniter's interpretation would effectively allow Miniter to collect premiums on any policies Ohio issued to Shawmut, whether or not it actually brokered them, simply because it brokered the initial VSI policy between those parties. Miniter's interpretation would preclude Ohio from honoring Shawmut's designation in any insurance policies Ohio issued to Shawmut. In other words, that interpretation would contradict subsequent provisions in the same section of the agreement. We reiterate that where the terms in an existing contract are clear and unambiguous, [we] cannot in effect create a new contract by finding an intent not expressed in the clear language. Alexander, 374 N.E.2d at 150. 31 Miniter argues that the producer provision applies when there are two competing insurance agents, not between an agent and the insured. Miniter points to no language in the agreement limiting that provision beyond its plain terms. Ohio law dictates that we must presume that the written contract reflects the intent of the parties, see Graham, 667 N.E.2d at 952, and that we may consider extrinsic evidence only when that language is ambiguous or when circumstances surrounding the agreement give the plain language special meaning. See id. Miniter points us to no authority indicating that an insured may not procure insurance directly from a carrier, and in effect, act as its own agent or broker. We do not identify any special circumstances surrounding this agreement which might give the plain language special meaning. 32 We note that by the terms of the agreement, the producer provision only takes effect when a conflict exists regarding which producer represents a policyholder. Shawmut informed Ohio that it would no longer be working through Miniter and that it was seeking proposals for a new policy. Shawmut cancelled the first policy. While Miniter now attempts to generate a conflict, or argue that the provision does not govern this situation, nothing in the record triggers the producer provision inasmuch as Shawmut on its own affirmatively undertook to negotiate the second policy. 33 Equally unavailing is Miniter's argument that it, and not Shawmut's in-house agency, produced the second policy. Accepting Miniter's definition of produced, 3 the record does not support its contention that, at a minimum, a dispute of fact exists as to whether it or Shawmut produced the second policy. Instead, as the record demonstrates, Miniter repeatedly urged Shawmut to move its business to another carrier rather than come to an agreement with Ohio, and effectively forced Shawmut to produce the policy by itself. 34 Grondin's undisputed testimony reflects Miniter's indication that Ohio was no longer interested in making a deal with Shawmut involving the lump sum payment. Miniter made this assertion despite the fact that Ohio remained willing to remit $1.8 million to Shawmut. In addition, Miniter tried to present Shawmut with proposals from other companies and urged Shawmut to let Miniter move the account to a different carrier. It was not until Shawmut decided to work directly with a carrier and contacted Ohio that the second policy began to take shape. On the undisputed facts in this record, Miniter cannot lay claim to commissions on the second policy by claiming that it, and not Shawmut, produced the policy.