Opinion
No. 2-786 / 00-2014
Filed March 26, 2003
Appeal from the Iowa District Court for Polk County, Richard G. Blane, II, Judge.
Agents appeal adverse rulings and verdicts in their suit against insurance company. AFFIRMED.
John R. Hearn, Des Moines, for appellants.
Denny M. Dennis and Todd A. Strother of Bradshaw, Fowler, Proctor Fairgrave, Des Moines, for appellee.
Heard by Vogel, P.J., and Zimmer and Hecht, JJ.
Jim Vandekamp and American Equitable Insurance Agency of Iowa, Inc. Dudley Dowell, Jr. and Dowell Financial Group, Inc. and Richard Schlindwein (the plaintiffs) appeal from the entry of directed verdicts on their fraud claims against Employers Modern Life Company (EML), as well the district court's submission of a jury instruction on their breach of contract claim, and the court's refusal to submit punitive damages. We affirm. Background Facts and Proceedings . In 1990 the plaintiffs contracted with EML to market and sell life insurance. Concerned about taking on an undeveloped territory and being able to maintain their positions as managing general agents long enough to make contracting with EML financially worthwhile, they sought pre-agreement assurances. On October 29, 1990, EML's president, Alan Huisinga, provided a letter declaring EML's intentions. The letter stated, in pertinent part:
Different plaintiffs entered into different agreements at varying times. We use the term "plaintiffs" to refer to those persons and entities involved in the initial arrangement — Vandekamp, American Equitable Insurance Agency of Iowa, Inc., and Dudley Dowell, Jr. — and generally use the dates associated with their agreements. The claims of Richard Schlindwein and Dowell Financial Group, Inc. are inextricably tied to the original actions of Vandekamp and Dowell.
The purpose of this letter is to reaffirm to you that we are committed to the Managing General Agent system. No one is really sure what the future has in store, but I will give you my assurance as President of Employers Modern Life we will back you as Managing General Agent as long as it is mutually profitable, for each of us. It would not be to the advantage of the company to watch you build a region, based upon obtaining mutual production objectives and then change the direction of the company.
Also, the future may be such that you are not interested in maintaining a Managing General Agent contract. Should this occur, we would not want to stand in the way of progress. In summary, no one is sure what tomorrow will hold. As long as we have an open means of communication and are working towards helping our P/C agents produce life business, I can see no reason why we will not have a successful business relationship.
On November 1, 1990, the plaintiffs signed agency agreements, which contained a mutual no-cause, thirty-day written notice termination provision, and which expressly terminated and replaced all prior negotiations and agreements. That same day the plaintiffs signed Managing General Agent Bonus Agreements, which referred to the November 1 agency agreements as Managing General Agent Agreements, and which by their owns terms were addendums to those agency agreements. In 1995, the parties entered into Regional General Agent (RGA) Supplemental and Bonus Plan Agreements. By their own terms these agreements were incorporated into and made part of the original 1990 agency agreements.
Because the Polk County Clerk of Court is unable to locate the two boxes of trial exhibits in this case, we are limited to a review of the agreements as they appear in the appendix. This makes it difficult to identify and date all the relevant contracts for each plaintiff, as many agreements in the appendix were disordered, only partially reproduced, or simply absent. By our best estimation the dates and identity of parties are accurately stated.
New agency agreements were entered in 1997. These agreements still provided for a mutual no-cause, written termination, but extended the notice period to ninety days. Even though the 1997 agreements expressly terminated and replaced "all prior negotiations, agreements, and their addenda," the parties continued to operate as if the 1995 RGA Supplemental Agreements remained in force. Then, in 1998, EML reconsidered the efficacy of its external RGA system, and on October 26, 1998, provided ninety-day written notice it was terminating the contract marketing of its life insurance plans.
The plaintiffs sued EML on fraud and breach of contract theories, and sought punitive damages. EML obtained directed verdicts as to the fraud claims. The court submitted the contract claims to the jury, but refused to instruct on punitive damages. The jury found EML had not breached any of the contracts.
Two additional theories of recovery, tortious interference and breach of covenant of good faith and fair dealing, were dismissed on summary judgment prior to trial, and are not at issue in this appeal.
Scope of Review . We review grant of a motion for directed verdict for correction of errors at law. McClure v. Walgreen Co., 613 N.W.2d 225, 230 (Iowa 2000). When ruling on such a motion, the court was required to consider the evidence in a light most favorable to the plaintiffs. Id. A refusal to give a jury instruction is also reviewed for correction of errors at law. Beyer v. Todd, 601 N.W.2d 35, 38 (Iowa 1999). The plaintiffs were entitled to have their legal theory submitted to the jury if it was supported by substantial evidence in the record. Id.
Fraud Claims . The plaintiffs contend Huisinga's 1990 letter contained two fraudulent misrepresentations. The first, that the plaintiffs would be granted a long-term or perpetual RGA agreement, is limited to a claim of affirmative misrepresentation. See Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 400 (Iowa 2001) (setting forth elements of claim). The second, that EML would maintain an open line of communication, is centered on EML's 1998 failure to disclose information about the viability of the external RGA system. The plaintiffs appear to alternately posit this claim as one of affirmative misrepresentation, as well as nondisclosure. See Clark v. McDaniel, 546 N.W.2d 590, 592 (Iowa 1996) (setting forth elements of fraudulent concealment). Reviewing the record in the light most favorable to the plaintiffs, we conclude at least one element of each claim was unsupported by substantial evidence. As such, the directed verdicts were appropriate. McClure, 613 N.W.2d at 230.
