Russell v. Allianz Life Insurance Company of North America et al

Filing 106

ORDER granting in part and denying in part 62 Motion to Dismiss for Failure to State a Claim. Signed by District Judge Debra M. Brown on 9/12/14. (bds)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION
DUGAN CALVIN RUSSELL

PLAINTIFF

V.

NO. 3:13-CV-00030-DMB-JMV

ALLIANZ LIFE INSURANCE
COMPANY OF NORTH AMERICA;
LTCAMERICA INSURANCE
COMPANY; LIFE INSURANCE USA
COMPANY; and XYZ CORPORATIONS
1-50

DEFENDANTS

MEMORANDUM OPINION AND
ORDER GRANTING IN PART MOTION TO DISMISS
This is a breach of contract action arising from the termination of an agent relationship
between Plaintiff Dugan Calvin Russell and Defendants Allianz Life Insurance Company of
North America (“Allianz NA”), LTCAmerica Insurance Company (“LTCAmerica”), and Life
Insurance USA Company (“Life Insurance USA”). Before the Court is the motion to dismiss of
the defendants (collectively, “Allianz”), made pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure.1 Doc. #62.
I
Motion to Dismiss Standard
As a general matter, “[a] pleading that states a claim for relief 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). When a complaint falls short of this directive, a defendant may move to dismiss the
claim for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In

1

Russell alleges that LTCAmerica and Life Insurance USA are both subsidiaries of Allianz. Doc. #36 at ¶¶ 3–4.

considering the interplay between Rule 8 and Rule 12, the United States Supreme Court has
explained that:
To survive a motion to dismiss [for failure to state a claim], a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face. 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. The plausibility standard is not
akin to a probability requirement, but it asks for more than a sheer possibility that
a defendant has acted unlawfully. Where a complaint pleads facts that are merely
consistent with a defendant’s liability, it stops short of the line between possibility
and plausibility of entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and punctuation omitted) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–58 (2007)). Under this standard, a “court must
accept all well-pleaded facts as true and view those facts in the light most favorable to the
plaintiff.” Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 803 n.44 (5th Cir. 2011)
(internal quotation marks and punctuation omitted).
II
Factual Allegations
A. Agency Agreement
On March 27, 2000, Russell entered into an “Agent Agreement” (“Agreement”) with
Allianz.

Doc. #36 at ¶ 6.

The Agreement provided that Russell would act as Allianz’s

“agent/broker … to represent [it] in connection with [its] long term care insurance and health
products ….” Doc. #36 at Ex. A. To this end, the Agreement explained that Russell would be
“deemed to have a separate contract enforceable by and against each of the Companies.” Id.
Of relevance to this action, the Agreement contained the following provisions:
FREEDOM OF CHOICE.
companies.

You are free to contract with other insurance

* *

2

*

TRUST. Both parties understand that each occupies a position of trust and
confidence in dealings with each other, and each party agrees to act in accordance
with the highest ethical and fiduciary standards when dealing with the other.
* *

*

TERMINATION WITHOUT CAUSE. Termination without cause will not
impair any contractual right to vested commissions. This Agreement will be
terminated without cause … by either party giving written notice, at least thirty
(30) days prior to the date of termination, mailed or delivered to the last known
address.
* *

*

TERMINATION FOR CAUSE. This Agreement will be terminated for cause,
if you … misrepresent or omit any material information on an application for, or
reinstatement of, our policy [or] commit or attempt to commit fraud against us
[or] repeatedly fail to comply with material terms of this Agreement, or our stated
rules and regulations [or] falsify or omit material information provided to us ….
A termination for cause will be effective upon your conviction of a felony, or
revocation of your license, or upon the Company sending you a written notice of
termination which specifies the reason for termination for cause.
* *

*

GENERAL PROVISIONS … This agreement is governed by the laws of the
State of Minnesota.
Doc. #36 at Ex. A.
Allianz’s rules and regulations, in turn, provided that “Agents may not [s]ign applications
or other forms on behalf of another person. This includes situations where the other person has
granted verbal or written permission to do so.”2 Doc. #63-1.
The Agreement was signed by Russell and representatives from Life Insurance USA and
Allianz NA. Doc. #36 at Ex. A.

