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Applied Underwriters, Inc. v. Top's Personnel, Inc.

United States District Court, D. Nebraska

August 2, 2018



          John M. Gerrard United States District Judge

         This dispute concerns a promissory note issued by the defendant, Top's Personnel, Inc., to the plaintiff, Applied Underwriters, Inc., in 2014. Filing 23-1. Applied is suing Top's on the promissory note, claiming that Top's "has made no payments" toward its obligation. Filing 142 at 1. Top's has responded with an affirmative defense, arguing that the note is "void" and the alleged obligation unenforceable. Filing 129 at 3.

         This matter is before the Court on the parties' cross-motions for summary judgment. Filing 141; filing 145. For the reasons explained below, Applied's motion (filing 141) will be granted, and Top's motion (filing 145) will be denied. Top's will be ordered to pay Applied the sum of $166, 202.65.


         Applied Underwriters markets and sells a workers' compensation program called EquityComp. Filing 146 at 2; see filing 148-4 at 8. In 2011, Applied sold an EquityComp policy to Top's Personnel. Filing 146 at 2.

         Top's monthly premiums under its policy generally ranged from $50, 000.00 to $120, 000.00 per month. Filing 146 at 7; filing 148-9. But in January 2014, Top's received an invoice for $511, 358.70. Filing 146 at 7; filing 148-9 at 51-52. Unable to pay that amount, Top's issued a promissory note to Applied in the amount of $119, 645.13. See filing 23-1 at 1-6. Top's "acknowledge[d] its indebtedness" in the note, and "promise[d] to pay" Applied the amount reflected above. Filing 23-1 at 1.

         When Top's failed to pay its alleged obligation, Applied filed suit, seeking $126, 488.45 "plus accruing per diem interest." Filing 23 at 2. Top's answered Applied's complaint with a series of affirmative defenses, including the one at issue here: that EquityComp is unlawful and the promissory note void. Filing 129 at 3. Top's now moves for summary judgment on those grounds, arguing that it is entitled to relief as a matter of law. See filing 145. Applied, too, has moved for summary judgment, claiming that it is owed $166, 202.65. Filing 141; see filing 143 at 12.


         Summary judgment is proper if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). The movant bears the initial responsibility of informing the Court of the basis for the motion, and must identify those portions of the record which the movant believes demonstrate the absence of a genuine issue of material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does so, the nonmovant must respond by submitting evidentiary materials that set out specific facts showing that there is a genuine issue for trial. Id.

         On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts. Id. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the evidence are jury functions, not those of a judge. Id. But the nonmovant must do more than simply show that there is some metaphysical doubt as to the material facts. Id. In order to show that disputed facts are material, the party opposing summary judgment must cite to the relevant substantive law in identifying facts that might affect the outcome of the suit. Quinn v. St. Louis County, 653 F.3d 745, 751 (8th Cir. 2011). The existence of a mere scintilla of evidence in support of the nonmovant's position will be insufficient; there must be evidence on which the jury could conceivably find for the nonmovant. Barber v. C1 Truck Driver Training, LLC, 656 F.3d 782, 791-92 (8th Cir. 2011). Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Torgerson, 643 F.3d at 1042.


         As noted, the parties dispute the validity of Top's 2014 promissory note. Top's argues that the note is unenforceable because it derives from an insurance program (EquityComp) that is "unlawful under New Jersey law." Filing 147 at 18. Applied disagrees, arguing that the note is enforceable regardless of its compliance (or noncompliance) with state regulations. Filing 158 at 3. The Court will provide a brief overview of EquityComp, and the relevant statutory requirements, before addressing the parties' dispute.

         1. EquityComp

         As a New Jersey employer, Top's is required to obtain workers' compensation insurance for its employees. See N.J. Stat. Ann. ยง 34:15-78. So, in 2011, Top's purchased an insurance policy through Applied's Equity Comp program. Filing 146 at 2. The details of that program are complex and disputed, but it's generally ...

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