Alpha/Omega Ins Svcs v. Prudential Insurance ( 2000 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-20200
ALPHA/OMEGA INSURANCE SERVICES, INC.,
Plaintiff-Appellant,
v.
PRUDENTIAL INSURANCE COMPANY OF AMERICA,
Defendant-Appellee.
_______________________________
Appeal from the United States District Court
for the Southern District of Texas
(H-97-CV-3435)
_______________________________
January 12, 2000
Before JOLLY, EMILIO M. GARZA and BENAVIDES, Circuit Judges.
PER CURIAM:*
Appellant Alpha/Omega Insurance Services, Inc.
(“Alpha/Omega”) appeals from the district court’s grant of
summary judgment to appellee Prudential Insurance Company of
America (“Prudential”). We affirm the summary judgment as to
Alpha/Omega’s fraud and misrepresentation claim and vacate the
summary judgment as to Alpha/Omega’s conversion and tortious
interference claim.
I. Factual and Procedural Background
In July, 1991, Prudential appointed Alpha/Omega as its
*
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should not be published and is not precedent except under the limited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.
special agent,2 thereby authorizing Alpha/Omega to write and sell
Prudential’s property and casualty insurance.
On December 7, 1995, Prudential gave Alpha/Omega notice that
the agency relationship would terminate on December 31, 1995.
Alpha/Omega protested: under the Texas Insurance Code, article
21.11-1(1)(a), Prudential owed Alpha/Omega six months notice and
payment of renewal commissions until December 31, 1996. In a
letter dated December 22, 1995, Prudential relented,
acknowledging that it had a “unique relationship” with
Alpha/Omega and agreeing to follow Texas law.
In February, 1996, Prudential began contacting Alpha/Omega
clients insured by Prudential, notifying them of non-renewal, and
offering them replacement policies with other carriers.
Alpha/Omega objected to Prudential’s conduct, and Prudential
agreed to stop soliciting Alpha/Omega’s clients.
Alpha/Omega filed suit on June 27, 1997, in Texas state
court. Though the original petition stated causes of action for
fraud and misrepresentation, conversion and tortious interference
with contract, the heart of Alpha/Omega’s complaint is that
Prudential is stealing Alpha/Omega’s book of business.3
Prudential removed to federal court on grounds of diversity.
2
Alpha/Omega is an “independent insurance agent,” which means that it is
“not owned or controlled by any insurer or group of insurers and whose agency
agreement does not prohibit the representation of other insurers.”
Alpha/Omega Ins. Servs. Inc. v. Prudential Ins. Co. of America, No. 97-3435,
slip op. at 2 n.2 (S.D. Tex. Feb. 1, 1999).
3
The “book of business” or “expirations” refers to a copy of the policy
containing the date of the insurance policy, the name of the insured, the date
of its expiration, the amount of insurance, premiums, property covered and the
terms of insurance. See id. at 8.
2
The district court granted summary judgment to Prudential on
February 1, 1999. It held that Alpha/Omega had not introduced
facts to support its claim for fraud and misrepresentation, and
that Prudential owned the book of business, thus rendering
conversion and tortious interference impossible.
Alpha/Omega timely filed this appeal.
II. Standard of Review
We apply de novo review to summary judgment motions and
evaluate the case under the same standards employed by the
district court. See Shakelford v. Deloitte & Touche, LLP, 190
F.3d 398, 403 (5th Cir. 1999).
The district court should grant summary judgment where “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 judgment as a matter of law.”
Fed. R. Civ. Proc. 56(c). “An issue is genuine if the evidence
is sufficient for a reasonable jury to return a verdict for the
nonmoving party.” Owsley v. San Antonio Indep. Sch. Dist., 187
F.3d 521, 523 (5th Cir. 1999). On summary judgment, “we consider
the evidence and all reasonable inferences to be drawn therefrom
in the light most favorable to the nonmovant[.]” Rushing v.
Kansas City S. Ry. Co., 185 F.3d 496, 505 (5th Cir. 1999).
III. Fraud and Misrepresentation
Alpha/Omega claims that Prudential committed fraud and
misrepresentation when it led Alpha/Omega to believe that it was
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seeking a principal-agent relationship for purposes of
distributing its property and casualty insurance products.
Rather, Alpha/Omega contends, Prudential planned to use the
principal-agent relationship to gather the information necessary
to steal Alpha/Omega’s clientele. Alpha/Omega maintains that
Prudential made misrepresentations when it: (1) failed to
disclose that it intended to compete with Alpha/Omega; (2) failed
to reveal that it intended to steal Alpha/Omega’s book of
business; and (3) promised that it would follow industry customs.
Prudential responds that the fraud and misrepresentation
claim involved only the claim that Prudential promised to pay
renewal commissions through December 31, 1996 and failed to do
so. Because Robert Wheeler (“Wheeler”), Alpha/Omega’s CEO,
conceded that Prudential did in fact make such payments,
Prudential argues that no fraud and misrepresentation occurred.
