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Trumble v. Farm Bureau Mutual Insurance Company of Idaho

Supreme Court of Idaho

December 17, 2019

BRIAN D. TRUMBLE, Plaintiff-Counterdefendant-Appellant-Cross Respondent,
v.
FARM BUREAU MUTUAL INSURANCE COMPANY OF IDAHO, an Idaho corporation; WESTERN COMMUNITY INSURANCE CO., an Idaho corporation; FARM INSURANCE BROKERAGE CO., INC., an Idaho corporation, Defendants-Counterclaimants-Respondents-Cross Appellants.

          Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Nancy A. Baskin, District Judge.

         The district court's grant of summary judgment for Farm Bureau is affirmed. The district court's grant of summary judgment for Trumble on Farm Bureau's counterclaims is also affirmed.

          Points Law, PLLC, Boise, and Eberle, Berlin, Kading, Turnbow & McKlveen, Chtd, Boise, attorneys for Appellant. Michelle R. Points argued.

          Racine, Olson, Nye & Budge, Pocatello, attorneys for Respondent. Lane V. Erickson argued.

          BEVAN, JUSTICE

         I. Nature of the Case

         This case is about whether a career agent for Farm Bureau Mutual Insurance Company can collect service bonus commissions that were credited to him during his career, but which became forfeitable after the agent's termination if the agent competed with Farm Bureau within one year of his termination. The district court held that the agent forfeited his commissions by competing with Farm Bureau in violation of the one-year non-competition requirement. We agree, affirming the district court's judgment dismissing the agent's claims.

         In addition, this case is about Farm Bureau's counterclaims against the agent, alleging the agent misappropriated trade secrets and intentionally interfered with Farm Bureau's prospective economic advantage after his termination. The district court held that the agent was blameless for his actions after termination and dismissed Farm Bureau's counterclaims. We likewise agree with this determination, and affirm the district court's dismissal of Farm Bureau's counterclaims.

         II. Factual and Procedural Background

         In December 1995, Brian D. Trumble entered into a Career Agent's Contract ("Agent Contract") with Farm Bureau. Under the Agent Contract, Trumble was an independent contractor who procured insurance from interested buyers on Farm Bureau's behalf. The Agent Contract included a non-competition clause which stated:

Upon termination of this contract, Agent shall not compete in any way with [Farm Bureau] for a period of ninety days from the date of termination within a radius of fifty miles from Agent's residence at the time of termination. Competition includes but is not limited to the following:
a. Employment as an insurance agent, independent contractor or employee of any other insurance company or agency selling or brokering the same or similar type of insurance as [Farm Bureau];
b. Soliciting casualty, property, disability, life or health insurance;
c. Owning or operating any brokerage or independent insurance agency; or
d. Providing any information to [Farm Bureau's] competitors about [Farm Bureau's] rates, insurance policies, insureds, or policy forms.

         At about the same time Trumble entered into the Agent Contract with Farm Bureau, Farm Bureau provided Trumble with a separate document titled "Career Agent's Service Bonus Commission Memorandum of Understanding" with an effective date of January 1, 1994 ("1994 Memorandum"). The 1994 Memorandum explained:

As of January 1, 1994, each qualifying, full-time agent under contract [with Farm Bureau] will be eligible to receive a service bonus commission after termination if the agent meets the conditions set forth each year and does not compete with [Farm Bureau] for a period of one year after he or she has terminated.

Neither party signed the 1994 Memorandum.

         In 2011, Farm Bureau revised the 1994 Memorandum and issued another version of the "Career Agent's Service Bonus Commission Memorandum of Understanding" ("2011 Memorandum").[1] The language quoted above remained substantially unchanged[2] but multiple sections were added to the 2011 Memorandum that were absent from the 1994 Memorandum. Those sections read:

After completion of each qualifying service year, the service bonus commission credit will be placed on deposit. . . . The commission credit made on behalf of each agent and interest will not become payable to agent, however, until the agent complies with all other requirements of the plan, terminates, and fulfills the no competition requirements. Any commission credit which does not become payable to agent will revert back to [Farm Bureau].
The no competition restriction referred to above means that the agent shall not own, operate or be employed as an agent, independent contractor or employee of any other insurance company . . . for a period of one year from the date of termination within a radius of fifty (50) miles of the agent's residence at the time of termination. A violation of the no competition restriction will result in forfeiture of the service bonus commission and interest credited.
The service bonus commission will be paid one year after the agent terminates their contract with [Farm Bureau], provided the no competition restriction is observed. . . . No service bonus will be paid to any agent committing fraud, dishonesty or other material agent misconduct.