2

Allianz attached a portion of the rules and regulations, which were referenced in the complaint, to its motion to
dismiss. The Court will consider this document for the purpose of deciding the motion. See Lone Star Fund V
(U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (“The court’s review is limited to the
complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are
central to the claim and referenced by the complaint.”).

3

B. Complaint and Termination
In 2009, Russell “began to experience various problems with Allianz, ranging from their
paying the wrong beneficiaries on policies to sending out the wrong 1099’s.” Doc. #36 at ¶ 9.
Sometime later, Russell, “seeing how [the] changed method of doing business was affecting
customers and policy holders, expressed his unhappiness with the situation to Allianz,
specifically with Allianz Chief Investigator and CFO Gary Romo.” Id. This conversation
inspired Allianz “to get rid of [Russell] as an agent [and to] intentionally damage his business.”
Id.
On January 28, 2011, Allianz NA sent Russell a letter stating that “[w]e regret to inform
you that effective 01/28/2011, your appointment and/or Agent Agreement with Allianz Life
Insurance Company of North America has been terminated for cause.” Doc. #36 at Ex. B. The
letter did not identify the “cause” for which Russell was terminated. Russell received the
termination letter on January 28, 2011. Id. at ¶ 10.
Russell contacted Romo and requested that Romo “put in writing why the Agreement had
been terminated for cause.” Id. at ¶ 11. Romo replied “that would never happen.” Id.
Following the termination letter, Allianz “filed a report or complaint” about Russell with
the Commissioners of Insurance for the states of Mississippi and Arkansas. Id. at ¶ 12. In May
2011, Russell received a letter from Chief Investigator Mary Coney of the Arkansas Insurance
Department. Doc. #36 at Ex. C. The letter stated that:
The Arkansas Insurance Department received information from Allianz that they
had cancelled your appointment with them “for cause.” I request that you furnish
the Arkansas Insurance Department a written explanation regarding the allegation
that you cut and pasted client signatures and dates and/or forged client signatures
and dates.
Id.

4

On August 4, 2011, Allianz sent Russell’s Allianz clients a letter informing them of
Russell’s termination. Id. at Ex. D. The letter did not state the reason for Russell’s termination.
Id.
On August 12, 2011, Romo wrote to the Mississippi Insurance Department that:
Per your request, I am providing you with a summary of the concerns we
experienced with Mr. Russell which led to termination with cause of his Allianz
appointment and contract.
1. Donald Bentley Complaint, received July 8, 2010. Findings include … Russell
admitted to signing Mr. Bentley’s signature on his delivery receipt …. Russell
initially stated that Mr. Bentley signed the receipt …. Russell did not deliver Mr.
Bentley’s policy on the date indicated on the receipt. In fact, Russell did not
deliver the policy on any date ….
2. Russell altered the date on an application to make it appear as if a new
signature was obtained [for] Audra Gaines ….
3. Russell altered the date on an application and replacement form to make it
appear as if new signatures were obtained [for] Kay Steele …. This is especially
concerning due to the fact that we mailed Mr. Russell a warning letter on
September 3, 2010, explaining that any further occurrences of altering dates on a
document could impact his Allianz appointment.
Doc. #36 at Ex. E.
On October 19, 2011, Romo sent Russell a letter stating: “You have requested the reason
for your termination with cause. The reason is [you c]ommitt[e]d or attempt[ed] to commit fraud
against us.” Id. at Ex. F.
Following the purported termination, Gaines and Steele executed affidavits averring that
the August 12, 2011, allegations concerning their respective policies were “incorrect.” Id. at
Exs. G & H. Bentley executed an affidavit stating, in essence, that while Russell signed a form
on behalf of Bentley, he did so with Bentley’s permission. Id. at Ex. I. Bentley’s also asserted
that the annuities purchased by virtue of Russell’s signature were not what Bentley wanted, but
that the mistake was a miscommunication and not fraud. Id.

