United States District Court, D. Nebraska
MEMORANDUM AND ORDER
Richard G. Kopf Senior United States District Judge
Plaintiff, Lincoln Benefit, has filed a motion “requesting a ruling on whether Lincoln Benefit’s affirmative defenses are precluded by the law of the case doctrine” (Filing No. 194 at CM/ECF p. 2). Nine affirmative defenses are stated in the answer to Defendant’s counterclaim, but Lincoln Benefit’s motion concludes with a limited request that it be permitted “to proceed to trial on its Second and Fourth Affirmative Defenses” and “[t]o the extent that the Court permits [Defendant] Wilson to pursue attorneys’ fees, ” that it be permitted “to pursue its Sixth and Seventh Affirmative Defenses” (Filing No. 194 at CM/ECF p. 8). Wilson, in responding to the motion, has withdrawn the request for attorneys’ fees, so the only disputed issues are whether the Second and Fourth Affirmative Defenses are precluded. However, because Lincoln Benefit’s motion discusses all nine affirmative defenses, the court will do the same in order to avoid any confusion or misunderstanding.
Technically, the law-of-the-case doctrine is inapplicable because the court’s previous orders (ruling on motions for summary judgment and motions in limine) are not final orders. See Murphy v. FedEx Nat. LTL, Inc., 618 F.3d 893, 905-06 (8th Cir.2010) (the law-of-the-case doctrine only applies to final orders, not interlocutory orders such as the denial of a motion for summary judgment); First Union Nat. Bank v. Pictet Overseas Trust Corp., Ltd., 477 F.3d 616, 620 (8th Cir.2007) (interlocutory orders “can always be reconsidered and modified by a district court prior to entry of a final judgment”) (quoting United States v. Hively, 437 F.3d 752, 766 (8th Cir. 2006)). But the court understands Lincoln Benefit’s motion to be asking whether the affirmative defenses are precluded by the collateral estoppel doctrine, which has served as a basis for the court’s previous rulings. With that understanding, the court will now review each of the nine affirmative defenses.
1. Failure to State a Claim
Lincoln Benefit first asserts that Wilson “failed to state a claim against Lincoln Benefit upon which relief may properly be granted” (Filing No. 19 at CM/ECF p. 4).In its “motion for ruling on affirmative defenses, ” however, “Lincoln Benefit concedes that Wilson has alleged sufficient facts to set forth a claim for breach of contract” (Filing No. 194 at CM/ECF p. 3). The court therefore finds that the First Affirmative Defense is withdrawn.
2. Waiver and Estoppel
Second, Lincoln Benefit asserts that “Wilson’s Counterclaim is barred by the doctrine of waiver and/or estoppel” (Filing No. 19 at CM/ECF p. 4). “Lincoln Benefit maintains that it is permitted to pursue its Second Affirmative Defense based on an explicit contractual provision stating that Wilson forfeits the right to commission under certain circumstances” (Filing No. 194 at CM/ECF p. 3). The provision upon which Lincoln Benefit relies is contained in the 2004 Agent’s Agreement. It reads as follows:
Termination - Either party may terminate this Agreement at any time by giving written notice. Notice may be mailed or delivered to the last known address of the other party. If you reside in, or are licensed in Arkansas, Florida, Illinois, Missouri and/or Oregon, you hereby agree to waive any advance notice of termination and agree that termination will be effective upon delivery of written notice. Upon termination, you shall in no manner thereafter act for LBL and shall promptly account for and remit to LBL any monies then held for it. On demand, you shall turn over to LBL all undelivered policies, rate books, other records, materials, and properties pertaining to your agency business. Your right to any commission or other thing of value shall cease if you: commit any act that injures the business or reputation of LBL; fail to account for and remit promptly any monies collected by you for LBL; or withhold any policies, money or other property belonging or returnable to LBL.
(Filing No. 103-4 at CM/ECF p. 11) (emphasis added).
