Opinion ID: 6346156
Heading Depth: 3
Heading Rank: 1

Heading: Ottemann’s GA contract

Text: Ottemann alleges that the Order breached Sections 4, 7, 8, and 13 of his GA contract. Section 4 of the GA contract provides that “the General Agent shall be free to exercise independent judgment as to the eligible persons from whom applications for insurance will be solicited, and as to the time and place of such solicitation.” It also states: “The General Agent shall abide by rules and procedures established by the Order, but such rules and procedures shall not be construed as interfering with the freedom of action of the General Agent as described in this agreement.” Ottemann argues that the Order breached this provision when it prevented him from soliciting certain members in his region. Ottemann’s complaint states that the Order directed Ottemann to refrain from soliciting NFL coach Joe Lombardi, who lived in Ottemann’s territory, because the Order sought to solicit him under their NFL-specific program. The parties differ in their understanding of this conduct. Ottemann’s interpretation of this provision, as alleged in his complaint, is that “[S]ection[] 4 of the [GA] Agreement . . . stated that Plaintiff was an independent contractor that was ‘free to exercise independent judgment as to eligible persons from who applications for insurance will be solicited’ and court does not seem to have contemplated the various FA contracts to which Ottemann and the Order were parties but which primarily concerned Ottemann’s FAs. Ottemann did not include these separate contracts with his pleadings, and his complaint merely suggested that the FA agreements he signed in his capacity as a GA were substantially the same as the one he signed in 2013. 6 Case: 21-30138 Document: 00516340925 Page: 7 Date Filed: 06/02/2022 No. 21-30138 have ‘freedom of action.’” The Order responds that the GA contract explicitly stated that Ottemann had no “authority to bind the Order to issue any insurance policy,” and that it was no breach to tell Ottemann not “to waste his (and the Order’s) time and resources soliciting that person.” The Order also argues there would be no damages to sustain a claim because, even if Ottemann was allowed to solicit Lombardi, the Order contractually reserved rights to refuse the issuance of policies. We hold that Ottemann’s claim as to Section 4 is plausible at the motion to dismiss stage. Although there is nothing particularly surprising about the Order’s interest in diverting high-value prospects into a special sales program, the contract states that the rules and procedures set up by the Order “shall not be construed as interfering with the freedom of action of the General Agent.” The contract does not demarcate the boundary between Ottemann’s freedom of action as a GA and the scope of the Order’s ability to dictate “rules and procedures” that would divert otherwise available insurance prospects from his territory. We hold that Ottemann’s claim based on breach of Section 4 of the GA contract survives the motion to dismiss stage. Because Ottemann plausibly alleges that this diversion was done with bad faith, his claim for breach of the duty of good faith and fair dealing regarding Section 4 of the GA contract also survives the motion to dismiss stage. The remainder of Ottemann’s theories of breach of the GA contract were properly dismissed. Section 6 of the GA contract states that commissions will be paid according to a schedule incorporated in the contract. Section 7(c) states that “[t]he right to commissions . . . shall also be subject to payment of the General Agent’s indebtedness to the Order,” stating a non-exclusive list of items included in the calculation of that indebtedness. 7 Case: 21-30138 Document: 00516340925 Page: 8 Date Filed: 06/02/2022 No. 21-30138 In his complaint, Ottemann alleges that the Order impermissibly withheld commissions under Section 7 by failing to make appropriate reimbursements and illegitimately increasing the FA draw debt. 2 Specifically, Ottemann alleges that he was never reimbursed for “costs for leasing an office, using computer equipment, supplies, insurance, software, postage, and continuing education, among others.” Ottemann also claims that the Order “withheld, diverted, deducted, or purportedly offset Mr. Ottemann’s earned renewal commissions by the amount of Field Agents’ draw debt.” These may be understandable grievances, but they do not constitute additional breaches of contract. For example, the Order was not obligated under the GA contract to reimburse Ottemann for “costs for leasing an office, using computer equipment, supplies, insurance, software, postage, and continuing education.” On the contrary, Section 5(d) of the GA contract specifically stated that “[t]he General Agent and his Field and District Agents shall not incur any expense on behalf of the Order,” and Section 7(c) specifically allows for deductions for “supplies provided to the General Agent or his Field and District Agents by the Order.” If anything, the GA contract makes Ottemann liable to the Order for such expenses, not the other way around. 2 In his third amended complaint, Ottemann also alleges that the Order renegotiated contracts after his termination so that he would no longer earn commissions. The only portion of the appellate briefing that could potentially relate to this claim merely states that a Knights of Columbus Vice President once said, “[w]e have ways to make [a General Agent] stay away by cutting off his [insurance policy] renewals and commissions,” and that the Order “engaged in the same course of conduct in relation to [Ottemann’s] omissions.” Such limited discussion is insufficient to sustain the argument on appeal. See United States v. Scroggins, 599 F.3d 433, 447 (5th Cir. 2010) (holding that an appellant waives a claim on appeal by failing to brief it adequately). 8 Case: 21-30138 Document: 00516340925 Page: 9 Date Filed: 06/02/2022 No. 21-30138 Further, Ottemann has not alleged an additional breach in his claim that the Order “withheld, diverted, deducted, or purportedly offset [his] earned renewal commissions by the amount of Field Agents’ draw debt.” It is not a breach of the contract to hold Ottemann liable for legitimate Field Agent draw debt: Section 6(b) expressly provides that commissions are “subject to offset . . . of any amounts paid to the General Agent, or to the General Agent’s Field Agents, as a draw against future commissions.” Further, even if the Order interfered with Ottemann’s freedom of action as a GA in preventing his termination of FAs, the appropriate measure of damages would necessarily contemplate compensation for withheld commissions due to illegitimate draw debt. Ottemann’s alleged breaches of Section 8 and 13 of his GA contract also fail. Section 8 of the GA contract provides for the vesting and payment of renewal commissions for GAs. Section 13 concerns the return of “property of the Order” upon termination. Because Ottemann has not addressed on appeal how the Order breached these provisions, he has forfeited these arguments. See Scroggins, 599 F.3d at 447 (holding an appellant waives a claim on appeal by failing to adequately brief it). Summarizing Ottemann’s claims about his GA contract, we hold that Ottemann has stated a plausible claim that the Order breached Section 4 of his GA contract. The district court did not err, though, in dismissing Ottemann’s claims under Sections 7, 8, and 13 of the GA contract.