Justia Business Law Opinion Summaries

In 2006, plaintiff Robert Kyle Morris, a licensed insurance agent, was working for his father's independent insurance agency, the Morris Insurance Agency ("Morris Insurance"). At some point, Morris contacted one of the Farmers entities about becoming a Farmers agent. Morris testified that he initially became interested in working as a Farmers agent because Farmers had a policy whereby a Farmers agent could place insurance with a different company if a customer was not eligible for insurance issued by Farmers or if Farmers refused to underwrite a policy for the customer. He further testified that he had not been looking to disaffiliate himself from his father's insurance agency and that he had told a Farmers recruiter that he did not want to cut off the working relationship he had with his father. Morris also testified that, when he agreed to become a Farmers agent, he signed several different agreements; that nothing in any of those agreements or documents indicated that his relationship with his father's agency constituted a conflict of interest; that the documents given to him did not say anything contrary to what he had been told by any recruiter, or that any representations made to him by the agents of Farmers were false. Despite signing an agent agreement, and having been recruited, Morris' contract was ultimately terminated for conflict of interest. Morris sued Farmers, arguing that Farmers had fraudulently induced him to become a Farmers agent. The trial court ruled in Morris' favor, and Farmers appealed. The Supreme Court affirmed in part and reversed in part. The Court found Morris did not blindly rely on oral representations and ignore the terms of his contract. "The only information contrary to what Morris had been told was buried in a 200-page manual among dozens of other documents provided for training modules, and even longtime Farmers employees were not aware of the existence of the statement." Morris presented sufficient evidence of fraudulent inducement for the matter to be decided by the jury. Farmers' postjudgment motion was denied by operation of law, but the trial court did not make any findings regarding Farmers' request for a remittitur of the punitive-damages award. The Court remanded this case for the trial court to conduct a hearing on the punitive-damages award. View "Farmers Insurance Exchange v. Morris" on Justia Law

Federal Insurance Company appealed a circuit court order denying its motion to compel arbitration of the breach-of-contract claim asserted against it by Kert Reedstrom. In 2008, Reedstrom entered into a written employment agreement with Marshall-Jackson Mental Health Board, Inc., d/b/a Mountain Lakes Behavioral Healthcare ("MLBHC"), to begin serving as its executive director in Guntersville. During the course of Reedstrom's employment with MLBHC, MLBHC held an executive-liability, entity-liability, and employment-practices-liability policy issued by Federal Insurance that generally protected certain MLBHC officers and employees described as "insureds" in the policy from loss for actions committed in the course of their employment with MLBHC. It was undisputed that Reedstrom was an "insured" covered by the Federal Insurance policy. The Federal Insurance policy contained an arbitration provision. A separate endorsement to the Federal Insurance policy further highlighted the arbitration provision and explained that its effect was that any disagreement related to coverage would be resolved by arbitration and not in a court of law. In July 2010, MLBHC terminated Reedstrom's employment and, in December 2010, Reedstrom sued MLBHC alleging that his termination constituted a breach of his employment contract. MLBHC asserted various counterclaims against Reedstrom based on his alleged misconduct while serving as executive director. Thereafter, Reedstrom gave Federal Insurance notice of the claims asserted against him and requested coverage under the terms of the Federal Insurance policy. Federal Insurance ultimately denied his claim and refused to provide him with counsel to defend against MLBHC's claims. A jury returned a verdict awarding Reedstrom $150,000 on his claim against MLBHC and awarding MLBHC $60,000 on its claims against Reedstrom. Consistent with its previous denial of his request for coverage, Federal Insurance refused Reedstrom's request to satisfy the judgment entered against him. Reedstrom sued Federal Insurance, asserting one claim of breach of contract and seeking $72,000 in damages ($60,000 for the judgment entered against him and $12,000 for the attorney fees he incurred in defending those claims). The Supreme Court reversed and remanded, finding that the trial court did not articulate its rationale for denying the motion to compel arbitration. The denial was apparently based on the court's resolving at least one of the arbitrability issues raised by Reedstrom in his favor and against Federal Insurance. However, because the subject arbitration provision delegated to the arbitrators the authority to resolve such issues, the trial court erred by considering the waiver and nonsignatory issues raised by Reedstrom instead of granting the motion to compel arbitration and allowing the arbitrators to resolve those issues. View "Federal Insurance Company v. Reedstrom" on Justia Law