Court Opinion

ID: 3021176
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:24:16.405578+00
Date Added: 2024-06-11T11:47:26.940152
License: Public Domain

United States Court of Appeals
                               FOR THE EIGHTH CIRCUIT
                                       ___________

                                       No. 97-2154
                                       ___________

Lincoln Benefit Life Company, a             *
Nebraska Domestic Insurance                 *
Corporation,                                *
                                            * Appeal from the United States
              Plaintiff - Appellant,        * District Court for the
                                            * District of Nebraska.
   v.                                       *
                                            *
Robert R. Edwards,                          *
                                            *
              Defendant - Appellee.
                                       ___________

                            Submitted: November 19, 1997
                                Filed: July 7, 1998
                                    ___________

Before BEAM, HEANEY and JOHN R. GIBSON, Circuit Judges.
                           ___________

JOHN R. GIBSON, Circuit Judge.

        Lincoln Benefit Life filed a declaratory judgment in Nebraska state court against
Robert Edwards, alleging he owed Lincoln $452,558.29. Edwards removed the action
to federal court and filed a counterclaim for breach of contract. Lincoln raised the
statute of limitations as an affirmative defense to Edwards' counterclaim. The district
court1 concluded that there was an agency relationship between Lincoln and Edwards,
and that the statute of limitations did not begin to run until February 1995, when
Lincoln terminated the contractual relationship. Lincoln appeals, arguing that Edwards'
claim is barred by the statute of limitations, and that the district court incorrectly
decided that the statute of limitations period did not commence until the agency
relationship ended. We affirm.

      Lincoln and Edwards entered into a Marketing Director Agreement effective
February 1, 1982. In exchange for overwrite commissions, Edwards agreed to recruit,
train, and supervise general agents to sell Lincoln's policies. The agreement provided
that Edwards was an independent contractor and that amounts payable under the
contract "shall be solely for services as an independent contractor."

      The agreement provided that the agent commission statements rendered by
Lincoln concerning "commissions paid and/or payable, advances and indebtedness shall
be conclusive" unless Lincoln received notice within thirty days.          The agent
commission statements documented all financial activities for a particular agent,
including commissions earned and "chargebacks" (which occurred when Lincoln
advanced a commission on a policy and the policy was canceled before the policy
term). The agreement allowed Lincoln to amend the overwriting commission at any
time, but Lincoln agreed that it would pay all marketing directors the same commission.
Contemporaneously with the Marketing Director Agreement, Lincoln and Edwards
entered into a General Agent Agreement which also set forth Edwards' obligation to

      1
      The Honorable Richard G. Kopf, United States District Judge for the District
of Nebraska.
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market insurance products for Lincoln in exchange for commissions. Edwards and
Lincoln later entered into a Master General Agent Agreement on March 29, 1984. This
agreement also provided that Lincoln would pay all master general agents the same
overwriting commission and characterized the relationship of master agent and Lincoln
as an "independent contractor."

      Although not stated in the written agreements, Lincoln told Edwards that it
would not "compete" to recruit future agents in his geographical area, and that it would
assign all agents in the Dallas-Fort Worth area to Edwards.

      On March 7, 1986, Edwards signed an agreement to pay Lincoln $433,100.72,
plus interest. This obligation came about from an indebtedness created by several of
Edwards' subagents. To help Edwards pay this debt, Lincoln agreed to increase his
commissions and to assist Edwards in the recruitment of additional brokers in the
Dallas-Forth Worth area.

      In January 1994, Edwards requested an accounting of all transactions under the
1982 agreement. Lincoln denied the request, and on February 21, 1995, Lincoln
notified Edwards that it was terminating its agreements with him. Lincoln filed suit in
state court for breach of the March 7, 1986, contract, as modified by a May 1, 1987,
addendum revising Edwards' payment obligations.

