McClure v. American Family Mut. Ins. Co.

29 F.Supp.2d 1046

Mary McCLURE and Gary Kemp, Plaintiffs, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, American Standard Insurance Company of Wisconsin, American Family Life Insurance Company, Wisconsin corporations doing business in the State of Minnesota, David N. Krueger, Daniel DeSalvo, Harvey Pierce, and Dale Mathwich, Defendants.

No. CIV. 97-1225 DSD/MM.

United States District Court, D. Minnesota.

December 10, 1998.

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Jeffrey R. Anderson, Joanne J. Mullen, and Reinhardt & Anderson, St. Paul, MN, for plaintiffs.

Cory L. Bettenga, and Fredrikson & Byron, Minneapolis, MN, and David P. Jendrzejek, Paul J. Yechout, and Moss & Barnett, Minneapolis, MN, for defendants.

ORDER

DOTY, District Judge.

This matter is before the court on the motion of defendants American Family Mutual Insurance Company, American Standard Insurance Company of Wisconsin, American Family Life Insurance Company, David N. Krueger, Daniel DeSalvo, Harvey Pierce, and Dale Mathwich for summary judgment. Based on a review of the file, record, and proceedings herein, and for the reasons stated, the court grants in part and denies in part defendants' motion.

BACKGROUND

Plaintiff Mary McClure is a resident of Nicollet County in the State of Minnesota. Plaintiff Gary Kemp is a resident of Dakota County in the State of Minnesota. Defendants American Family Mutual Insurance Company, American Insurance Company of Wisconsin, and American Family Life Insurance Company (hereafter collectively referred to as "American Family") are affiliated Wisconsin corporations operating under common management and control with their principal places of business in Wisconsin. All three companies are licensed to sell insurance in the State of Minnesota. Defendants David N. Krueger, Daniel DeSalvo, Harvey Pierce and Dale Mathwich are residents and citizens of the State of Wisconsin. Defendant Krueger at all relevant times was employed by American Family as Northwest Regional Vice President.¹ Defendant DeSalvo was employed as Executive Vice President. Defendant Pierce was employed as President and Chief Operating Officer. Defendant Mathwich served as Chairman of the Board and Chief Executive Officer. The court's jurisdiction in this matter is based on diversity of citizenship of the parties pursuant to 28 U.S.C. § 1332.

American Family sells multiple lines of insurance, including property and casualty insurance, auto insurance, life insurance, and multiple commercial lines. American Family sells this insurance through exclusive agents, who have individual agency agreements with American Family and are classified as independent contractors. The agents sell only American Family policies, and are required to sell all lines of the forementioned types of insurance.

Plaintiff Kemp entered into an agency agreement with American Family on or about September 12, 1967, whereby Kemp agreed to act as an American Family exclusive agent. The Kemp agency contract was most recently modified by agreement effective January 1, 1996. Plaintiff McClure entered into an agency agreement with American Family on or about August 1, 1986, whereby McClure also agreed to act as an American Family exclusive agent. The McClure agency contract was most recently modified by agreement effective January 1, 1993.

During their relationship with American Family, both plaintiffs were active participants in the American Family Agents' Association (hereafter "Association"). At the time of his termination, Kemp served as president of the National Association. McClure served as a board member of the Minnesota Association and was chair of the National Association Legislative Committee. American Family's unwritten corporate policy was to not recognize the Association. Deposition of Gary Hammer, Exhibit 1 to Affidavit of Harvey Eckart (Docket No. 21) at 42. One of the Association's primary activities was lobbying the Minnesota legislature on insurance issues. Of primary importance in this case is the Association's support of the "Quota Bill," which prohibited insurance companies from imposing on independent agents a requirement that the agent sell a specified number or dollar amount of life or health insurance policies in order to sell more profitable property and casualty insurance. When the Quota Bill was introduced in the 1995 legislative session, American Family opposed an amendment to include in the bill exclusive agents such as those selling American Family products, and the amendment was rejected. In the fall of 1995, plaintiffs met with Dominic Sposeto, a registered contract lobbyist, and hired him to represent the Association in lobbying the Minnesota legislature in favor of a Quota Bill to cover exclusive agents in the next legislative session. Sposeto, in late 1995, met with Vicky Rizzolo and William Dooley of American Family's governmental affairs department to discuss the quota issue and his intended lobbying efforts.