5

C. This Action
Russell filed this action in the Circuit Court of Desoto County. On February 1, 2013,
Allianz timely removed the case to this Court. Doc. #1. Russell filed an amended complaint on
June 10, 2013. Doc. #36. Russell’s amended complaint asserts claims for: (1) breach of
contract; (2) breach of the covenant of good faith and fair dealing; (3) breach of fiduciary duty;
and (4) “intentional interference with business relations.” Id.
Russell alleges that, as a result of Allianz’s actions, he suffered the following damages:
(1) “[a]nnual income in the amount of $127,000;” (2) “[l]oss of Renewal income and updated
records on over 400 clients that the Plaintiff lost;” (3) [l]oss of a contract with American Equity
and North American Life;” (4) “[l]oss of ability to gain similar agency status with other firms,
including Liberty Bankers Life, which refused to give the Plaintiff a license because of his
termination for cause, and the filing of the Complaints or reports with the State Department of
Insurance in Mississippi and Arkansas;” (5) “[l]oss of reputation in the annuities and insurance
community;” and (6) “emotional distress.” Doc. #36 at ¶ 25.
III
Choice of Law
As explained above, the Agreement contains a choice of law clause designating
Minnesota law as controlling.

“[A] federal court exercising diversity jurisdiction typically

applies the choice of law rules of the forum state.”

Jackson v. W. Telemarketing Corp.

Outbound, 245 F.3d 518, 522 (5th Cir. 2001). Generally, Mississippi courts will enforce a
choice of law provision unless:
the chosen state has no substantial relationship to the parties or the transaction and
there is no other reasonable basis for the parties’ choice, or … application of the
law of the chosen state would be contrary to a fundamental policy of a state which
has a materially greater interest than the chosen state in the determination of the

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particular issue and which … would be the state of the applicable law in the
absence of an effective choice of law by the parties.
PIC Group, Inc. v. LandCoast Insulation, Inc., 718 F.Supp.2d 795, 799–800 (S.D. Miss. 2010)
(quoting Restatement (Second) of Conflict of Laws § 187(2) (1971)).

Here, Allianz NA,

LTCAmerica and Life Insurance USA all have their principal places of business in Minnesota.
Doc. #36 at ¶¶ 2–4. Accordingly, this Court will enforce the Minnesota choice of law provision.
See Garrett Const., Inc. v. Ashbritt, Inc., No. 1:09-cv-379, 2010 WL 583921, at *2 (S.D. Miss.
Feb. 16, 2010) (“Under Mississippi law … Florida is the location of Ashbritt’s main office and
principal place of business and the Court finds that this constitutes a reasonable basis for the
selection of Florida law to apply to the contract.” (citing Kiefer v. Harris, 125 F.3d 852 (5th Cir.
1997)).
Under Mississippi law, where a choice of law provision states an agreement is “governed
by” the laws of another state, the law of the selected state applies to contract based claims while
tort claims are governed by Mississippi law. Cypress Pharm., Inc. v. CRS Management, Inc.,
827 F.Supp.2d 710, 723–24 (S.D. Miss. 2011). Accordingly, the Court will apply Minnesota law
to the claims for breach of contract and breach of the covenant of good faith and fair dealing.
See Braidfoot v. William Carey Coll., 793 So.2d 642, 651 (Miss. 2000) (“breach of a duty of fair
dealing … emanates from the law on contracts”); Bobby Kitchens, Inc. v. Mississippi Ins. Guar.
Ass’n, 560 So.2d 129, 134–35 (Miss. 1989) (“[T]he ‘tort’ of ‘breach of an implied duty of good
faith and fair dealing’ … is not a tort in the general sense.”). In contrast, the claims for breach of
fiduciary duty and intentional interference with business will be analyzed under Mississippi law.
See Union Nat. Life Ins. Co. v. Crosby, 870 So.2d 1175, 1180 (Miss. 2004) (“A claim of breach
of fiduciary duty is appropriately recognized as an action in tort, not contract.” (internal
quotation marks omitted)); see also Protective Serv. Life Ins. Co. v. Carter, 445 So.2d 215, 216
7

