BRET D. KUNZ and MARTI KUNZ, Husband and Wife, Plaintiffs-Appellants,
NIELD, INC., dba INSURANCE DESIGNERS, an Idaho corporation, Defendants-Respondents.
Opinion No. 86
from the District Court of the Sixth Judicial District of the
State of Idaho, Bear Lake County. Hon. Mitchell Brown,
judgment of the district court is affirmed. No attorney fees
or costs on appeal are awarded to either party.
A. Wuthrich, Montpelier, attorney for appellant.
Echohawk Law, Pocatello, attorneys for respondent. Joseph T.
Nature of the Case
appeal arises from an agent contract (the "2009
Contract") entered into between Bret Kunz
("Bret") and Nield, Inc. ("N.I.")
authorizing Bret to sell insurance on behalf of N.I. N.I. is
owned by two brothers, Bryan Nield ("Bryan") and
Benjamin Nield. A dispute arose concerning the method and
type of compensation available to Bret under the 2009
Contract. Bret filed a complaint seeking, inter
alia, a declaratory judgment interpreting the 2009
Contract. The district court held, inter alia, that
the 2009 Contract did not provide for profit sharing as Bret
claimed. Bret and his wife, Marti, (collectively, the
Factual and Procedural Background
crux of this appeal is whether Bret is entitled to profit
sharing payments under the 2009 Contract, and if so, what
percentage of the profit sharing should be distributed to
him. Profit sharing is a unique type of commission that
insurance agents earn by meeting certain goals. If an insurance agent qualifies for profit
sharing, the payment is made the year after it is earned.
Ordinary insurance commissions, which are a percentage of the
premiums for new and renewed policies, are paid monthly.
business relationship between Bret and N.I. began in 1996
when the parties entered into a written contract (the
"1996 Contract") for Bret to sell insurance as a
subcontractor for N.I. As a subcontractor for N.I., Bret
worked under his brother Michael, who was also a
subcontractor for N.I. and had been since 1982. Pursuant to a
contract Michael signed with N.I. in 1982, he and N.I. split
his book of business 50/50. While Bret's 1996 Contract
was substantially similar to Michael's 1982 Contract, it
did not contain a provision addressing the ownership of the
book of business.
and Michael agreed that Michael would cover all of the
overhead expenses and Bret would receive the entire 80%
monthly commission to which he was entitled under the 1996
Contract. Michael did not make any money from Bret, but
received profit sharing from sales attributable to Bret due
to the fact that Michael owned 50% of the book of business.
According to Bret's testimony, he did not expect to
receive profit sharing under his 1996 Contract because that
contract did not address the ownership of the book of
4, 2008, Michael died. Thereafter, the Kunzes purchased
Michael's insurance agency and Michael's share of the
business placed with N.I. from Michael's surviving
spouse. Around October 2008, Bret and N.I. began to discuss
the need for a new contract that would include an ownership
provision similar to the ownership provision in Michael's
1982 contract. Bret testified that Bryan brought a draft of
the 2009 Contract to his office that mirrored Michael's
around the end of October, or the beginning of November 2008,
Bret signed a final version of the 2009 Contract. Bret
testified that he did not review the 2009 Contract closely
and was not aware that the language therein was different
from the language in the draft contract. Bret testified that
at the time he signed the 2009 Contract, Bryan mentioned that
"they had some pretty good profit sharing checks with
[Michael]." Bret also recalled that between November
2008 and February 2009, Bryan mentioned the profit sharing
checks again, likely in an attempt to motivate Bret to sell
pertinent provisions of the 2009 Contract are as follows:
(5) Responsibilities of Agent: The agent is a sub-contractor
and as such has responsibility for all expenses related to
his or her business. . . . Agent is to place all insurance
business through company. Company has final underwriting
authority for all business placed. . . . Agent is responsible
for all premium and return commissions on business placed.
When collections are not on time, deduction may be made from
payment of commissions due. When the collection is completed
the deducted commission will be paid.
(6) Responsibilities of Company: Company will maintain
contracts with companies for placing of insurances. Company
will do all billing and accounting functions (except
collections). Agent is personally responsible for the
collection of premiums and returned commissions on business
placed. . . . [provide Bret with a commission check based on
agreed percentages on the 15th of each month, and other
functions based upon commission split and individual
(7) Terms of Compensation: Agent will receive 80 percent of
commissions received on insurance placed by agent with
company. Company will receive 20 percent of commission placed
by agent with company.
