Court Opinion

ID: 9593904
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:25:39.817527+00
Date Added: 2024-06-11T13:04:20.796650
License: Public Domain

BISTLINE, Justice,
dissenting.
PART I
Without the benefit of having the record available, the reader will find the majority opinion logical, and, possibly compelling. The Court makes clear that the issue presented is a straight forward contractual arrangement, whereby either party could terminate their relationship upon 90 days notice. True, such a provision was built into the agency agreement. But it was a printed form agreement of the insurance company’s making. The majority tells us that all is well because “[tjhere may be a myriad of reasons on either side which make such a right of termination desirable or necessary.” Maj. Op. at 300, 766 P.2d at 770. How many reasons make up a myriad I am not sure, but the reason Farmers terminated the relationship with Clement, unmentioned by the majority, is odious: Farmers wanted to deprive Clement of the commissions which would become his on renewals of insurance policies which he had sold.1 This most likely is not one of the “myriad of reasons” envisioned by the majority as an acceptable basis for the company’s termination of the agency. Regardless, the majority’s approval of Farmers' bad faith termination of its agent is not acceptable.
We are, of course, but one vote shy of doing justice. The special concurrence is a vote to affirm the summary judgment on the basis that Clement was an agent — not an employee. This dichotomy is unconvincing.
The Restatement (Second) of Contracts, § 205 (1979) provides: “Duty of Good Faith and Fair Dealing. Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” (emphasis added). Whether an employee or an agent, Clement was a party to the contract. Furthermore, the Restatement (Second) of Agency § 454 (1957) provides:
*310Revocation in Bad Faith of Offer of Compensation. An agent to whom the principal has made a revocable offer of compensation if he accomplishes a specified result is entitled to the promised amount if the principal, in order to avoid payment of it, revokes the offer and thereafter the result is accomplished as the result of the agent’s prior efforts,
(emphasis added). These provisions have been relied upon to ensure that salespersons receive their earned commissions. See, e.g., Fortune v. National Cash Register Co., 373 Mass. 96, 364 N.E.2d 1251 (1977). Unaddressed by those in the majority is Hall v. Farmers Ins. Exchange, 713 P.2d 1027 (Okla.1985), which is remarkably similar to this case, the only difference being that Farmer’s scheme mulcted a different salesperson. The court there held that where an insurance company intends to wrongfully deprive an agent of the fruits of his contract, it breaches its implied covenant of good fath. 713 P.2d at 1030-31. Unfortunately, for Mr. Clement, his claim for relief is being decided in Idaho.
Thus, it is seen that other courts have not used the employee versus agent distinction (one without a perceivable difference) as a roadblock to defeat claims based on the implied covenant of good faith. Justice Johnson, in his special concurrence, contends that if such a dichotomy is not upheld, a “novel,”, “drastic change in the law of contracts” will occur. This is much doubted. But, if true, the appropriate and unanswered question is, however, would such a change advance justice? Stare de-cisis does not demand blind allegiance to obvious error.
Anyone who becomes acquainted with the circumstances of this case will readily see that the no-cause termination, if upheld, allows the insurance company to inflict the penalty of forfeiture upon Clement. Regarding Justice Johnson’s concerns above related, this same Court 34 years ago, wrought a drastic change in the law, for the better. Graves v. Capic, 75 Idaho 451, 272 P.2d 1020 (1954). Citing an earlier case, the Court ruled against the allowance of a forfeiture “unless the failure to do so would lead to an unconscionable result.” 75 Idaho at 456, 272 P.2d at 1025. Recognizing that the instant case is unlike Graves in that the contract here results in Clement being penalized by forfeiting his entitlement to renewal premiums, not a question of stipulated damages as in Graves, the same principle applies. In Graves the Court said, “Here the damage stipulated for by the parties is clearly unconscionable and exorbitant.” 75 Idaho at 459, 272 P.2d at 1028.
That same language is equally applicable to the circumstances here: the termination provision of the insurance companies form contract is clearly unconscionable and exorbitant. The company is guilty of bad faith in attempting to enforce it.
PART II
In the first line of the majority opinion is the correct observation that the trial court rendered summary judgment against Clement. On page 300, 766 P.2d page 770 of the Maj. opinion, contrary to all of the case law holdings that all facts and inferences which can be drawn from those facts must be in favor of the party against whom summary judgment is being granted, the author of the majority opinion throws a way-outside roundhouse curve, “Presumably the right of termination being an express provision of the written contract, it was bargained for, and considered necessary by both parties.”
In earlier times the coiner of that language entertained just the opposite view, i.e., the Doctrine of Reasonable Expectations.
Corgatelli urges, and we agree, that the so-called “doctrine of reasonable expectations” (alias the doctrine of adhesion contracts) should be adopted in Idaho. [footnote omitted] That doctrine was articulated in the case of Gray v. Zurich Insurance Company, 65 Cal.2d 263, 54 Cal.Rptr. 104, 419 P.2d 168 (1966). Gray involved the duty of an insurer under a personal liability policy to defend the insured against personal injury or property damage lawsuits.
*311That court held that any exception to the basic underlying obligation of the insurer must be set forth in such a manner that the insured is clearly informed of its import. The court stated:
These principles of interpretation ... have found ... restatement in the doctrine of adhesion contract ... [A] contract entered into between two parties of unequal bargaining strength, expressed in the language of a standardized contract, written by the more powerful bargainer to meet its own needs, and offered to the weaker party on a “take it or leave it basis” carries some consequences that extend beyond orthodox implications. Obligations arising from such a contract inure not alone from the consensual transaction but from the relationship of the parties.
Although courts have long followed the basic precept that they would look to the words of the contract to find the meaning which the parties expected form them, they have also applied the doctrine of the adhesion contract to insurance policies, holding that in view of the disparate bargaining status of the parties we must ascertain that meaning of the contract which the insured would reasonably expect. 419 P.2d at 171-172 (footnotes omitted).
* * * * * *
The doctrine of reasonable expectations is peculiarly applicable to contracts where as here it is drawn in such a fashion that one hand steals away what the other seemingly concerns. A close analysis of the literal meaning of the words in the provision in question solves none of the problems since the literal language is at odds with the reasonable expectations an insured would obtain from the contract.
Corgatelli v. Globe Life & Accident Insurance Co., 96 Idaho 616, 619, 533 P.2d 737, 740 (1975) (emphasis added).
While Justice Shepard today willingly engages in a presumption that the termination provision was bargained for, just the other day more was required:
It is the very essence of contract law that there must be a meeting of the minds of the parties for the contract to be binding upon the parties. Pierson v. Sewell, 97 Idaho 38, 539 P.2d 590 (1975); Brothers v. Arave, 67 Idaho 171, 174 P.2d 202 (1946). In the instant case, there was clearly no meeting of the minds ...
Haener v. Ada County Highway Dist., 108 Idaho 170, 173, 697 P.2d 1184, 1187 (1985).
Haener, apparently, and Corgatelli, too, were naught but passing fancies.

. This is the reason alleged in the complaint. Whether it is true, of course, would be a matter for the trier of fact, and certainly not an issue which can be decided in summary judgment proceedings.