Nowlin v. Allstate Insurance Company

Filing 20

OPINION AND ORDER that Defendant Allstate Insurance Company's Motion to Dismiss 13 Plaintiff's Amended Complaint is GRANTED. Plaintiff's claims are DISMISSED WITH PREJUDICE. IT IS FURTHER ORDERED that Defendant's request for in junctive relief, contained in its Motion to Dismiss, is DENIED. IT IS FURTHER ORDERED that Defendant's Motion to Strike 16 Plaintiff's Notice of Filing of Supplemental Evidence is DENIED AS MOOT. Signed by Judge William S. Duffey, Jr on 7/29/2014. (anc)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ANGEL NOWLIN,
Plaintiff,
v.

1:13-cv-2042-WSD

ALLSTATE INSURANCE
COMPANY,
Defendant.

OPINION AND ORDER
This matter is before the Court on Defendant Allstate Insurance Company’s
(“Defendant” or “Allstate”) Motion to Dismiss [13] Plaintiff Angel Nowlin’s
(“Plaintiff” or “Nowlin”) Amended Complaint [12]. Also before the Court is
Defendant’s request for injunctive relief, contained in its Motion to Dismiss, and
Defendant’s Motion to Strike [16] Plaintiff’s Filing of Supplemental Evidence.
I.

BACKGROUND
A.

Introduction

This is an action by Nowlin, a former Allstate agent, to recover certain funds
she alleges are due to be paid after an agency agreement with Allstate was
terminated (the “Termination Funds”). Plaintiff alleges that the United States
Bankruptcy Court wrongfully determined that she is not entitled to the Termination

Funds and that Allstate was required to pay the Termination Funds to the trustee of
the bankruptcy estate of Plaintiff’s corporation, the Nowlin Agency, Inc. (the
“Corporation”), including to satisfy a loan obtained by the Corporation and secured
by the Termination Funds.
B.

Background Facts

On September 1, 2004, Plaintiff and Allstate entered into an agency
agreement which provided that Plaintiff would sell Allstate insurance policies and
products, and that Allstate would pay Plaintiff commissions based on her sales.
The agreement also provided that Plaintiff acquired an economic interest in the
Allstate customer accounts she developed (the “Book of Business”), which could
be transferred to an approved buyer or sold to Allstate upon termination of their
agency agreement.1 (Am. Compl. ¶¶ 6-8).
On September 13, 2004, Plaintiff became the President and Chief Executive
Officer of the Corporation and transferred her economic interest in the Book of
Business to the Corporation. (Id. ¶¶ 9-11).
On December 7, 2007, the Corporation obtained a loan in the amount of
$173,000 from Oak Street Funding, LLC (“Oak Street”). Repayment of the loan
1

Plaintiff asserts that she was known as Angel McMurry when she first
became an Allstate agent, and at some point, Plaintiff had “the interest in the Angel
McMurry agency transferred to Angel Nowlin.” (Am. Compl. ¶ 7).
2

was secured by a lien on substantially all of the Agency’s assets, including the
Book of Business. (Id. at Ex. B). The Corporation, Oak Street and Allstate also
executed a Security Interest and Collateral Assignment of Termination Payments
and Economic Interests (“Termination Payments Assignment”). Under the terms
of the Termination Payments Assignment, the Corporation granted to Oak Street a
security interest in all termination payments due upon termination of the
Corporation’s agency agreement with Allstate and granted to Oak Street the right
to receive direct payment from Allstate of all termination payments owed by
Allstate to the Corporation. (Id.; [Bankr. 14] at 50).2
On August 27, 2011, the Corporation was administratively dissolved. (Am.
Compl. ¶ 14).
On February 21, 2012, Oak Street filed a complaint against the Corporation
in the Superior Court of Hamilton County, Indiana, alleging that the Corporation
had defaulted on its loan obligations and seeking to foreclose on the collateral
securing the loan, including the Corporation’s rights to commission and other
payments from Allstate.3 ([Bankr. 14] at 7).

