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AIG Agency, Inc. v. Missouri General Insurance Agency, Inc.

Court of Appeals of Missouri, Eastern District, Third Division

November 3, 2015


Appeal from the Circuit Court of St. Louis County. 12SL-CC01281. Honorable Michael T. Jamison.

FOR APPELLANT: Christopher M. Garcia, Terese Adele Drew, St. Louis, MO.

FOR RESPONDENT: Russell F. Watters, Timothy J. Wolf, Patrick A. Bousquet, St. Louis, MO.

ROBERT M. CLAYTON III, Presiding Judge. Lawrence E. Mooney, J. and James M. Dowd, J., concur.



AIG Agency, Inc., d/b/a Associated Insurance Group (" AIG" ) appeals the trial court's grant of summary judgment in favor of Missouri General Insurance Agency, Inc. (" Missouri General" ), Jim Baxendale, and Mitch O'Brien (collectively " Respondents" ) on AIG's claims arising from the transfer of insurance agent Martin Tessler's relationship with Missouri General to AIG. We affirm in part and reverse and remand in part.


Tessler began working with Missouri General in 1988. Missouri General provided office space, equipment, bookkeeping, marketing services, and mail service in exchange for Tessler's agreement to place all of his insurance sales (his " book of business" ) through Missouri General, sharing the commissions Tessler earned on his book of business. The contract governing the arrangement (the " Producer Agreement" ) specified, " [a]ll insurance business, accounts, records, and files produced by [Tessler] are the sole and exclusive property of [Tessler] and [Missouri General] shall not, by virtue of this Agreement, acquire any right, title or interest in such business."

The Producer Agreement specified its term would continue indefinitely until terminated by either party. However, it also specified that " certain obligations contained in this [Producer] Agreement shall by their very terms survive the termination of this [Producer] Agreement." It did not specify which obligations would endure. Finally, the Producer Agreement contained a non-assignment clause, which stated " [t]his agreement shall not be assignable by [Missouri General] or [Tessler]."

On December 31, 2010, Tessler left Missouri General to become an agent with AIG. Tessler entered into an Independent Contractor and Asset Purchase Agreement with AIG on that day and terminated the Producer Agreement with Missouri General. Tessler and his office assistant moved to AIG's offices and began servicing clients there starting January 1, 2011.

Although Tessler serviced all but one[1] of his accounts from AIG's offices, Missouri General was still the agency of record listed on each client's account. It is undisputed that this arrangement is typical in the insurance industry because for an insurer to change the agency of record in the middle of the policy period, it would have to cancel the policy and reissue a new policy, leading to higher costs and duplicative paperwork. Therefore, typically agencies instead send transfer letters to the insurers when an agent moves his book of business, leaving the original agency as the agency of record until the policy renews, at which point it is rewritten with the new agency as the agency of record. Because Missouri General was still the agency of record, Tessler would occasionally forward paperwork he prepared for policy changes to Missouri General, which then forwarded that paperwork to the insurer. Missouri General billed Tessler for its mail costs associated with this paperwork. It is in dispute in such an arrangement to whom commissions are owed.

The one account Tessler did not continue servicing after he left Missouri General involved a real estate business, Woodson Development (the " Woodson account" ). Baxendale, president of Missouri General, was also an owner of the Woodson account. Thomas Lane, president of Woodson Development, dealt primarily with Baxendale or his assistant regarding the account. The parties dispute whether Baxendale told Lane the Woodson account could not move to AIG due to a non-compete provision for Tessler in the Producer Agreement.

When Tessler terminated the Producer Agreement with Missouri General and the Woodson account was not transferred to AIG, Tessler and Gregory Wherry, AIG's president, communicated with Lane to discuss moving the account to AIG. Lane testified at his deposition that he did not recall anyone ever telling him Tessler had a non-compete provision in his contract with Missouri General, or that Lane was not free to move his business to AIG if he so chose. Wherry testified to the contrary -- that Lane told Wherry over the phone that Baxendale told Lane the Woodson account could not be moved to AIG due to Tessler's non-compete provision. Lane also testified he did not consider moving the Woodson account to AIG because he had not done any due diligence on AIG at the time of AIG's attempt to win the account, and that he never received a specific proposal from AIG with respect to the Woodson account.

After December 31, 2010, although Missouri General was not actively servicing Tessler's accounts (except the Woodson account), it retained all the commissions it received from insurance companies on Tessler's accounts for which it was the agency of record. As a result, AIG filed this instant lawsuit against Respondents. Count I claimed breach of contract for Missouri General retaining the commissions it received on Tessler's accounts. Though Missouri General and AIG did not have a contractual relationship, AIG alleged it acquired Tessler's contract rights under the Producer Agreement. Count II claimed tortious interference based on Missouri General's alleged representations to Woodson Development that it could not move the Woodson account to AIG ...

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