(Miss. 1983) (“wrongful or malicious interference with … the right to pursue a lawful business
… generally constitutes a tort”).
IV
Analysis
A. Breach of Contract
Under Minnesota law, “[i]n order to state a claim for breach of contract, the plaintiff must
show (1) formation of a contract, (2) performance by plaintiff of any conditions precedent to his
right to demand performance by the defendant, and (3) breach of the contract by defendant.”
Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 833 (Minn. 2011).
Allianz argues that Russell’s breach of contract claim must fail because Russell
“breached his agreement with Allianz and attempted to defraud Allianz on more than one
instance.” Doc. #63 at 8.

Russell responds that Allianz breached the Agreement by: (1)

attempting to terminate him for cause without stating the reason for his termination; and (2)
attempting to terminate him for fraud even though no fraud occurred.3 Doc. #71 at 6–7.
1.

Notice of Termination

“A contract may provide the manner or time frame in which a party is required to give
the other party notice of breach of the contract.” Valspar Refinish, Inc. v. Gaylord’s Inc., 764
N.W.2d 359, 365 (Minn. 2009). Pursuant to the Agreement, a termination for cause would not
be effective until: (1) Russell was convicted of a felony; (2) Russell had his insurance license
revoked; or (3) Allianz sent Russell a written notice of termination which specifies the reason for
termination for cause.

Accordingly, as pled, Russell’s termination was not effective until

3

The Agreement was not signed by a representative of LTCAmerica. Furthermore, the notice of termination only
purported to terminate the Agreement on behalf of Allianz NA. See Doc. #36 at Ex. B. Additionally, most
correspondence attached to Russell’s complaint purports to be on behalf of Allianz NA, without reference to the
other Allianz entities. Nevertheless, the complaint and both parties have treated the alleged wrongful acts as if made
on behalf of all entities. This Court will do the same for the purpose of deciding this motion to dismiss.

8

October 19, 2011, when Romo informed him that he was terminated for fraud. Nevertheless,
prior to the effective date of Russell’s termination, Allianz revoked his ability to act as an agent
pursuant to the Agreement. Doc. #36 at ¶ 14.
Based on these allegations, the Court concludes that Russell has pled the existence of a
contract (the Agreement) and a breach of such contract (Allianz’s termination of the Agreement
prior to meeting the requirements for termination). There is no indication that the breached
notice provision was dependent on a condition precedent. Accordingly, dismissal of the breach
of contract claim is improper. See Midwest Sports Mktg., Inc. v. Hillerich & Bradsby of Canada,
Ltd., 552 N.W.2d 254, 267 (Minn. Ct. App. 1996) (summary judgment against plaintiff
inappropriate where defendant failed to comply with contractually required termination notice).
2.

Fraud

Russell also argues that his termination for “fraud” against Allianz was a breach because
he did not commit “fraud” within the meaning of the contract. Doc. #71 at 6–7.
When interpreting a contract, Minnesota courts “look to its language to determine the
parties’ intent. In other words, where there is a written instrument, the intent of the parties is
determined from the plain language of the instrument itself.

Accordingly, [courts] assign

unambiguous contract language its plain meaning.” Savela v. City of Duluth, 806 N.W.2d 793,
796–97 (Minn. 2011) (internal punctuation and citations omitted). In ascertaining a term’s plain
meaning, a court may consider “dictionary definitions” and Black’s Law Dictionary. State v.
Weayaus, 836 N.W.2d 579, 583 (Minn. Ct. App. 2013).
The Agreement does not define or elaborate on the meaning of fraud as used in its
termination for cause section.