      Edwards removed the case to federal court and filed a counterclaim on June 1,
1995, alleging that Lincoln breached their agreements by: 1) failing to assign agents in
the Dallas-Fort Worth area to him; and 2) paying some agents at a higher commission

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rate. Lincoln raised the statute of limitations as an affirmative defense. Lincoln's
position was that Edwards knew of the alleged breaches more than five years before
he filed his counterclaim on June 1, 1995. Lincoln contended that Edwards knew about
the assignment of agents as early as 1985 and about the differing commission rates in
1989.

        The district court denied Lincoln's summary judgment motion, concluding that
the statute of limitations2 did not begin to run until Lincoln terminated the agency
relationship on February 21, 1995. Lincoln now appeals, arguing that the statute of
limitations began to run in 1989, the date of the alleged breach. Lincoln contends that
the court erred in concluding that the statute of limitations period began from the date
Lincoln and Edwards ended their agency relationship and in concluding that the two
parties had an agency relationship.

                                            I.

        In general, a cause of action accrues and the statute of limitations begins to run
when the aggrieved party has a right to institute and maintain a suit. See, e.g., L. J.
Vontz Constr. Co. v. Department of Roads, 440 N.W.2d 664, 666-67 (Neb. 1989).
Relying on Central States Resources Corp. v. First National Bank, 501 N.W.2d 271
(Neb. 1993), the district court concluded, however, that the statute of limitations did
not begin to run when the alleged breach of contract occurred, but rather, the statute did

        2
       Nebraska provides for a five-year statute of limitations for breach of a
written contract and a four-year statute of limitations for breach of an oral contract.
See Neb. Rev. Stat. §§ 25-205, 206 (1995).
                                            -4-
not commence until Lincoln and Edwards terminated their agency relationship in 1995.
Lincoln contends that the district court relied on dictum from Central States, and that
the court erred in applying Central States at all because Edwards was an independent
contractor and not an agent of Lincoln.

      We review the district court's interpretation of Nebraska law de novo, giving no
deference to the district court's interpretation of state law. See Salve Regina College
v. Russell, 499 U.S. 225, 231 (1991).

                                             A.

      In Central States, the Nebraska Supreme Court stated:

      [W]here there is a general or continuing agency, a statute of limitations
      does not commence to run until the agency is terminated, so that unless
      the death of one of the parties occurs, the termination of a continuing
      agency cannot be effective so as to set the statute in motion until an
      accounting is had or a demand for an accounting made and refused, or
      there is an express repudiation of agency communicated to the principal.
501 N.W.2d at 276.

      The district court concluded that there was a general or continuing agency
relationship between Edwards and Lincoln such that the statute of limitations did not
begin to run until February 1995, when Edwards demanded an accounting and Lincoln
terminated their contractual relationship.

                                             -5-
      We summarily reject Lincoln's first argument that the district court relied on dicta
from Central States in concluding that a general or continuing agency relationship tolled
the statute of limitations. The Nebraska Supreme Court decided the statute of
limitations had not expired in Central States because there was a continuing agency
relationship between two banks. 501 N.W.2d at 276-77. The direction of the court
that the statute of limitations period did not commence until the agency relationship
ended was central to the court's holding that the statute had not yet expired. The
language was not dictum, and controls here. Cf. McCuen v. American Cas. Co., 946
F.2d 1401, 1407 (8th Cir. 1991).

                                           B.

      Lincoln's next argument is that Central States does not apply because Edwards
was an independent contractor and not an agent of Lincoln. Lincoln points out that the
1982 and 1984 agreements specifically provide that Edwards is an independent
contractor and not an "employee[] or servant[] of [Lincoln]." Lincoln also contends
that an examination of the ten factors used to determine whether an individual is an
agent or an independent contractor, see Delicious Foods Co. v. Millard Warehouse,
Inc., 507 N.W.2d 631, 636 (Neb. 1993), establishes that Edwards was an independent
contractor and not an agent of Lincoln. The ultimate conclusion of whether an
individual is an independent contractor is a question of law, which we review de novo.
See id.; see also Berger Transfer & Storage v. Central States, Southeast and Southwest
Areas Pension Fund, 85 F.3d 1374, 1377-78 (8th Cir. 1996); Wal-Mart Stores, Inc. v.
Crist, 855 F.2d 1326, 1330 n.4 (8th Cir. 1988).