We hold that the district court properly dismissed this
claim. Alpha/Omega’s complaint identifies only one
representation as fraudulent: that Prudential would continue
paying renewal commissions through December 31, 1996. Wheeler
admits in his deposition that he received renewal commissions up
until that date. As Prudential’s representation was true, no
action for fraud and misrepresentation can lie, and the district
court did not err in granting summary judgment for Prudential.
As to Alpha/Omega’s contentions about other
misrepresentations on Prudential’s part, Alpha/Omega cannot
raise these additional claims of fraud for the first time on
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appeal. See Fed. R. Civ. Proc. 9(b) (requiring claims of fraud
to be pled with particularity in the complaint); see also United
States ex rel Wallace v. Flintco Inc., 143 F.3d 955, 971 (5th
Cir. 1998) (refusing to consider a new argument, raised for the
first time on appeal, unless it “presents a pure question of
law,” or, “if ignored, would result in a miscarriage of justice”
or which “meets the plain error standard.”). We therefore affirm
the summary judgment as to the fraud and misrepresentation claim.
IV. Conversion and Tortious Interference with Contract
Alpha/Omega alleges that Prudential converted Alpha/Omega’s
book of business and tortiously interfered with Alpha/Omega’s
contracts with its own clients.
Prudential counters that it owns the book of business and
therefore cannot have converted its own property or tortiously
interfered with its own contracts.
Because we find that the question of ownership of the book
of business is a contested factual issue, we hold that summary
adjudication was improper. The question of ownership turns on
the terms set forth in the contract governing the agency
relationship.4 Here, the parties disagree as to the meaning of
4
Alpha/Omega argued that the contract in the record pertained merely to
life insurance, not property and casualty insurance, policies. It based its
argument on Wheeler’s testimony that he thought the written contract pertained
only to life insurance. But the plain language of the contract grants
Alpha/Omega authority “[t]o solicit and procure applications for all types of
insurance policies.” Without evidence of an oral agreement that the contract
at issue applied only to life insurance, Wheeler’s misunderstanding of the
contract does not create an ambiguity. See Davis v. Davis, 175 S.W.2d 226,
229 (Tex. 1943); 14 Texas Jurisprudence § 191 (3d ed. 1981). We therefore
proceed with the understanding that the contract does govern the terms of the
agency relationship.
5
section 6(g) of the contract, which states, in its relevant part,
“All books, accounts . . . records . . . and all other items
provided by [Prudential], and relating to or connected with the
business of the [Prudential] . . . shall be the property of the
[Prudential].”
Alpha/Omega argues that the contractual provision either
does not convey the book of business or is ambiguous as to its
meaning. Whether a contract is ambiguous in Texas is a question
of law. See Triad Elec. & Controls, Inc. v. Power Sys. Eng’g,
Inc., 117 F.3d 180, 187 (5th Cir. 1997). Alpha/Omega posits that
the clause only applies to those items provided to Alpha/Omega by
Prudential; the book of business is indisputably provided by
Alpha/Omega to Prudential. Whether “provided by [Prudential]”
modifies “all books, accounts [and] records” or merely “and all
other items” is unclear, as is Prudential’s contention that the
clause can be read, “books, accounts [and] records . . . relating
to or connected with the business of [Prudential].” Thus, the
contract is ambiguous, and the parties may introduce additional
facts of custom and practice in the industry to guide
interpretation of the provision. See Cicciarella v. Amica Mut.
Ins. Co., 66 F.3d 764, 768 (5th Cir. 1995) (“Once the document is
found to be ambiguous, the determination of the parties’ intent
through extrinsic evidence is a question of fact.”). Because we
find the contract provision ambiguous, and inasmuch as
Alpha/Omega has submitted evidence that the disputed contractual
provision did not convey the book of business to Prudential, a
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fact issue sufficient to survive summary judgment exists.5
Finally, Prudential agreed to comply with Texas Insurance
Code, article 21.11-1(1)(a), even though that provision does not
apply “where the policies and the insurance business is owned by
the company and not the agent.” Tex. Ins. Code, art. 21.11-1(3).
Prudential’s compliance with article 21.11-1(3) evidences its own
belief that it did not own Alpha/Omega’s book of business on
December 22, 1995 when it agreed, by letter, to comply with the
terms of the statutory provision, and its own understanding of
its ownership of the book of business contributes to the genuine
factual dispute that exists. In short, Alpha/Omega proffered
sufficient, specific evidence that the contract did not convey
the book of business to Prudential to survive summary judgment.
We therefore vacate the summary judgment on the conversion and
tortious interference claims for further proceedings.
For the foregoing reasons we affirm the summary judgment
with respect to the fraud and misrepresentation claim and vacate
the summary judgment with respect to the conversion and tortious
interference claims.
AFFIRMED IN PART, VACATED IN PART.
5
Prudential argues that the compensation schedule, incorporated by
reference in section 3 of the contract, conveys the book of business to it.
We reject this argument. While section 3 undoubtedly incorporates by
reference a compensation schedule, we have no reason to believe that it
incorporated the compensation schedule included in the record, which, on its
face, applies to all ordinary agency representations. Alpha/Omega was a
special agent.
7