Black’s Law Dictionary defines fraud as “[a] knowing

misrepresentation of the truth or concealment of a material fact to induce another to act to his or

9

her detriment.” Black’s Law Dictionary (9th ed. 2009), fraud. Oxford English Dictionary, in
turn, defines the term as the use “of false representations to obtain an unjust advantage or to
injure the rights or interests of another.” Oxford English Dictionary Online, www.oed.com (last
visited Aug. 28, 2014) (search for “fraud, n.”). In light of these definitions, the Court concludes
that the plain meaning of fraud as used in the Agreement is: (1) a knowing misrepresentation or
concealment of a material fact; (2) made to gain an unjust advantage or to induce another to act
to its detriment.
Based on the allegations and documents before the Court, Russell was terminated for
“fraud” based upon his allegedly misrepresenting the signee of a document and altering dates and
signatures on relevant forms.4 As an initial matter, it appears that, in executing the Agreement,
the parties differentiated between misrepresentations on application forms and fraud.

In

providing the justifications for terminations for cause, the Agreement listed: misrepresentations
on applications for policies, falsifying material information provided to Allianz, and the
commission or attempted commission of fraud. If making misrepresentations on policy forms
constituted fraud, then at least one of the foregoing provisions would be superfluous. Minnesota
law counsels against interpretations of contracts that render provisions superfluous. See Econ.
Premier Assur. Co. v. W. Nat. Mut. Ins. Co., 839 N.W.2d 749, 756 (Minn. Ct. App. 2013) (“If
the truck fits both classifications, at least one contract provision is rendered superfluous, a
rendering our interpretation should avoid if possible.”). Accordingly the Court concludes that,

4

In its reply brief, Allianz argues that “the fraud committed, and for which Allianz terminated the Agent Agreement,
is based on Plaintiff’s misleading Allianz in its investigation, and his attempts to cover up his repeated violations of
important Allianz policies and procedures.” Doc. #76 at 5. While the August 2011 letter to the Mississippi
Insurance Department referenced that “Russell initially stated that Mr. Bentley signed the receipt,” the Court has
been unable to find anything in the pleadings or attached documents that shows Russell was terminated for any type
of “cover-up.” Indeed, it appears that Allianz informed the Arkansas Insurance Department that Russell was
terminated for cutting and pasting client signatures and dates. Doc. # 36 at Ex. C. In the absence of any indication
to the contrary, the Court, for the purposes of deciding the motion to dismiss, draws the reasonable inference that
Russell was terminated for the reasons set forth in the Arkansas Insurance Department letter.

10

pursuant to the Agreement, misrepresentations on application forms (without more) do not rise to
the level of “fraud.” Because, as pled, Allianz terminated Russell for making misrepresentations
on policy documents, he could not have been terminated for “fraud” under the Agreement.
Furthermore, even if misrepresenting information on policy forms could be deemed
“fraud” under the Agreement, dismissal at this stage would still be inappropriate. Viewing the
allegations in the light most favorable to Russell, the Court concludes that it is facially plausible
that the statements were made for reasons other than to induce Allianz to perform a selfdetrimental act or for Russell to gain an “unjust” advantage, and thus could be found to not
constitute “fraud” within the meaning of the Agreement. Indeed, Russell specifically pled that
he did not attempt to defraud Allianz. Doc. #36 at ¶ 21. Taking this allegation as true (as it
must), the Court cannot conclude that it is facially implausible that Russell did not commit fraud
within the meaning of the Agreement. Accordingly, as pled, Allianz breached the Agreement by
terminating Russell for fraud and the motion to dismiss must be denied in this regard. See
Twombly, 550 U.S. at 556 (“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’”).
B. Implied Covenant of Good Faith and Fair Dealing
“Under Minnesota law, every contract includes an implied covenant of good faith and fair
dealing requiring that one party not unjustifiably hinder the other party’s performance of the
contract.” In re Hennepin Cnty.1986 Recycling Bond Litig., 540 N.W.2d 494, 502 (Minn.1995)
(quotation omitted). This covenant “prohibits a party from failing to perform for the purpose of
thwarting the other party’s rights under the contract.” Team Nursing Servs., Inc. v. Evangelical
Luthern Good Samaritan Soc., 433 F.3d 637, 641–42 (8th Cir. 2006) (citing Coddon v.