Even if we assume the 1990 letters operated to control the plaintiffs' RGA status separate and apart from the 1990 agency agreements, nothing on the face of the letters themselves would seem to constitute a promise for a perpetual arrangement or one that exceeded the roughly eight years during which the plaintiffs served as RGAs. In the letters EML expressed only its commitment to the Managing General Agency system and assured continuation of the arrangement with the plaintiffs only as long as it was mutually profitable. The letter very carefully avoided a promise of long-term commitment, twice articulating the uncertainty of the future, and affirming the plaintiffs' right to terminate the agreement.
However, even if the letter and surrounding oral representations were sufficient to send the element of representation to the jury, there is no evidence of false intent on the part of Huisinga or EML. Intending that the letter not create a binding promise, and intending to mislead the plaintiffs into assuming a binding promise was made, are two separate things. While the record contains evidence of the former, it does not contain evidence of the latter.
The claim centered on EML's failure to disclose information is similarly flawed. Even if we assume there was substantial evidence of a promise to share information relevant to the RGA system, Gibson, 621 N.W.2d at 400, or of special circumstances which gave rise to a duty to disclose on the part of EML, Clark, 546 N.W.2d at 592, there is no evidence that, in 1990, EML intended to deceive the plaintiffs about the scope of the "open means of communications" or somehow intended to conceal a then nonexistent fact. The district court did not err in directing verdicts on the plaintiffs' fraud claims.
Jury Instruction 20 . The plaintiffs contend the court erred when it instructed the jury, in pertinent part:
If you determine the October 1990 letters do not form part of the Plaintiffs' contracts, then EML had the right to terminate the RGA Supplemental Agreements by written notice with or without cause. This result is required whether you find the RGA Supplemental Agreement is a part of and subject to or is independent of the Agency Agreement.
On appeal the plaintiffs focus on the controlling nature of the 1990 letters, and any integration between the letters and the RGA Supplemental Agreements. However, the objection at trial was limited to whether, without reference to the 1990 letters from Huisinga, the RGA Supplemental Agreements allowed for at-will termination. We therefore limit our analysis to issues regarding the agency agreements and the RGA supplemental agreements. See Kellar v. Peoples Natural Gas Co., a Div. of InterNorth, Inc. , 352 N.W.2d 688, 692 (Iowa Ct.App. 1984) ("We do not consider on appeal objections to jury instructions which were not presented to the trial court.").
Essentially, the plaintiffs sought an instruction that required the jury to first determine whether the RGA Supplemental Agreements had incorporated any of the agency agreements. The plaintiffs argued that if the jury found the supplemental agreements had not incorporated the agency agreements, but were independent and separate agreements, the jury should have then been required to determine whether the supplemental agreements created a perpetual agency that was not terminable at will. Reviewing the requested instruction, we find no reversible error.
Specifically, counsel stated:
[T]he jury should be instructed that aside from and without regard to the 1990 letters, it should decide if the RGA Supplemental Agreement, 1995, incorporates any of the Agent Agreements and, if so, the effect of the language as impacting and allowing termination on the contract notice, whether it be 30 or 90 days. The jury should also be allowed to decide if, aside from and without the 1990 letters, the 1995 RGA Supplement is an independent and separate agreement from any of the agent agreements and, if so, whether it grants a perpetual agency that may not be terminated at will. Proposed Instruction 20 erroneously instructs that the 1995 RGA supplemental agreement allows termination at will, whether it incorporates the agency agreements or not.
The court's failure to give the requested jury instruction warrants reversal only if it resulted in prejudice to the plaintiffs. Vaughan v. Must, Inc. , 542 N.W.2d 533, 539 (Iowa 1996). Here, no prejudice is shown. If the jury had determined the agency agreements and the RGA Supplemental Agreements were incorporated, then it seems clear the plaintiffs' RGA status was terminable by the written notice provided by EML. If the jury had determined the RGA Supplemental Agreements were independent agreements, there was no basis upon which to find a permanent agency, as lifetime duration must be clearly and unequivocally expressed. Thompson v. Miller , 251 Iowa 324, 327, 100 N.W.2d 410, 412 (1960). That requirement cannot be met by the vague and largely silent documents at issue here, nor by any of the alleged oral promises by EML officers.
The plaintiffs alternately argue that if the RGA Supplemental Agreements were independent agreements silent as to termination, then under Des Moines Blue Ribbon Distrib., Inc. v. Drewrys Ltd., U.S.A., Inc., 256 Iowa 899, 908, 129 N.W.2d 731, 737 (1964), a no-cause termination required "reasonable notice." However, the plaintiffs do not point out which evidence was allegedly relevant on the issue of reasonable notice, and we cannot discern any such evidence from the abbreviated record provided. Because there was not substantial evidence in the record from which a jury could conclude EML's notice was unreasonable, any error in the court's instruction was harmless.
Punitive Damages. As we find no error in the proceedings below, and as the jury found no breach of contract, it is not necessary to address the contention punitive damages should have been submitted to the jury. We note, however, that in breach of contract cases, there must be a showing "the breach (1) constitutes an intentional tort, and (2) is committed maliciously. . . ." Magnusson Agency v. Public Entity Nat'l Co. Midwest, 560 N.W.2d 20, 29 (Iowa 1997). We further note the facts of this case fall far short of such a standard.