2

Citations to documents filed in In re: Nolin Agency, Inc., No. 12-65618-crm
(Bankr. N.D. Ga.) (the “Bankruptcy Action”), are indicated as “[Bankr. ].”
3
Oak Street Funding LLC v. Nowlin Agency, Inc., No. 29D03-CC-001719.
3

At some point in 2012, Plaintiff contacted Allstate to transfer the
Corporation’s Book of Business to herself. (Am. Compl. ¶¶ 15-16). Plaintiff
asserts that an Allstate representative told her that “[Allstate’s] search revealed no
existing liens on [the Corporation’s] economic interest;” and that Plaintiff “could
follow the same practice that the Parties [sic] had practiced throughout their
relationship to change the name and interest in the [Book of Business]” and
execute a new agency agreement in her own name. (Id.).
On March 1, 2012, Plaintiff and Allstate executed an Exclusive Agency
Agreement (the “March 1, 2012, EAA”), which, Plaintiff asserts, transferred to
Plaintiff the Corporation’s economic interest in the Book of Business. (Id. ¶ 17
& Ex. A).
Later in March 2012, Plaintiff claims, she “decided to sell her economic
interest in the [Book of Business] to Allstate.” (Id. ¶ 22). Plaintiff asserts that
Allstate told her that she would receive a total of approximately $145,000 in
termination payments, which would be paid to her in twelve (12) equal monthly
payments, beginning in May 2012. (Id.).
At some point, Allstate learned about the Indiana Action and Oak Street
requested that Allstate pay it the monthly termination payments until the
Corporation’s loan was fully repaid. ([Bankr. 14] at ¶ 24).

4

On May 3, 2012, Plaintiff “learned that Allstate forwarded her [t]ermination
[p]ayments to a third party, Oakstreet [sic] Funding,” which, she claims, was
“unlawful” including because “Allstate had previously confirmed that there were
no active liens or garnishments against her economic interest in her [B]ook of
[B]usiness.” (Am. Compl. ¶ 28).
On June 1, 2012, Oak Street filed in the Indiana Action a motion for leave to
issue a garnishment summons against Allstate for the Termination Funds. ([Bankr.
14] ¶ 27).
On June 22, 2012, the Corporation filed a petition for relief under Chapter 7
of the United States Bankruptcy Code (the “Bankruptcy Action”). (Id. ¶ 31 &
Ex. B).4 In the petition, Plaintiff, on behalf of the Corporation, listed herself—
apparently in her individual capacity—as one of the Corporation’s creditors.
([Bankr. 1] at 19-20).
On August 6, 2012, Plaintiff, represented by counsel, filed a complaint
against Allstate in the Superior Court of DeKalb County, Georgia, seeking to
compel Allstate to pay the Termination Funds to Plaintiff.5 On September 5, 2012,
the DeKalb County Action was voluntarily dismissed without prejudice.

4
5

In re: Nolin Agency, Inc., No. 12-65618-crm (Bankr. N.D. Ga.).
Nowlin v. Allstate Insurance Co., No. 12CV9267.
5

On January 7, 2013, Oak Street filed in the Bankruptcy Action its Motion for
Approval of Agreement Modifying Automatic Stay (“Motion for Approval” or
“Oak Street’s Motion”), seeking the Bankruptcy Court’s approval of an agreement
between Oak Street, Allstate and the Trustee regarding the Termination Funds.
(Am. Compl. ¶ 32 & [Bankr. 14]). The agreement provided that Allstate would
pay the Termination Funds, in the amount of $128,271.20, to the Trustee;6 that the
Trustee would pay Oak Street, and Oak Street agreed to accept, $102,000 to satisfy
in full any claim Oak Street might have against the Corporation’s bankruptcy
estate, including for payment of the Corporation’s outstanding loan balance; and
that the remaining $26,271.20 would be held by the Trustee on behalf of the
bankruptcy estate. Notice of the Hearing on Oak Street’s Motion and a copy of the
motion were sent to the Corporation’s creditors, including Plaintiff. ([Bankr. 14] at
66).
On January 31, 2013, the Bankruptcy Court conducted a hearing on Oak
Street’s Motion. Plaintiff did not appear at the hearing and she did not object to
Oak Street’s Motion.
On February 1, 2013, the Bankruptcy Court granted Oak Street’s Motion for
Approval. The Bankruptcy Court found that it had jurisdiction to consider Oak
6