11

Youngkrantz, 562 N.W.2d 39, 43 (Minn. Ct. App. 1997)). To establish a violation of the implied
covenant of good faith and fair dealing, “a party must establish bad faith by demonstrating that
the adverse party ha[d] an ulterior motive for its refusal to perform a contractual duty.”
Minnwest Bank Cent. v. Flagship Props. LLC, 689 N.W.2d 295, 303 (Minn. Ct. App. 2004).
Allianz argues that Russell has failed to plead it acted with bad faith. In his response brief,
Russell focuses on the fact that he was terminated for fraud and that he did not commit fraud.
As alleged, Allianz improperly terminated Russell’s contract for “fraud” with the purpose
of “intentionally damag[ing] his business.” Doc. #36 at ¶¶ 9, 21. Taking this allegation as true,
the Court concludes that Russell has properly pled a claim for violation of the implied covenant
of good faith and fair dealing.
C. Breach of Fiduciary Duty
In order to state a claim for breach of fiduciary duty under Mississippi law, a plaintiff
must allege the existence of a fiduciary duty and a breach of such duty. See Lowery v. Guar.
Bank and Trust Co., 592 So.2d 79, 83 (Miss. 1991) (“A fiduciary duty must exist before a breach
of the duty can occur.”). Generally, a fiduciary relationship may be “created by contract [or]
may arise from an informal relationship where both parties understand that a special trust and
confidence has been reposed.”

Burgess v. Bankplus, 830 So.2d 1223, 1227 (Miss. 2002).

Allianz challenges only the first requirement – the existence of a fiduciary relationship.5 Russell
responds that a fiduciary relationship was created by contract. Doc. #71 at 12.
“The existence of fiduciary duties depends on the facts of a particular relationship.
Usually, therefore, a claim alleging the existence of a fiduciary duty is not subject to dismissal in

5

In its reply brief, Allianz also argues that Russell failed to allege a breach of a fiduciary duty. Doc. #76 at 7–10.
However, “the court may not consider a new argument made for the first time in a reply. Cross v. Senior Living
Props., LLC, at *1 n.1 (N.D. Tex. Feb. 19, 2008).

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a 12(b)(6) motion, given the generous pleading standard established in Fed.R.Civ.P. 8.” Boley v.
Pineloch Assocs., Ltd., 700 F.Supp. 673, 680–81 (S.D.N.Y. 1998) (internal footnotes omitted).
With regard to contractual fiduciary relationships, the Mississippi Supreme Court has
held that:
Although every contractual agreement does not give rise to a fiduciary
relationship, such relationship may exist under the following circumstances: (1)
the activities of the parties go beyond their operating on their own behalf, and the
activities for the benefit of both; (2) where the parties have a common interest and
profit from the activities of the other; (3) where the parties repose trust in one
another; and (4) where one party has dominion or control over the other.
Hopewell Enters., Inc. v. Trustmark Nat. Bank, 680 So.2d 812, 816 (Miss. 1996). “While
Mississippi law does not require any ‘magic words,’ there must be evidence that both parties
understood that a special trust and confidence was being reposed.”