In its complaint, Lincoln Benefit alleges that “Wilson was not entitled to commissions following the judgment in the underlying litigation because his wrongful conduct formed the basis for the plaintiff’s claims” and therefore “Wilson was in material breach of his Agent’s Agreement” (Filing No. 1-3 at CM/ECF p. 14, ¶ 76). In a memorandum and order entered on December 16, 2015, the court determined that the collateral estoppel doctrine applies to this allegation and ruled that “Plaintiff is precluded from asserting as a defense that Defendant breached the agent’s contract in connection with the sale of the term life insurance policies” (Filing No. 154 at CM/ECF p. 30).
Lincoln Benefit seeks to avoid application of the collateral estoppel here by arguing that the “waiver defense is not premised on a claim that Wilson breached his contract. To the contrary, the contract contemplates the possibility that Wilson might engage in conduct that harms Lincoln Benefit’s business or reputation, and the contract sets forth the consequences of such behavior” (Filing No. 194 at CM/ECF pp. 3-4). Lincoln Benefit claims “Wilson should have known that Lincoln Benefit regarded the policies as non-convertible if they were purchased after the insured’s 70th birthday, ” and will seek to establish through expert testimony that “Wilson should not have advised his client that the policies were convertible because such a statement was inaccurate” (Filing No. 194 at CM/ECF p. 4). The expert will testify that Wilson was negligent in “fail[ing] to adhere to the standards expected of a life insurance producer as well as the obligations in his producer’s contract with Lincoln Benefit, ” in “fail[ing] to educate himself regarding the policies’ features, ” and in “fail[ing] to review of [sic] the policies prior to delivery” (Filing No. 194 at CM/ECF pp. 4-5). Lincoln Benefit contends “[t]he New York jury was never asked to determine whether Wilson harmed Lincoln Benefit’s business or reputation, and the jury’s findings cannot be construed as a finding in favor of Wilson on this factual question” (Filing No. 194 at CM/ECF p. 5).
Lincoln Benefit’s assertion that Wilson “waived” his right to receive a commission because of his alleged negligence in connection with the sale of the term life insurance policies is unsupportable as a matter of law. “Waiver is a voluntary and intentional relinquishment or abandonment of a known existing legal right or such conduct as warrants an inference of the relinquishment of such right.” Omaha Police Union Local 101, IUPA, AFL-CIO v. City of Omaha, 872 N.W.2d 765, 773 (Neb. 2015) (citing Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 780 N.W.2d 416 (Neb. 2010)). “To establish a waiver of a legal right, there must be a clear, unequivocal, and decisive act of a party showing such a purpose, or acts amounting to an estoppel on his or her part.” Id.(citing State ex rel. Wagner v. Amwest Surety Ins. Co., 790 N.W.2d 866 (Neb. 2010)). “A party may prove the waiver of a contract by (1) a party’s express declarations manifesting the intent not to claim an advantage or (2) a party’s neglecting and failing to act so as to induce the belief that it intended to waive.” Id.(citing D & S Realty v. Markel Ins. Co., 789 N.W.2d 1 (Neb. 2010)).
Lincoln Benefit cannot possibly prove that Wilson manifested an intent to waive his right to receive an additional commission upon conversion of the policies by “advis[ing] his client that the policies were convertible” (Filing No. 194 at CM/ECF p. 4). The so-called “waiver” defense is, in actuality, a claim that Wilson “failed to adhere to the standards expected of a life insurance producer as well as the obligations in his producer’s contract with Lincoln Benefit” (Filing No. 194 at CM/ECF p. 4). In other words, Lincoln Benefit is claiming breach of contract. See Thurston v. Nelson, 842 N.W.2d 631, 643 (Neb.App. 2014) (“[W]here a plaintiff is suing for breach of a contractual duty which would not have existed but for the contractual relationship, it should be brought as a breach of contract action and not as a tort claim.”).
In summary, consistent with the court’s previous holding that “Plaintiff is precluded from asserting as a defense that Defendant breached the agent’s contract in connection with the sale of the term life insurance policies” (Filing No. 154 at CM/ECF p. 30), the court finds that Lincoln ...