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Fastrich v. Continental General Insurance Co.

United States District Court, D. Nebraska

August 21, 2017

JOHN FASTRICH, and UNIVERSAL INVESTMENT SERVICES, INC., Plaintiffs,
v.
CONTINENTAL GENERAL INSURANCE COMPANY, and GREAT AMERICAN FINANCIAL RESOURCE, INC., Defendants.

          MEMORANDUM AND ORDER

          Laurie Smith Camp Chief United States District Judge

         This matter is before the Court on the Motion to Dismiss for Lack of Personal Jurisdiction, ECF No. 35, filed by Defendant Great American Financial Resource, Inc. (“GAFRI”), and on the Motion to Dismiss for Failure to State a Claim, ECF No. 32, filed by Defendants GAFRI and Continental General Insurance Company (“CGI”). For the reasons stated below GAFRI's Motion to Dismiss for Lack of Personal Jurisdiction will be granted and the Motion to Dismiss for Failure to State a Claim will be granted, in part, and denied, in part.

         BACKGROUND

         The following facts are those alleged in the Complaint, ECF No. 1, which are assumed true for purposes of the Motion to Dismiss, as well as those contained in the evidence submitted to support personal jurisdiction over GAFRI.

         This is a class action brought by John Fastrich and his insurance agency, Universal Investment Services, Inc., on behalf of themselves and on behalf of “[a]ll current and former regional managers, general agents, associate general agents, and agents of CGI . . . who have lost commissions, renewals, and/or overrides as a result of Defendants' wrongful conduct . . .” (John Fastrich, Universal Investment Services, Inc., and the purported class will be collectively referred to as “Plaintiffs”). Complaint, ECF No. 1, Page ID 7 ¶ 42. According to the Complaint, Plaintiffs entered into contracts with CGI to sell CGI's insurance products to individual customers. These products included Medicare supplements, long-term care and senior life policies, and annuities. Pursuant to their contracts with CGI, Plaintiffs were to receive compensation in the form of commissions, renewals, and overrides on the various insurance products they sold.

         Plaintiffs worked in a four-level hierarchy of regional managers, general agents, associate general agents, and agents. Plaintiffs would become the “agent of record” any time they sold an insurance product to a customer and “took the original information” from the customer. Complaint, ECF No. 1, Page ID 2 ¶ 6. If an agent of record received less than $600 in renewals and overrides in a one-year period, however, their commissions, renewals, and overrides would revert to the next-highest agent in the hierarchy. This is referred to as non-vesting.

         CGI was a domestic insurer organized under Nebraska law and the wholly-owned subsidiary of Ceres Group, Inc. (“Ceres”). In 2006, GAFRI applied to the Nebraska Department of Insurance to acquire all the shares of Ceres and the Department approved the acquisition. Sometime after GAFRI finalized the acquisition of Ceres, and thereby CGI, GAFRI and CGI began contacting existing insurance policyholders and offering them new, less expensive insurance products without giving Plaintiffs the opportunity to sell the new products. As a result, the original insurance policies that Plaintiffs sold on CGI's behalf were cancelled and new insurance products were marketed and issued by other agents.

         Plaintiffs allege that “[regardless whether a policy was replaced by a new policy by in-house marketing organizations and/or selected outside agents, Plaintiffs remain the agents of record for the purpose of receiving commissions, renewals, and/or overrides.” Complaint, ECF No. 1, Page ID 5 ¶ 31. Yet Plaintiffs were not paid the promised commissions, renewals, and overrides they claim they were entitled to receive. Plaintiffs also assert that they were contractually entitled to “commissions on premium increases on long term care policies written before January 2000, ” but have been denied those commissions as well. Furthermore, when CGI and GAFRI issued the new policies, it caused several Plaintiffs to become non-vested, but CGI and GAFRI retained the amounts that should have reverted to the next-highest agent in the hierarchy.

         Plaintiffs have brought claims against CGI and GAFRI for breach of contract, tortious interference with a business relationship or expectancy, and unjust enrichment. GAFRI argues the Court should dismiss it from this action because it is not subject to the Court's personal jurisdiction. CGI and GAFRI both argue Plaintiffs' claims should be dismissed for failure to state a claim upon which relief can be granted.

         STANDARD OF REVIEW

         I. Lack of Personal Jurisdiction Under Fed.R.Civ.P. 12(b)(2)

         To survive a Federal Rule of Civil Procedure 12(b)(2) motion to dismiss for lack of personal jurisdiction, a plaintiff must plead “sufficient facts ‘to support a reasonable inference that the defendant[ ] can be subjected to jurisdiction within the state.'” K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591-92 (8th Cir. 2011). When jurisdiction is challenged, the “‘nonmoving party need only make a prima facie showing of jurisdiction.'” Pangaea, Inc. v. Flying Burrito LLC, 647 F.3d 741, 745 (8th Cir. 2011) (quoting Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991)). The nonmoving party's prima facie showing is analyzed “not by the pleadings alone, but by the affidavits and exhibits presented with the motions and in opposition thereto.” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004). “‘[T]he court must look at the facts in the light most favorable to the nonmoving party, and resolve all factual conflicts in favor of that party.'” Id. (quoting Dakota Indus., Inc., 946 F.2d at 1387).