Mabus v. St. James

Episcopal Church, 884 So.2d 747, 758 (Miss. 2004). In this regard, a “fiduciary [duty] may
exist when there is a relationship wherein one person is in a position to exercise a dominant
influence upon another, arising either from weakness of mind or body, or through trust.” Roman
Catholic Diocese of Jackson v. Morrison, 905 So.2d 1213, 1239 (Miss. 2005).
At least one court in this state has treated the four Hopewell “circumstances” as “four
factors that might convert a standard contractual relationship to one fiduciary in character.”
Ward v. Life Investors Ins. Co. of Am., 383 F.Supp.2d 882, 886–87 (S.D. Miss. 2005).
Employing this “factor” test, the district court in Ward held that, in the absence of a “contract
that … indicates [a] desire[] to be bound in a fiduciary relationship,” insurance agents are not in
fiduciary relationships with insurance companies they contract with because such agents are not
“under the dominion and control of the company ….” Id. at 887.
In arguing that it did not owe Russell a fiduciary duty, Allianz relies on an array of cases
in which courts declined to find a fiduciary duty between either brokers and principals or lenders
13

and lendees. See Doc. #63 at 14 (citing Ward, 383 F.Supp.2d at 887; In re Koelfgen, 87 B.R.
993, 997 (Bankr. D. Minn. 1998); Furr Mktg. Inc. v. Orval Kent Food Co., Inc., 682 F.Supp.
884, 886 (S.D. Miss. 1988); Shaffer v. Guardian Life Ins. Co. of Am., 986 F.Supp. 1066, 1068
(S.D. Tex. 1997); and H Enters. Intern. Inc. v. Gen. Elec. Capital Corp., 833 F.Supp. 1405, 1422
(D. Minn. 1993)). However, of relevance here, none of the cited cases involved an express
assumption of fiduciary standards. Indeed, two of the cases expressly noted the absence of such
a provision. Ward, 383 F.Supp.2d at 887 (“There is nothing in the contract that is before this
Court that indicates Life Investors desires to be bound in a fiduciary relationship to the
plaintiffs.”); In re Koelfgen, 87 B.R. at 997 (“There is nothing in the contract which would
indicate that there was an express or technical trust.”).
Here, the Agreement expressly acknowledged that “[b]oth parties understand that each
occupies a position of trust and confidence in dealings with each other, and each party agrees to
act in accordance with the highest ethical and fiduciary standards when dealing with the other.”
Doc. #36 at Ex. B (emphases added). Thus, in addition to reposing trust between the parties, the
Agreement expressly acknowledged that the parties must act “in accordance with … fiduciary
standards.”
Unlike the cases cited by Allianz, the parties expressly placed a high degree of trust in
each other and covenanted to act in accordance with fiduciary standards. The Court concludes
that the express assumption of “a position of trust” and “fiduciary standards” placed the parties
in a position to exercise a dominant influence upon each other, with such dominance arising from
trust reposed by a mutual assumption of fiduciary duties. Accordingly, Russell has adequately
pled the existence of a fiduciary relationship. Morrison, 905 So.2d at 1239; see also Pentech
Pharms, Inc. v. Par Pharm., Inc., No. 04-c-3149, 2004 WL 2390088, at *3 (N.D. Ill. Oct. 21,

14

2004) (“absent an express provision, parties that deal with each other at arms length generally
do not enjoy a fiduciary relationship”) (emphasis added).
D. Tortious Interference with Business Relations
A claim for tortious interference with business relations arises from “interfer[ence] with a
prospective business advantage.” AmSouth Bank v. Gupta, 838 So.2d 205, 214 (Miss. 2002).
“There are four elements necessary to prove a claim of tortious interference with a business
relationship: (1) The acts were intentional and willful; (2) The acts were calculated to cause
damage to the plaintiffs in their lawful business; (3) The acts were done with the unlawful
purpose of causing damage and loss, without right or justifiable cause on the part of the
defendant (which constitutes malice); (4) Actual damage and loss resulted.” Biglane v. Under
the Hill Corp., 949 So.2d 9, 15–16 (Miss. 2007).

