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Russell v. Allianz Life Insurance Company of North America

United States District Court, N.D. Mississippi, Oxford Division

December 31, 2014



DEBRA M. BROWN, District Judge.

This is a breach of contract action arising from the termination of an agency relationship between Plaintiff Dugan Calvin Russell and Defendants Allianz Life Insurance Company of North America, LTCAmerica Insurance Company, and Life Insurance USA Company. Before the Court is the motion for summary judgment of the defendants (collectively, "Allianz"), made pursuant to Rule 56 of the Federal Rules of Civil Procedure. Doc. #111. Having considered the motion and responses thereto, case record, and applicable law, the Court finds that, for the reasons below, Allianz's motion for summary judgment should be granted in part and denied in part.


Standard on Summary Judgment

"Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law." Norwegian Bulk Transp. A/S v. Int'l Marine Terminals P'ship, 520 F.3d 409, 411 (5th Cir. 2008) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 22-23 (1986)). To award summary judgment, "[a] court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Norwegian Bulk Transp. A/S, 520 F.3d at 411-12 (internal quotation marks and citations omitted). To this end, "[t]he moving party bears the burden of establishing that there are no genuine issues of material fact." Id. at 412.

"If, as here, the nonmoving party bears the burden of proof at trial, the moving party may demonstrate that it is entitled to summary judgment by submitting affidavits or other similar evidence negating the nonmoving party's claim, or by pointing out to the district court the absence of evidence necessary to support the nonmoving party's case." Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998) (citation omitted). If the moving party makes the necessary demonstration, "the burden shifts to the nonmoving party to show that summary judgment is inappropriate." Id. In making this showing, "the nonmoving party must go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Cotroneo v. Shaw Env't & Infrastructure, Inc., 639 F.3d 186, 191-92 (5th Cir. 2011) (internal punctuation omitted). When considering a motion for summary judgment, the Court views all evidence in the light most favorable to, and "resolve[s] factual controversies in favor of the nonmoving party." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).


Factual Background

A. Agency Agreement

On March 27, 2000, Russell entered into an "Agent Agreement" ("Agreement") with Allianz. Doc. #36 at ¶ 6. The Agreement provided that Russell would act as Allianz's "agent/broker... to represent [it] in connection with [its] long term care insurance and health products...." Id. at Ex. A. To this end, the Agreement explained that Russell would be "deemed to have a separate contract enforceable by and against each of the Companies." Id. The Agreement was signed by Russell and representatives of Life Insurance USA Company and Allianz Life Insurance Company of North America. Id.

Of relevance to this action, the Agreement contained the following provisions:

FREEDOM OF CHOICE. You are free to contract with other insurance companies.
* * *
TRUST. Both parties understand that each occupies a position of trust and confidence in dealings with each other, and each party agrees to act in accordance with the highest ethical and fiduciary standards when dealing with the other.
* * *
TERMINATION WITHOUT CAUSE. Termination without cause will not impair any contractual right to vested commissions. This Agreement will be terminated without cause... by either party giving written notice, at least thirty (30) days prior to the date of termination, mailed or delivered to the last known address.
* * *
TERMINATION FOR CAUSE. This Agreement will be terminated for cause, if you... misrepresent or omit any material information on an application for, or reinstatement of, our policy [or] commit or attempt to commit fraud against us [or] repeatedly fail to comply with material terms of this Agreement, or our stated rules and regulations [or] falsify or omit material information provided to us.... A termination for cause will be effective upon your conviction of a felony, or revocation of your license, or upon the Company sending you a written notice of termination which specifies the reason for termination for cause.
* * *
GENERAL PROVISIONS... This Agreement is governed by the laws of the State of Minnesota.

Doc. #36 at Ex. A.

Allianz's rules and regulations, in turn, provided that "Agents may not [s]ign applications or other forms on behalf of another person. This includes situations where the other person has granted verbal or written permission to do so." Doc. #111-3 at 10. On September 15, 2008, Russell signed paperwork attesting that he read and understood the rules and regulations. Doc. #111-2 at 32:6-15.

B. Clients

Pursuant to the Agreement, Russell sold annuities and other Allianz products to his clients until his termination. Doc. #123 at 2. In total, Allianz products constituted eighty percent of his business. Doc. #122-1 at 63:12-16. Of relevance here, Russell sold Allianz products pursuant to the Agreement to three individuals: Donald Bentley, Audra Gaines, and Kay Steele. Doc. #123 at 4.

1. Donald Bentley

In April 2010, Donald Bentley contacted Russell in order to purchase two annuities for Bentley and his wife in the amounts of $6, 000 and $5, 000, respectively. Doc. #122-4 at ¶ 6. Instead of ordering two separate annuities, Russell placed the money in one annuity with Allianz for $11, 000. Id. at ¶ 11. When the annuity was delivered, Russell signed the policy delivery receipt on behalf of Bentley. Doc. #123 at 4-5. On June 25, 2010, after reviewing the policy, Bentley contacted Allianz to change the single annuity to two separate annuities, as he originally requested. Doc. #122-4 at ¶ 13; Doc. #122-10.

On June 29, 2010, Gary Romo, Allianz's chief fraud investigator, sent Bentley a copy of the delivery receipt and an affidavit of forgery. Doc. #122-8 at 74:20-21; Doc. #122-10. The affidavit, drafted with Bentley as affiant, stated that "what purports to be my signature [on the receipt] is a forgery. I did not sign [the receipt], nor did I authorize any person to sign [the receipt] on my behalf or otherwise approve of or consent to the signature on [the receipt]." Doc. #122-9. Bentley neither signed the affidavit nor returned it to Romo. Doc. #122-7 at 40:18-21.

On August 19, 2010, Romo sent Russell a letter regarding Bentley's annuities. Doc. #111-10. In the letter, Romo stated that "[Allianz] rel[ies] on the agent to obtain authentic signatures and dates on all policy documents. It is not acceptable for you, or anyone in your office, to sign a document for the policyowner, even if the policyowner authorizes you to do so." Id. The same day, Romo wrote in an internal document that the Bentley matter was "not fraud, consumer authorized him to sign the delivery receipt." Doc. #122-10.

2. Audra Gaines

In August 2010, Russell sold an Allianz annuity to a new client, Audra Gaines. Gaines signed the original paperwork on August 16, 2010. Doc. #111-12 at ¶ 2. Russell subsequently realized that, while the money to be used to purchase the annuity was located with an insurance company, the application erroneously stated that the money was located in a retirement fund. Doc. #122-1 at 92:16-20. Without consulting Gaines, Russell used white-out to remove the inaccurate information and then wrote in the ...

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