         From December 1995 until Trumble's termination in May 2016, Trumble was a qualifying agent who met the requirements to earn the service bonus commission every year. On January 26, 2016, Farm Bureau sent Trumble a letter showing that he had qualified for service bonus commissions totaling $251, 431.96, if he met "all requirements of the program . . . before and after termination of [his] contract."

         On May 4, 2016, Farm Bureau terminated Trumble's Agent Contract for alleged dishonesty. The next day, Trumble's counsel sent a letter to Farm Bureau requesting that it restore Trumble as an agent and further requesting that if Farm Bureau did not rescind its termination, that Farm Bureau immediately pay Trumble the bonus commission in full. Farm Bureau's counsel responded on May 9, 2016, explaining that "[Trumble's] [A]gent [C]ontract was ending in part, due to his dishonesty in listing a property in which he held a partial ownership interest, in which he did not reside, as his primary residence, when he knew full well that it was not." Farm Bureau expressed the view that based on the dishonesty provision in the 2011 Memorandum, Farm Bureau had no contractual obligation to pay any service bonus commissions to Trumble. The letter also noted that "even if Mr. Trumble were entitled to his service bonus, the [2011] Memorandum contains a non-competition clause restricting payment until after compliance for a 12-month period."

         Two weeks later Trumble filed his complaint, seeking declaratory relief and requesting the district court: (1) find the 90-day covenant not to compete in the Agent Contract unenforceable; and (2) order Farm Bureau to immediately pay Trumble the service bonus commission. Trumble then filed a motion for summary judgment seeking a ruling that (1) the non-competition agreement in the Agent Contract was unenforceable and (2) the noncompetition and forfeiture provisions in the 2011 Memorandum were unenforceable.

         The district court denied summary judgment, holding that the issue over the noncompetition clause in the Agent Contract was moot because more than ninety days had passed. The district court also relied particularly on Anderson v. Farm Bureau Mut. Ins. Co., 112 Idaho 461, 470, 732 P.2d 699, 708 (Ct. App. 1987) (abrogated on other grounds by Metcalf v. Intermountain Gas Co., 116 Idaho 622, 778 P.2d 744 (1989), in ruling that the one-year noncompetition and forfeiture clauses in the 2011 Memorandum were enforceable as a matter of law. The district court explained:

[Trumble] . . . asserts that the non-competition restriction in the service bonus commission memorandum is only applicable if the agent terminates his or her contract. . . . In interpreting this provision, [Trumble] focuses only on the phrase "after they have terminated" rather than considering the sentence as a whole. The plain language of the provision indicates the general terms of eligibility "to receive a service bonus commission after termination." In terms of such eligibility, there is no indication that agents who elect to terminate their contracts are treated any differently from agents who have their contracts terminated by [Farm Bureau]. Under [Trumble's] interpretation, an agent whose contract is terminated by [Farm Bureau] would not be eligible to receive any service bonus commission, because the memorandum contains no separate statement defining eligibility under that circumstance. For these reasons, the court cannot conclude that the non-competition restriction is inapplicable to [Trumble] simply because he did not elect to terminate his contract with [Farm Bureau].

(Emphasis in original).

         About six months later, Trumble moved for reconsideration. Significantly, for purposes of this appeal, Trumble asserted generally that the forfeiture clause in the 2011 Memorandum was overbroad and that the forfeiture provision should not be enforced because it was unreasonable. Trumble sought to distinguish Anderson, arguing that it was inapplicable to his case because he had earned the service bonus commissions, unlike the agent in Anderson. Trumble did not argue that the non-competition clause was ambiguous, or that it should be construed against Farm Bureau.

         On reconsideration, the district court held that the 2011 Memorandum is not ambiguous. The court also upheld the forfeiture provision in the 2011 Memorandum, noting that "[a]lthough the law does not favor forfeitures, courts will generally uphold contracts that expressly provide for forfeitures." (quoting Hull v. Giesler, 156 Idaho 765, 779 (2014)). The court also noted that forfeitures must strictly follow the contract terms and that "[t]here is no showing . . . that [Farm Bureau] did not follow the terms of the 2011 Memorandum in denying [Trumble's] request for payment of his service bonus prior to the satisfaction of all the terms of the 2011 Memorandum."

