American Family Mutual Insurance Company; American Family Life Insurance Company; American Standard Insurance Company, Wisconsin corporations, Plaintiffs - Appellees
Steven G. Graham, a Minnesota resident; Steven Graham Agency, Inc., a Minnesota corporation, Defendants - Appellants
Submitted February 10, 2015.
Appeal from United States District Court for the District of Minnesota - Minneapolis.
For American Family Mutual Insurance Company, American Family Life Insurance Company, American Standard Insurance Company, Wisconsin corporations, Plaintiffs - Appellees: Martin S. Chester, Justin P. Krypel, Faegre & Baker, Minneapolis, MN.
For Steven G. Graham, a Minnesota resident, Steven Graham Agency, Inc., a Minnesota corporation, Defendants - Appellants: David Fulton Herr, Attorney, Geoffrey P. Jarpe, Jesse Mondry, Maslon Llp, Minneapolis, MN.
Before GRUENDER, SHEPHERD, and KELLY, Circuit Judges.
KELLY, Circuit Judge.
Steven Graham and his insurance agency, Steven Graham Agency, Inc. (collectively Graham), appeal the denial of Graham's post-trial motions and the district court's enforcement of a stipulated-d amages clause in Graham's Agent Agreement with American Family Mutual Insurance Company (American Family). We affirm the judgment.
Graham sold insurance for American Family from 1988 until 2011. On January 1, 1996, Graham and American Family entered into an American Family Corporate Agent Agreement (Agent Agreement). In 2010, a customer complaint led to an investigation of Graham. American Family concluded that Graham had increased coverage and added endorsements on customers' insurance without customer permission, thereby increasing premiums; improperly applied multi-vehicle discounts to accounts with only one car; and changed vehicle-rating symbols used to assign risk and determine appropriate premiums for automobile insurance. On January 7, 2011, Austin Caves, Graham's state sales director, met with Graham and terminated the Agent Agreement between Graham and American Family.
Several weeks later, Graham formed an independent insurance agency. On February 24, 2011, Graham sent a letter to approximately 1,500 of his former American Family customers telling them he no longer represented American Family Insurance Company and had signed an Agent Agreement not to solicit or induce former customers for one year. According to the letter, however, this Agent Agreement did not prohibit him from offering policies for insurance needs not covered by an existing American Family policy. In the letter, Graham stated he now represented over 50 insurance companies and could offer clients " more choices, expanded coverage, and excellent rates" that might be " better suited for your needs." The letter concluded by inviting customers to view his new insurance agency's website. If a former customer contacted Graham in response, the customer was asked to sign a " non-inducement form," which stated that Graham had not " solicit[ed] or induc[ed]" them " to replace, lapse or cancel any American Family Insurance policies" during the one-year, non-compete period.
In 2012, American Family sued Graham in federal court. American Family alleged that Graham violated the Agent Agreement when he sent the February 2011 letter to his former customers because the Agent Agreement expressly prohibited Graham from inducing or attempting to induce any former American Family customer to cancel an American Family policy for a year after leaving American Family. As damages, American Family sought all of Graham's extended earnings. At the time of his termination, Graham's extended earnings amounted to approximately $938,000. American Family had paid Graham $523,153.70 prior to filing suit.
Graham counterclaimed for wrongful termination. He alleged the Agent Agreement required American Family to give him " notice in writing of any undesirable performance which could cause termination of [the] agreement if not corrected" and to wait six months after such notice before terminating the agreement. American Family had given no notice to Graham before the termination. According to the Agent Agreement, however, if Graham engaged in " dishonest, disloyal, or unlawful conduct," no notice was required. American Family asserted that Graham's conduct qualified as " dishonest," obviating the need for notice under the Agent Agreement.
The case was tried before a jury in October 2013. The jury found in favor of American Family on all claims. Graham moved for judgment as a matter of law (JMOL) and a new trial. The court denied the motions and entered judgment in favor of American Family. In addition, the court ordered Graham to repay the $523,153.70 in extended ...