On approximately January 8, 1996, Rizzolo informed defendant Krueger that Kemp and McClure, on behalf of the Association, had retained Sposeto. On January 11, 1996, Krueger and District Manager Al Baumgartner visited Kemp at his agency office, informed him of his termination, and served him with his termination letter, which read:

Your Agents Agreement with American Family Insurance Company is being terminated immediately for conduct prejudicial to the company. You have ten days to turn over your files and other materials, as required by your Agreement, to your District Manager.

A letter from Agency Services will be following explaining these and other obligations under your Agency Agreement.

Letter from David Krueger to Gary Kemp, Exhibit 3 to Affidavit of Harvey Eckart (Docket No. 21) at P 189. The conduct deemed "prejudicial to the company" was retention of a lobbyist to support an agenda "in direct conflict with the company." Deposition of Vicky Rizzolo, Exhibit 2 to Affidavit of Harvey Eckart (Docket No. 21) at 36-37. Also on January 11, 1996, McClure was visited at her home by her District Manager, Derwin Dugger, and Minnesota South State Director Gary Hammer. McClure was also informed of her termination and served with her termination letter.² No other documents or explanation were given to plaintiffs at this time.

Plaintiffs' termination received coverage in the press. American Family spokesman Rick Fetherston was quoted in articles appearing in the Milwaukee Journal Sentinel and Manitowoc-Two Rivers Herold Times Reporter. In addition, Gary Hammer wrote a letter that was published in the Mankato Free Press discussing the terminations. American Family also sent internal communications to other American Family agents discussing the terminations, and sent a letter to plaintiffs' former clients which plaintiffs contend was misleading and implied improper behavior on their part. Finally, plaintiffs allege that American Family issued a public statement accusing plaintiffs of engaging "in a pattern of disruptive and disloyal activities over a period of years." Complaint (Docket No. 1) at ¶ 28. This statement was allegedly quoted in a number of newspapers. The contents of all these communications will be discussed more fully below as relevant to plaintiffs' claim for defamation.

Plaintiffs instituted this action on or about April 29, 1997, in Ramsey County District Court, alleging defamation (Count I), wrongful termination in violation of public policy (Count II), tortious interference with contract (Count III), intentional interference with prospective contractual relations (Count IV), violation of the Minnesota Uniform Deceptive Trade Practices Act, Minn.Stat. § 325D.44 (Count V), fraud and intentional misrepresentation (Count VI),³ and breach of contract (Count VII).⁴ The allegations in Counts I, II, IV, V, VI, and VII are made against American Family. The allegations in Count III are made against the four individual defendants. Defendants filed their Notice of Removal to this court on May 19, 1997, pursuant to 28 U.S.C. § 1441, and now bring this motion for summary judgment. After oral argument, this matter is properly before the court for decision.

DISCUSSION

The court should grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). This standard mirrors the standard for judgment as a matter of law under Federal Rule of Civil Procedure 50(a), which requires the trial court to enter judgment as a matter of law if there can be but one reasonable conclusion as to the verdict. See Anderson v. Liberty Lobby, Inc., 477 U.S 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material only when its resolution affects the outcome of the case. Id. at 248, 106 S.Ct. 2505. A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. Id. at 252, 106 S.Ct. 2505. There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Id. at 249, 106 S.Ct. 2505.

On a motion for summary judgment, the court views the evidence in favor of the nonmoving party and gives that party the benefit of all justifiable inferences that can be drawn in its favor. Id. at 250, 106 S.Ct. 2505. The nonmoving party, however, cannot rest upon mere denials or allegations in the pleadings. Nor may the nonmoving party simply argue facts supporting its claim will be developed later or at trial. Rather the nonmoving party must set forth specific facts, by affidavit or otherwise, sufficient to raise a genuine issue of fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If reasonable minds could differ as to the import of the evidence,...