(8) Ownership: This is subject to change, but only as agreed
between Company and Agent. The agent will own 50% of the book
of business and the company will own 50% of the book of
previously mentioned, the crux of this appeal is whether Bret
is entitled to profit sharing under the 2009 Contract. More
specifically, the issue is whether Bret is entitled to profit
sharing for business he wrote with Gem State Insurance
Company ("Gem State"), Farmers Alliance Mutual
Insurance Company ("Farmers Alliance"), Acuity
Mutual Insurance Company ("Acuity"), and Allied
Insurance Company ("Allied"). The following is a
summary of payments that N.I. made to Bret, which the Kunzes
allege were profit sharing payments. In 2009, Bret received
his first alleged profit sharing check from N.I. for 2008
business done with Gem State. Bret's work in 2009 did not
qualify for profit sharing; accordingly, he did not receive
an alleged profit sharing check in 2010. In 2011, Bret
received an alleged profit sharing check for 2010 business
done with Gem State and Acuity. Bret testified that, at the
time he received the check, he believed the amount he
received was the appropriate percentage of the profit share.
However, he did not have access to data to enable him to
verify that he received the appropriate amount of the profit
share. He did, however, have access to Gem State data because
he had exclusive control over the Gem State book of business.
In 2012, Bret received an alleged profit sharing check for
2011 work done with Gem State and Farmers Alliance. Bret
testified that the profit sharing amount he received for Gem
State business reflected a 50/50 split, but that the profit
sharing for Farmers Alliance was less than 10% of the 80% he
believed he was owed.
testified that N.I. does not pay profit sharing or contingent
commissions and characterized the payments made to Bret as
bonuses. Notwithstanding the foregoing, Bryan conceded that
N.I. paid Bret 50% of the profit sharing that N.I. received
from Gem State. The district court concluded that the Gem
State profit sharing agreement was an "individual
agreement, " which Bryan described as follows:
Gem State is a separate issue by itself. . . . the whole book
of business is totally separate from ours. Therefore anything
that he would receive as profit sharing is paid directly to
Bret from Gem State. . . . So based on the Gem State paying
him, since we own 50 percent of his book of business,
therefore we receive 50 percent of the profit sharing.
January 16, 2013, Bret sent Bryan a letter wherein he argued
that the profit sharing split should be the same as the
ordinary commission split, 80% to him, and 20% to N.I. In the
letter, Bret conceded that the profit sharing split "was
never addressed in the contract with [Michael] or me."
On January 22, 2013, Bryan responded to Bret's letter and
agreed that there was nothing in the 2009 Contract addressing
the issue. Bryan explained that "[p]rofit sharing is a
bonus based on loss ratios and book of business as you know.
It is not based on commissions. The reason we have split
profit sharing 50/50 is based on ownership, not commissions,
and there are no guarantees on profit sharing."
Nonetheless, Bryan included a check for 80% of the profit
sharing for Gem State, which the district court concluded was
a "one-time acquiescence and showing of good
faith." Bryan testified that he gave Bret the 80%
because it was "not worth the fight for a couple hundred
April 2013, Bret received a check from N.I. for $424 with the
notation "Profit Sharing 2012." On April 17, 2013,
Bret emailed Bryan asking for the "company [the profit
sharing check] came from" and the split percentage.
Additionally, Bret asked for information regarding the
"profit sharing agreements with all of the
companies." Bret testified that Bryan never responded to
the email, but that he later learned the check was for
business written with Acuity.
the initiation of this action, Bret learned the amount of
profit sharing that N.I. received from Acuity between 2009
and 2013 and from Farmers Alliance between 2010 and 2014.
Bret argued that he did not receive the profit sharing to
which he was entitled, considering the amounts received by
N.I. Bret testified that he believes profit sharing should be
calculated as follows:
I would take the total written premium. So, for example,
let's say the total written premium with Acuity was
[$]200, 000. If I had wrote [$]100, 000 of that, then I would
- - and let's say the total contingent payment was [$]10,
000, and my book of business would have been responsible for
[$]5, 000 of that, then I would take 80 percent of that [$]5,
Conversely, Bryan offered the following testimony to explain
N.I.'s bonus structure:
[W]hat we do is get together and take any profits that
we've earned. And if we decide to give out bonuses then
we decide what - - we take and pay money to the company, see
what is left, and determine what amount to pay for a bonus to
whoever we feel it is necessary.
Bryan continued, explaining that N.I would not pay bonuses
unless it received profit sharing ...