         During the litigation, Trumble had generated a list ("Subject List") containing the names and addresses of 578 individuals, some of whom were customers of Farm Bureau. Trumble compiled the list from personal contacts in his phone, old commission statements, old calendars and his own personal knowledge and experience. After the ninety-day non-compete in the Agent Contract had elapsed, Trumble began working for one of Farm Bureau's competitors, Post Insurance, and began soliciting new customers from the Subject List. Farm Bureau learned of the solicitation after a customer notified Farm Bureau about receipt of a solicitation letter. Additionally, some customers requested to have their policies with Farm Bureau cancelled as a result of a solicitation letter.

         Based on this information, Farm Bureau filed its answer and asserted two counterclaims: (1) Trumble violated the Idaho Trade Secrets Act ("ITSA"); and (2) Trumble intentionally interfered with Farm Bureau's prospective economic advantage. Soon after, Trumble moved for summary judgment on both of Farm Bureau's counterclaims, asserting that Trumble did not violate the ITSA and that Trumble did not interfere with Farm Bureau's prospective economic advantage. The district court ultimately agreed with Trumble, granting summary judgment to him on the counterclaims, ruling that Trumble did not misappropriate any trade secrets or intentionally interfere with Farm Bureau's prospective economic advantage.

         During this same period, Farm Bureau also brought a motion for summary judgment asserting that Trumble's admitted competition with Farm Bureau within one year of his termination acted as a forfeiture of the service bonus commission under the 2011 Memorandum. In response, Trumble argued that summary judgment should be granted to him "on the grounds that Farm Bureau's actions and representations made Trumble's compliance with the terms of the [2011 Memorandum] futile and/or were an anticipatory breach. . . ." Trumble did not argue that the terms of the Memorandum were ambiguous or that it should be construed against Farm Bureau. Indeed, Trumble agreed with what a plain reading of the 2011 Memorandum required of him in his memorandum opposing summary judgment:

Farm Bureau is correct that the Career Agent's Service Bonus Commission Memorandum of Understanding at issue in this case [the 2011 Memorandum] conditioned payment of the service bonus commission upon Trumble not competing with Defendants for a period of one year. It is also true that Trumble competed with Farm Bureau prior to the expiration of one year. However, Farm Bureau ignores the key undisputed fact explaining why Trumble did not honor the non-compete condition contained in the [2011 Memorandum]: namely, that Farm Bureau made absolutely clear that it would not pay the service bonus commissions even if Trumble complied with the non-compete provision. Trumble also argued that "Farm Bureau should be estopped from asserting that Trumble

         was required to comply with the one year term of the non-compete based upon Farm Bureau's past inconsistent statements." He based this argument on doctrines of quasi estoppel, anticipatory repudiation and/or futility, which he contended nullified the non-competition condition in the 2011 Memorandum when Farm Bureau declared it would not pay the service bonus commission based on Trumble's alleged dishonesty.

         The district court granted summary judgment for Farm Bureau, holding: (1) the 2011 Memorandum was not ambiguous about what would occur if an agent is terminated; and (2) the non-competition language amounted to a forfeiture provision, which was enforceable and was not unconscionable. Thus, the court held that Farm Bureau did not breach any contract it had with Trumble and that Trumble had no right to the service bonus commission.

         The district court did not award attorneys' fees or costs to either party. Both parties appealed.

         III. Issues on Appeal

1. Whether the district court erroneously granted summary judgment for Farm Bureau, finding Trumble had no right to the service bonus commission because he did not satisfy the eligibility requirements.
2. Whether the district court erroneously granted summary judgment for Trumble, finding no misappropriation of any trade secret or intentional interference with a prospective economic advantage.
3. Whether either party is entitled to attorneys' fees and costs on appeal.

         IV. Standard of Review

         This Court employs the same standard as the district court when reviewing rulings on summary judgment motions. La Bella Vita, LLC v. Shuler, 158 Idaho 799, 804-05, 353 P.3d 420, 425-26 (2015). Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." I.R.C.P. 56(a). A moving party must support its assertion by citing particular materials in the record or by showing the "materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact[s]." See I.R.C.P. 56(c)(1)(B). Summary judgment is improper "if reasonable persons could reach differing conclusions or draw conflicting inferences from the evidence presented." La Bella Vita, 158 Idaho at 805, 353 P.3d at 426 (quoting McPheters v. Maile, 138 Idaho 391, 394, 64 P.3d 317, 320 (2003)). Even so, a "mere scintilla of evidence or ...


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