To establish damages arising from a

“prospective relationship,” a plaintiff must allege a “reasonable likelihood that the relationship
[would have] come into existence.” Ward, 383 F.Supp.2d at 888.
In its motion to dismiss, Allianz argues that Russell’s tortious interference claim must fail
because: (1) “[t]here is no cause of action for interference by a former agent against an insurance
company regarding the company’s business relationships or contracts with its own customers or
clients;” (2) the “allegations that Allianz sent notices to affected customers that Plaintiff was no
longer authorized to act as Allianz’s agent regarding their Allianz policies, cannot form the basis
of a tort of any kind [because t]he statement was completely true, and Plaintiff does not allege
otherwise;” and (3) “Allianz was required by statute to report [the termination] to its
customers.”6 Doc. #63 at 15 (emphasis omitted).

6

Allianz, citing to Minnesota case law, also argues that “the tortious interference claim is also barred by the
economic loss doctrine.” Doc. #63 at 18. However, in tortious interference claims, “[r]ecovery for stand-alone
economic injury is clearly permitted … under Mississippi law.” Mississippi Law of Torts § 18:26 (2d ed.).

15

In his response to the motion to dismiss, Russell argues that he has stated a claim for
tortious interference because the “wrongful termination on the part of [Allianz] damaged [his]
ability to sell insurance products for other companies, and harmed existing relationships with
long-time customers who bought products [Russell] sold on behalf of [Allianz], as well as
prospective customers.” Doc. #71 at 15. Thus, Russell appears to argue that Allianz interfered
with three types of business relationships: (1) those between Russell and his customers; (2) those
between Russell and other insurance companies; and (3) those between Russell and potential
future customers.
As to Russell’s argument regarding damages arising from loss of prospective business
from his former clients and prospective customers, “[i]t is without question that Mississippi
recognizes the claim of tortious interference with a business relationship, which ‘occurs when a
person unlawfully diverts prospective customers away from one’s business.’” Unified Brands,
Inc v. Teders, 868 F.Supp.2d 572, 578 (S.D. Miss. 2012) (quoting Par Indus., Inc. v. Target
Container Co., 708 So.2d 44, 48 (Miss. 1998)). However, despite the allegations in his response
brief, Russell has not pled that Allianz’s actions diverted customers. In the absence of such
allegations, the Court cannot reasonably infer that there was a “reasonable likelihood” that the
allegedly lost relationships would have come into existence.7 Ward, 383 F.Supp.2d at 888.
In contrast to the non-existent allegations regarding lost customers, Russell pled that: (1)
Allianz terminated him for cause; (2) such termination was done to intentionally damage his
business; (3) the termination was done without right; and (4) due to the termination, he lost two
contracts, and was unable to “gain a similar agency status” with another company. These
7

Although apparently not raised in the response brief, to the extent Russell’s complaint seeks to recover for loss of
renewal commissions from his former clients, such claim must fail because renewal payments are “derivative of a
contract between [Allianz] and the insured,” and thus, Russell “had no independent business relationship with which
[Allianz] could have interfered.” Ward, 383 F.Supp.2d at 889.

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allegations are sufficient to state a claim for tortious interference. See Biglane, 949 So.2d at 15–
16; see also Weber v. FujiFilm Med. Sys. U.S.A., Inc., No. 3:10-cv-401, 2013 WL 6592592, at
*3–4 (D. Conn. Dec. 16, 2013) (tortious interference claim recoverable if plaintiff “could show
that the designation of his termination as for cause proximately caused his inability to find
comparable employment”).
V
Conclusion
For the reasons set forth above, the motion to dismiss [62] is GRANTED in Part and
DENIED in Part. The motion is granted as to the claim for tortious interference arising from
alleged interference with prospective and former customers. The motion is denied in all other
respects.
SO ORDERED, this the 12th day of September, 2014.

/s/ Debra M. Brown
UNITED STATES DISTRICT JUDGE

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