         II. Failure to State a Claim Under Fed.R.Civ.P. 12(b)(6)

         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To satisfy this requirement, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Corrado v. Life Inv'rs Ins. Co. of Am., 804 F.3d 915, 917 (8th Cir. 2015) (quoting Bell Atlantic Corp. v. T wombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Barton v. Taber, 820 F.3d 958, 964 (8th Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Zink v. Lombardi, 783 F.3d 1089, 1098 (8th Cir. 2015) (quoting Iqbal, 556 U.S. at 678), cert. denied, 135 S.Ct. 2941 (2015). The complaint's factual allegations must be “sufficient to ‘raise a right to relief above the speculative level.'” McDonough v. Anoka Cty., 799 F.3d 931, 946 (8th Cir. 2015) (quoting T wombly, 550 U.S. at 555). The Court must accept factual allegations as true, but it is not required to accept any “legal conclusion couched as a factual allegation.” Brown v. Green Tree Servicing LLC, 820 F.3d 371, 373 (8th Cir. 2016) (quoting Iqbal, 556 U.S. at 678). Thus, “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Ash v. Anderson Merchandisers, LLC, 799 F.3d 957, 960 (8th Cir. 2015) (quoting Iqbal, 556 U.S. at 678), cert. denied, 136 S.Ct. 804 (2016).

         On a motion to dismiss, courts must rule “on the assumption that all the allegations in the complaint are true, ” and “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.'” T wombly, 550 U.S. at 555 & 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). “Determining whether a complaint states a plausible claim for relief . . . [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Mickelson v. Cty. of Ramsey, 823 F.3d 918, 923 (8th Cir. 2016) (alternation in original) (quoting Iqbal, 556 U.S. at 679).

         DISCUSSION

         I. Personal Jurisdiction

         GAFRI argues it is not subject to the Court's personal jurisdiction. In determining whether personal jurisdiction over a nonresident defendant exists, the Court must determine whether: (1) the requirements of the Nebraska long-arm statute are satisfied; and (2) the exercise of jurisdiction is permitted by the Due Process Clause of the Fourteenth Amendment. See Coen v. Coen, 509 F.3d 900, 905 (8th Cir. 2007). Nebraska's long-arm statute, Neb. Rev. Stat. § 25-536, has been interpreted to extend jurisdiction over nonresident defendants to the fullest degree allowed by the Due Process Clause of the United States Constitution. Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 561 (8th Cir. 2003). Thus, the Court need only determine whether the assertion of jurisdiction offends constitutional limits.

         “The touchstone of the due-process analysis remains whether the defendant has sufficient “minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Viasystems, Inc. v. EBM-Papst St. GEorgen GmbH & Co., KG, 646 F.3d 589, 594 (8th Cir. 2011) International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). “The Supreme Court has recognized two theories for evaluating personal jurisdiction: general and specific jurisdiction.” Steinbuch v. Cutler, 518 F.3d 580, 586 (8th Cir. 2008) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984)). “Under the theory of general jurisdiction, a court may hear a lawsuit against a defendant who has 'continuous and systematic' contacts with the forum state, even if the injuries at issue in the lawsuit did not arise out of the defendant's activities directed at the forum.” Dever, 380 F.3d at 1073 (quoting Helicopteros, 466 U.S. at 415-416). On the other hand, under the theory of specific jurisdiction, “the injury giving rise to the lawsuit [must have] occurred within or had some connection to the forum state.” Dever, 380 F.3d at 1073 (citing Helicopteros, 466 U.S. at 414). In other words, a court will have specific jurisdiction over a cause of action “arising from or related to a defendant's actions within the forum state.” Bell Paper Box, 22 F.3d 816, 819 (8th Cir. 1994).

         Under either theory, the defendant must have committed “‘some act by which the defendant purposely avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'” Dever, 380 F.3d at 1073 (quoting Denckla, 357 U.S. at 253). A defendant's “purposeful availment must be sufficient to provide the defendant with fair warning that his activities might result in his being haled into court in that jurisdiction.” Johnson v. Woodcock, 444 F.3d 953, 955 (8th Cir. 2006) (citing Porter v. Berall, 293 F.3d 1073, 1075 (8th Cir. 2002)). In other words, the defendant's contacts with the forum state must not be “random, ” “fortuitous, ” “attenuated, ” or the result of the “unilateral activity of another party or a third person.” Burger King, 471 U.S. at 475 (quotations and citations omitted). A ...


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