It is unclear what, if any, of the Termination Funds were disbursed by
Allstate before it reached the agreement with Oak Street and the Trustee.
6

Street’s Motion; that “without Oak Street’s knowledge or consent, [the
Corporation] terminated its agency agreement with Allstate and directed Allstate to
make all termination payments to [Plaintiff, the Corporation’s] sole shareholder
and officer;” that the Corporation had defaulted on its loan obligations; that “[n]o
party, other than Oak Street and the Trustee, has any legal or equitable interest in
or to the Termination Funds;” and that Oak Street was entitled to enforce its
security interests, including in the Termination Funds. The Bankruptcy Court
held:
Once Allstate has disbursed the $128,271.20 to the Trustee,
Allstate shall be permanently discharged from any and all further
liability to any party for commissions, Termination Funds or any other
type of payment or financial obligation that relates or refers in any
way to the [Corporation], Angel Nowlin or the Nowlin Allstate
Agency that was owned and operated by [the Corporation] and/or
Angel Nowlin. Any and all claims that were raised or could have
been raised against Allstate by the [Corporation], the Trustee, Oak
Street, Angel Nowlin or any other party in this Chapter 7 bankruptcy
case shall forever be released, barred and discharged by this Order.
([Bankr. 15] at 4).
On February 14, 2013, Plaintiff moved for reconsideration of the
Bankruptcy Court’s February 1, 2013, Order, on the grounds that the Bankruptcy
Court lacked jurisdiction to grant Oak Street’s Motion because Plaintiff is not a
party to the Bankruptcy Action and she did not receive notice of Oak Street’s
Motion or the hearing on it. ([Bankr. 17]). Plaintiff claimed that she is entitled to
7

the Termination Funds because Allstate “transferred all economic interest, policy
commissions and termination payments from [the Corporation] to [Plaintiff].”
(Id.).
On February 20, 2013, the Bankruptcy Court denied Plaintiff’s motion for
reconsideration. ([Bankr. 18]).
On March 12, 2013, Plaintiff filed a Notice of Appeal, seeking to appeal the
Bankruptcy Court’s denial of her motion for reconsideration. ([Bankr. 21]). On
March 19, 2013, Plaintiff also filed an application to proceed in forma pauperis on
appeal, which the Bankruptcy Court denied on April 5, 2013. ([Bankr. 28, 30]).
On May 7, 2013, the Court denied Plaintiff’s appeal as untimely and for failure to
pay the filing fee. ([Bankr. 35]).
On June 18, 2013, Plaintiff, proceeding pro se, filed her “Request for
Injunction for Relief and Restraining Order” (“Request for Injunction”) [1] in this
action, seeking to enjoin Allstate from disbursing the Termination Funds pursuant
to the Bankruptcy Court’s February 1, 2013, Order.
On September 26, 2013, the Court found that, although the Clerk docketed
Plaintiff’s Request for Injunction as a “complaint,” the filing did not assert any
discernible causes of action and failed to comply with Rule 8(a) of the Federal
Rules of Civil Procedure, including because it did not contain a statement of the

