Court Opinion

ID: 38865
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:16:19+00
Date Added: 2024-06-11T17:16:07.504011
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT                  June 23, 2005

                                                         Charles R. Fulbruge III
                                                                 Clerk
                           No. 04-50713

TIM MCCOY AND ASSOCIATES INC. doing business as, Neat Management
Group

          Plaintiff - Counter Defendant - Appellee

versus

NATIONAL STATES INSURANCE CO.

          Defendant - Counter Claimant - Appellant

                       --------------------
          Appeal from the United States District Court
            for the Western District of Texas, Austin
                          1:03-CV-433-LY
                       --------------------

Before GARWOOD, GARZA, and BENAVIDES, Circuit Judges.

PER CURIAM:*

     Appellant National States Insurance Co. (“National States”)

appeals the district court’s denial of its motion for summary

judgment and the district court’s grant of Appellee Tim McCoy and

Associates, Inc. d/b/a NEAT Management Group’s (“McCoy”) motion

for summary judgment.   After considering the record and the

parties’ briefs and arguments on appeal, we affirm the district

court’s judgment, principally for the reasons set forth in the

     *
      Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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district court’s good and well-reasoned opinion.

     This action arises out of a dispute over the interpretation

of a contract between McCoy and National States.   McCoy develops

and markets several different insurance products for various

carriers through independent agents specifically recruited by

McCoy.   National States is an insurance company that sells life,

health, and accident insurance policies.   On June 11, 1991,

National States entered into a General Agent’s Contract (the

“Contract”) with McCoy for McCoy to recruit independent agents to

market National States’ Final Expense insurance product to

consumers.

     Pursuant to the terms of the Contract, McCoy was to recruit

individual agents who would enter into Managing General

Agreements with National States to solicit applications for

National States’ insurance policies.   Upon receipt of premiums

paid for policies issued through the agents recruited by McCoy,

National States paid McCoy “override” commissions for the

difference between the amount of commission that National States

was obligated to pay McCoy and the amount of commission that

National States was obligated to pay its insurance agents.     Under

the terms of the Contract, National States would continue to pay

commissions to McCoy as premiums were paid on policies that were

renewed (“renewal commissions”).

     On or about April 23, 2003, McCoy sent a letter to National

States’ president, Thomas Green, informing National States that

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due to declining commissions from sales of existing products,

McCoy was developing other insurance products through other

carriers to compensate for its losses.

     National States responded by letter dated April 25, 2003,

terminating the Contract with McCoy and instructing McCoy to

refrain from contacting any of National States’ agents “in an

effort to influence them to write business with [McCoy’s] new

carrier in place of National States.”    National States also

discontinued payment of McCoy’s renewal commissions, which

totaled roughly $160,000 per month.

     On May 14, 2003, McCoy filed suit against National States in

Texas state court seeking a declaratory judgment that 1) the

Contract does not prohibit McCoy from entering into new contracts

to market similar products through an agency field force which

includes independent agents recruited by McCoy and currently

contracted with National States; and 2) National States is

required to pay McCoy’s renewal commissions pursuant to the terms

of the Contract.   National States filed a counterclaim seeking a

declaratory judgment that 1) McCoy may not contact any agents

currently with National States in an effort to influence them to

write business with other carriers in place of National States;

and 2) to do so forfeits the obligation of National States to pay

renewal commissions pursuant to the terms of the Contract.

National States removed the case to federal court on June 30,

2003.

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     The parties filed cross motions for summary judgment in

September and October 2003.

     On April 28, 2004, the district court granted McCoy’s Motion

for Summary Judgment and denied National States’ Counter Motion

for Summary Judgment.   The district court found that McCoy did

not violate the terms of the Contract and that National States

was required to pay McCoy the disputed renewal commissions.

After the district court denied National States’ Motion for

Reconsideration, this appeal followed.

                              DISCUSSION

     We review a district court’s grant of summary judgment de

novo.   Facility Ins. Corp. v. Employers Ins. of Wausau, 357 F.3d
508, 512 (5th Cir. 2004).   Summary judgment is appropriate if

there is no genuine issue as to any material fact, and the movant

is entitled to judgment as a matter of law.    Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986).

     We agree with the district court’s determination that McCoy

did not violate the terms of the Contract.    Although it has been

advanced that McCoy could have breached the Contract by merely

harming National States’ business, the Contract actually requires

“interference.”   We agree with the district court’s determination

that there was no actionable interference in this case.

     Additionally, the Contract allowed National States to

terminate the Contract for cause if McCoy did “anything toward

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inducing or influencing agents of [National States] to leave its

service.”   If the Contract had been terminated for cause, then

National States would not have had to continue paying renewal

commissions to McCoy.    We agree with the district court that

McCoy did not violate the terms of the Contract by offering

independent agents the opportunity to sell the products of other

insurance companies.    By doing so, McCoy did not induce or

influence agents to actually leave National States’ service.     The

independent agents were at all times free to sell competing

insurance policies, so McCoy did not induce or influence them to

leave National States’ service by providing them with an

alternative product that they could sell.

     Because we find that McCoy did not breach the Contract, we

agree with the district court’s conclusion that National States

must continue to pay renewal commissions to McCoy.

     For the foregoing reasons, the district court’s judgment is

in all things AFFIRMED.

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