                                           -6-
      Whether an agency exists depends on the facts underlying the relationship of the
parties, irrespective of the words or terminology used by the parties to characterize
their relationship. See Waterhout v. Associated Dry Goods, Inc., 835 F.2d 718, 720
(8th Cir. 1987); Delicious Foods Co., 507 N.W.2d at 637. Lincoln argues that because
Edwards determined when he wanted to work and who he wanted to work with, he
controlled his own business and was not an agent of Lincoln.

      The district court found, however, that Lincoln had sufficient control over
Edwards to create an agency relationship. The court pointed out that although the
marketing agreement gave Edwards the responsibility of developing and supervising
Lincoln's business, this responsibility was subject to Lincoln's rules, regulations and
standards.   The agreement barred Edwards from entering into insurance sales
agreements with other insurers. The court acknowledged that although Lincoln did not
control the manner in which Edwards physically conducted himself in performing his
duties, Lincoln required Edwards to operate on Lincoln's behalf and held veto power
over Edwards' agent selections. Lincoln considered Edwards as a marketing director,
"the front line of management for the company." The court determined that Lincoln
required Edwards to act as its representative, and Edwards had authority to conduct
business transactions on Lincoln's behalf. Lincoln does not argue that these underlying
findings are clearly erroneous, and we are persuaded that the relationship parallels the
relationship in Grone v. Lincoln Mutual Life Insurance Co., 430 N.W.2d 507 (Neb.
1988). In that case, the Nebraska Supreme Court characterized a similar relationship
as that of a principal and agent. Id. at 511. As here, the individual had an exclusive
selling agreement with the insurance company, and there was evidence of the insurer's
ability to control the agent's activities. Id. at 509. Cf. Birchem v. Knights of

                                          -7-
Columbus, 116 F.3d 310, 313 (8th Cir. 1997); Moore v. Hartford Fire Ins. Co., 481
N.W.2d 196, 197 (Neb. 1992).

      We conclude that an agency relationship existed between Edwards and Lincoln
and that the statute of limitations did not begin to run until February 1995, when the
agency relationship ended. Accordingly, we need not consider Edwards' alternative
argument that the statute of limitations was tolled because of fraudulent concealment
or Lincoln's argument that Edwards claim is actually a claim for an "account stated."

      We affirm the district court's judgment.

BEAM, Circuit Judge, concurring.

        I concur in the result reached by the court, and write separately only to address
a distinction which the parties failed to discern. Lincoln argues that Edwards could not
have been an agent because he was an independent contractor. This, however, is a
false dichotomy. An agent can be either an independent contractor or an employee.
See, Restatement (Second) of Agency § 14N. For example, the attorney-client
relationship is an agent-principal relationship and yet attorneys are also independent
contractors. See 41 Am. Jur. 2d Independent Contractors § 2. The ability of
independent contractors to be agents is beyond dispute. The parties' confusion seems
to stem from the occasional tendency of courts to use "agent" as a colloquial synonym
for "employee" when distinguishing between an employee and an independent
contractor. See, e.g., Delicious Foods Co. v. Millard Warehouse ,Inc., 507 N.W.2d
631, 636 (Neb. 1993).

     In this case, we are not concerned with whether Edwards was Lincoln's
employee or an independent contractor. We are concerned with whether Edwards was

                                           -8-
Lincoln's agent, because only agency will toll the statute of limitations. Under
Nebraska law, one is an agent if he or she acts: (1) for the benefit of another and (2)
subject to that other’s control. See, e.g., Andrews v. Schram, 562 N.W.2d 50, 54
(Neb. 1997). Edwards meets both prongs of this test. Therefore, the court correctly
holds that the resulting agency relationship served to toll the statute of limitations, and
I concur.

      A true copy.

             Attest:

                     CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

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