8

grounds for the court’s jurisdiction [11]. The Court directed Plaintiff to file, on or
before October 28, 2013, a complaint complying with the Federal Rules of Civil
Procedure, and the Court denied without prejudice Allstate’s Motion to Dismiss
Plaintiff’s Request for Injunction.
On October 28, 2013, Plaintiff filed her Amended Complaint [12]. Plaintiff
asserts that the Bankruptcy Court “had no jurisdiction to override [her] personal
contractual and substantive rights to [the Termination F]unds” because she was not
a party to the Bankruptcy Action, and that she has a “legitimate claim” to the
Termination Funds because the March 1, 2012, EAA transferred to Plaintiff the
Corporation’s economic interest in the Book of Business. Plaintiff seeks to enjoin
Allstate from complying with the Bankruptcy Court’s February 1, 2013, Order, and
to compel Allstate to disburse the Termination Funds to Plaintiff. Plaintiff seeks,
in the alternative, an award of damages in the amount of $144,000 “for the amount
owed to [her], plus [her] costs incurred as a result of Allstate’s breach of [her]
contract entitling her to the [Termination Funds] which is around an additional
$100,000.” (Am. Compl. at 9-10).
On November 11, 2013, Allstate moved to dismiss Plaintiff’s Amended
Complaint on the basis that the Bankruptcy Court’s February 1, 2013, Order bars
Plaintiff’s claims in this action.

9

On February 15, 2014, Plaintiff submitted supplemental evidence in support
of her Amended Complaint, consisting of a Form 1099 tax document, which
Plaintiff asserts shows that Allstate acknowledged its debt owed to Plaintiff [15].
On March 10, 2014, Allstate moved to strike [16] Plaintiff’s supplemental
evidence, arguing that it is not material or relevant to Plaintiff’s claims.7
The Court first determines whether it has jurisdiction to consider Plaintiff’s
claims in her Amended Complaint.
II.

DISCUSSION
The Bankruptcy Court found in its February 1, 2013, Order, that “[n]o party

other than Oak Street and the Trustee has any legal or equitable interest in or to the
Termination Funds” and held that “any and all claims that were raised or could
have been raised against Allstate by the [Corporation], the Trustee, Oak Street,
Angel Nowlin or any other party in this Chapter 7 bankruptcy case shall forever be
released, barred and discharged by this Order.” ([Bankr. 15] at 3-4). Plaintiff
argues that the Bankruptcy Court lacked jurisdiction to “override [her] personal
contractual and substantive rights to those funds,” including because Plaintiff was
not a party to the Bankruptcy Action. The Court disagrees.
7

Allstate also asserts that the Form 1099 Plaintiff submitted was issued in
error, that a corrected form was later issued to Plaintiff indicating that she did not
receive any income from Allstate in 2013, and that Allstate issued a new form,
indicating that the $128,271.20 was paid to the Corporation.
10

“[B]ankruptcy jurisdiction . . . is principally in rem jurisdiction.”
Alderwoods Grp., Inc. v. Garcia, 682 F.3d 958, 969 (11th Cir. 2012) (quoting
Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 369 (2006)). The Bankruptcy Code
provides that a bankruptcy court “in which a [petition for bankruptcy] is
commenced or is pending shall have exclusive jurisdiction of all the property,
wherever located, of the debtor . . . and of property of the estate.” 28 U.S.C.
§ 1334(e)(1). Property of the bankruptcy estate includes “all legal or equitable
interests of the debtor in property.” 11 U.S.C. § 541(a)(1). Bankruptcy courts
have authority to hear matters concerning administration of the bankruptcy estate,
the allowance or disallowance of claims against the estate, proceedings to
determine, avoid or recover fraudulent conveyances, and determinations of the
validity, extent, or priority of liens. 28 U.S.C. § 157(b).
In its bankruptcy petition, the Corporation included among its personal
property its agency agreement with Allstate. ([Bankr. 1] at 7). The Termination
Funds—which consist of the payments due to be paid to the Corporation in
connection with the termination of the Corporation’s agency agreement with
Allstate—are therefore property of the Corporation’s bankruptcy estate,
see 11 U.S.C. § 541(a)(1), and the Bankruptcy Court has exclusive jurisdiction to
decide any and all claims to the Termination Funds, see 11 U.S.C. § 157(b);

