Farmers Insurance Wins Summary Judgment on Ex-Employee’s Breach of Contract
As we’ve covered before on Suits by Suits, summary judgment can be a powerful weapon for a party to a civil lawsuit. By granting summary judgment, a court can resolve a claim before trial, meaning that it’s never heard by a jury. The standard for granting summary judgment, found in Rule 56 of the Federal Rules of Civil Procedure, is well-known to civil litigators: it is appropriate when there are no genuine issues of material fact and the case can be decided as a matter of law.
In a recent case from the District of Minnesota, Farmers Ins. Exchange v. West, the Farmers Insurance Group used summary judgment effectively on both offense and defense. First, it won a ruling that its former district manager, Theodore West, breached his appointment agreement and that Farmers suffered damages as a result. Then, on defense, it knocked out West’s counterclaims for breach of contract and discrimination.
So what happened in West’s case, and why did Farmers prevail?
In late 2010, West resigned from Farmers after a romantic entanglement with another Farmers agent, and Farmers terminated his appointment agreement. Under the agreement, West was due to receive “Contract Value” payments in installments for a year after his termination. However, the agreement also stated that West was prohibited from accepting the business of Farmers policyholders for that same year. A few months after he left Farmers, West wrote a policy on behalf of a different insurer for an apartment management company, which had been a Farmers client before it switched. Farmers stopped paying and sued West for breach of contract, and West counterclaimed for his remaining installment payments.
There was no dispute as to whether West had written the new policy, because he admitted to it in testimony that he gave during discovery in the case. Rule 56's summary judgment procedure allowed the court to use that undisputed fact to enter judgment on Farmers’s claim that West breached the appointment agreement, and to enter judgment against West on his claim to the remaining payments under the agreement.