11

28 U.S.C. § 1334(e)(1).8
Plaintiff argues that the Bankruptcy Court lacked jurisdiction to “override
[her] personal contractual and substantive rights to those funds” because Plaintiff
was not a party to the Bankruptcy Action and did not receive notice of Oak Street’s
Motion. Plaintiff’s assertions are not supported by the record. Plaintiff, on behalf
of the Corporation, listed herself—in her individual capacity—as one of the
Corporation’s creditors in its bankruptcy petition, and the record is further that Oak
Street served Plaintiff, as a “party in interest,” with copies of its Motion for
Approval and a Notice of Hearing on the motion. ([Bankr. 1] at 19-20; [Bankr. 14]
at 65-66). The Notice of Hearing clearly states, “YOUR RIGHTS MAY BE
AFFECTED BY THE COURT’S RULING ON THESE PLEADINGS,” and “[i]f
you do not want the court to grant the relief sought in these pleadings or if you
want the court to consider your views, then you and/or your attorney must file an
objection to the Motion and attend the Hearing.” ([Bankr. 14] at 1).9 Because
8

To the extent Plaintiff argues that the Trustee wrongfully consented to Oak
Street’s Motion, in a case under Chapter 7 of the Bankruptcy Code, the trustee may
avoid certain preferential and fraudulent pre-petition transfers of the debtor’s
property and may recover, for the benefit of the bankruptcy estate, the property
transferred or the value of such property. See 11 U.S.C. §§ 544, 547, 548, 550.
Property recovered by the trustee becomes property of the debtor’s bankruptcy
estate. 11 U.S.C. § 541(a)(3).
9
That Plaintiff asserts in her Motion for Reconsideration that she did not file
an objection to Oak Street’s Motion, or attend the hearing, purportedly on advice
12

Plaintiff did not object to Oak Street’s Motion and chose not to submit a proof of
claim in the Bankruptcy Action, Plaintiff cannot assert in this action a claim to the
Termination Funds. See, e.g., Tenn. Student Assist. Corp. v. Hood, 541 U.S. 440,
447 (2004) (citing 11 U.S.C. § 726; Fed. R. Bankr. P. 1007(a)(1), 2002(l), 3002(a))
(“In a typical voluntary bankruptcy proceeding under Chapter 7, the debtor files a
petition for bankruptcy in which he lists his debts or his creditors, . . . [t]he clerk
notifies the debtor’s creditors of the [petition], and . . . if a creditor wishes to
participate in the debtor’s assets, he files a proof of claim. If a creditor chooses not
to submit a proof of claim, once the debts are discharged, the creditor will be
unable to collect on his unsecured loans.”).
Even if Plaintiff were not a creditor in the Bankruptcy Action, “[a]
bankruptcy court’s in rem jurisdiction permits it to ‘determine all claims that
anyone, whether named in the action or not, had to the property or thing in
question.’” Id. at 448 (quoting 16 J. Moore et al., Moore’s Federal Practice
§ 108.70[1] (3d ed. 2004)). “A bankruptcy court is able to provide the debtor a
fresh start . . . despite the lack of participation of all his creditors, because the
court’s jurisdiction is premised on the debtor and his estate, and not on the
creditors.” Id. at 447; see also Alderwoods, 682 F.3d at 969.
of counsel for the Corporation, undercuts her assertion that she did not receive
notice of the Oak Street’s Motion and the hearing. ([Bankr. 17] at 1-2).
13

The Termination Funds are property of the Corporation’s bankruptcy estate
and the Bankruptcy Court, as “the court administering the bankrupt’s estate—the
res—is the court with the power to enter orders effecting its distribution and to
‘adjudicate rights in it that are binding against the world.’” Alderwoods, 682 F.3d
at 969 (quoting Odyssey Marine Expl., Inc. v. Unidentified Shipwrecked Vessel,
657 F.3d 1159, 1171 (11th Cir. 2011)). The Bankruptcy Court, in its
February 1, 2013, Order, found that “[n]o party other than Oak Street and the
Trustee has any legal or equitable interest in or to the Termination Funds” and held
that “any and all claims that were raised or could have been raised against Allstate
by the [Corporation], the Trustee, Oak Street, Angel Nowlin or any other party in
this Chapter 7 bankruptcy case shall forever be released, barred and discharged by
this Order.” ([Bankr. 15] at 3-4). To the extent Plaintiff seeks relief from the
Bankruptcy Court’s February 1, 2013, Order, such a request is required to be made
in the Bankruptcy Court.10 See Fed. R. Civ. P. 59, 60. The Court lacks jurisdiction
10

Plaintiff did, unsuccessfully, move for reconsideration of the Bankruptcy
Court’s February 1, 2013, Order. The Court notes that Plaintiff’s Motion for
Reconsideration is nearly identical to Plaintiff’s Amended Complaint here, and res
judicata bars further consideration in this action of Plaintiff’s arguments
considered and rejected by the Bankruptcy Court in its February 20, 2013, Order
denying Plaintiff’s Motion for Reconsideration. See In re Piper Aircraft Corp.,
244 F.3d 1289, 1296 (11th Cir. 2001) (“The doctrine of res judicata . . . will bar a
subsequent action if: (1) the prior decision was rendered by a court of competent
jurisdiction; (2) there was a final judgment on the merits; (3) both cases involve the
14

to consider in this action Plaintiff’s claim to the Termination Funds and her
Amended Complaint is required to be dismissed.11, 12
III.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Defendant Allstate Insurance Company’s

Motion to Dismiss [13] Plaintiff’s Amended Complaint is GRANTED. Plaintiff’s
claims are DISMISSED WITH PREJUDICE.

same parties or their privies; and (4) both cases involve the same causes of
action.”); Chicot Cnty. Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 377
(1940) (A bankruptcy court “has the authority to pass upon its own jurisdiction and
its decree sustaining jurisdiction against attack, while open to direct review, is res
judicata in a collateral action.”). Plaintiff’s Amended Complaint is required to be
dismissed for this additional reason.
11
Because the Court concludes that it lacks jurisdiction to consider Plaintiff’s
claims in this action, the Court does not consider Allstate’s other ground for
dismissal and Allstate’s Motion to Strike is denied as moot.
12
In its Motion to Dismiss, Allstate also requests an order enjoining Plaintiff
from bringing any subsequent action related to the Termination Funds. The
Bankruptcy Court’s February 1, 2013, Order provides that “[a]ny and all claims
that were raised or could have been raised against Allstate by the [Corporation],
the Trustee, Oak Street, Angel Nowlin or any other party in this Chapter 7
bankruptcy case shall forever be released, barred and discharged by this Order.”
([Bankr. 15] at 4). To the extent Allstate seeks additional relief to enforce the
Bankruptcy Court’s February 1, 2013, Order, Allstate is required to make such a
request in the Bankruptcy Court. See, e.g., Alderwoods, 682 F.3d 958 (party
seeking to enforce injunction cannot obtain a successive injunction, that is, an
injunction ordering compliance with an existing injunction; only bankruptcy court
that entered order had authority to impose sanctions for its violation). Allstate’s
request for a permanent injunction is denied.
15

IT IS FURTHER ORDERED that Defendant’s request for injunctive
relief, contained in its Motion to Dismiss, is DENIED.
IT IS FURTHER ORDERED that Defendant’s Motion to Strike [16]
Plaintiff’s Notice of Filing of Supplemental Evidence is DENIED AS MOOT.

SO ORDERED this 29th day of July, 2014.

16